Failed M1 deal leaves telcos trapped in price war

Analysts see renewed StarHub opportunity after sale collapse

The collapse of Keppel Ltd’s proposed $1.4b sale of M1 to Tuas Limited could prolong aggressive competition in the telco sector, as uncertainty around potential industry tie-ups pushes operators to continue defending market share.

The transaction involved Tuas subsidiary Simba Telecom acquiring M1’s telecommunications business, which would have seen Keppel receive around $1b for its 83.9% stake in the operator.

The agreement lapsed on 21 May after regulatory approval from the Infocomm Media Development Authority was not obtained following the authority’s suspension of its review over investigations into Simba’s alleged unauthorised use of spectrum.

“This outcome is disappointing for the market, especially since the deal was initiated in 2025,” Lim Siew Khee, group head of research and Singapore head of research at CGS International Securities, told Singapore Business Review.

Keppel may also need to delay plans to monetise M1 by up to two years following the failed transaction, Lim said.

“However, it could also create an opportunity for market repair once there is greater clarity,” she added.

The failed transaction has revived speculation around alternative buyers for the telco.

Lim noted that StarHub Ltd., which had previously expressed interest in the deal, could still emerge as a potential strategic party.

Separately, a Maybank report said StarHub remains a credible candidate for industry tie-ups given its long-standing interest in the sector, as well as potential network and cost synergies.

Maybank said uncertainty around potential deals could keep competition aggressive as operators continue defending market share, putting pressure on profitability in the near term.

The brokerage added that intensified competition over the past year has already pressured sector revenue growth and profitability.

‘Next move’

CGS International downgraded Keppel from “Add” to “Hold” following the collapse, saying the group may now need to “go back to the drawing board” as monetisation momentum stalls.

“We expect share price to be range-bound as Keppel refocuses on optimising M1,” the brokerage said.

CGSI also noted during an analyst call that Keppel remains free to negotiate with alternative buyers whilst maintaining its FY2026 asset monetisation target of $2b to $3b.

The group has begun a 90-day plan to improve M1’s efficiency through measures including right-sizing, lowering network and technology costs, and product rationalisation.

CGSI said Keppel could also accelerate the sale of other assets to maintain its monetisation target.

“Other assets ready for sale include Keppel Bay plot 6, Keppel South Central, and Rigco assets,” the brokerage added.