Telecoms/IT players and investors have often looked to emerging markets in Southeast Asia as greenfield investment opportunities. Nowadays, the ‘true’ greenfields are just about gone, but real investment opportunities abound if you know where to look. The question is whether incumbents can cash in on them beyond simply providing the pipe.
Those were the themes that emerged during a panel discussion on greenfield investment opportunities in Southeast Asia and India at the Capacity Asia 2017 conference in Hong Kong on Tuesday.
On the question of where the greenfield markets are, Katrina Luna-Abelarde, VP and head of PLDT’s International & Carrier business, said that it depends what you define as ‘greenfield’.
“Southeast Asia is not a greenfield market, but horizontally and vertically there are a lot of opportunities for investment in the region,” she said.
Jean-Philippe Gauvrit, CFO for Asia-Pacific and Japan at Nokia, agreed. “There are no greenfields in Southeast Asia in the traditional sense, but there a lot of opportunities for investment, to include the opportunities we don’t yet know about.”
Gauvrit said the shift towards trends like Industry 4.0, the growth of megacities, increasing video demand and millennials is creating all kinds of new opportunities.
Manoj Paul, MD for India at GPX Global Systems, cited India as an example of a market that is no longer a traditional greenfield, yet offers plenty of investment opportunities – particularly for areas such as FTTH, smartphone-driven apps and services, gaming, and other segments where only a minority of the population have adopted such services.
The insatiable hunger for video is also driving opportunities for CDN players, he added, while the growing data traffic that results from video and other digital services will also drive demand for internet exchanges. “So there’s a lot of scope for investment.”
Luna-Abelarde added that there are also plenty of opportunities on the consumer side of the business in terms of getting closer to them and creating more immersive experiences via emerging technologies like big data and AI. Even blockchain will enable new kinds of possibilities.
However, while the investment opportunities are there, the monetizable ones tend to be on the digital side, which raises a lot of questions about where incumbent telcos fit in to those opportunities apart from being the pipe.
“The opportunity depends on which side of the spectrum you’re on, and whether your P&L is focused on the top line or the bottom line,” Luna-Abelarde said.
That’s why partnerships are a necessary part of any telco strategy to cash in on these opportunities, she said.
“You have to learn how to partner,” she advised. “Consolidation will happen on the infrastructure side. The P&Ls are getting tougher and the margins are shrinking. So partnering is key – there are no boundaries with digital. We can’t do it alone.”
And telcos can’t do it with their old business models, mindsets and internal processes, she continued.
“[Digitalization] is a tough road for telcos. Telcos grew up in an infrastructure-centric world – digital is the antithesis of that,” she said. “The first thing to address is the culture – it’s an overused term but it’s true. We lack the ability to understand the needs of consumers. Their engagement is directly with the OTTs – we’re just the pipe.”
Luna-Abelarde also warned that telcos only have a few years left to make that change. “We need to adopt a platform economy, and we need to embrace partnerships,” she said.
“The choice is whether you become a pipe, or you become something more than that.”