In 2024, the Asia-Pacific communications industry experienced a 69% surge in Greenfield FDI, reaching USD 40 billion, making it the second-largest investment sector after renewable energy (UN ESCAP). Within Southeast Asia, Indonesia attracted $2.02 billion in telecom FDI during Q3 2024 (McKinsey & Company), while Vietnam received a $1.5 billion investment proposal from SpaceX for its Starlink satellite internet service.
The telecommunications industry in ASEAN is on the brink of a significant transformation in 2025, driven by emerging technologies, strategic industry consolidation, and financial restructuring. The sector's growth is being fueled by three dominant trends expansion of digital infrastructure, market consolidation, and financial optimization that will define the competitive landscape.
As consumer demand for high-speed internet, cloud computing, and digital services accelerates, telecom operators are scaling up their investments in AI-ready data centers, sovereign AI solutions, and 5G network expansions. Concurrently, mergers and acquisitions are reshaping market structures, reducing competition in certain markets while intensifying it in others. The shift from capital-intensive expansion to financial optimization is also allowing companies to achieve stability, making the sector attractive to investors.
The Digital Infrastructure Boom: AI and Data Center Expansion
As AI adoption grows and businesses move to the cloud, demand for high-density computing power and secure data hosting has surged. Telecom operators are responding by expanding data centers, deploying AI for operational efficiency, and forming strategic partnerships with cloud providers.
Expanding Data Center Networks to Support AI and Cloud Computing
Investments in data centers have become a strategic priority for telecom companies, as sovereign AI and cloud computing require robust digital infrastructure.
For example, Singtel is spearheading regional data center growth through multiple strategic initiatives, including a 58MW AI-ready facility in Tuas, Singapore, positioned to become Southeast Asia's most advanced AI-optimized data center. The telecommunications giant is simultaneously expanding its footprint across key markets with a 20MW project in Thailand and a 17MW development in Indonesia, solidifying its presence in major Southeast Asian economies.
Notably, Singtel's collaboration with Telekom Malaysia (TM) through a joint venture aims to construct a 64MW hyperscale data center expandable to 200MW which would rank among the region's largest planned facilities, demonstrating the company's multi-pronged approach to meeting escalating demand for AI and cloud infrastructure capabilities.
These investments are expected to diversify revenue streams for telecom operators, as businesses increasingly rely on cloud-based services and AI computing.
AI as a Key Growth Driver for Telecoms
AI is transforming network operations, customer service, and business intelligence across the telecom industry.
AIS, Thailand's leading telecommunications provider, is harnessing the power of artificial intelligence to enhance both its network operations and customer experience. The company has successfully integrated AI technology into over half of its network sites, yielding significant improvements in energy efficiency and cost reduction. This implementation has led to a 4.4% decrease in energy consumption and a 2% reduction in utility expenses across its network infrastructure.
On the customer service front, AIS has deployed sophisticated AI-powered voice assistants and chatbots, which now manage more than a quarter of all customer transactions.
These AI-driven solutions have proven highly effective, achieving an impressive 94% customer satisfaction rate, demonstrating AIS's commitment to leveraging cutting-edge technology to improve service delivery and operational efficiency.
By integrating AI into their operations, telecom operators are improving network resilience, customer experience, and financial efficiency, further cementing their role in ASEAN's digital economy.
Market Consolidation: Strengthening Competitive Positioning
Consolidation within ASEAN's telecom markets is creating a more sustainable competitive environment, leading to better pricing power and operational efficiencies. However, some markets still face regulatory challenges and intense competition, limiting the benefits of mergers.
How Mergers Are Reshaping the ASEAN Telecom Industry
Thailand's telecommunications landscape underwent a significant transformation in March 2023 with the merger of TRUE and DTAC, creating the country's largest telecom operator. This consolidation has reduced the number of major players in the market to two, establishing a duopoly in the Thai telecom sector. The merger has had a stabilizing effect on pricing strategies, allowing the industry to recover from years of intense price competition.
As a direct consequence, the Average Revenue Per User has shown signs of improvement. The newly formed entity, TRUE, is projected to achieve profitability by 2025, marking a milestone in its post-merger journey. This financial turnaround is expected to culminate in TRUE announcing its first dividend payout, signaling a new era of financial stability and growth for the company and potentially reshaping the competitive dynamics of Thailand's telecommunications market.
While these mergers have improved pricing dynamics in some markets, Malaysia and the Philippines continue to face intense competition despite past consolidations.
Financial Optimization: Higher Dividends and Lower Capex
With capital expenditures declining across the region, telecom operators are returning more capital to shareholders through higher dividends and financial restructuring.
Singtel is actively pursuing a value unlocking strategy to boost dividends. The company has identified S$12-13 billion in monetizable assets, including stakes in regional associates and non-core fixed assets. This capital recycling effort is expected to fund higher value-realisation dividends (VRDs) in the coming years. For FY2025, Singtel projects a total dividend of 16.5 cents per share, representing a 5.2% dividend yield. The company's improved return on invested capital of around 9%, surpassing its weighted average cost of capital of 7%, further supports its ability to sustain and potentially increase dividend payouts.
AIS, Thailand's leading telecommunications provider, is poised for significant dividend growth in 2025. The company's strategic implementation of AI across its network infrastructure has resulted in improved operational efficiency, with a 4.4% reduction in energy consumption and 2% savings in utility costs. This optimization, coupled with enhanced customer experience through AI-powered solutions, is expected to drive profitability and support an 11% increase in dividend payouts for 2025. AIS's focus on technology to improve pricing power underpins its ability to deliver growing returns to shareholders.
Capex Efficiency and Infrastructure Monetization
Many telecom operators are monetizing their infrastructure assets including towers and fiber networks to unlock capital for reinvestment.
In connection to this trend, PLDT has sold a portion of its telecom towers, redirecting capital toward higher-margin digital services.
With improving financial metrics and capital discipline, ASEAN telecom stocks are becoming increasingly attractive for income-focused investors.
Key Takeaways
ASEAN's telecommunications sector is undergoing a pivotal transformation, marked by divergent market dynamics and strategic shifts. Market consolidation in Thailand and Indonesia has bolstered pricing discipline, enhancing operator profitability, while Malaysia and the Philippines grapple with intense competition, suppressing ARPU growth. Indonesia's looming 5G rollout poses capex risks, whereas the Philippines, past its investment peak, prioritizes financial optimization. Regulatory changes, such as Thailand's 2025 spectrum auctions and Malaysia's dual-network transition, add complexity to investment strategies.
Dividend growth is gaining traction, with AIS, Singtel, and PLDT leading higher payouts, while TRUE's post-merger entry into dividend markets signals financial stability. Indonesian telecom stocks, trading at lower EV/EBITDA multiples, offer value for growth-focused investors. The sector's future hinges on AI adoption, digital infrastructure investments, and financial discipline, shifting from capex-heavy expansion to efficiency-driven models. As ASEAN's digital economy expands, telecom operators embracing innovation and regulatory agility will dominate the landscape.
