2008 Asia - Telecoms, Mobile and Broadband in Cambodia, Laos and Vietnam

This Annual Publication: Telecoms, Mobile and Broadband in Asia – Cambodia, Laos and Vietnam profiles three countries which once made up the French colonial entity known as Indochina. It is reasonable to say that Cambodia, Laos and Vietnam are all still in comparatively early stages of their telecommunications development with expanding national infrastructure and growing subscriber bases across all market segments. The introduction of Internet and especially broadband Internet is still very much in the early stages, although 2007 saw a significant surge in online access in Vietnam.

Continuing to ignore fixed-line services, Cambodia has built a healthy mobile market instead, reaching the 2.5 million subscriber milestone (17% penetration) in early 2008 and was growing at an annual rate of around 50% into 2008. In the meantime, fixed-line services had flattened out at around 42,000, with no sign of any revival in interest in this segment of the market. Surprisingly, at the same, Internet penetration has remained particularly low; one of the biggest inhibitors to Internet growth in Cambodia is the high cost of online access in Cambodia in comparison to other countries in the region. The push towards the strengthening of the telecom regulatory environment as well as the expansion of the national telecom infrastructure in Cambodia has been continuing. This is despite the occasional political problem and the country’s mixed success in its wider struggle to build the national economy. The country has certainly entered a period of relative political stability, presenting a useful opportunity for some serious regulatory reform. Foreign investor confidence appears to have returned and there is every indication that the economy is strengthening in a sustainable fashion. For the country overview, see chapter 1, page 1.

There was no hiding the fact Laos had to struggle for years with a poorly performing economy and a commercial environment that was in desperate need of reform. However, in the 2006/07 period there was a noticeable shift in the outlook for the country with positive news being reported on many fronts. Most importantly, a significant number of hydro-electric power projects and mining ventures have become or are close to a reality, with many more possible projects in the pipeline. Laos is at last moving forward in a confident fashion.

As attention turned to building the country’s infrastructure, by early 2008 fixed-line teledensity stood at less than two telephones per 100 people. While more foreign investment is needed to boost the sector, the government must also be judicious in selecting and licensing new operators to ensure that it gets the best value out of the investment. The joint venture formed by the government with Thai company Shinawatra in 1996 let the five year period of market exclusivity granted to Lao Telecom pass without any serious attention to infrastructure building. When the market was opened up to competition in 2002, foreign capital finally started to flow. The mobile phone market took off in early 2003, with the number of subscribers increasing sevenfold in the two years following. The Lao telecom sector still has many issues to address. The rate of regulatory reform continues to lag well behind industry development and has the potential to derail the progress already made if the reform is not speeded up. For the country overview, see chapter 2, page 18.

Vietnam has become the target for an energetic new round of investor interest of late. Numerous foreign telcos are turning their attention to this significant South East Asian market. The country has it seems come out of a period of wishful thinking – based on the belief that it could ‘go it alone.’ The introduction of a limited level of competition into the telecoms market, combined with a generally improved economic climate, triggered a round of strong growth in the sector. More recently the move to allow an increased level of ‘equitisation’ (the Vietnamese government’s word for ‘privatisation’) has sent a clear message to investors that the rules are changing and the door has been opened. Vietnam’s accession to the WTO in 2007 effectively provided a formal confirmation of change. It was still not totally clear, however, what form the government’s involvement in the telecom sector will take into the future.

As well as strong growth in Vietnam’s mobile sector (28 million subscribers at end-2007, 33% penetration), there has been surprisingly healthy growth in the country’s fixed line subscriber base. Although precise figures are hard to get, fixed-line services were continuing to expand by an estimated 25% a year. The government continues to demonstrate a certain ambivalence about the Internet; nevertheless, this has not stopped the market starting out on a what looks like a solid growth path. Internet user penetration was running at an impressive 21% in January 2008 and the ‘hot’ broadband segment of that market was growing at an annual rate of well over 100%. For the country overview, see chapter 3, page 34.

Key highlights

• Vietnam’s mobile market had passed the 28 million subscriber mark coming into 2008.
• The country’s annual growth rate in the mobile market was running at around 75% and looked set to continue.
• The 2007 year saw a remarkable surge in Vietnam’s broadband Internet market, following on from a similar surge in 2006.
• With broadband subscriber growth running at an annual rate of almost 150%, interest in broadband services was finally picking up.
• Overall broadband penetration remained low, (6% of households) but continuing strong growth in this market segment can be expected.
• Vietnam launched its Vinasat-1 satellite in early 2008; this was the country’s first venture into the satellite market.
• In Cambodia, mobile services have continued to dominate the local telecom market in what is still a relatively poor country, (estimated GDP per capita of almost US$600 in 2007).
• There were 2.5 million mobile subscribers in a country of just under 15 million people (17% penetration) coming into 2008, with the market continuing to expand at almost 50% per annum.
• A similar picture was emerging in Laos, where mobile penetration had reached 20% early in 2008, as annual growth was running at about 40% in this country of only 6 million people.
• Whilst to the outside observer progress seems painfully slow at times, all three countries have been making steady progress with regulatory change and structural reform within their respective telecom sectors.

Mobile subscribers, penetration and annual change – by country – 2007

(Source: BuddeComm data)

Data in this report is the latest available at the time of preparation and may not be for the current year.