Elevating growth: Five strategic priorities for Technology, Media and Telecommunications companies in Asia Pacific

By Jianbin Gao, Lee Chian Yorn and Irvin Menezes

The agenda of CEOs of Technology, Media and Telecom (TMTs) companies in Asia Pacific is as full as it has ever been. Filled with both complex challenges and compelling opportunities — geopolitical tensions, artificial intelligence (AI) and climate change being just three — the need for business reconfiguration for continuing success is both clear and urgent. We believe there are significant opportunities for incumbents as well as new arrivals. Regardless of where companies seek to play, and which pockets of growth they pursue, it's evident that significant investment — of time, strategic thinking, resources and finance — will be required if TMTs are to thrive. Where do you start?

In this article, we share five strategic priorities that we believe will position TMTs for higher value, competitiveness and growth.

Priority 1:

Re-inventing the telecom business model

In PwC’s 27th Annual Global CEO Survey, 52% of telecom CEOs said they believed their company would no longer be economically viable a decade from now if it continued on its current path, compared with 45% of all CEOs globally. This paints a picture of an industry that knows it is in a period of flux and willing to do something about it. 

It is our belief that leaders must reconsider the vertically integrated carrier model and focus on analysing, optimising, and potentially separating business layers. This can involve dividing the business into distinct components: ‘InfraCos’ to operate passive infrastructure, ‘NetCos’ to deliver network utility services, ‘ServeCos’ to manage customer-facing services and ‘TowerCos’ — potentially selling off tower infrastructure. Specialisation brings reward. As Netscape founder Jim Barksdale famously exclaimed “There are only two ways to make money in business: One is to bundle; the other is to unbundle.”¹ ‘Delayering’ can sharpen leadership focus on the main drivers of value, enhance strategic clarity and offer flexibility for investors and partners to contribute essential capital or capabilities.

Several of the major players in the region are already exploring this. In 2022, Axiata acquired Indonesia's broadband and cable TV provider Link Net with the intention of consolidating its business, making the company more agile, scalable and attractive to relevant partners. The delayering plan is expected to position XL Axiata as the second-largest fixed broadband operator in Indonesia². And, in Singapore particularly, we’ve seen larger telecoms using the mobile virtual network operation (MVNO) model to launch sub-brands targeting younger consumers. Innovative MVNOs have since sprung up in Japan, Vietnam, Australia and New Zealand. They stand out by using cutting-edge cloud technologies to offer service bundles, personalised experiences and tailored customer deals. 

An essential first step towards restructuring your business model would be to create a business architecture — a blueprint of the businesses you are involved in. Sketch out their boundaries, objectives, resources and assets, market and transformation priorities. This will provide you with a compass, and clarity on what capabilities are needed where, when and why. 

Priority 2:

Understand the power of the megatrends

Powerful global and local forces are driving the need to reinvent. The majority of TMT CEOs (72%) in our 27th Annual Global CEO Survey, expect technological change will drive business model change in the next three years. 63% expect changes in customer preferences.

For Asia Pacific, technological change — in the form of 5G — rapidly made its mark. In China, the rollout of 5G cellular networks is almost complete, reflecting the mandate from the government for telecoms to implement it as fast as possible³. There’s even talk of 5.5G⁴. Adoption of 5G across broader Asia Pacific is expected to reach 430 million by 2025, led by pioneering 5G markets such as China, Australia, Japan and South Korea⁵. This brings enormous potential for Asia Pacific-based telecoms to leapfrog other countries and provide customer services that other countries can only still dream of. 

Evolving customer preferences are driving change as new devices emerge with ever-higher requirements for data. This is largely attributable to video. Our inaugural Global Telecom Outlook revealed that of the 9.7 million petabytes of data that will be consumed globally in 2027, almost 7.7 million (or 79%) will consist of digitised video content⁶. Games, a key growth hotspot for both the Entertainment and Media, and Telecom industries, will also play an increasingly important role, as will virtual reality. This combination of technological innovations and changing consumer expectations — partly pushed by cost-of-living pressures — means the price of data is declining. As a result, companies will soon no longer be able to rely on healthy revenues from connectivity. Operators are diversifying into content. In South Korea, all three major mobile carriers — SK Telecom, KT and LG Uplus (LGU+) — have expanded into producing and distributing their own media content such as drama⁷.

The ongoing global semiconductor supply crisis — so crucial to global TMTs requiring sophisticated chips for cloud-based innovations — is actually working in Asia Pacific’s favour. Malaysia, in particular, is seeing a boon in technology investment. It has become an unlikely beneficiary of the current geopolitical landscape, which has spurred corporations from China and the West to diversify and expand in Southeast Asia in the semiconductor and digital infrastructure space. Johor, just across from the border with Singapore, is fast becoming a global data centre and manufacturing hotspot⁸.

Additional forces facing TMTs include shifting government regulation, climate change responsibilities and cybersecurity challenges. Carefully analysing how these forces are impacting the Asia Pacific region, and individual geographies, will help you identify opportunities and stay ahead of threats. 

Priority 3:

Embracing the cloud

Cloud technology offers simplified, more scalable infrastructure and faster innovation. The technical, operational and economic benefits of cloud-centric operations are undeniable. Our EMEA Cloud Business Survey 2023 found that only 54% have already adopted cloud in all or most parts of their business (i.e. “cloud-mature”). Anecdotally, our experience in Asia Pacific suggests the same. There is reticence over governance and data security. And, for incumbents sitting on large network estates which often have a fragmented, federated structure involving multiple national operating companies, building an enterprise-wide cloud is a major commercial and technical challenge.

One key challenge — and opportunity — is to reassess the traditional definition of where application architecture domains start and end. Cloud-native XaaS (Everything as a Service) providers have expanded up and down the value chain. For telecom companies, cloud transformation offers broader benefits and scope because it extends beyond the information technology systems to their main customer offering: the core network services. The next wave of value creation lies in cloudification of the network, the largest area of spending from the standpoint of both capital and operating expenditures.

An understanding of the legal regulatory implications is, of course, essential in our region. Markets, laws and regulations vary widely on key matters across our region, including data sovereignty. Where possible, shaping a cloud vision for the end-to-end value chain — both internally through operations and externally with customers — will see TMTs gain advantage. 

Priority 4:

Move fast but responsibly on generative AI (GenAI)

There’s an AI race among the world’s tech giants, following OpenAI’s launch of ChatGPT. Aside from China, which is now seeing its major technology companies develop foundation language models, adoption of GenAI more broadly in Asia Pacific, has been slow. A major challenge has been concern around increased cybersecurity risk and the bias of data, originating from outside of the region (mainly the US). Foreign technology investors have capitalised on this. In Malaysia, supportive government policies and initiatives have seen Intel, Microsoft, Google and IBM establish a local presence. Notably, data centre investment in Asia Pacific has surged significantly. In 2023, the region's data centre deals hit a record high of $3.45 billion, and is set to be surpassed this year⁹.

The danger for Asia Pacific-based TMTs is an extended overreliance on the big global tech companies, rather than generating homegrown innovation and reaping those rewards. Speed and mindset change is our greatest weapon here. To develop local competencies and advance digital solutions across a variety of sectors and verticals, CelcomDigi, for example, has launched its own AI Experience Centre (AiX) powered by an ecosystem of global technology leaders, local partners and solution providers¹⁰.

AI technology has tremendous potential in all aspects of a telecom company’s business (see chart below) and by applying responsible AI, it can drive sustained outcomes. Operating in AI-enabled ways will become the industry norm in areas including network management, device interfaces, and customer and employee experience. Those players who move early to lead this transformation stand to gain a significant competitive edge.

To realise gains, TMT companies should go beyond using specialised GenAI platforms and integrate AI capabilities into existing enterprise-wide applications. By fostering experimentation throughout the organisation and emphasising on use cases that can scale, they can reinvent how their businesses operate.

Priority 5:

Go beyond decarbonisation for sustainability

In recent years, transparent reporting on Environmental, Social and Governance (ESG) performance and impacts has advanced from an aspiration to a regulatory, societal and reputational necessity. Increasing regulation in Europe and the US especially, is requiring focus on emissions tracking within companies’ own operations and also increasingly along their supply chains. The big players in Asia Pacific realise that their market is a global market. So too, the location of investors. TMT companies who fail to heed these shifting dynamics in international markets, risk being left behind.

Some telecom companies are embracing sustainable practices, including integrating energy-efficient technologies and procedures into their infrastructure and operations, and adopting renewable energy sources. YTL in Johor, Malaysia, has gone one step further, addressing the energy-hungry nature of data centres by developing the country’s first data centre park powered by renewable solar energy¹¹.

However, despite the appetite of some countries in Asia Pacific, notably Singapore, in steering industries towards greater sustainability, TMT companies face an uncomfortable truth. Their development trajectory often includes network densification, proliferation of new end-user devices and a substantial increase in data centre capacity, all of which strain efforts to achieve net zero ambitions. But there are valuable steps companies can take.

Look for opportunities to create nature-positive business models that don’t just mitigate risks, but also strengthen financial returns and benefit society. Build circular-by-design device and network life-cycle management practices into operations and networks from end to end. Encourage circular customer behaviours to reduce e-waste. Invest in biodiversity protection and restoration around telecom infrastructure, and develop technology-based products and services to address environmental challenges. There are multiple ways to create value for both the company and society.