Asia 2023: Huawei's surprise, telco AI and another bad one for Optus

Huawei, chips and the US-China tech war once again dominated the Asian news cycle, but it was also a huge year for AI and another disastrous one for Optus.

Huawei surprised the world when it quietly dropped a 5G-capable smartphone built from Chinese components, punching a hole in the US sanctions regime. Experts said it was a result of loose enforcement of the rules. Washington announced a tightening of measures and Commerce Secretary Gina Raimondo has since vowed further action.

In another sign of a rebound, Huawei recorded quarterly sales growth for the first time in three years.

North Asian telcos, led by SK Telecom, embraced AI. The Korean operator laid out a three-tiered strategy of AI hardware, digital transformation and services, aiming for $19 billion in revenues by 2028. It took a $100 million stake in Silicon Valley firm Anthropic and co-founded a global operators' AI group with DT, e& and Singtel.

Not to be outdone, SoftBank chief Masayoshi Son declared his company will "use AI more than anybody else in the world" and claims to have personally filed more than 900 gen AI patents.

Chinese telcos leveraged their massive computing networks to build AI platforms tailored to industry verticals, while China Telecom said it would create a Chat GPT-style service for enterprise customers.

Optus crash

It took a while, but Malaysia finally got a 5G deal, with the government agreeing to the establishment of a second wholesaler operator.

The five telcos have committed to taking a 70% stake in state-run wholesaler Digital Nasional Berhad (DNB), with the Ministry of Finance holding the remaining 30%. The second 5G wholesaler will be set up after DNB meets key rollout and coverage targets.

In one of the year's biggest stories, Optus' data network went down for half a day, taking 10 million customers and a big slice of Australia's digital economy with it. The outage was attributed to bad routing data following a routine software upgrade, but it is still not clear how and why this took down the network.

The crash came a year after a network breach that resulted in the theft of private data of millions of Optus customers. The dual disasters left CEO Kelly Bayer Rosmarin with little choice but to resign.

KT Corp had its own long-running drama that left it without a CEO and a functioning board for much of the year following a shareholder clash. New CEO Kim Young-Shub, the former head of LG IT services subsidiary LG CNS, took the reins in August.

Minister jailed

In a further embarrassment, Seoul police raided the offices of KT's then-acting CEO and two former CEOs as part of their probe into alleged corrupt practices at the Korean telco.

Indonesian communications minister Johnny G. Plate was jailed for 15 years for siphoning off funds meant for a rural 4G project, causing a loss of 8 trillion Indonesian rupiah (US$511 million) to the state.

Rakuten Mobile lost high-profile CEO Tareq Amin, who stepped aside in August for what he said were personal reasons. The company grew its customer base to 5.2 million in Q3 and narrowed its operating loss but is well behind its break-even targets.

PLDT chairman Manny Pangilinan is to return as CEO following the retirement of Alfredo Panlilio for health reasons after three years in the post.

Millions of China 5G subscribers had a problem with efforts by operators to corral them onto 5G networks. The newest Chinese telco, China Broadnet, came under fire from customers for terrible coverage, weak signal and dysfunctional customer service.

Japanese operators and dozens of organizations objected to a plan to reform or abolish the NTT Law that governs the country’s largest telco group.

As China's 5G spending slowed, ZTE cut 2,000 jobs. With 6G coming into focus, the Korean government committed $325 million in R&D funds, aiming to develop "pre-6G technology" by 2026.

Alibaba pulls IPO

In Hong Kong, private equity firms once again eyed HKBN but made no offer, while PCCW considered selling a stake in its fiber business. Cable TV, the city's original cable operator, shut its doors after 30 years, driven out by IPTV and streaming.

In transactions completed, PCCW sold a stake in streaming service Viu to Canal+ for up to $300 million, while Aussie Broadband acquired cloud telco Symbio and Taiwan consolidated from five players to three.

A clutch of deals didn't happen. Australian regulators ruled out TPG's attempted network sharing deal with Telstra on competition grounds. TPG's attempt to offload some of its fiber assets onto Vocus also failed after Vocus pulled out.

Alibaba announced a restructure into six independent businesses, with the aim of taking some of them public, but six months later suddenly canceled its cloud IPO, blaming uncertain chip supply.

Axiata fielded an offer from NTT DoCoMo and Mitsui for a share of tower company edotco. It also pulled out of its loss-making Nepal business because of worsening economic conditions.

As low-Earth orbit satellites proliferated, Asian telcos lined up to strike deals. The NTT group announced a partnership with Project Kuiper and Skyperfect JSAT for broadband and enterprise services. KDDI picked Starlink as its satellite-to-mobile provider. Spark teamed up with Lynk.

Telstra, which already had a backhaul agreement with OneWeb, signed with Starlink for satellite broadband and voice, as did Optus. Starlink and OneWeb both targeted the Philippines market, while at year-end the government weighed a possible partnership with Starlink.