Stronger competition will boost markets in Cambodia and Laos

Although subscriber data for Cambodia and Laos are hard to come by, the telecommunications sectors of both Southeast Asian countries have seen reasonable growth despite competition stagnating, according to BMI.

Mobile subscriber growth in Laos was stronger than previously expected, with an estimated 5.805mn subscribers at the end of 2011. This number is expected to increase to 8.453mn by 2016. However, the growth momentum in the fixed-line and fixed broadband sectors is significantly slower due to the higher cost of network expansion. Forecasts indicate that by 2016 there will be 193,000 fixed-line and 78,000 fixed broadband subscribers.

Meanwhile in the Cambodian telecoms market, 22.832mn mobile subscribers are forecast for 2016, representing a penetration rate of 150.3%. Although these forecasts are based on data published by the Ministry of Post and Telecommunications, the accuracy of the figures is debatable. As a benchmark, India's regulator has announced that typically only about 70% of its mobile subscriptions are deemed to be active. Furthermore, there is the phenomenon of multiple SIM ownership, which is prevalent in emerging markets. Meanwhile, around 467,000 fixed-line and 140,000 fixed broadband subscribers are expected by 2016.

The competitive landscapes of Cambodia and Laos continue to exhibit a lack of significant improvements. Two new operators are looking to enter the Cambodian mobile market in the near future, which is the result of the regulator's liberal approach in issuing licences with a view to ensure competition remains high. While operators such as Lao Telecommunications reported higher mobile revenue and ARPU due to the Ministry of Post, Telecommunication and Communication dictating tariff rates and prohibiting certain promotions, the intervention is likely a temporary measure to provide some stability.

Vietnamese investment in Cambodia is booming, particularly in the mining and rubber sectors, and greater bilateral trade and investment linkages are likely over the coming years. However, with Vietnam's real GDP growth expected to remain subdued at 5.8% in 2012, Cambodia's real GDP growth is expected to come in at just 4.8% in 2012 (from an estimated 6.3% in 2011), which is below the IMF's 6.5% forecast. Meanwhile, Laos' political landscape in 2012 is expected to revolve around foreign relations with its neighbours. The country's accession to the World Trade Organisation is likely to take centre stage and this development can be seen as an endorsement by the international community of Laos' reform efforts.

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