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DBS upgrades StarHub to 'buy' on potential M1 merger - The Business Times https://www.businesstimes.com.sg/companies-markets/dbs-upgrades-starhub-buy-potential-m1-deal-merger-drive-telcos-recovery   DBS upgrades StarHub to ‘buy’ on potential M1 deal; merger to drive telcos’ recovery   Source: The Business Times, by Shikhar Gupta | Published: 28 Jul 2026, 12:12 PM       📌 Rating & Valuation Update   - StarHub: Upgraded to Buy (from “fully valued”) on 27 Jul 2026; target price raised to S$1.40 (from S$0.94). If the merger falls through, target price drops back to S$1.05. - Singtel: Maintained Buy with sum-of-the-parts target price of S$5.46.   🤝 Background of the Potential Deal   - The move comes after Keppel (M1’s parent) renewed commitment to consolidation, following the collapse of M1’s S$1.43 billion sale to Simba Telecom in May 2026. Analysts see StarHub as the clear suitor for M1. - Valuation: M1’s enterprise value estimated at S$1 billion (7–7.5x EV/earnings), lower than the Simba deal due to weaker earnings amid fierce competition. - Funding: Planned via sale of StarHub’s Ensign InfoSecurity (~S$400m) plus ~S$621m new debt; net debt-to-earnings may peak at 3.5x in FY2027. - Post-merger financials: 120% earnings accretion in Year 2, 250% in Year 3 as integration completes.   📈 Synergies (target: S$70m annual run-rate by FY2029)   Category Value (S$m) Share  HQ & staff rationalisation 25 36%  Retail footprint consolidation 18 26%  ARPU upside 15 21%  Network consolidation 10 14%  Cross-selling 2 3%  Total: S$65–75m/year, equal to 9–11% of combined FY2026 forecast earnings, adding S$0.35/share to StarHub value.      📊 Impact on Major Telcos   Telco Current share Key Impacts  Singtel 44% Biggest winner: gains from rationalised pricing without integration risks. ARPU to rise from S$22.10 (FY2027) to S$25.90 (FY2030, +13%). EBITDA CAGR: 8–8.5% (2028–2030). Holding company discount to narrow from 22% to 10% via asset sales/IPOs.  StarHub 21% Combined share ~43%. Dividends may be lower for ~2 years to cut debt.  M1 22% Keppel exits at fair value, ending margin pressure from price wars.  Simba 14% Limited spectrum (10MHz vs 100MHz for peers) makes low-price model unsustainable; price hikes likely from 2027.    📡 Market Outlook   - Singapore completed nationwide 5G-standalone rollout in 2026, ending 4G fallback. - Consolidation will end hyper-aggressive price wars, restoring rational competition and lifting sector ARPU from 2027.