IMDA halts review of proposed M1-Simba merger due to possible breach

The Infocomm Media Development Authority (IMDA) has stopped its review of the proposed merger between M1 and Simba in light of an alleged breach.

The statutory board is investigating the matter and will take "appropriate enforcement actions" if established, it said in a May 18 statement.

The review will remain suspended until the investigation has been concluded.

Proposed merger

On Aug. 11, Singapore asset manager Keppel announced that it would sell the telecom operations of its subsidiary, M1, to Simba Telecom.

The sale was valued at S$1.43 billion.

Following this, IMDA began an assessment of the proposed merger, according to the framework set out in the Telecom and Media Competition Code.

This included an evaluation of whether the merger would "significantly lessen competition or raise public interest concerns", IMDA said.

It also included a review of whether the telecoms' infrastructure meets Singapore's cybersecurity requirements.

Given the size of M1's mobile and broadband networks, the assessment has "necessarily been detailed and thorough".

Potential breach

During the review, IMDA learnt that Simba could have been using unauthorised radio frequency bands to provide mobile services.

This would constitute a breach of the Telecommunications Act 1999, and similarly of Simba's operating licence, the statutory board said.

IMDA is hence investigating the matter.

As the investigation results may be relevant to IMDA's assessment of the proposed merger, it has decided to suspend its review in the interim.

Keppel will move to Plan B

In response, Keppel said that it "respects [IMDA]'s decision" and understands its considerations.

While waiting on the outcome of IMDA's assessment, the asset manager "[has] also been working on a Plan B, in case Keppel retains majority ownership of M1".

It will hence begin executing this contingency, Keppel said.

In response to the challenges facing the telecom industry in Singapore, Keppel will embark on a 90-day plan to drive M1's efficiency.

But Keppel nonetheless believes that the telecommunication industry in Singapore "is in need of and will benefit from consolidation".

As such, it remains open to opportunities for divestment, it said.