2013-12-26 00:56:42 - Recently published research from Business Monitor International, "Cambodia & Laos Telecommunications Report Q1 2014", is now available at Fast Market Research
Following the exit of VimpelCom from the Cambodian market, there are fears that the company may also choose to withdraw from Laos as well. Both countries have a relatively well-developed mobile sector, but declining ARPU levels, slowing growth opportunities and intense competition are having negative effects on operator revenue. VimpelCom has reported net losses for its South East Asian operations over the past year and a half, partly as a result of subscriber losses and low spending. Prior to VimpelCom's exit, Thaicom's Cambodian unit filed for insolvency and merged its operations with Mobitel.
Full Report Details at
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The region is becoming less attractive for mobile operators and we expect further withdrawals and consolidation to occur over the next year.
The Cambodian and Laos fixed-line industries are still expected to experience growth at least until the end of our five-year forecast period to 2017, but mobile substitution is becoming an increasing threat, especially when operators step up their rural expansion plans. The mobile-over-fixed substitution is also likely to play out in the broadband segment, considering the lower cost associated with mobile broadband products and services.
* Release of new data from regulators has led to some revisions in forecasts for Cambodia, while Laotian projections remain mostly unchanged. 2013 ARPU for Cambodia faces downside risks from potential price wars, with recommendations from the International Telecommunication Union (ITU) that the minimum call prices could be lowered.
* LTE services have been made available in Laos, and Cambodia could follow suit in the next few years. However, we do not expect this to provide a significant boost to the overall broadband market due to a lack of demand and consumers' low purchasing power.
Key Trends And Developments
In May 2013, all mobile operators agreed with the Telecommunication Regulator of Cambodia (TRC) to stop offering excessive free calls aimed at increasing their market shares. They have also agreed to set a minimum price of US$0.045 per minute for on-net calls and US$0.0595 per minute for off-net calls. BMI expects the new consensus to improve ARPUs and margins for operators.
Russia's Vimpel Communications (VimpelCom) announced on April 19 that it has sold its entire indirect stake in Sotelco (branded as Beeline Cambodia) to its local partner Huot Vanthan. The possibility of exiting Cambodia was flagged up in late 2012 as part of VimpelCom's plan to focus on its more profitable businesses. The divestment chimes with BMI's view that the Cambodian telecoms market has long lost its lustre and Laos could be next to follow.
Earlier in 2013, the Telecommunication Regulator of Cambodia (TRC) commissioned the ITU to study the country's telecoms market and mobile call prices. The ITU has recommended that minimum call prices could be decreased from the floor prices established in a December 2009 edict. The regulator is due to meet with operators after the July 28 2013 national elections to discuss the change. BMI believes that adoption of this suggestion would not be advisable, considering the TRC's previous attempts to regulate price competition in the market.
Thaicom's original plan to sell Cambodian operator Mfone to INT Management Service collapsed after the latter did not fulfil the condition precedent. On January 9 2013, Mfone filed a petition for the opening of insolvency proceedings, and, as a result of the filing, Mfone transferred its subscribers to rival Mobitel (operating under the brand Cellcard), after Huawei Technologies dropped its challenge against it.
Cambodia and Laos continue to make up the bottom two spots in our Asia Pacific Telecoms Risk/Reward Ratings, at 17th and 18th respectively. Both countries share similarities such as intense competition, a heavy reliance on prepaid and basic mobile services, underdeveloped fixed-line market and regulatory uncertainty.
Laos officially became a member of the World Trade Organisation on February 2. While we believe that membership to the global trade body will undoubtedly carry considerable advantages for the landlocked nation, we highlight that there remains much to be desired within Laos' political and economic and business environment. We highlight conditions Laos will have to fulfil in order for us to upgrade our risk ratings and turn more sanguine on Laos' economy.
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