US tariff policies are quite fluid and variable. This GlobalData report is intended to help clients understand the general impact, threats, and opportunities within the Technology and Telecom sector, even as implementation timelines and market-specific levies may change.
Summary Bullets:
• The US tariffs have minimal direct impacts on the ASEAN enterprise telecom sector as businesses are mainly domestic.
• However, there could be moderate indirect impacts, especially from lower spending in several key sectors such as manufacturing.
The US government’s announcement on new tariffs last week has already shaken the global economy. Within a couple of days from the announcement, S&P 500 companies saw a total of $5 trillion loss in stock market value. Governments, central banks and companies across the world are also assessing the mid and long-term impacts on the economy and businesses; and developing mitigation plans.
Direct Impacts: Low The US tariffs have different impacts across industries. While the impacts are significant on sectors like chemicals, automotive, and hardware, it has a minimal effect on the enterprise telecom industry in ASEAN. Operators’ businesses are largely from the domestic market. For example, Telekom Malaysia reported over 80% revenue in 2024 from its local operations. Telkom Indonesia has over 85% revenue from its operations in Indonesia. PLDT’s domestic revenue is more than 95% of its total. Their exposure to the global market, especially the US, is minor – just a small percentage of the overall revenue mix.
Besides, while most operators have branch offices in the US mainly to serve their home MNCs, their global businesses are mostly services such as network connectivity, cloud, data center, and managed services. There is no direct impact on solutions and services so far, as the current US tariffs focus only on products and hardware.
Indirect Impacts: Moderate However, there are several moderate indirect impacts on the sector. First is lower spending by companies significantly affected by the tariffs. While the enterprise telecom sector is expected to remain stable, the tariffs have significant impacts on ASEAN and its countries. Manufacturing is a major industry in the region. In Indonesia, it contributes to around 20% of the country’s total GDP, while the US is its key trading partner with major exports including apparel, footwear, and electronics. Similarly for Malaysia, manufacturing accounts for about a quarter of the country’s GDP. As the US is also one of the country’s main trading partners, manufacturers of key export sectors such as electrical and electronic equipment, rubber products, and furniture. The Philippines has lower tariffs (at 17%) compared to its ASEAN neighbors. However, the tariffs will still affect manufacturing sectors like electronics, machinery, and apparel. The total export of these sectors was reported to be around $8 billion. Agriculture is another impacted sector in the Philippines. This could lead to domestic market saturation and slower economic growth, and hence lowering down companies’ overall spending including tighter ICT budgets and slower decision sales cycles.
Another indirect impact is rising costs for operations in the US. Most operators such as Telin and Telkom Malaysia have satellite offices in the US to serve the outbound MNCs. Globe Philippines acquired a US-based cloud consulting company, Cascadeo. The tariffs could lead to an increase in operational costs such as servers and equipment. Nevertheless, the increase in costs could be negligible when compared to the total group operating expenditure. Besides, operators with US-based customers could see changes in the ICT requirements. As tariffs push companies to buy US domestic products, there will be an increase in demand to support wider American equipment and device manufacturers. This could range into hardware peripheries, networking, and server deployments. Or a higher price for existing products and margin squeeze for any operator resale business.
There are also other indirect non-measurable influences such as increased supply chain risks and higher competition from companies diverting to non-US markets.
What’s Next: While the consequence of tariffs to the enterprise telecom sector in ASEAN is minimal so far, operators should work more closely with companies from high-impact export sectors. This includes positioning IT-OT solutions to enable lean manufacturing for higher scalability and efficiency during the current situation. Operators could also work with these companies by leveraging solutions such as networking and cloud, as well as global partners, to expand in other markets to diversify their supply chain and shoring options and gradually reduce dependencies on the US. ASEAN operators will likely need to brace for headwinds such as longer sales cycles reflecting a slowdown in ICT spending. They will also need to assess the impact of any downsizing or layoffs in the global IT sector, such as major GSIs and NEPs, may have on day to day operations.
Besides, the tariffs could also bring benefits to some operators. Lower tariffs in the Philippines and Malaysia compared to Vietnam, Indonesia, and Thailand could attract investors to establish manufacturing operations and supply chain hubs in the countries. Operators can point to their vertical capabilities to capture opportunities from new companies. China or EU inbound or outbound opportunities, for example, may also start to take a higher priority.