Billionaire businessman David Teoh’s $1.7 billion buyout of Singaporean telecoms group M1 is facing a major new hurdle after the takeover target’s biggest customer asked the country’s regulator to allow it to tear up its contract as a condition for allowing the deal to proceed.
Tuas is a mobile and broadband provider spun out of Teoh’s TPG Telecom business when it merged with Vodafone in 2020. The billionaire is the company’s executive chairman and, in August, announced the company would acquire M1, a rival owned by investment giant Keppel.
However, M1 is embroiled in a worsening dispute with its largest customer, Liberty Wireless, which buys access to its mobile infrastructure.
Liberty Wireless and its subsidiary Circles.Life want M1 to be forced to renegotiate the contract, a move that would significantly cut into the company’s earnings.
The matter is now before the High Court of Singapore. The disclosure of the filing sent Tuas shares diving last month.
In a submission to the Infocomm Media Development Authority, which oversees the industry in Singapore, Liberty Wireless is arguing that it should be allowed to terminate or renegotiate its contract with M1 as a condition for allowing the transaction to proceed.
It argues that the combination of M1 and Tuas’ Simba brand could create an uneven playing field.
In a statement, Circles.Life said it had requested the regulator allow it to renegotiate or exit its contract with M1 and urged it to “take strong action in protecting the competitiveness of the Singapore market”.
“Given the merged entity will control 77 per cent of the wholesale market and have a postpaid retail market share exceeding 38 per cent, the need to retain competition for consumers is a central focus of this regulatory process,” Circles.Life said. “We firmly believe that if necessary protections are not put in place, Singaporean consumers will suffer.”
Tuas’ acquisition comes at a fraught time for the industry.
Singtel is under significant scrutiny over its ownership of Optus after a failure of its Australian network left three people dead from not being able to call Triple Zero. Hundreds of others were unable to call the emergency number during an outage that is now the subject of a parliamentary inquiry.
Communications Minister Anika Wells has ordered Singtel to engage independent external advisers to scrutinise the outage. Former NBN Co director Kerry Schott will review how the company manages Triple Zero calls, while the Australian Communications and Media Authority is separately investigating the failure.
Tuas’ buyout of M1 would bring together Singapore’s third and fourth-largest mobile operators and challenge Singtel and StarHub, the second most popular. To buy M1, Tuas raised $385 million from institutional investors and $50 million from retail shareholders at $5.15 a share in August.
Tuas, in which Teoh has a 32 per cent stake, had its shares jump to $8.32 in September. Since then, they have slid to $6.90, where they closed on Friday. The company has long been a favourite among fund managers, who are betting Teoh can recreate the successful growth of TPG in the Singaporean market.
Tuas did not respond to requests for comment.
Some analysts are increasingly sceptical about the acquisition, particularly if M1 is forced to renegotiate its contract with Liberty Wireless. The contract is significant because, as analysts from Singaporean bank DBS told clients, the bulk of M1’s profits come from its Circles.Life brand.
“Our channel checks indicate that Circles.Life contributes up to 50 to 60 per cent of M1’s earnings before interest, tax, depreciation and amortisation and up to 60 to 80 per cent of M1’s net profit, despite comprising just 15 to 25 per cent of M1’s service revenue,” DBS analyst Sachin Mittal wrote.
“We conclude that there is substantial pressure … due to intense competition. With consumer revenue shrinking each quarter, we believe M1’s market value could diminish with more delay in sector consolidation.”
The Singaporean regulator must approve the deal, and has asked the industry to provide its views about the effects on competition.
M1, which did not respond to requests for comment, has previously said it rejects Liberty Wireless’ demand that it enter into “good faith negotiations” to change the mobile network services agreement entered into in 2019.
M1 was founded in 1994 as MobileOne and has more than 2 million mobile customers. Once the deal closes, Tuas will control 38 per cent of the postpaid market – almost equal to Singtel.
However, the larger company has almost a two-thirds share of the prepaid mobile market.
Source: https://www.afr.com/technology/teoh-s-1-7b-singapore-takeover-play-faces-fast-mounting-roadblocks-20251109-p5n8v5