ASEAN Telecom Five Countries Rating: THA > SGP > MYS > IDN > PHL, Capital Expenditures Peaking Favor Dividends

Overview

This report is material from Morgan Stanley's 2026 Asian Summer School presentation, focusing on the current status and outlook of the telecom industry in five major Southeast Asian countries (Thailand, Singapore, Malaysia, Indonesia, Philippines). The report ranks each country's telecom market based on five underlying drivers, concluding that Thailand's market is the strongest, followed by Singapore, Malaysia, Indonesia, and the Philippines. Meanwhile, the report delves into how telecom operators leverage their network and data资源优势 to actively expand into the fast-growing data center (DC) business, with Malaysia becoming a key hub for taking over spillover demand from Singapore due to cost advantages.

Core views

In terms of competitive landscape, Thailand exhibits a duopoly (AIS and TRUE), with rational competition and rising ARPU; Singapore has four competitors—SingTel, StarHub, M1, and Simba—but its mobile business remains controlled, while broadband competition intensifies due to Simba's launch of low-price, high-speed plans; Malaysia forms a four-strong oligopoly after the merger of Celcom-Digi, and U Mobile's independent 5G network construction introduces new variables; Indonesia sees improved competition on Java Island, though competition may rise on outer islands; the Philippines introduces a third operator, Dito, but broadband prices account for too high a proportion of household income, limiting penetration growth. Regarding the capital expenditure (Capex) cycle, most ASEAN countries have passed the peak of 4G/5G network construction. Thailand's operators' Capex-to-sales ratio is expected to drop to around 13%; Indonesia's overall Capex has peaked, though outer island expansion and 5G deployment still pose some pressure; the Philippines has high absolute Capex but its ratio is trending downward; Malaysia currently has low Capex, yet it may see room for growth as it transitions to a dual-network architecture and U Mobile builds its own network. In terms of regulatory environment, Thailand's regulation has significantly improved, with reasonable spectrum auction prices and court settlements promoting market consolidation; Indonesia's government, through the Omnibus Law, relaxes foreign investment restrictions and allows spectrum sharing, keeping regulatory impact moderate and stable; the Philippines strengthens regulation on tower sharing and foreign ownership to promote competition; Malaysia has experienced multiple policy shifts in its 5G network architecture (transitioning from single wholesaler to dual networks), resulting in higher regulatory uncertainty. As for data center (DC) opportunities, Singapore, as a submarine cable hub, faces high land and power costs, slowing down capacity growth; Malaysia, benefiting from lower power costs and geographic proximity to Singapore, is experiencing a data center boom and is expected to surpass Singapore in capacity. Major telecom operators such as SingTel, TLKM, Indosat, Globe, and PLDT are accelerating their DC deployments, positioning them as new growth engines. In terms of capital allocation and returns, as capital expenditure peaks pass, operators are expected to increase dividend payout ratios. Thai operators (AIS, TRUE) are forecasted to raise dividends; Indonesian operators (TLKM, Indosat) will also grow dividends; Malaysian operators are expected to see dividend growth after 2025; Philippine operators (PLDT, Globe) have clear expectations of increased dividends.

Analysis framework

The firm uses a 'five underlying drivers' framework to compare and rank ASEAN telecom markets horizontally. These five factors include: level of competition (number of players, structural substitution, regulatory events), capital expenditure cycle (technology upgrades, network expansion, fixed-line investments), regulatory influence (spectrum auctions, interconnection fees, merger policies), flexibility in capital allocation (balance sheet strength, dividend and M&A policies), and valuation levels (EV/EBITDA, dividend yield, FCF yield, etc.). By scoring these five dimensions, the firm arrives at the comprehensive ranking of THA > SGP > MYS > IDN > PHL. Additionally, the report employs leading-lagging analysis of financial indicators, pointing out that changes in ROIC (Return on Invested Capital) typically lead changes in EV/EBITDA valuation multiples by about 18 months, thus forecasting valuation trends.

Methodology notes

• Company Fundamentals and Financial FrameworkROIC–WACC spread

  ROIC (Return on Invested Capital) as a leading indicator of valuation multiple changes

  The report notes that changes in ROIC across global and ASEAN telecom industries typically lead changes in EV/EBITDA valuation multiples by about 18 months. This means investors can track changes in operators’ profitability efficiency (ROIC)—whether improving or declining—to predict future directions of valuation multiples, whether expanding or contracting.

• Industry Analysis FrameworkUpstream-Midstream-Downstream Industry Chain Transmission

  Spillover effects of data center demand among different countries

  The report analyzes how Singapore’s resource constraints have led to data center capacity saturation, spilling demand onto neighboring Malaysia, which has lower power costs. This cross-regional supply-demand transmission mechanism explains the fundamental reason behind Malaysia’s data center boom.

• Competition and Strategy FrameworkMoats/Competitive Advantages

  Competitive barriers formed by infrastructure scale and coverage

  When analyzing each country’s competitive landscape, the report emphasizes base station coverage (e.g., AIS covers 95% of Thailand’s population) and fixed-line penetration rates (e.g., TM maintains over 60% share in Malaysia) as core competitive advantages for telecom operators. These physical assets form high barriers to entry.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Advanced Info Service (AIS) [ADVANC.BK]

  Thailand’s telecom leader, benefiting from a stable duopoly and declining capital expenditures, expected to see dividend growth.

  Strengths

  Covers 95% of Thailand’s population, high 5G subscriber share (39%), acquisition of Triple T Broadband enhances fixed-line strength.

  Comparison

  Holds about 40% market share in Thailand, forming a duopoly with TRUE; both are valued and competitive above peers.

  Risks

  Longer payback period for 5G investments, intensified competition in the fixed-line market.

• Singapore Telecom (Singtel) [SGX:S68]

  Singapore’s telecom leader, a pioneer in data centers, benefiting from regional DC demand spillover.

  Strengths

  Owns 62MW of DC capacity in Singapore and aggressively expands DC business through JVs in Thailand, India, Malaysia, etc.

  Weaknesses

  Intense competition in Singapore’s local broadband market puts pressure on ARPU.

  Comparison

  Among ASEAN telecom operators, Singtel has the most aggressive and extensive DC layout, considered a leader in this field.

  Risks

  Singapore’s mobile business faces ongoing challenges from emerging operators like Simba.

• Telekom Malaysia (TM) [KL:TM]

  Malaysia’s fixed-line leader, a key beneficiary of the data center business, and a pivotal player in the 5G network architecture adjustment.

  Strengths

  Expected to maintain over 60% fixed-line market share, low power costs attract significant DC investment.

  Weaknesses

  Disputes over the 5G agreement with DNB could cause short-term operational disruptions or increased costs.

  Comparison

  In Malaysia’s telecom market, fixed-line position is solid, but faces competition from CelcomDigi and Maxis in mobile communications.

  Risks

  Malaysia’s 5G regulatory policies frequently change, and DNB’s equity structure is complex.

• PLDT [PH:TEL]

  Philippines’ telecom leader, benefiting from fiber migration and data center expansion.

  Strengths

  High 5G coverage, migrating broadband users from FWA to fiber, with data center capacity reaching 64MW.

  Weaknesses

  Macroeconomic conditions in the Philippines limit broadband penetration speed due to user affordability.

  Comparison

  Together with Globe, leads the Philippine market, but needs to remain cautious when facing competition from newcomer Dito.

  Risks

  Philippine government’s mandatory tower-sharing policy could weaken its network exclusivity advantage.

• Globe Telecom [PH:GLO]

  Philippines’ second-largest operator, entering the data center sector through joint ventures.

  Strengths

  Good 5G coverage, established JV with Ayala and STT GDC, aiming for 52MW DC capacity by 2026.

  Weaknesses

  Market share slightly below PLDT, facing low-price competition from Dito.

  Comparison

  Adopts a light-asset cooperation model for data center deployment, unlike PLDT’s heavy-asset self-construction.

  Risks

  Low broadband penetration rate in the Philippines limits ARPU growth.

Key data

• Thailand Telecom Market Overall Score23 pointsFirst among ASEAN five countries, ahead of Singapore (22 points), Malaysia (20 points), etc.
• Total Premium for Thailand’s 5G Spectrum Auction25% / -37%Compared to global average prices, the 700MHz band premium is 25%, while the 2600MHz band discount is 37%.
• Malaysia’s Data Center Capacity Share56%In 2025, Malaysia accounted for the largest share of ASEAN data center capacity, surpassing Singapore (29%).
• ROIC Leading Time Over Valuation Multiples18 monthsHistorical data shows that ROIC changes lead EV/EBITDA multiples by about 18 months.
• Philippines’ Broadband ARPU as Percentage of Household Income~2.5%Far above ASEAN average (1.6%), indicating broadband affordability remains a major bottleneck.
• Average Annual Broadband Price Decline in Singapore~3%From 2012 to 2024, Singapore’s broadband ARPU declined by about 3% annually, mainly driven by new entrants like Simba.

Impact & implications

For investors, Thailand’s telecom stocks offer the highest allocation value thanks to their stable duopoly structure and upcoming cash flow release. Malaysian telecom stocks benefit from the explosive growth of their data center business; although short-term regulatory uncertainties exist, the long-term logic remains clear. Singapore’s telecom stocks need to watch out for price wars in the broadband business eroding profit margins, though their mobile business remains solid. While Indonesian and Philippine telecom stocks have solid fundamentals, they should be wary of capital expenditure pressures from outer island expansion and macroeconomic consumption constraints. Overall, the ASEAN telecom industry is at a critical juncture, transitioning from large-scale capital expenditure toward shareholder returns (dividends).

Risks

• Indonesia’s outer islands’ capital expenditures exceed expectations, dragging down ROIC.
• Malaysia’s 5G regulatory policies shift unfavorably again.
• Singapore’s broadband price war further worsens, squeezing profit margins.
• Philippines’ macroeconomic weakness limits broadband consumption capacity.
• Geopolitical risks affect the position of the submarine cable hub.

What to watch

• Synergies and ARPU performance after the merger of Thailand’s TRUE and DTAC.
• Progress of Malaysia’s U Mobile building its own 5G network and its impact on DNB’s dual-network architecture.
• Promotion of Singapore’s Simba broadband plan and its impact on traditional operators like SingTel.
• Whether the Indonesian government further relaxes foreign ownership restrictions to attract DC investment.
• Customer structure and utilization rates of each operator’s data center business.