Telecoms in Q3 20 performed better as governments relaxed movement restrictions

Most Asian countries went into a state of complete lockdown sometime in early March (2020) with movement restriction orders lasting at least a few months. Telcos, governments, and regulators implemented effective policies and programs to ensure citizens that had continued unrestricted access to communication services during this period. While consumption of data and voice services reached new heights, operator revenues were negatively impacted due to closing of retail outlets and loss of roaming revenues.

In Q3 20, we saw telcos record impressive improvements in top-line as various governments relaxed movement restrictions. In Twimbit’s assessment, service provider revenues improved an average 1.7% year-on-year (YoY) during 3Q20, with the majority recording positive changes in revenues.

EBITDA and revenue growth across APAC markets, 3Q20

Asia’s 10 fastest growing telcos in Q3 20

Owing to the growth in data services, telecoms service providers recorded better revenue growth in Q3 20. Operators across multiple Asian markets witnessed an increase in revenues as significant lifestyle and social changes were brought about as a result of the pandemic. New customer segments, needs, and service requirements emerged as customers embraced ‘work from home’ and ‘learning from home’ among many other digital activities. The following telecoms operators demonstrated strong revenue growth during Q3 20.

Top 10 APAC telecoms operators in Q3 20 by revenue growth

Q3 20 key takeaways and highlights

Emerging Asia shows robust improvement in revenue growth

Telecoms operators in emerging Asian economies including India, Indonesia, Myanmar, and the Philippines dominated the top 10 list. The trend underlines huge appetites for data services in these markets and consequently also the monetization opportunities available to service providers. Remote working, online schooling, and an accelerated shift towards digital lifestyles have set the long-term demand trends for data services.

Average increase in mobile data usage per subscriber (3Q20 vs 3Q19)

Telecoms service providers reacted through a range of promotional plans, wherein most noticed were the introduction of unlimited data packs (and large data buckets) across both emerging and mature markets. A few examples are listed below.

Return of unlimited data packs

Table 1: *Unlimited data packs

Need based service plans

Most common example included specific service plans for three specific user categories: students, working professionals, and businesses. Specific plans included bundled applications relevant for each user group.

Early signs to 5G monetization

Operators in leading 5G markets, China and South Korea, also recorded a healthy growth in revenues. Telcos have been focusing on developing 5G use cases that are relevant to consumer and industry verticals. Bundling 5G specific services (apps) with tiered data plans have been instrumental in driving revenue growth as 5G penetrations starts to tick.

Revenue growth and 5G subscription penetration

Relevant value-add services for monetizing 5G

Bundling premium devices with premium service plans have remained a popular monetization strategy for telcos. Bundling premium 5G devices with 5G service plans is an option, however, operators must note the increasing preference for SIM-only plans in many developed Asian markets. Also, many operators have slashed the per-GB price for 5G compared to 4G.

Monetization strategies therefore have to focus on new 5G applications and services that can drive data consumption creating a need for subscribers to shift to larger buckets and unlimited data plans. Many 5G operators in the markets including South Korea, Thailand, Taiwan, Hong Kong, and China are bundling a new breed of 5G applications to support 5G premium. Some notable examples are listed below.

Encouraging 5G adoption with multiple service tiers

On the other end, operators need to ensure 5G is accessible to all. Where operators have introduced premium plans with unlimited data bundled with 5G applications, they have also created multiple tiers with trimmed entry level service plans. This is essential to allow wider adoption of 5G services. Others have introduced 5G add-ons for customers to try out 5G services without switching from their existing plans.

• Tiered 5G service plans: LG U + has introduced multiple tiers for its 5G service plans, offering 9 different 5G service plans varying in service pricing and data buckets
• 5G add-on plans: M1 launched 5G add-on plans. They allow existing users to try 5G network at a minimum additional charge

Digital transformation efforts continued

The past two quarters have highlighted significant digital transformations undertaken by regional telcos. Lockdowns have forced societies to adapt to hyper-digital lifestyles. Operators have seen a surge in digital channel usage for service support and sales activities over the past few months. AIS, for instance, reported 72% YoY growth in the monthly active users of the MyAIS app. In terms of digital interactions, the number of chatbot conversations grew threefold, while about 90% of all chatbot communications were completed without an agent’s involvement.

• SK Telecoms’ decision to remodel distribution channels: took three initiatives for the transformation. SK Telecom introduced Barodochak, a new premium Online-to-offline (O2O) service available through T Direct Shop. It is also setting up a ‘green privacy store’ which are designed to be customer data privacy protection kiosks, across 2,500 retail stores. Lastly, SK Telecom is also introducing unmanned stores where customers can purchase service plans and smartphones without staff assistance.

• LG U+ digitizing customer channels: online shops (U+Shop) recorded 40% increase in the purchase of mobile plans in September 2020, compared to January 2020. LG U+ aims at improving the online shopping experience for its customers. It redesigned the UI and UX for the online shop ‘U+Shop’. It introduced an exclusive promotional program ‘U+Shop Exclusive Partnership Pack’ for online buyers. The focus also remained on O2O convergence, allowing subscribers to pick devices from a nearby store the same day after placing order through U+Shop.

Read highlights from previous quarter here, Future of telecoms in Asia: 2Q20 update