Potential StarHub-M1 merger could create stronger rival to Singtel but reduce consumer perks, say analysts

“If the Simba-M1 merger had taken place instead of StarHub-M1, I feel that the new Simba would add even more competitive pressure,” said Mr Oo.

He added that Simba, as the new entrant, has been growing from zero in just a few years, against the three other telcos who have been around for much longer and have been seeing their mobile profits drop.

Mr Puar said that in a newly consolidated market, if the StarHub-M1 deal goes through, competition could still stay alive if smaller budget brands can easily enter the market.

“Smaller operators such as CirclesLife can still provide a degree of price competition, but only if they continue to receive fair access to the merged entity’s network,” he said.

Analysts, however, noted the trade-offs between price and longer-term investment and innovation by the telco firms.

“A cut-throat business is not necessarily for the benefit of the industry as a whole. If the telcos all can’t make money, then it could slow future innovation or affect quality of service,” said Mr Oo.

Mr Puar said that over the longer term, cost synergies from a potential StarHub-M1 deal could unlock “substantial capital to reinvest in future generation network infrastructure and product innovation”.

“Whether consumers ultimately benefit will depend on whether the merged company passes those savings on through better pricing and services, or retains them as profit,” he said.