The year 2023 witnessed widespread roll-out of 5G services in the Southeast (SEA) region and a consequent surge in data consumption by consumers and businesses alike. During the year, SEA attracted increasing investments from global data centre players, owing to its proximity to international subsea cable networks and the accelerated pace of digitalisation. While the focus area during the year continued to be commercial deployments of the 5G network, governments and operators also took initiatives to develop 6G technology.

A look at the key trends that dominated SEA’s telecom sector during 2023…

5G expansion and monetisation

Although each country in SEA is at a different stage of its 5G journey, the pace of the roll-out of 5G was rapid. Telcos, particularly in Singapore, Malaysia, Thailand and Indonesia, made significant investments in their 5G networks.

Malaysia has a unique approach to 5G roll-out – opting to use a single national 5G vehicle, Digital Nasional Berhad (DNB), instead of individual networks set up by each national operator. At the end of October 2023, DNB announced that Malaysia’s five mobile network operators – Celcom Digi Berhad, Maxis Broadband, U Mobile, Telekom Malaysia, and YTL Power International – had agreed to each acquire a 14 per cent stake in DNB. As per the agreement, each operator would contribute $50 million to the company for its funding requirements. As DNB’s network growth reached 80 per cent coverage, the government approved the proposal for a second national 5G roll-out, which was announced in May 2023. The network is being launched to compete with DNB, which currently has a monopoly on the 5G market.

The Indonesian government’s digital roadmap for 2021-24 recognises ICT infrastructure as a key enabler of digital transformation and prioritises the completion of 4G infrastructure and the development of 5G networks. However, as of Q3 2023, 5G network coverage stood at 15 per cent of the population, compared to 97 per cent for 4G. This is because Indonesia is facing a shortage of mobile spectrum, especially mid-bands that are crucial for reliable high speed mobile broadband services in heavily populated urban areas.

Singapore was among the world’s first to roll out a nationwide 5G standalone network. Three major telcos in the country – Singapore Telecommunications (Singtel), StarHub and M1 – announced plans to shut down their 3G networks in July 2024 and repurpose the spectrum to improve 5G services. In 2023, the Infocomm Media Development Authority (IMDA) partnered with enterprises to develop innovative, first-of-its-kind 5G solutions across sectors as part of the next wave of transformative 5G use cases. This is part of the IMDA’s SGD 30 million 5G Innovation Programme, which was launched in 2021 to help accelerate the adoption and commercialisation of enterprise 5G solutions.

Enhancing connectivity: Land, sea and satellites

Fibre penetration rates are on the rise in SEA, driven in part by national governments. Brunei, in particular, demonstrated significant progress with an increase of its fibre footprint by 55 per cent between 2019 and 2023, and an increase in fibre broadband access coverage by 81 per cent during the same period. Over 93 per cent of Brunei’s populated areas are fiberised with ongoing fiberisation in all remaining areas. However, fibre broadband service take-up rates remained below 50 per cent in most of the other markets, which suggests that the utilisation of fibre infrastructure was still far from saturation in the SEA region.

Broadband penetration in Indonesia and the Philippines remained low as rural locations and small islands are not serviceable by fixed networks. To this end, satellite-based internet is being explored to provide internet access in outlying areas. For example, Société Européenne des Satellites (SES) is providing network and internet coverage to several markets and is expected to work with local telcos as well as the Indonesian and the Philippines governments to provide connectivity. In July 2023, the first Starlink terminal was deployed at a smart farm in Cambodia. Indonesia also launched its first satellite to enable better internet connectivity in its T3 region, which constitutes many remote islands. US-based Astranis announced it will deliver the Philippines’ first dedicated satellite internet service, expected to be launched in 2024. Besides, OneWeb and mu Space announced a multi-million, multiyear deal to deliver OneWeb’s low earth orbit connectivity solutions across mainland SEA, including Thailand, Laos, Cambodia, Vietnam and Malaysia.

There was a flurry of activity in the SEA region in the subsea cable network segment. Singapore is already Asia’s subsea capacity hub, hosting around 30 international submarine cables that provide an aggregate 44.8 terabits per second (Tbit/s) capacity, up from 18 Tbit/s in 2019. Additionally, the work on the $300 million Asia Link Cable (ALC) project, a regional project intended to improve data capacity, began in 2023. DITO and Globe Telecom, Inc. joined the ALC consortium, which already includes Singtel, China Telecom Global Limited, and Brunei’s Unified National Networks. The 6,000 km subsea system will link Singapore, Brunei Darussalam, the Philippines and China, with a minimum trunk capacity of 18 Tbit/s in each fibre pair. Cable-laying operations for the project are expected to begin in 2024.

Proliferation of data centres

SEA’s data centre market has been established as a global hub for private investment. Long-term stable returns and an unprecedented surge in demand for data centre services have made the sector a safe bet for investors in an otherwise unpredictable global market.

In a notable development, US-based private equity (PE) giant Kohlberg Kravis Roberts & Co. (KKR) acquired a 20 per cent stake in Singtel’s regional data centre business. The $800 million investment is KKR’s largest investment in Southeast Asian data centre infrastructure to date.

Malaysia generated two of SEA’s largest data centre deals in 2023. Singapore-based real estate PE firm Area Group acquired 150 acres in a transaction valued at approximately $3.5 billion in the northern Malaysian state of Kedah, bordering Thailand, for developing a new data centre park. A few months later, US-based Vantage Data Centers announced an investment worth $3 billion in a new data centre campus in Cyberjaya, a smart city and major technology hub near Kuala Lumpur.

The Vietnam government granted approval for the first National Data Centre project at the Hoa Lac High-Tech Park, Hanoi City, to store government data. The project construction is likely to be completed by 2025. While the state budget is the primary source of funds, the government has also invited private investments.

6G blueprint

In June 2023, the International Telecommunication Union approved a 6G vision framework, a foundational document for global 6G work, giving momentum to renewed research and development of 6G technology across the world. The governments of Indonesia and Singapore released regulations and roadmaps for the development and implementation of 6G technology by 2030. Vietnam established a team to develop 6G equipment in collaboration with internal agencies and three major telcos, including state-run Viettel. Going forward, the adoption and monetisation of 5G and innovations in 6G will shape the future of SEA’s communications industry.