News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Sunday, 27 September 2009

Cambodia continues to benefit from the growth of telecoms and Internet services - but is the growth truly sustainable?

The gimlet eye of DevelopingTelecomsWatch roves back to Cambodia today, where a mobile operator given a fair amount of coverage here for its impressive subscriber growth is also quickly carving out a huge slice of the country's ADSL market.

That cellco is one whose aggressive pricing has stimulated comment here more than once, most recently in an article about a bitter dispute over cutthroat tariffs between two of its rival MNOs. It is this brutally competitive nature of the rather crowded Cambodian mobile market which prompted global emerging markets player Millicom International Cellular to sell its stake in one of the players in this rather rough game.

The MNO doing well in the broadband space is Metfone, an offshoot of Viettel, an operator from neighbouring Vietnam which is owned by that county's military establishment. Viettel, as discussed in a March DTW article about telecoms organisations affiliated with the governments of socialist regimes, has built a strategy around delivering services to lower income population segments. Low prices are clearly an important component of that strategy. For Metfone, the aforementioned strong growth has yielded an estimated 15.06% market share (by end-August) according to WCIS. This has been achieved in just seven months, the operator having launched services in February of this year.

So, while the likes of Millicom balk at the notion of the razor-thin margins that very aggressive pricing must yield in an already lower-ARPU market, Metfone's Vietnamese owners are less squeamish. I have opined here more than once that the company's being rooted in the state of a socialist country must confer on its managers a quite different view of acceptable levels of profitability than the ones expected in more orthodox market economies.

This formula, however, undeniably produces strong consumer acceptance of communication services. Now, according to a recent TeleGeography article, which states that Metfone now commands 60% of Cambodia’s ADSL market and 50% of the country’s landline connections.

The affordability of broadband may soon receive another boost in the southeast Asian county. Nathan Green of the Phnom Penh Post writes that Cambodia's connection to a high-bandwidth fibre-optic cable linking Southeast Asia to the United States is expected to go live before the end of this year, and that services will be of a higher quality than those enabled by current connectivity in the county. This is apparently because connectivity is presently sourced from operators in Thailand and Vietnam that tend to provide the country only with their overflow capacity.

So telecoms and Internet services continue to penetrate Cambodian society, although this improved availability is in some cases being driven by pricing strategies which may not be sustainable if commercial logic (as most of us understand it) is applied.


  1. The current Metfone press release is a bit misleading.

    The "landlines" are basically the same as a normal mobile phone i.e. phone with a SIM and there is basically no market (total 30 to 40,000 users out of 14 million population) and only two other telcos targeting this.

    ADSL market again is very small and their main strength is controlling the line to Vietnam.

    For mobile subscribers they have definitely made some impact but so has Beeline and Smart.

    Mfone and Hello are a bit static.

    Star-Cell, qb and Excell are virtually inactive.

    At the moment the whole future of the market seems to rely on who can give money away for the longest.

    I would be interested to know any updates on rankings for mobile subscribers. If Metfone is number 2 then who is now 3,4,5,6,7,8,9?

  2. Thanks for the comments re: landlines etc. Regarding the ranking of Cambodian mobile operators by no. of subscriptions (i.e. market share), Informa Telecoms & Media ranks them thus:

    1. CellCard/Mobitel: 45.21%
    2. Mfone: 20.44%
    3. Metfone: 15.06%
    4. Axiata Cambodia/Hello: 13.19%
    5. Cadcomms/QB: 2.07%
    6. Sotelco/Beeline: 1.42%
    7. Star-Cell/Applifone:1.29%
    8. Latelz: 0.96%
    9. GT-TELL/Excell: 0.37%

    Estimate numbers for end-August. As you can see, this places Metfone 3rd not 2nd.

  3. Nowaday, Cambodia have strongly developed at Telecom. But internet seem slowly and expensive.

  4. Those numbers are very interesting but I think by year end 2009 the bottom 6 will be shaken up quite signficantly.

    I am certain that Beeline has completely overtaken QB and maybe equal or just behind Hello now.

    Latelz/Smart should easily be higher than QB, Excell and Star-Cell as of beginning October based on their market activities.

    BTW - Good blog, very interesting reading!


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