He sees no reasons for the merged Simba-M1 entity to be aggressive on pricing, “otherwise they will hurt themselves”. Meanwhile, RHB expects the merged entity to continue driving market share with discounted offerings in the medium term, with prices rising gradually as network upgrades take effect.
Saifee also downplays the impact of the larger spectrum share and network advantage by the Simba-M1 entity, given Singapore’s already extensive coverage. However, StarHub could benefit from network synergies as it operates a shared 5G access network with M1.
“We assume that going forward, even Simba spectrum will be deployed over the singular network. StarHub won’t be footing the bill of industry consolidation and complex network integration and as such, we see better certainty of its dividends,” note Saifee, who maintains his “hold” call on StarHub with a target price of $1.10.
RHB took a more cautious view, noting that the StarHub-M1 network-sharing joint venture could attract scrutiny from the Infocomm Media Development Authority (IMDA) over spectrum rights. The JV could give the Simba-M1 merged entity access to “valuable low and mid-band spectrum,” which could have implications for StarHub. As such, RHB maintains its "neutral" stance on StarHub with a target price of $1.14.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
As competition may ease, Singtel will also benefit. However, the direct uplift will be relatively limited as less than 10% of its sum-of-the-parts valuation comes from Singapore’s consumer market. Both Maybank and RHB are keeping their “buy” calls on Singtel, with target prices of $4.30 and $4.70 respectively.
As at 1.17 pm, shares in Singtel are trading 1 cent higher or 0.25% up at $3.94, while shares in StarHub are trading 2 cents higher or 1.72% up at $1.18.
