Light Reading

APAC Telecom's Seismic Shift

Light Reading
News Analysis
Light Reading
2/8/2013
50%
50%

Asia/Pacific's maturing telecom markets are undergoing a "seismic shift," and many of the market assumptions about them no longer hold true, according to ratings firm Moody's Investors Service. Laura Acres, senior vice president of the firm's corporate finance group, says carriers in the region are shifting their focus away from capex and investment and towards returns to the shareholders. "Capex is plateauing, revenue [growth] is slowing, and margins are declining," she told attendees at the TMT Finance & Investment Asia Conference in Hong Kong this week. "People think of Asia as high growth, but growth is in line with GDP," she noted. Asia/Pacific telecom markets are no longer low penetration, Acres continued. "It is reaching super-saturation in some markets. Many countries have far more than 100 percent penetration. India actually has more mobile phones than toilets!" Operators can no longer rely on growth simply by getting phones into the hands of subscribers. Now their strategies are more focused on trying to build up postpaid subscriber numbers and/or developing value-added services (VAS). In Indonesia, where churn is commonly above 100 percent, carriers are looking to services such as mobile banking and transactions to retain customers. But Acres said that although margins are down from "very high levels" in the recent past, they are still at levels that European operators "would kill for." She named four operators -- Philippine Long Distance Telephone Co. (PLDT), China Mobile Ltd., and Indonesian mobile operators PT Telekomunikasi Selular (Telkomsel) and PT Indosat Tbk -- that still enjoyed EBITDA (earnings before interest, tax, depreciation and amortization) margins above 50 percent. At the other end of the market, competition and a consumer-friendly regulator in South Korea had helped drive EBITDA margin levels to well below 30 percent. The changing environment is stretching some telcos, however. Last August Moody's cut its rating on incumbent operator Singapore Telecommunications Ltd. (SingTel) to Aa2 from AA3 because of its plan to raise dividends despite relatively high debt. In addition, Malaysia's Axiata Group Berhad was downgraded to Baa2 because it had hiked returns while also boosting capex. Despite this, telecom operators -- and not just in Asia/Pacific -- are still very much favored by capital markets. "There just aren't enough telco bonds," stated one bondholder at the conference. Acres noted that Hong Kong Broadband Network Ltd. (HKBN) sought US$450 million from the bond markets in January and was over-subscribed 20 times. "This is for a company that really is not known very much," said Acres. "It actually went to the bond markets without a rating: no rating, not very well-known internationally and it still got $9 billion. On the whole this is an industry with utility-like cash flows. It is very resilient, especially in Asia." Asia/Pacific telcos have enough cash and cash flows to self-fund during the next 12 months without raising any incremental debt, she added. "We see a sector that is highly bankable." -- Robert Clark, contributing editor, special to Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (8) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (1) comment


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
LRTV Custom TV
Orchestrating NFV vCPE Services Across Multivendor Networks

6|26|15   |   5:46   |   (0) comments


Nirav Modi provides an overview of vCPE, the fastest-growing NFV use case, showing how Cyan's Blue Planet orchestrates vCPE services across a multivendor infrastructure to rapidly deliver new managed services for business customers.
LRTV Custom TV
ZTE at LTE Summit Amsterdam 2015

6|26|15   |     |   (0) comments


As one of the leading global telecommunications providers, ZTE presented its cutting-edge technology at LTE World Summit 2015 in Amsterdam. On display at ZTE's booth were the latest R&D achievements in wireless, 5G development, HetNet, deep convergence of FDD and TDD, and RCS/IMD/iSDN/vCN.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Hot Topics
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones