- Simba’s announcement to acquire M1 at enterprice value of S$1.43b (at an EV/EBITDA of 7.3x M1 ex-ICT EBITDA) is a positive step towards rational competition as operators in Singapore have competed intensely for the past several years. M1 and Simba combined will lead to equitable market share among telcos (Singtel: ~55%, StarHub: ~24%, M1+Simba: ~22%).
Potential for competition to start subsiding.
- - Read this at SGinvestors.io -
Starhub: multiple benefits stemming from merger.
- - Read this at SGinvestors.io -
- The merged company will gain spectrum market share and network superiority, but we don’t see this as a huge differentiator as Singapore already has wide network coverage.
- Note that Simba, with a relatively inferior network, managed to gain market share in Singapore. StarHub will also be a beneficiary of network synergies as StarHub and M1 operate a singular 5G access network and we assume that going forward even Simba spectrum will be deployed over the singular network and the synergies of that will help StarHub.
- StarHub won’t be footing the bill of industry consolidation and complex network integration and as such, we see better certainty of its dividends.
Singtel would also benefit, but to a limited extent.
- Read more at SGinvestors.io.
