Telecom Industry Booming, as Competition Rises

By Ros Sothea, VOA Khmer

Original report from Phnom Penh

21 September 2009

Advertisements for every mobile phone network in Cambodia can be seen in newspapers, on television, on the street and in supermarkets. Companies are reducing prices, giving away air time and, in some cases, giving away phones.

Nine companies in fact are fighting for customers in the most competitive environment in a decade.

Gary Foo, chief of marketing manager of Hello, which is owned by Malaysia’s Axiata Group, said his company was facing its toughest competition since it arrived in 1997.]

“It is one of the most competitive markets in the world, actually, just because of the fact that there are too many players in the market,” he said. That has led led to a slowdown in new subscribers, he said.

Thomas Hundt, CEO of Smart Mobile, which is invested in by Russia’s Timeturn holdings, said the market is competitive but still potentially alluring.

“At the present moment, the market is giving enough room to grow,” he said. “A lot of people are using more than one sim card. They are even using more than three sim cards. Especially the young people: they have plenty of choices, and they are jumping from one to another operator.”

Consumers are benefiting from the increase in competition.

For example, Smart Mobile responded to the new environment by offering two hours of free talking each day, and by putting a game room and restaurant at the company’s office center.

The government gets a piece too.

Telecom investment increased from $30 million in mid-2008 to $234 million in mid-2009, according to figures from the Ministry of Post and Telecommunications. The investment brings some $30 million dollar annually to Cambodia’s government.

Prior to 2008, only four mobile phone operators existed in Cambodia: Khmer Royal Group’s Mobitel, Thai Shin Satellite’s Mfone, Axiata’s Hello, and Applifone’s Star-Cell.

One year later, five more players entered, Cube, owned by Cambodian-Israeli Cambodia Advance Communication; Excell, owned by Cambodia’s GT-TELL; Metfone, owned by Vietnamese’s Viettle; Smart Mobile’s Latelz and Beeline, with investment from Russia’s VimpelCom.

That’s nine mobile phone operators for 14 million people, compared to China’s three state-run companies for 1.3 billion people, or four companies each in Vietnam and Thailand, which have, respectively, 80 million and 60 million people.

(More than 4 million Cambodians use mobile phones, an increase of 1 million in the past year alone.)

However, without a telecommunications law, a tough competitive market has led to disputes. Beeline, for example, was accused of violating pricing regulations by Mobitel and others.

The competition “will bring the prices down, and users will have m ore choices from that,” said Sarak Khan, undersecretary of state for the Ministry of Posts and Telecommunication.

The ministry has created a special team, which is preparing new regulations to ensure fair competition, he said.

Simon Perkins, CEO of Beeline, said mobile operators have to look at their finances in order to survive in this environment, and some companies will likely not make it.

“Some people entering the market, trying to compete and to survive, they don’t often succeed, because they face stronger opponents,” he said. “It is a natural way for some companies to go into bankruptcy.”

Sam Kong Kea, corporate affairs officer of Star-Cell, agreed. He said companies are now hardly generating revenue and only huge financial operators will be able to survive this market.