Asia’s three largest regional telecoms operators have all made headlines in the financial news over the past month, with two groups taking steps to reduce their exposure in the region as they face rising debts and sluggish growth, while the other is investing heavily in what it sees as long-term growth markets.

Last week Bloomberg reported that Telenor is considering selling its 49 per cent stake in Malaysia’s Digi or lining up a partner to form a joint venture, while Axiata Group aims to reduce stakes in three of its Asian operations to raise funds to pay down a growing debt burden.

Telenor, which operates in five other Asian markets, said in its Q2 results that market conditions remained “challenging” in Malaysia, as it saw revenue drop 4 per cent in local currency terms. ARPU in the country fell 6 per cent “due to continued price pressure on international traffic and domestic data, combined with decline in voice revenues”. But Digi’s market share rose 2.5 points to 28.5 per cent over the past two years.

Meanwhile, Kuala Lumpur-based Axiata, with operations in 10 countries, reportedly is trying to unload 11 per cent of XL in Indonesia and also is looking to sell 30 per cent stakes in its Sri Lankan unit Dialog and in its Cambodian subsidiary Smart.

Last month, Axiata reported a sharp fall in net profit, as its two largest regional units – Celcom and XL – continued to lose subscribers and saw revenue decline. Its debt has expanded 55 per cent since the end of June 2014 to $5.2 billion.

XL has gone through a particularly bad patch, with its market share dropping from 21 per cent in Q2 2014 to just 12 per cent last quarter.

Rebalancing act
While those two groups are mulling rebalancing their Asian portfolios, Singtel announced last month plans to boost its stakes in the largest mobile operators in Thailand and India – AIS and Bharti Airtel – with an investment of $1.84 billion. Singtel currently has a 23.3 per cent stake in AIS and a 32.5 interest in Airtel.

The Thai investment, however, is really an internal accounting issue for the Singapore government, with Singtel boosting its stake via a share purchase from state-investment firm Tenasek (Temasek holds a 41 per cent stake in the Thai operator).

The operator, the largest mobile player in mature Singapore, has long said it plans to increase exposure in its high-performing regional partners, with the stated objective of having majority control of all its associates. In addition to AIS and Airtel, its regional partners include Optus in Australia, Telkomsel in Indonesia and Globe Telecom in the Philippines.

Singtel has acknowledged it is facing slowing growth in its home market and Australia, which isn’t likely to turn around anytime soon. It sees Thailand and India as “attractive markets that are reaping the benefits of rapidly increasing smartphone penetration and mobile data adoption by a growing middle class”.

The same could be said of both Indonesia and Malaysia, where smartphone penetration has expanded rapidly over the past two years, hitting 47 per cent and 67 per cent respectively. But it seems Axiata and Telenor don’t have the deep pockets or the patience required to wait for speedier growth and better margins while investing heavily in 4G networks.

A Hong Kong-based bank analyst told Mobile World Live that the pullback is likely more about the current scale of their investments relative to likely capex-spectrum costs going forward. “4G requires operators to double down on investments, so it’s a moment of truth,” he said.

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