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MANAGEMENT DISCUSSION & ANALYSIS
Axiata Group Berhad | Annual Report 2016
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INDUSTRY AND MARKET OUTLOOK IN 2017
The effect of reducing revenues, coupled with increasing capex spend is presenting operators across the globe with challenges. This has resulted in a shift
of value from asset heavy telecom operators to newer asset-light or OTT players. In 2017, Axiata foresees the data interdependence cycle to continue, with
traditional telecom operators responding more aggressively to the structural shifts.
Smartphone penetration is expected to continue to rise, likely exceeding 60% in Axiata’s footprint markets driven by sub-USD50 4G LTE devices and demand
for video content from mobile-first customers. It is anticipated that the industry will see continued heightened capex intensity due to the need to invest in
additional spectrum and data network capacity, as well as coverage.
As data devices and networks continue to proliferate and improve, it is likely that data usage will continue to increase at approximately 50% compound annual
growth, which may result in average usage across the Group increasing to approximately 3GB per user per month. The heaviest usage markets of Malaysia
and Cambodia is expected to approach 6GB per user per month on mobile.
With the increasing emergence, acceptance and adoption of SVOD services, it is anticipated that fixed and mobile convergence will become a priority, for
telecom operators in 2017 as they seek to displace traditional media and Pay TV players, monetise content driving capital investments in the network, and
move into the home segment on a lower cost fixed platform.
In 2017, it is expected that the telecoms industry will see further consolidation in three possible dimensions:
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Mobile network sharing/consolidation
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Mobile mergers to achieve greater scale
•
Mobile and Fixed mergers to achieve Convergence
Challenges in 2017
Moving into 2017, the Group is prepared for the onslaught of several challenges within its operating environment. The unprecedented competition which
marked the Indian telco sector in 2016 will continue into the first half of 2017. Ideally, the Indian telco industry’s restructuring and rationalisation through
market consolidation into a three player market would allow for more rational and reasonable competition. In Malaysia, currency volatility and increasingly
stringent forex control requirements are expected to persist. However, the Group’s aggressive mitigation exercise of forex exposure by hedging US Dollar-
denominated debts will reduce its vulnerability.
Rapid changes in regulatory and government policies such as spectrum reallocations and auctions, and national taxes, remain at the forefront of challenges.
For 2017, these uncertainties include spectrum reallocation in Malaysia, the impact of new taxes announced in the 2017 Sri Lankan Budget and uncertainty
over network sharing in Indonesia. As well as that, effective and meaningful customer touchpoints are becoming more essential to generate sustainable
business growth and Axiata needs to defend its customer relationships in all its markets of operation.
2017 OUTLOOK