The telecom industry in Southeast Asia (SEA) witnessed significant developments during the past year. In line with the global trend, a surge in the demand and adoption of data services remained the key highlight of the year. This was driven by growing smartphone uptake and operators’ efforts to increase the coverage of long term evolution (LTE) services.
In addition, 2017 saw operators upgrading their networks to launch LTE-Advanced (LTE-A). Some operators opted for inorganic means of growth to strengthen their data networks and enhance coverage. The region also saw significant activity on the 5G front with operators making efforts to transition to 5G. Another key development was the emergence of new players in some telecom markets, which is expected to intensify competition in the future.
tele.net takes a look at the key trends that dominated SEA’s telecom sector in 2017 and the outlook for 2018…
Surge in 4G roll-outs
The roll-out of 4G services remained a key focus area for telecom operators in 2017. Operators in countries like the Philippines, Myanmar, Indonesia and Vietnam expanded their 4G coverage during the year. To this end, the Philippines-based Smart Communications decided to commission 2,165 LTE sites in low spectrum bands and 3,568 sites in high spectrum bands. Myanmar-based Telenor Myanmar extended its LTE network to six new cities, increasing the company’s total 4G service areas to 17. In Indonesia, XL Axiata expanded its 4G coverage in Sulawesi, Labuan Bajo, Sumatra, Central Java and West Kalimantan; Telkomsel expanded its coverage to Mandalika, Padar and Gili Lawa islands; and Hutchison 3 Indonesia expanded its 4G coverage to 227 cities across the country. Vietnam also witnessed a surge in 4G deployments as the Ministry of Information and Communications awarded a 4G licence to Vietnamobile, making it the fifth operator to be granted a licence for 4G services, after Viettel, MobiFone, VNPT-Vinaphone and GTel Mobile. Meanwhile, Viettel commercially launched its 4G services covering 95 per cent of the population in 2017. VNPT-Vinaphone also extended its 4G services to Binh Duong province and Gia Lai province in Vietnam.
Growing smartphone adoption
The smartphone market in the SEA region witnessed unprecedented growth in 2017. This was driven by the increased availability of a wide range of smartphones and extensive marketing campaigns by vendors. Further, China-based manufacturers played a crucial role in increasing the uptake of smartphones by offering affordable devices across a wide price range. As per market reports, out of the total smartphones shipped, around 62 per cent were priced at less than $150. Therefore, affordability has been an important reason for people switching from feature phones to smartphones. Approximately 89 per cent of internet users in SEA use smartphones as their primary device.
With smartphones becoming the go-to device for internet access and for other online services, the demand for smartphones is poised to grow significantly in the future as well. According to the Ericsson Mobility Report, the number of smartphone users in SEA and Oceania is expected to increase at a compound annual growth rate of 13 per cent, from 480 million in 2016 to 1,000 million in 2022.
Deployment of LTE-A
In a bid to offer high speed data services to customers, operators in countries like the Philippines, Myanmar and Cambodia launched LTE-A services. In the Philippines, Globe Telecom commercially deployed LTE-A technology using the 2600 MHz band. The technology was deployed at 110 sites, mostly in Metro Manila and specifically in Makati, and in certain areas in Quezon City, Marikina, Antipolo and San Mateo. In Myanmar, Myanmar Post and Telecommunications announced that its LTE-A services were available in every state across the country, while Ooredoo Myanmar introduced its LTE-A network across 200 townships. In Cambodia, Smart Axiata deployed an LTE-A network capable of supporting maximum speeds of 600 Mbps.
While some operators opted for network expansion and upgradation during 2017, others resorted to the inorganic growth route to strengthen their network coverage and position. These operators included Thailand-based Advanced Info Service (AIS) and Indonesia-based Telkom Indonesia. In October 2017, AIS acquired a 42.07 per cent stake in broadband service provider CS Loxinfo for THB 1.95 billion. The stake acquisition is expected to bolster AIS’s position in the fixed internet segment. In November 2017, Telkom Indonesia decided to buy a majority stake in Malaysian satellite company TS Global Network for $26 million. The acquisition was undertaken as a part of the operator’s regional expansion programme.
Road to 5G
Apart from these developments, the year 2017 witnessed significant developments on the 5G front as operators took early steps to create a conducive ecosystem for 5G deployment. Operators in countries like Singapore and the Philippines worked in collaboration with equipment vendors like Huawei Technologies, Ericsson and Nokia to conduct 5G trials. In February 2017, Singtel partnered with Ericsson for conducting trials for massive multiple-input, multiple-output (MIMO) and cloud radio access network (RAN) technologies, which are both essential for 5G evolution. Under the partnership, the two companies will test Ericsson’s AIR 6468 radio system, which provides 64T64R massive MIMO capabilities, and conduct a joint trial for cloud RAN technology. Further, the Philippines-based PLDT signed an MoU with Huawei Technologies to jointly conduct research and development on 5G technology. Under the MoU, PLDT and Smart Communications will work with Huawei to facilitate the strategic and commercial development of a new 5G ecosystem.
Countries like Thailand, Indonesia, Malaysia and Laos also jumped onto the 5G bandwagon. In April 2017, Thailand-based True Corporation collaborated with Ericsson to conduct the country’s first 5G trial. Ericsson also completed its first 5G trial in Indonesia. Further, in May 2017, Indonesia-based operator Telkomsel conducted a 5G trial in collaboration with Huawei in Jakarta. Meanwhile, Malaysia-based Celcom Axiata conducted the country’s first 5G trial using the 28 GHz band. In August 2017, Laos also entered the 5G space with the Lao Telecommunications Company signing an MoU with Nokia Shanghai Bell for jointly working on 5G technology.
Telecom regulatory authorities also worked towards creating a favourable policy and regulatory environment to ease the transition to 5G. In January 2017, Singapore’s telecom regulator, the Info-communications Media Development Authority, announced its plans to launch a public consultation on developments related to 5G technology and the spectrum requirements needed to support it. Further, Thailand’s National Broadcasting and Telecommunications Commission selected Ericsson to perform a live 5G end-to-end demonstration in Thailand. The trial achieved a peak throughput of 5.7 Gbps.
Paving the way for competition
Many countries like Myanmar and the Philippines opened up their telecom markets for new players. Myanmar’s Ministry of Communications and Information Technology awarded the country’s fourth telecom licence to Myanmar National Tele and Communications (MNTC) in January 2017. MNTC paid $300 million for the licence and is expected to commercially launch its services by 2018. Recently, the Department of Information and Communications Technology (DICT) of the Philippines published its guidelines to accommodate the entry of a third major operator. Among the key requirements laid down by DICT is a stipulation that the new licensee must have a valid congressional franchise to install and operate nationwide telecommunications facilities and services. Besides, the franchise should be valid at least until December 31, 2023. In addition, the bidding consortiums for the third licence must be at least 60 per cent Philippines-owned and must have no connection with any group currently having at least a 40 per cent share in the mobile and/or broadband wireless segments (PLDT and Globe).
Outlook for 2018
Overall, the year 2017 was an eventful one for SEA’s telecom industry, and 2018 is likely to bring in many opportunities as well as challenges for industry stakeholders. Data-based services will remain the key focus area for operators, who will continue improving their network capacity and coverage, as well as deliver new services like voice over LTE. Further, the region is set to witness considerable activity in the 5G domain with all operators striving to launch services to get ahead of their competitors. In addition, significant consolidation is expected to take place across SEA, especially in markets where operators are not scaling up investments. These acquisitions will take place across the value chain, from data centre facilities to application players and tower companies. However, incumbent operators in markets that have opened up to new players are going to struggle as the entry of new players will intensify competition and take the war for market share to another level.