Eventful year for the telecom industry-
The year 2016 turned out to be an eventful one for the Southeast Asian (SEA) telecom industry. The year saw a significant surge in the adoption of data services on account of rising smartphone uptake and increased demand for mobile broadband services. While there was a series of 4G long term evolution (LTE) roll-outs in mature markets in the region, several of the emerging ones welcomed new players. Several telecom players in the region also embarked on transforming themselves into integrated service providers by expanding their product and service portfolio to include a multitude of services, the key among them being mobile money.
Southeast Asia Infrastructure takes a look at the trends that dominated the telecom sector in the SEA markets in 2016 and expectations from 2017…
Paving the way for competition
Many SEA countries opened up their telecom markets to new players in 2016. For instance, Australia-based operator TPG Telecom won the right to become Singapore’s fourth mobile network operator. The company has been provisionally allocated 60 MHz of spectrum, comprising 20 MHz in the 900 MHz band and 40 MHz in the 2.3 GHz band to provide international mobile telecommunications (IMT) and IMT-advanced 4G services. Vietnamese military-owned telecom group Viettel was selected to partner with a consortium of local companies called Myanmar National Telecom Holding Public, and a subsidiary of military-run Myanmar Economic Corporation called Star High Public Company to establish Myanmar’s fourth mobile operator.
In November 2016, the Philippines’ National Telecommunications Commission also confirmed that it will auction the spectrum relinquished by the country’s two major operators, PLDT and Globe Telecom. Companies already holding frequencies would be barred from the process in a bid to establish a new player in the market.
Smartphone adoption on an upward trajectory
The smartphone market in the SEA region showed tremendous growth in 2016 driven by the increased availability of a wide range of smartphones at competitive price points and extensive marketing campaigns by vendors. Moreover, Chinese manufacturers played a crucial role in increasing the uptake of smartphones by offering devices in the $100-$200 range. Further, with the launch of 4G services across the SEA region, the uptake of 4G-enabled smartphones also picked up significantly.
According to the International Data Corporation, total smartphone shipments in the SEA region reached nearly 28 million units in the quarter ended June 2016, an 18.1 per cent increase on a quarter-on-quarter basis and a 6.5 per cent growth on a year-on-year basis. Further, smartphones priced at less than $150 made up 68 per cent of the total smartphone shipments in the quarter ended June 2016. Indonesia, the biggest smartphone market in the region, had the maximum number of entry-level smartphone brands and additional consumers.
4G roll-out surges, but remains uneven
In line with the global trend, 4G adoption continued to rise in the SEA region in 2016. The increased availability of low- to mid-tier LTE smartphones/devices and operators’ strategies with regard to pricing, network expansion and marketing, coupled with maturing device and content ecosystems, were instrumental in driving growth in the 4G market.
The growth in 4G uptake, however, continued to remain unevenly distributed in the region. Singapore again stood miles apart from other markets, providing both superior coverage as well as speed. Malaysia achieved over 75 per cent LTE coverage. The adoption of LTE services in Indonesia remained slow since their initial launch in December 2014. However, according to the country’s operators, although 4G service adoption was moderate, it was still better as compared to 3G service adoption when it was initially rolled out. During the first quarter of 2016, 4G-based smartphone shipments to Indonesia surpassed those of 3G for the first time.
Myanmar became the latest entrant in the 4G space in the SEA region, with Ooredoo Myanmar launching the country’s first 4G services in May 2016.
Strong uptake of mobile money services
The trend of using mobile money gained momentum in Southeast Asia in 2016. Several operators collaborated with banks and mobile wallet players to offer low-cost and easy access to financial transactions. For instance, Singapore’s StarHub collaborated with Apple’s mobile payment and digital wallet service, Apple Pay, to facilitate payments by iPhone and Apple Watch users at the operator’s kiosks. Telenor Myanmar also entered the mobile payments space with the launch of a mobile money service in collaboration with Yoma Bank called “Wave Money”. The service allows customers to transfer and receive money through a distribution network of more than 4,000 local stores named Wave Shops, covering 60 per cent of all townships and most economic corridors in Myanmar.
In another significant move in this space, Philippines’ PLDT and Globe Telecom signed an agreement for interoperability amongst their digital payments platforms, allowing users of both platforms to send funds to each other. This was the first successful interoperability trial in Southeast Asia between two mobile money providers.
What to expect in 2017
The year 2017 is likely to be a little challenging for incumbent operators in markets which have opened up to new players. The entry of new players would intensify competition and take the war of market shares to a new level. At the same time, consolidation is expected in markets where operators are not scaling up investments, such as in Indonesia. These acquisitions will happen across the value chain, ranging from takeovers of data centre facilities to app players, while tower companies will consolidate to create larger footprints with more tenancies. Going forward, data services are likely to remain the key focus area for telecom operators in the SEA region as they continue to improve network capacity and coverage. Service providers will continue to transition customers to 3G and LTE as well as deliver new services like voice over LTE and enabling LTE advanced features.
