Invest more or face irrelevance, report urges telcos
Southeast Asian telecommunications companies will have to maintain more aggressive financial policies in order to stay competitive in an increasingly data-driven revenue landscape, according to a report published on Monday by S&P Global Ratings.
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“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,” said S&P Global Ratings credit analyst Wei Kiat Ng, commenting on “The Smartphone Dilemma for Southeast Asian Telcos: Invest More for Lower Returns or Face Irrelevance” report.
Rising investments are imperative if regional operators hope to compete in the smartphone era, the report said, adding that 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. Moreover, we expect traditional services will shrink to less than a quarter of combined revenues over the next five years,” the credit analyst said.
“While the new landscape offers rare opportunities to gain market share in a previously static industry, the structural shift in telecommunications has also been tough on balance sheets,” he added.
