Fixed Broadband is set to get a boost from Covid-19 as the trend of work, school and entertain from home gains traction.
According to a report by UBS, 30-35 per cent of jobs in wealthier countries can be done from home. While this number is lower in emerging markets, it continues to grow and has got a boost from COVID-19.
This trend of work/school/entertain from home (WSEFH), in turn, is driving increased demand for home broadband particularly in emerging Asian markets where penetration remains low (below 20 per cent in India, Indonesia and the Philippines and below 50 per cent in Thailand and Malaysia).
Across ASEAN and India, UBS has highlighted Telkom Indo, PLDT and Globe as best positioned to capitalise on this opportunity with AIS, Bharti, Maxis and Reliance Industries also standing to benefit from this new growth driver.
FBB penetration is less than 20 per cent in India, Indonesia and the Philippines and less than 50 per cent in Thailand and Malaysia.
“Using income distribution data, we estimate the size of addressable market at 20-60 per cent of households in India, Indonesia and the Philippines, and 40-80 per cent in Thailand and Malaysia,” UBS said.
This points towards a potential 2-5 times expansion in subscriber base in next 3-5 years. “While mobile networks have historically supported Internet usage in EMs, we estimate monthly data use can be 400-500GB in full WSEFH environment, making it difficult for mobile networks to support from a cost and capacity standpoint,” it said.
Upfront capex is high for FBB versus mobile but recurring opex, capex and churn are much lower, resulting in healthy return profile as businesses mature.
More importantly, while fully-loaded capex for a new subscriber can be as high as $400-500, last mile capex is only $200-300. As mobile networks need fiberized backhaul, a large part of capex can be shared between fixed and mobile, lowering the entry hurdle. Not surprisingly, mobile operators such as AIS, Globe, Bharti Airtel, Maxis, have started expanding their FBB businesses in recent years, it said.