May 23, 2011

Thaicom's mobile phone struggling to stay in business in Cambodia, while Vietnam's Viettel shot up to No. 1 position


Thaicom's Cambodian mobile phone unit Mfone shed 3.5% of its users in the first quarter, a spokesperson said last week, amid increasing signs the company has fallen outside of the country's top four operators by market share for the first time.

Public relations manager Piyanuch Sujpleum told the Bangkok Post that Mfone lost more than 25,000 users between the start of the year and April 1, down to just under 700,000, a figure below those most recently reported by the company's two main rivals, Hello and Smart Mobile.

Mfone's new CEO, Yap Wai Khee, was unavailable for comment last week and public relations manager Pradon Phueng-Ngoen declined to comment.

As recently as last August, Mfone was No. 3 in Cambodia by user numbers in a market of nine, according to figures compiled by the Ministry of Posts and Telecommunications, all of which are supplied by the operators themselves.

However, in September Axiata's local subsidiary Hello overtook Thaicom's unit, the same government data showed. The Kuala Lumpur-based company announced a subscriber base of 900,000 users by the end of 2010.

Meanwhile, two other rivals Smart Mobile and Star Cell, in January announced a merger creating a new company that retained the Smart Mobile brand, claiming a combined base of 850,000 subscribers, said CEO Thomas Hundt.

"Since then we have been growing further," he said. "We believe we have reached No. 3 in the market."

Metfone, a division of Viettel which is run by the Vietnamese military, currently holds the highest market share in Cambodia followed by Mobitel which is run by Cambodian tycoon Kith Meng. Although the latest figures almost certainly suggest Mfone has slid from third out of nine operators to fifth out of eight since August, user data are notoriously inflated in Cambodia, according to analysts.

Only a handful of companies are listed on the stock market and many are understood to be looking for buyers or mergers as one of the world's most competitive mobile phone markets looks to consolidate further. According to government data, there were almost 10 million wireless connections in Cambodia at the end of last year, but most industry CEOs admit more likely there are anywhere between four and six million active users out of a population of less than 15 million people.

Mr Hundt declined to say how many subscribers Smart Mobile had at the end of the first quarter, adding that other operators had been unwilling to confirm their own user numbers, while Axiata is yet to announce its results for the period.

"From our perspective, 2011 has started off much better than the equivalent period in 2010," said Hello CEO Simon Perkins.

Although Thaicom also started this year better than 2010 in terms of total subscribers, the latest figures suggest the company has not been adding users quickly enough in Cambodia's cut-throat, quickly expanding mobile sector.

Thaicom announced on May 12 that it added 4.9% more Mfone subscribers in the first quarter compared to the same period last year as revenues from operations in Cambodia and Laos fell 29% to 321 million baht. By contrast to its operations in Cambodia, Thaicom added 22.9% more subscribers in Laos in the same period compared to last year to retain its No. 1 position with 1.6 million users in a market of four operators, it said.

SET-listed Thaicom's consolidated net loss in the first quarter edged up to 167 million baht from 161 million in the same period last year.

Thaicom has in the past cited Cambodia as the main reason behind a fall in revenues for its regional telecoms subsidiaries. Mfone announced a loss of more than US$13 million last year amid "a price war and intense competition in the market", adding the appreciating baht had affected revenues calculated in US dollars in Cambodia.

Ms Piyanuch said the company would maintain its strategy in Cambodia, which has focused on extensive network coverage and a roaming package that offers calls at $0.18 per minute in Thailand and Laos.

She added that Thaicom would refrain from entering a price war that has prompted Cambodian government intervention in the past. "We do not use a price strategy," she said.

Mfone has not made a profit in Cambodia since 2009 when it made 7.6 million baht, the same year the market dramatically increased in size with the addition of Vimpelcom, a global operator listed on the New York Stock Exchange, and the newly crowned No. 1 operator Viettel.


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