Simba’s 5G spectrum hurdle may accelerate Singapore’s telco market reset
Regional experience such as in Thailand suggests that consolidation often leads to more disciplined pricing
[SINGAPORE] Singapore’s telco sector may be approaching a turning point, as mounting spectrum pressures on fourth operator Simba raises questions over the sustainability of price-led competition, analysts said.
A failed merger with M1, investigations into the utilisation of unauthorised spectrum, as well as a recent court order to pay S$700,000 in damages for trespassing has cast a giant spotlight on the telco – which shook the market in 2020 with the introduction of cheap plans.
Now, analysts are questioning the competitiveness of the telco as the Republic transitions into a 5G standalone (5G-SA) model, which is expected to be completed by mid-2026.
Unlike the current non-standalone 5G networks which leans on existing 4G infrastructure, the 5G-SA runs on dedicated 5G infrastructure, delivering greater capacity, speed and consistent performance.
However, this transition exposes significant weakness in Simba, which some analysts describe as one of its biggest structural disadvantages.
Sachin Mittal, analyst at DBS Group Research, said: “All of Simba’s usable 5G capacity sits in a single 10 MHz of 2,100 MHz (of spectrum), while peers run their 5G-SA networks on 100 MHz of 3.5 GHz (of spectrum) apiece.”
Moreover, Simba does not hold any 1,800 MHz and 3.5 GHz – the two bands that carry the bulk of urban indoor capacity and 5G capacity respectively for other telcos, he added
The telco’s thin 5G-capable spectrum, coupled with a growing customer base, means that the telco is carrying more traffic with “very little spare room”, he noted.
The telco has 1.4 million active mobile subscribers as at Jan 31, an increase from 1.2 million from the year-ago period.
“A potential inability to offer 5G and a patchy 4G service could weaken Simba substantially, paving the way for mobile average revenue per user (ARPU) repair to happen earlier than our base-case of a recovery in 12 months,” said Mittal.
Additional compliance cost
Spectrum constraints aside, analysts also flagged that Simba will need to pay additional cybersecurity compliance fees.
Mittal estimated that this will result in a one-time payment between S$21 million to S$28 million. Moreover, the telco is required to pay an additional S$3 to S$5 million in recurring fees.
This might result in Australia-listed Tuas Limited’s – Simba’s holding company – free cash flow to become negative, he added.
While DBS noted that Tuas reported free cash flow of S$26 million for FY2025, the additional payments may drive capital expenditure to S$60.5 million in a base case, or even as high as S$77 million in an accelerated scenario.
Hussaini Saifee, analyst at Maybank Securities, added that Simba is also required to renew its spectrums – which will expire in 2033 – at market rates through auctions.
The mounting pressure on Simba may have wide-reaching implications for Singapore’s telco industry.
Introduced in 2020, Simba – then TPG Telecom – has been a driver of aggressive price competition, with incumbents slashing mobile plan prices to compete.
This has weighed on industry profitability. In recent years, local telcos are facing flatlining ARPU values.
Singtel’s ARPU fell slightly to S$23 per month as at Mar 31, slightly lower than S$24 compared to the previous year. StarHub’s ARPU flatlined at S$21 as at Mar 31.
Hussaini noted that ARPU of Singapore’s telco players has “compressed significantly”.
Singapore’s ARPU is on the lower end of Asian development market peers, “underscoring the need for consolidation and competitive rationality”, he added.
That said, Chris Muckensturm, analyst from Bloomberg Intelligence, emphasised that a rebound in ARPU is still achievable, driven by a potential consolidation in the telco industry.
“Singapore mobile ARPU could improve, assuming regulatory scrutiny and the need to align with stricter cybersecurity mandates forces Simba to tone down its aggressive pricing,” she said.
However, she cautioned that promotional discounting by Singtel might pose a counter-risk to recovering ARPU.
Consolidation back in focus
The pressure on Simba is also reviving discussion about long-term consolidation in Singapore’s telco industry.
Mittal from DBS outlined two possible scenarios.
The first is that StarHub acquires M1 – a scenario that Saifee noted is “more likely”.
“(StarHub’s) existing network-sharing arrangement with M1 gives a future StarHub-M1 combination a more concrete industrial logic than a simple market-share argument,” noted Mittal.
The other scenario floated by analysts is Singtel acquiring a “struggling” Simba.
“Singtel’s balance sheet makes it best positioned to potentially acquire Simba’s assets in a liquidation scenario,” Mittal added.
However, Saifee noted that the acquisition remains unlikely, “given Singtel’s dominant market position”.
Regional experience such as in Thailand suggests that consolidation often leads to more disciplined pricing as operators tend to shift away from competing primarily on lower prices.
Instead, they focus more on upselling and capturing high-value customers, said Muckensturm.
“While regional peers demonstrate the benefits of transitioning to two-mobile player dynamics, it remains to be seen whether Singapore’s regulator would want to maintain a degree of competition by preventing the market from becoming a duopoly,” she added.
