[SINGAPORE] When news broke of the sale of M1 to Simba, it seemed like StarHub was left at the altar, as the market whispers of a merger had reached fever pitch at the start of 2025.
With the sale of M1’s consumer business to the smallest Singapore telco for S$1.4 billion in cash, the market reacted negatively to StarHub’s failure to seal the deal. StarHub’s share price fell some 6.6 per cent on Monday (Aug 11), the day the deal was announced.
But not buying M1 might be a good move for StarHub in the long run.
Under Keppel’s wing, M1’s consumer business has not been the focus. Revenue growth in the first half-year of 2025 was driven mainly by the information and communication technology business, which Keppel is retaining. Enterprise revenue grew from S$245 million in H1 2024 to S$335 million in H1 2025, while consumer revenue fell from S$348 million in H1 2024 to S$337 million in H1 2025.
This is a key theme that Keppel has fostered, steadily increasing enterprise revenue at M1, even as consumer revenue headed the other way.
With the consumer mobile market flooded for choice with both telcos and mobile virtual network operators (MVNO), there is some wisdom in searching for growth in a segment that is not as saturated.
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A billion dollars is a lot to pay for a business that is facing such stiff competition, with depressed margins that are likely not to trend upwards any time soon. Without the enterprise segment of M1’s business, the 7.3 multiple of earnings before interest, taxes, depreciation and amortisation of S$195.4 million seems high.
Then, there is the biggest challenge of integration, which corporates have never really tackled well. Anecdotally, there are stories of people within Singapore corporates who still introduce themselves as part of the acquired company, despite the acquisition having happened decades ago.
Simba will now have to tackle integrating M1’s staff, infrastructure and operations into its fold, where the culture battle begins. M1, being an incumbent, will likely not have the same scrappy attitude that Simba embodies. Integrating tech and infrastructure will be less of a hassle since machines lack organisational inertia or the reluctance to change how they operate.
Simba’s case is even more unique, given that it is a smaller company swallowing a bigger one, which would affect the success of the integration. The ratio of M1 to Simba staff could lead to Simba becoming more like M1, rather than the other way round.
This acquisition will likely see some churn from M1’s customer base as end-users ponder what it means to them. Simba will either have to prove to M1 customers that nothing will change for them, or accept that M1 will look more like Simba – a low-cost telco.
Should M1 look more like Simba, a stripped-down version of a telco with minimal offline shops, there could be customer churn among those looking to have a physical presence to solve their issues.
Furthermore, this could also prove to be a potential catalyst for StarHub to hunt for more market share during the period between the completion of the deal and the integration. Simba’s parent company is raising funds through a share placement and bank loan for the acquisition, and turned profitable only recently – in its H1 FY2025 ended Mar 31.
This would leave Simba more vulnerable in defending M1’s market share if StarHub and Singtel decide to make a play for more subscribers. StarHub has deeper pockets than Simba, and M1’s target audience is more similar to StarHub than Simba.
Convincing M1’s customers to switch to StarHub amid the uncertainty of a transition to Simba would be an easier sell than Simba convincing M1 customers to stay.
The only thing that could spoil the future upside for StarHub is if regulators veto the deal, which could leave the telco market back at square one.
Should the deal go through, StarHub might be better off as a competitor than a beau of M1.
