In just over a year, Simba Telecom has taken quite a tumble. On the verge of buying over rival M1 in August last year, it is now facing potentially severe fines and may even have its Singapore licence suspended or cancelled.
In an unprecedented case, the government regulator has told the telecom operator to answer some pretty serious questions on its operations.
The Infocomm Media Development Authority (IMDA) has set out six allegations, involving two where Simba is said to have utilised various parts of the airwaves that it was not allowed to. It was accused of doing so at more than 100 sites from 2022 to 2026.
More seriously, the regulator said Simba did not tap on the frequency spectrum by accident – the action was “intentional and approved by Simba senior management”.
Last month, Simba’s parent, Tuas, had said the unauthorised usage of one part of the spectrum was down to “a combination of both hardware and software issues.”
In its notice of Simba, IMDA also said the telco deployed 5G radio equipment at two locations ahead of IMDA’s go-ahead to do so in 2023.
Beyond this, IMDA said Simba had “deliberately” failed to produce documents asked for by the regulator. It called into question Simba’s “governance and compliance culture”, for which it is considering further obligations from the operator.
The details come from an IMDA notice to Simba to show cause. In other words, the regulator is telling Simba to answer the allegations and explain why it should not face penalties if they were true.
Tuas revealed the details to the Australian stock market today, adding that it would respond to the Singapore regulator. It has until November 16 to do so.
To be sure, the Singapore telco is in uncharted territory. While other telcos have been hit by penalties over the years, none have been been suspended or kicked out of Singapore altogether.
Those are the most serious potential punishments that IMDA has listed for Simba, should the allegations be true. The operator could also be fined 10 per cent of its annual turnover or S$1 million, whichever is higher.
Simba’s troubles have certainly deepened quickly in a mere 12 months or so. It had caught many by surprise last year when it said it was seeking to swallow up the consumer business of M1, which would make it the second largest mobile operator in town behind Singtel.
Entering the market a decade ago as TPG Telecom, Simba immediately faced an uphill battle with margins cut drastically through intense competition.
Sticking to low-cost plans that cost S$10 a month or less, it took until last year to post its first profit. However, its latest full-year earnings announced this year have shot up 277 per cent to S$26 million.
While mobile average revenue per user (ARPU) has remained slim at just S$9.42, Simba’s growing subscriber base has helped it with interconnect revenue.
After borrowing from investors to fund its takeover of M1 last year, Simba was priming itself to grab a much larger chunk of the market.
Yet, that deal unravelled this year, after the government regulator started investigating Simba for an unauthorised use of frequency spectrum. Its growing profits notwithstanding, the telco is facing its toughest challenge yet.
