United Kingdom Defence and Security Report Q1 2013

BMI View: The Cambodian and Laotian telecoms markets are similar in several ways. Both countrieshave a relatively well-developed mobile sector, although prepaid subscriptions are the norm, resulting inlow ARPU levels. Their fixed-line industries are still expected to experience growth at least until 2016 butmobile substitution is becoming an increasing threat, especially when operators step up their ruralexpansion 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

Cambodia's mobile subscriber forecast has been upgraded following new data. We expect about30mn subscribers by 2016, although the actual number would be lower in light of inactivesubscriptions and multiple SIM ownership.

We expect muted growth in both Cambodia's and Laos' fixed-line market due to the substitutionthreat from mobile services. We forecast their fixed line penetrations to reach 5.1% and 2.6% in2016 respectively.

Adoption of fixed broadband services is forecast to remain slow in light of a lack of networkcoverage and high cost barriers. By 2016, the fixed broadband penetration rates are expected toreach 0.9% and 4.5% in Cambodia and Laos respectively.

Key Trends & Developments

After more than one and a half years since the Ministry of Posts and Telecommunications of Cambodiaannounced in February 2011 that it was looking at the formation of a regulator, the ministry finallyannounced in September 2012 the establishment of the Telecommunication Regulator of Cambodia.In August 2012, Lao Telecommunications entered into a partnership deal with Thailand's state-ownedtelecoms operator CAT Telecom, reports the Lao News Agency. The deal is designed to offerinternational leased line services through multiprotocol label switching (MPLS). The networks of thefirms are linked along common borders between the two countries, thereby offering services to link sitesof business clients to branches and trade partners overseas through MPLS.

Cambodia (Telecoms Rating score of 42.4) and Laos (41.4) were ranked 15th and 17th respectively inBMI's Asia Pacific Telecoms Risk/Reward Ratings.