\n<\/p>\n
Despite the potential consolidation, analysts said that smaller players, including Simba, could still impact pricing levels in the sector, depending on the strategies they adopt.<\/p>\n
\u201cI wouldn’t rule out what Simba might do as it is the maverick that has been shaking up the market, so we still need to see what Simba’s response will be,\u201d said Mr Oo.<\/p>\n
He noted that Singtel and StarHub are both seeing reductions in mobile Average Revenue Per User (ARPU) recently, currently sitting between S$20 and S$22. In contrast, Simba\u2019s ARPU is around S$9 to S$10.<\/p>\n
\u201cBecause Simba\u2019s ARPU is more than half of the competition and it has still been profitable, it is showing that it can already make money at a lower selling price,\u201d said Mr Oo.<\/p>\n
Since entering the sector here, Simba is known for its low-cost mobile plans with large data bundles.<\/p>\n
\u201cIf the Simba-M1 merger had taken place instead of StarHub-M1, I feel that the new Simba would add even more competitive pressure,\u201d said Mr Oo.<\/p>\n
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.<\/p>\n
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.<\/p>\n
\u201cSmaller 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,\u201d he said.<\/p>\n
Analysts, however, noted the trade-offs between price and longer-term investment and innovation by the telco firms.<\/p>\n
\u201cA 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,\u201d said Mr Oo.<\/p>\n
Mr Puar said that over the longer term, cost synergies from a potential StarHub-M1 deal could unlock \u201csubstantial capital to reinvest in future generation network infrastructure and product innovation\u201d.<\/p>\n
\u201cWhether consumers ultimately benefit will depend on whether the merged company passes those savings on through better pricing and services, or retains them as profit,\u201d he said.<\/p>\n<\/div>\n
\n
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