Southeast Asian telcos face higher investment spending, lower returns

August 14, 2017

SINGAPORE -Southeast Asian telecommunications companies will have to maintain more aggressive financial policies to stay competitive in an increasingly data-driven revenue landscape, says S&P Global Ratings.

"To meet explosive data and bandwidth demand in the smartphone era, regional operators have had to invest heavily in spectrum and new service portfolios and they've had to do so while confronting intense competition and shrinking margins," says S&P credit analyst, Wei Kiat Ng.
 
Rising investments are imperative if regional operators hope to compete in the smartphone era, according to the report. Operators will need to spend more for lower returns or face irrelevance.
 
“We anticipate 2017 will be the watershed year in which data-derived revenues surpass traditional services (voice and SMS) for our rated companies,” it says.
 
´Moreover, we expect traditional services will shrink to less than a quarter of combined revenues over the next five years.
 
"While the new landscape offers rare opportunities to gain market share in a previously static industry, the structural shift in telecommunications has been tough on balance sheets." www.standardandpoors.com (ATI).