The graphic below analyses 2024 investor material from the top 11 telcos in APAC.
The bars show the eleven revenue lines discussed most often – with the colour of each bar showing an estimate of the maturity of CSP activities in that area.
Some mature revenue lines, such as IoT and digital content, did not get much highlight in CSP reporting presumably due to their maturity, lack of significant revenue growth or lower margins (e.g. IOT). However, two topics got significant coverage from most CSPs:
The interest level seen in APAC for developing new AI and gen AI products and services stands out globally, with various business models and initiatives announced in the last two years. China and South Korea saw a range of new models developed and investments in AI companies – with a focus on the development of local language models. Other countries mostly favored collaborations with large companies already investing heavily in the area. Examples of initiatives to bring new AI models and services to enterprise customers include Korea Telecom‘s launch of its Enterprise AI Market, a platform that enables businesses and public institutions to create and use gen AI services, and KDDI which has joined forces with an AI start-up to launch a LLM that will deliver services to enterprises and local governments. Chinese CSPs have also been rolling out their own LLMs with China Telecom creating 12 large vertical models in areas such as government administration, education, and transportation, enabling 600 projects. In addition, some CSPs are developing models for their local regions; for example, Reliance Jio has partnered with the Indian Institute of Technology Bombay to develop an LLM designed to meet the needs of India’s multiple languages.
Deployment of managed compute, storage, and data center infrastructure; integrated with core/5G networking was also a topic seen from nearly all APAC CSPs. Similar to their activities in AI, there is a split between build and partnering to provide these services depending on the CSP’s location. Examples include Telstra’s partnership with AWS and Microsoft and Bharti Airtel in partnership with advisory firm, Bridgepoint Technologies, to better support small-to-mid-sized companies while leveraging its existing capabilities as India’s largest network of 12 data centers and 120+ edge data centers. The Chinese market is very different, with the CSPs offering hyperscaler services in line with government focus on building cloud capacity. China Telecom is the 3rd biggest provider of IaaS in China according to Back4app.com, developing an intelligent computing acceleration platform which integrates cloud, intelligent computing, and supercomputing adapted to AI use cases. The other CSPs also have significant businesses with China Mobile purchasing nearly 8,000 AI servers in 2024 and China Unicom with over 400,000 data center cabinets deployed.
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Analyst firm, Twimbit reported that APAC CSP revenues grew 5.1% in 2023, with 88% of CSPs reporting growth with many CSPs seeing an upward trend in mobile data usage from remote working, online education, and an accelerated shift towards digital lifestyles; alongside some continued growth in fixed revenues and some limited growth in new revenues. Over the next few years, publicly available revenue forecasts from a range of analysts shows an average expected CAGR in the next 5-10 years ranging from 6.3% in India to 1.4% in Singapore:
In the more developed markets, growth is expected to come from 5G, IOT and continued growth in mobile data. Also, S&P Global Ratings note “where there is saturation in the mobile market and high price sensitivity, we see fixed broadband as a bright spot in telcos’ earnings as adoption grows”. These growth areas are underpinned by the expected continuation of government support and analyst also have expectations of a modest impact from new services.
At the higher end of forecasts, India is expected to see multiple sources of growth including, uptake of smartphones and digital services and growth from 5G, IOT, cloud and data centres. And, at the lower end, Globaldata still expects growth from both mobile data (with a 5-year CAGR of 6.9%) and fixed broadband (1.9% 5-year CAGR) in a highly mature market like Singapore; along with revenue growth from the Singaporean CSP’s efforts to embrace new digital services.
