Asia’s digital economy is booming. So why are Singtel and Co struggling?

As tech firms and internet services ride a wave of success, the firms supplying their lifeline – data and connectivity – are caught in a downward spiral

But while price wars, falling profits and cost cutting may be bad news for telcos, there’s a payoff for consumers – at least for now

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The region’s internet economy is on the up but profits at telecoms firms are going down. Photo: AFP

Published: 8:30am, 13 Jul 2019Updated: 6:05pm, 13 Jul 2019

For Singtel’s chief executive officer Chua Sock Koong, 2019 was supposed to be a year to remember.

She began working at Singapore’s biggest telecoms company (telco) 30 years ago, but rather than celebrating the anniversary with a bumper bonus, she took a major pay cut that sliced her yearly earnings nearly in half, to S$3.54 million.

That rude shock came after Singtel reported its net profits had fallen 43 per cent to S$3.1 billion in the year to March – a 16-year low for the firm.

The company was quick to admit the past year had been an especially difficult one. Singtel chairman Simon Israel blamed the results on a “perfect storm” of intense competition and rising economic uncertainty.

Singtel’s Chief Executive Chua Sock Koong has taken a pay cut. Photo: Reuters

Just like Singtel, many of Southeast Asia’s telcos face slowing growth and falling profits, their fates seemingly at odds with that of the region’s internet economy, one of the fastest growing in the world. Telcos supply the internet economy’s very lifeline: connectivity and data. Yet rather than riding the same wave of success, many are struggling.

Google and Temasek, in a joint report released late last year, estimated that the region’s internet economy had grown by more than 30 per cent a year over the previous three years. It projected that, with more people shopping online, buying food through apps and watching videos on their small screens, the digital economy would soar to US$240 billion by 2025, from US$72 billion last year.

Asia’s digital economy is booming. So why are Singtel and Co struggling?

As tech firms and internet services ride a wave of success, the firms supplying their lifeline – data and connectivity – are caught in a downward spiral But while price wars, falling profits and cost cutting may be bad news for telcos, there’s a payoff for consumers – at least for now

As tech firms and internet services ride a wave of success, the firms supplying their lifeline – data and connectivity – are caught in a downward spiral

But while price wars, falling profits and cost cutting may be bad news for telcos, there’s a payoff for consumers – at least for now