Cambodia & Laos Telecommunications Report Q2 2013 - New Market Study Published

The Cambodian and Laotian telecoms markets are similar in several ways. Both countries have a relatively well-developed mobile sector, although prepaid subscriptions are the norm, resulting in low ARPU levels. Their fixed-line industries are still expected to experience growth at least until 2017 but mobile substitution is becoming an increasing threat, especially when operators step up their rural expansion plans. The mobile-over-fixed scenario is also likely to play out in the broadband segment, considering the lower cost associated with mobile broadband products and services.

Key Data

* Forecast scenarios for the Cambodian and Laotian telecoms markets have generally been retained given a lack of updated figures from the regulatory bodies.
* 2012 and 2013 ARPU for Laotian operators have been upgraded in light of regulated tariff rates, although we expect the intervention to stop once the competitive landscape has stabilised.
* LTE services have been made available in Laos, and Cambodia could follow suit in the next few years.

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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

Thaicom has reported a positive performance from its Laotian telecoms business in 2012 due to Laos' Ministry of Posts and Telecommunications regulating tariff rates and prohibiting operators from giving free airtime to customers. The outlook of Thaicom's Laotian operation is enhanced by an increase in the number of wireless broadband (HSPA) subscribers, which resulted in higher internet revenue.

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 was supposed to transfer its subscribers to rival Mobitel (operating under the brand Cellcard), although the process has been challenged by Huawei Technologies.

Cambodia and Laos were ranked 17th and 18th respectively in BMI's latest Asia Pacific Telecoms Risk/ Reward Ratings. Both countries share similarities such as intense competition, a heavy reliance on prepaid and basic mobile services, underdeveloped fixed-line market and regulatory uncertainty.

The Cambodian economy expanded by 7.3% in 2012 according to a statement made by Prime Minister Hun Sen, driven by agriculture, tourism, garment exports and construction. The country's current growth boom is attracting interest from luxury brands, and we believe that the medium-term outlook for the consumer is bright. However, a sharp downturn in loan growth, from its current break-neck pace, should see real GDP growth fall to 6.0% in 2013.

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