The growing attraction of fixed-mobile convergence in Asia was highlighted recently by major players in the region looking to acquire fibre assets in Indonesia, Thailand and most recently Hong Kong.
Operators aim to tap a fixed broadband segment which S&P Global data showed increased 7.2 per cent in 2022. Emerging markets in Asia registered the strongest growth in subscribers and ARPU.
Asia Pacific’s average household penetration rate stood at 50.7 per cent at end-2022, but the figure hides huge differences between developed and developing countries: from 100 per cent in South Korea and Singapore, to 10.7 per cent in India and 18.6 per cent in Indonesia
Earlier this month, Indonesian operator Telkomsel agreed to integrate with its parent company’s broadband unit, which it stated holds a 75.2 per cent share of the market.
With low fixed broadband penetration in Indonesia and ARPU six-times greater than mobile, Telkomsel sees an attractive upside in the high-growth sector to complement its mobile operations, which face slowing growth.
Telkomsel’s service revenue increased 1.8 per cent in 2022 to IDR89 trillion ($5.9 billion), with legacy voice and SMS services down 16.4 per cent to IDR29.3 trillion and flat mobile ARPU of IDR44,000.
In Hong Kong, China Mobile is considering buying Hong Kong Broadband Network (HKBN), the second-largest provider of fixed-line broadband service in the territory with a 34 per cent share of the residential market and 37 per cent of the enterprise segment at end-2022.
GSMA Intelligence data showed China Mobile Hong Kong had a 38 per cent share of total mobile connections at end-March, making it the largest operator in the territory.
The parent company doesn’t break out revenue for the subsidiary.
AIS is working on a deal to acquire two broadband companies owned by Jasmine International, which will more than double its home broadband business to 4.4 million customers.
The company’s broadband business was its main driver of growth in Q4 2022, increasing 13 per cent year-on-year to THB2.6 billion ($75.5 million). Meanwhile, mobile service revenue was flat at THB29.5 billion, with post-paid ARPU down 3.8 per cent to THB455 and prepaid 10 per cent to THB123.
In the Philippines, Globe Telecom and PLDT have looked to beef up their fixed broadband capabilities, with elevated capex levels over the past few years.
Globe Telecom last month set its sights on the underserved prepaid fibre segment to drive growth in home broadband, as the addressable post-paid market reaches saturation.
Fixed-line broadband users rose 17 per cent to 1.1 million at end-2022 and revenue 27 per cent, but fixed wireless connections and sales were down 47 per cent and 49 per cent, respectively, cutting its total home broadband user base by 30 per cent and revenue 8 per cent to PHP27.1 billion ($487.8 million).
The company added about 1.4 million FTTH lines annually in 2022 and 2021.
Globe Telecom’s mobile service revenue in Q4 2022 increased 3 per cent to PHP107.5 billion, with prepaid ARPU down 1 per cent to PHP98.
PLDT also focused on fixed broadband in 2022, deploying some 1.3 million FTTH ports to take its total to near 6 million and cover about 40 per cent of all villages in the Philippines.
Home broadband sales in Q4 2022 rose 21.1 per cent to PHP12.6 billion and fibre customers by more than 500,000 to 2.9 million.
Mobile service revenue fell 2.5 per cent to PHP23.3 billion and subscribers 7 per cent to 64.3 million.
S&P Global forecasts the number of fixed broadband subscribers in the region will climb by 129 million, or 21.7 per cent, to 726 million between 2023 and 2027, offering an appealing upside for service providers.
Broadband revenue is expected to increase 22.4 per cent to $101.4 billion.
Head of Asia telecoms research at HSBC Neale Anderson told Mobile World Live data volumes in most markets are growing around 30 per cent a year, which “is obviously not the case for communications revenues”.
In addition to higher capex and spectrum costs to support 5G, Anderson explained the greater network density increases site lease, electricity and backhaul costs. “One way to limit this impact is to operate a merged fixed and wireless network”.
Anderson noted Asia is relatively unusual compared with Europe in still having a number of standalone mobile operators, with higher cost pressure one reason to add fixed broadband.
With slowing mobile revenue growth, he said adding other services to a bundle is a long-standing method of reducing customer churn.
Mei Lee Quah, director of ICT research at Frost and Sullivan, agreed, noting the industry has seen similar types of developments globally in the past, but this time there is an element of fibre in the mobile services business which can power 5G.
She emphasised the move to fibre assets is all about showing growth. “We can only hope the developments don’t set players too far back to catch up in a new form.”