Asia's telcos will come under even more pressure in 2013 amid declining revenues and pressure on their bottomlines in traditional core business such as voice and text messaging from over-the-top (OTT) service providers.
Adapting quickly and moving to new growth segments will then determine the level of success they will see this year, industry watchers said.
Bertrand Bidaud, managing vice president at Gartner, illustrated the regional telecoms scene when he said the industry is at the "crossroad" and likened it to a race in which non-communication service providers have steadily encroached on the lead held by telcos previously.
"Once growing, even booming, the telecom industry has hit a wall in mature markets. It may soon experience declining revenues unless it can expand its reach beyond pure communications," he said.
To push ahead, many Asian telcos are eyeing up adjacent industries and new growth segments to diversify their businesses. North Asian operators from Japan and South Korea are leading the way in this, forced by the competition from OTT players such as Internet Protocol messaging provider KakaoTalk, he said.
Other telcos such as those in Singapore, Philippines and India are catching up too, he added.
Lim May-Ann, research director at TRPC, elaborated further on the competition between operators and OTT players, saying the discussions around net neutrality and "free" data offerings were industry developments in 2012 that will continue to play a significant role in how the two camps engage each other.
With net neutrality upheld, all online services and content will need to be treated equally and this means Internet service providers cannot discriminate against OTT services by blocking or throttling bandwidth. Bandwidth throttling is something which third-party providers have often complained about in the past as it leads to compromised quality of their services, she noted.
In turn, telcos will have to figure out how to engage with OTT players. Many of them have partnered companies such as Facebook and Twitter to offer "free" data access to these services as part of a postpaid cellular plan, Lim noted, adding there are more such opportunities for the two camps to capitalize on in the year ahead.
Cloud, mobile advertising opportunities
As for diversifying into other growth areas, cloud computing has been the obvious choice for some telcos. Clement Teo, senior analyst at Forrester, said he expects operators to get more serious about moving into the infrastructure-as-a-service (IaaS) business to tap on the opportunities there.
Already, companies such as NTT Docomo, SingTel, Tata Communications, and Telstra, have embarked on providing IaaS services on top of broadband connectivity, Teo noted.
"Some of them have won large IaaS deals in the region, including G-clouds. We expect more enterprises will include these telcos in their IaaS sourcing shortlists next year," he added.
Mobile advertising is another growth area that telcos can tap on, said Teo.
The global mobile advertising market is projected to exceed US$20 billion by 2015, and this has spurred operators such as SingTel to acquire mobile ad firm Amobee while Softbank invested in InMobi and Telstra took a minority stake in video streaming firm Ooyala, he pointed out.
Expanding geographical markets
Asia's telcos are also moving beyond their domestic markets to grow their revenues and this, in turn, would likely lead to issues such as national security and foreign ownership being raised.
Lim said some notable incidents of such nature in 2012 include Japan's Softbank acquiring U.S. carrier Sprint, and the U.S. government deeming China's telecom equipment vendors ZTE and Huawei Technologies as a national security threat and urging businesses to reconsider doing business with the two companies.
Given past events, these make the opening up of Myanmar's telecommunications industry an interesting market to monitor in 2013, Lim said. "Myanmar can stand on the shoulders of the wisdom from different countries that have gone before them in its telco management."
The greenfield Southeast Asian market on Wednesday put up two telecommunications service licenses for tender to local and international operators, so as to encourage competition locally. Phonemakers such as HTC have also been eyeing the market, with the Taiwanese vendor launching six smartphones this week.