In Malaysia, competition in mobile and fixed lines is expected to intensify, while higher data revenues in Singapore are offset by rising competition in fixed broadband and pay TV.

As for Thai telecom companies, CIMB Research said the market is overly bullish on their earnings, and expected them to be weighed down by 3G capital expenditure and start-up costs.

The bright spot of the sector is the fixed broadband that still offers growth. Some operators such as Telekom Malaysia and Jasmine are riding rapid growth in fixed broadband.

China Unicom is also profiting from accelerating take-up of 3G and good cost discipline.

But otherwise, the performance of many telecom shares in the region this year will very much depend on their ability to re- price data services, and exploit network advantages can set each telecom company apart from their competitors.

Acknowledging that how to improve data profitability will be an ongoing focus, Nomura Equity Research said it is likely that the bargaining power of Asian telecom companies against application and content providers can improve but this will be a gradual transition.

In the backdrop of competition and regulatory risks to likely continue into this year, CIMB Research is forecasting 2013 could be a subdued year for the Asian telecom sector in general.