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Cambodia and Laos Telecommunications Report Q2 2011
Business Monitor International, April 2011, Pages: 93
Business Monitor International's Cambodia Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Cambodia's telecommunications industry.
There were several changes to the report’s telecoms forecasts for Cambodia and Laos in this quarter’s update. This is due to an update in terms of the latest data made available by the regulators and operators, as well as a change in BMI’s forecast methodology.
Cambodia’s Ministry of Posts and Telecommunications announced in January 2011 that there were 9.8mn mobile subscribers in the country, representing a penetration rate of 66%. This figure suggests that there is significant room for further growth and this report believes that the sector’s actual potential is higher because of number distortions by inactive mobile subscriptions, which operators are hesitant to remove.
The industry also saw a consolidation between TeliaSonera-owned Star-Cell and Smart Mobile. The two companies announced in December 2010 that they had agreed to merge their operations under the Smart Mobile brand. In a joint press release, Star-Cell and Smart Mobile announced they would have a combined subscriber base of 850,000. At the time of writing, the deal was still pending approval from the Cambodian regulatory authorities.
Meanwhile, there was also merger and acquisition (M&A) activity in the Laotian mobile industry. Russian operator VimpelCom acquired Millicom International Cellular (MIC)’s Laos unit (which trades as Tigo) after a two-year delay. With this purchase, VimpelCom has telecoms operations in Cambodia, Laos and Vietnam as it continues to tap into the region’s growth opportunities. BMI believe that VimpelCom’s experience of operating in frontier markets such as Kazakhstan, Kyrgyzstan and Tajikistan would ease entry into the Laotian market and help the operator to capitalise on the country's growing demand for telecoms services. Besides experience, VimpelCom also brings a much-needed capital investment in Tigo's network. Given that MIC decided to divest Tigo in 2009, it is unlikely that the company had committed significant capital to improve the unit's infrastructure.
Laos and Cambodia fell to 14th and 15th position in BMI’s latest Business Environment Ratings for the Asia-Pacific region. There were no changes to both countries’ Telecoms Ratings, but the changes in their rankings were due to an improvement in Bangladesh’s score, which cause Bangladesh to rise to 13th from 15th position. The telecoms industry of Laos and Cambodia remain relatively attractive due to low telecoms penetration rates but consumers’ low purchasing power continues to hinder operators’ ARPU levels and profitability.
That said, Laos has commenced trading on its new bourse, the Lao Stock Exchange, while Cambodia is not far behind as the Cambodian Stock Exchange (CSX) is scheduled to debut in July 2011. The establishment of a modern capital market in Cambodia and Laos would play a vital role in supporting economic development in the coming years.
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