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Growing Coverage: Southeast Asia witnesses surge in 4G uptake

September 15, 2016
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In line with the global trend, 4G adoption continues to rise in the Southeast Asian (SEA) region. According to industry reports, the initial response to long term evolution (LTE) technology in some of the region’s markets was much better than to 3G when the latter was launched. The 4G adoption rate has been much faster as compared to 3G primarily because data demand has grown exponentially in recent years. Users now demand every time, everywhere high speed network connectivity supported by almost unlimited bandwidth. While this paints a rosy picture for 4G adoption across markets, rolling out these services poses several challenges for operators.

Inadequacy of 4G spectrum is a key concern. Given the burgeoning data subscriber base, operators need a large amount of spectrum in more efficient bands to meet user needs. Second, the level of investments required to undertake complete modernisation of operator networks and make them 4G compatible is huge. Operators have been opting for a phased roll-out of 4G services, starting with high potential areas where adoption is expected to be high. Notably, in the SEA region, there are only a few countries, besides Singapore, where 4G has achieved complete coverage. The enthusiasm shown by operators while entering the market often fizzles out once they have launched 4G services in select pockets that have a greater number of data users. Thereafter, they go slow with subsequent roll-outs.

Notwithstanding the challenges, the SEA region’s telecom set-up throws open interesting opportunities in the 4G space. To begin with, the growth in 4G uptake remains unevenly distributed amongst the SEA countries. At one end of the spectrum is Singapore, which is a highly mature and advanced 4G market. On the opposite end are markets like Myanmar, which saw its first 4G commercial launch only recently, and Vietnam where 4G is still at the pilot stage. In between lie markets such as Malaysia, the Philippines and Indonesia, which are already witnessing high traction in 4G services, and the high potential markets of Thailand, Cambodia and Vietnam, which are stepping up their pace of 4G roll-outs.

The evolving 4G ecosystem is a key factor that has helped bring 4G into the telecom mainstream in the SEA region. Operators’ commercial strategies with regard to pricing, network expansion and marketing, coupled with maturing device and content ecosystems, have been instrumental in driving growth in the 4G market. In recent years, the SEA countries have recognised the role that mobile broadband, particularly 4G services, can play in realising the benefits of information and communications technology (ICT) in boosting their economies.

Regional market update

Amongst the countries in the region, Singapore leads in terms of 4G uptake. The country enjoys comprehensive coverage. It, in fact, is one of the few countries in the world to have imposed minimum standards for 4G QoS. While its peers in the SEA region are still struggling to achieve countrywide 4G coverage, Singapore has sailed ahead from the service delivery stage to the quality assurance stage.

Malaysia is one of the fastest growing 4G markets in the region and has achieved over 75 per cent population coverage. As per Ericsson’s mobility report, LTE subscriptions in Malaysia are expected to increase from 21 per cent of users at present to 61 per cent by 2021.

The Philippines too is poised for strong 4G growth in the coming years, following the approval of the agreement signed between PLDT and Globe Telecom to jointly use spectrum in the 700 MHz band acquired from the San Miguel Corporation. The two companies have already chalked out plans to leverage this newly acquired spectrum. PLDT’s wholly owned mobile phone and internet service subsidiary, Smart, intends to launch 360 cell sites based on 700 MHz technology by end-2016, while Globe plans to deploy 200 cell sites. PLDT is planning to shell out an extra PHP 5 billion for the LTE upgrade, in addition to its 2016 capex of PHP 43 billion.

Indonesia has high 4G growth potential, given the sheer size of its market, most of which remains underserved. The adoption of LTE services in Indonesia has been slow since their initial launch in December 2014. However, according to operators, although 4G service adoption has been moderate, it is still better as compared to 3G service adoption when it was initially rolled out. During the first quarter of 2016, 4G-based smartphone shipments to Indonesia surpassed those of 3G for the first time. Further, with the reassignment of spectrum in the 1800 MHz band and the government’s push for the localisation of LTE smartphones, 4G adoption is set to gain momentum towards end-2017.

Myanmar is the latest entrant in the 4G space in the SEA region. Ooredoo Myanmar recently launched the country’s first commercial 4G service in select parts of Naypyidaw, Yangon and Mandalay. The operator has expansion plans in place, but will require more spectrum from the regulator. To this end, the country’s Ministry of Transport and Communications is due to auction 2600 MHz frequencies later in 2016, with spectrum in the 1800 MHz band to be sold in the first quarter of 2017.

Evolving ecosystem

Operator strategies: Operators in the SEA region have adopted several strategies around customer segmentation, devices, pricing, marketing, and sales and distribution. Affordability remains a key starting point to bring users on board in developing countries. Companies often resort to data-device bundling to drive uptake, while operators in the more developed markets offer unlimited data with free calls and text messages. According to Avinash Sachdeva, senior analyst, digital transformation practice, APAC, Frost & Sullivan, “Operators offer service bundles with zero-rated over-the-top  apps and social networks that allow unlimited usage. While no new revenue is realised from such a move, the value addition is appreciated by the user, leading to user stickiness.”

In terms of distribution, operators use both their physical retail stores and online websites to drive the adoption of 4G services. “Operators also offer free SIM upgrade campaigns to help 2G/3G subscribers migrate to 4G,” says Sachdeva.

Device and content ecosystems: The increased availability of low- to mid-tier LTE smartphones/devices has been a key growth driver of 4G in the SEA region. These phones and devices are mostly shipped from global and China-based vendors such as Samsung, Lenovo and OPPO. However, of late, several local handset vendors in the region have ventured into the 4G market. This has increased the affordability as well as availability of 4G devices in the region. Sachdeva says, “Subsidies on mid-premium devices are also an interesting proposition for middle-class users who aspire to buy mid-premium devices. However, in a very dynamic and competitive market, these plans may not effectively work for the new generation, which is shy to commit to long-term relationships, be it with the network operator or the device manufacturer.”

“Content is a key proposition that influences subscribers’ uptake of 4G services,” Sachdeva adds. “For example, in Malaysia, some mobile operators are offering access to more than 15 content channels as a part of their data subscription plans. Further, content already accounts for almost 70 per cent of the data consumption.”


Barring the few initial hiccups, the long-term outlook for 4G services globally as well as in the SEA market seems positive. The technology is being seen as a key tool for meeting the growing demand for mobile broadband in the region. It may also prove to be a key delivery channel for ICT services in the region’s developing countries where fixed line internet penetration continues to be low.

With 4G roll-outs already initiated in all the countries of the region, operators’ focus now is on enhancing coverage. They are moving beyond soft launches to more commercial roll-outs, from urban and commercial centres to Tier II and Tier III cities, and remote areas.

Over the next few years, the region is expected to have ubiquitous LTE network coverage and high LTE device penetration. However, LTE monetisation and differentiation will be a key challenge for operators.

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