Asia 2022: Tech war, more tower sales and 5G

It was the year the tech war spiraled, the industry indulged its love for tower sales and 5G continued in a holding pattern.

The growing US blockade of China's hi-tech and military tech dominated the Asian telco and tech sectors in 2022.

The US widened export controls to deny the sale of virtually all advanced semiconductor technology to China. It is reportedly working with Japan and the Netherlands to create a global ban.

Figure 1: 5G subs up but not profits, an underwater volcano cuts off Tonga and major embarrassments for KDDI and Optus.
(Source: Philipp Dimitri/Westend61 GmbH/Alamy Stock Photo)

The Biden Administration also effectively banned any type of Huawei product from sale in the US.

The new rule will make little difference to Huawei's business. The vendor showed signs of halting its revenue slide and reported higher Q3 margins, mainly on the back of growth in cloud and its core carrier equipment business.

Asian operators continued to sell off their tower assets. In the wake of big Australian deals in 2021, the two major Philippines operators, all three New Zealand telcos and Telkomsel all sold off assets to tower companies this year.

Limited 5G gains

Operators showed big 5G subscriber numbers but felt little impact on the bottom line.

Most reported flat or limited gains from 5G, with South Korean operators experiencing ARPU declines. The Korean regulator directed two operators to return their 5G mmWave spectrum after failing to meet their rollout commitments.

5G has been a slog for newcomers in particular. Japan's Rakuten Mobile posted an $864 million loss in the third quarter on sales of $639 million as it endures a torrid price war against incumbent players. But it says it has staunched the bleeding and has forecast a profit in 2026.

Dito Telecom, a new entrant in the Philippines, also struggled to gain traction. It reported 14 million subscribers but it remains deep in the red from foreign exchange losses.

China's newest operator, China Broadnet, made its official debut in June. The small telco, backed by the cable TV operators and with Alibaba and State Grid as minority shareholders, has so far made little impact as it gradually rolls out nationwide.

The big three Chinese telcos turned their attention to supporting national digital projects, such as the East-West scheme to build out data centers in low-cost regions in western China. They also reaped the rewards of the digital transformation and cloud boom, with all three reporting 100% growth in cloud revenue.

Tonga offline

PLDT, one of the Philippines' most respected corporations, is enmeshed in a scandal over $866 million in undocumented capital spending. The company says it's found no sign of fraud but has already sidelined some senior execs and hired experienced hands to oversee its finances.

Tonga went offline for a month after an underwater volcano blew its top, displacing nearly 10 cubic km in material and severing the Pacific island state's sole international cable.

KDDI suffered a massive network outage that took out 31 million services and lasted three days, costing the company $40 million. It announced plans to bring forward $339 million in network spending. In the wake of the failure, which hit banking and connected auto services, the industry moved to introduce inter-carrier roaming.

Optus parent Singtel set aside $101 million to fund potential lawsuits or compensation arising out of the theft of customer data, which had exposed the personal details of nearly 10 million customers.

Singtel raised $1.6 billion by selling off 3.3% of its Bharti Airtel stake, saying the funds would be used for 5G and new investment. Its Indonesian affiliate Telkomsel merged its fixed and mobile businesses.

Telstra vowed to appeal against the regulator's decision to block its rural network sharing partnership with TPG Telecom. The ACCC said the deal would reduce competition and raise prices.

SKT pivots to AI

The new Australian government sent NBN Co back to the drawing board to come up with a new long-term framework for wholesale access.

Malaysia's long-running 5G network saga has been further delayed. Just as the project looked set to proceed with support from most operators, new Prime Minister Anwar Ibrahim called for a review of the licensing and network tender processes.

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SK Telecom is pivoting to AI, declaring revenue from AI-based services will drive a threefold growth in market cap over the next four years. SKT's metaverse platform ifland went live in 49 countries, with e&, NTT DoCoMo and Singtel as its initial telco partners.

NTT DoCoMo made big bets on emerging technologies. It set up a new $400 million company, Qonoq, to lead its metaverse and XR business and expects to invest around $4 billion in its new Web 3 partnership with Accenture over the next few years.

New Zealand is aiming for 100% fiber take-up by 2032, up from 87% today.

The ITU chose an insider, Doreen Bogdan-Martin, as secretary-general – the first female leader in the organization's 157-year history. Telstra picked CFO Vicki Brady to replace Andy Penn as CEO.

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— Robert Clark, contributing editor, special to Light Reading