Additional spectrum from Simba-M1 merger would give new entity ‘structural advantage’, says StarHub

[SINGAPORE] The proposed Simba-M1 merger will result in the combined Simba-M1 entity holding 900 MHz spectrum – above the current spectrum caps – and could give the new entity a “structural advantage”, StarHub’s chief executive officer Nikhil Eapen has said.

Responding to questions from The Business Times on the proposed merger, he said: “This must be addressed directly. Allowing excess spectrum to be retained would create a structural advantage and set a problematic precedent for future market developments.”

The regulator Infocomm Media Development Authority launched a public consultation on the proposed merger in October. The consultation period ended on Friday (Nov 7).

BT recently contacted StarHub and Singtel to ask these telcos, for example, what they saw as the primary market implications of the industry shakeup that would leave three mobile network operators in the game, down from four.

In the paired 900 MHz spectrum band space, which supports both 4G and 5G networks, Simba holds 10 MHz and M1 holds 5 MHz.

StarHub holds 5 MHz, and Singtel, 10 MHz.

This means that, following the proposed merger, the combined Simba-M1 entity will hold 15 MHz, more than its two rivals.

Spectrums, as described by Simba and M1, are “lanes on a highway for mobile data to travel”. With more “lanes”, the smoother the traffic flow can be, due to lowered congestion.

Hussaini Saifee, analyst at Maybank Research, told BT that the strongest objection to the M1-Simba merger voiced by industry players involves the extra spectrum.

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In their submission to IMDA, M1 and Simba stated that their paired 15 MHz of frequency division duplex 900 MHz spectrum would serve as a “stable anchor” for mobile coverage.

If the merger goes through and the combined entity is able to use all the spectrum resources allocated by the IMDA to M1 and Simba, it follows that customers of the combined entity would be able to enjoy enhanced mobile networks, they said.

They added that this was because the resulting network would have significantly enhanced coverage and capacity, as devices would be able to aggregate more carriers.

StarHub is not the only company raising concerns about the proposed merger.

Mobile network operator Circles.Life said last weekend that the combined Simba-M1 entity would control 77 per cent of the wholesale market and have a postpaid retail market share exceeding 38 per cent.

It said it had raised this concern to IMDA through a formal submission.

In their joint statement to IMDA, Simba and M1 said that the combined entity would “honour all existing mobile virtual network operators (MVNO) commitments and contracts, with no change to current commercial arrangement and service levels”.

They added that they would support any new MVNO looking to enter or launch services in the market under IMDA’s wholesale framework.

Nonetheless, analysts and some competitors have noted that similar merger of telcos in other markets brought about positive outcomes.

“Right now, industry revenues are shrinking. If it stabilises or improves from here, it is good for the industry,” said Saifee of Maybank Research.

Ng Tian Chong, chief executive officer of Singtel Singapore, told BT that the high quantity of mobile brands and Internet service providers in the market today has led to intense competition in a small market like Singapore’s.

Competition has hurt “the industry’s ability and willingness to continue important forward investments in newer technologies around networks, infrastructure, cyber and artificial intelligence”, he said.

Yuen Kuan Moon, chief executive officer of Singtel said at the media briefing for the telco’s H1 results on Wednesday that Singtel believed that, for sustainable market conditions in any market, big or small, having two to three operators would be “ideal”.

Operators, consumers and enterprises will benefit as operators would be able to generate sufficient return to reinvest into the network, which will then provide better services for all customers, he added.