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

StarHub and M1 are considering a merger, which could result in a dominant competitor to Singtel, according to analysts. However, this consolidation could also lead to reduced consumer perks and less competitive pricing. The proposed merger would give the combined entity significant economies of scale and a larger customer base, making it more competitive in both post-paid mobile and fixed broadband markets.

Keppel, M1's parent company, is in discussions with StarHub about the potential deal. If the merger proceeds, it would create the largest provider of post-paid mobile and fixed broadband services in Singapore. The move would also reduce overlapping costs and network infrastructure expenses, strengthening the combined company's position against Singtel.

While the merger could lead to lower prices in the short term, analysts warn that reduced competition may result in fewer discounts, promotions, and price moderations for consumers. The telco market in Singapore could become more concentrated if the number of network operators falls from four to three, potentially shifting the market towards an oligopoly structure with a few dominant players.

Nonetheless, smaller players like Simba could still impact pricing levels, depending on their strategies.