Southeast Asia’s telcos are quietly bleeding money. Not because customers are churning in huge numbers or networks are falling apart. The real problem is much simpler and much more painful: the cost of getting and keeping customers has become completely unsustainable.

The telco we actually want to be

The winners will run customer acquisition the way good banks run credit: every activation risk-scored, every subsidy priced dynamically, every dealer paid for real outcomes, and every SIM activated digitally.

That frees up billions to invest in 5G, fibre, AI, cybersecurity, and real enterprise growth.

Airlines did it. Insurance did it. Retail did it.

We are not different. We are just late.

Cost of reaching the customer

Every year in Malaysia, Indonesia, Thailand, and the Philippines, operators lose 18 to 30 percent of revenue before the customer even starts generating real value. That money disappears through three big leaks:

• Dealer commissions (8 to 15 percent postpaid, 5 to 8 percent prepaid)

• Bad debt (5 to 8 percent)

• Handset subsidies (another 5 to 8 percent)

The hidden layer of costs no one talks about (additional 3 percent of revenue)

When we add the “invisible but very real” operational layers behind distribution:

• CRM platform costs

• Dealer management systems

• Incentive trips and dealer reward programmes

• Warehousing, logistics, 3PL, 4PL

• Dealer-induced churn (SIM swapping, forced recontracts)

• Fraud leakages tied to distribution

…the total CAC burden climbs by another 3 percent of revenue.

Why telcos are still stuck

Here is the part that keeps me up at night. Almost every other consumer industry has already solved this problem.

Airlines eliminated agent-heavy models through digital booking, transparent pricing, and app-led service. Insurance moved from armies of agents to digital KYC, instant underwriting, and super-app distribution. Retail and e-commerce went direct-to-consumer, built their own logistics, and automated replenishment. In each case, expensive middle layers largely disappeared.

Telcos have most of the same building blocks: digital identity, eSIM, app onboarding, real-time credit scoring, and super-app partnerships waiting to happen. Yet we are still happily paying 8 to 15 percent commissions on postpaid activations like it is 2015.

Why?

It is a mix of dealer relationships we are afraid to touch, old market habits, fragmented onboarding systems, weak subsidy discipline, and sales and risk teams that still do not talk to each other.

A clear example is eSIM. Instead of promoting it as a frictionless onboarding and retention tool, many operators deliberately under-marketed eSIM out of fear that it would make switching easier. Rather than using it as an opportunity to simplify acquisition and reduce costs, it was treated as a threat.

This hesitation created space for third-party players like Airalo and Holafly to dominate the roaming eSIM use case, capturing value that should have belonged to operators themselves.

The result is the same: we are trapped in a value-destruction spiral while everyone else has moved on.

The numbers do not lie anymore

ARPU is flat or barely moving in most SEA markets. Competition is brutal. Device prices keep climbing. Credit risk is getting worse. The old logic, pay a lot now because lifetime value will save us later, has stopped working.

Another underused lever is Customer Value Management. In banking and retail, hyper-personalised offers and lifecycle management are core growth engines. In telecom, even best-in-class operators often celebrate a 10 percent topline uplift from CVM as a success.

This reflects a deeper issue. Most telcos still benchmark their customer journeys only against other operators. They rarely measure themselves against digital-native and consumer-focused industries such as banking and retail, where personalisation, real-time engagement, and experience design are far more advanced.

Until telcos raise their internal benchmarks and treat CX and CVM as strategic assets rather than side projects, meaningful value creation will remain limited.

Five practical moves we can actually do this year

No need for a five-year transformation. These five changes can start delivering impact in months:

1. One single digital onboarding path
   Every sale, whether from a dealer, retailer, or online, ends in the same biometric KYC, real-time risk engine, eSIM default, and dynamic subsidy rules.
   → Bad debt down 2 to 3 points, subsidy waste down 20 to 30 percent.

2. Pay dealers for outcomes, not activations
   No commission if the line is not used. Higher pay for low-risk, rural, SME, or high-retention customers.
   → Commissions drop 4 to 6 points.

3. Dynamic handset subsidies (think airline seat pricing)
   Big subsidy for proven loyal high-ARPU customers. Zero or deposit for high-risk profiles.
   → Subsidy leakage down 25 to 40 percent.

4. Credit-tiered postpaid for prepaid upgraders
   Not everyone gets a flagship on day one. Start conservative, prove payment behaviour, then upgrade.
   → Bad debt falls significantly.

5. Consolidate the dealer network and invest in the survivors
   Fewer, stronger partners who actually deliver quality.
   → Structural CAC reduction of 3 to 5 percent.

What not to do

• Slash subsidies across the board and anger customers

• Abruptly cut dealers and create chaos

• Go digital-only and leave rural and mass-market behind

• Keep paying for activations that never generate value

Your view

What do you think? Have you seen any SEA operators quietly fixing this already? Or are we all still pretending the old model still works?