New Mobile Operator Pins Hopes on 4G

Cambodia’s ninth mobile telephone service provider, which will be operated by Star Digital Muds Co under the brand name Emaxx, is expected to launch at the end of April, a company official said yesterday.

Emaxx will be the first wireless provider in Cambodia to boast so-called 4G technology, raising the ante for companies in an already competitive market where many expect consolidation rather than new entrants.

Star Digital obtained licenses for both Wimax Internet and a 4G network service in 2007, and unlike most mobile telephone operators here, is financed by a consortium of about 20 Cambodian investors, said Frank May, the company’s chief operating officer.

The technology will give Emaxx a clear advantage over competitors, many of which use 3.5G technology, Mr May said, suggesting that competitors would have to make large investments to match Emaxx’s service.

“They will have to find common ground to take the next big step to do that,” he said, adding that he expected some companies to apply for 4G licenses.

Mr May said the company’s 4G LTE technology would allow for faster data transfers and more advanced Internet service for smart phones. He expects the service could help draw 500,000 new customers by the end of the year. The company will also offer broadband Internet.

Though almost four years have passed since the license was issued, he said, 2011 marks the year when several 4G handsets will go on the market, explaining the delay.

The company has so far invested $75 million and has installed one tower in each of Cambodia’s 25 provinces and municipalities, and will rent the use of Mfone towers for remote areas of the country under Mfone’s 3.5G technology, he said.

Mr May declined to discuss the company’s market strategy or disclose the names of its investors.

Minister of Posts and Telecommunications So Khun declined to comment yesterday. The ministry’s director general, Mao Chakrya, said he was unaware of Emaxx, although the company produced a copy of its license from the ministry in its office.

Operators have long predicted that the number of players in the telecommunications sector would be whittled down to four or five in the next several years as profits stagnate amid a highly competitive market.

Less than three months ago, the number of operators decreased from nine to eight when Smart Mobile absorbed the customers and infrastructure of Star-Cell. According to MPTC figures, before the merger Star-Cell and Smart Mobile claimed to have 470,000 and 460,000 subscribers, respectively, after about two years of service.

The market is estimated to range from 4 million to 8 million users, and with most companies launching in the last three years, there has been a competitive grab for customers.

Mobile phone operators are the country’s largest ad buyers, a fact immediately apparent on Phnom Penh’s riverside, where four operators advertise on giant 15- by 50-meter billboards.

Telecom CEOs and experts said yesterday they doubted Emaxx’s 4G technology posed an immediate threat to competitors, as most Cambodians limit their phone usage to voice and SMS, and there is still a lack of 4G-capable handsets.

It’s difficult to predict how the new company could affect consolidation potential in the market and there is no guarantee that 4G would give it an advantage, said Jeremy Chase, a senior associate at Allens Arthur Robinson law firm who specializes in telecommunications.

“How will a new player come into the market in a profitable manner when others have not been able to do so is a question that will need to be answered,” said Mr Chase, who is based in Singapore.

He said the company is more likely to have an effect on Internet service, where there are fewer players offering high quality broadband.

While nine operators appears to be too many, it is significant that companies continue to want to enter the field in spite of the competition, said Jayesh Easwaramony, director of telecommunications practice for Frost & Sullivan’s Asia-Pacific region consultancy firm

“If people are willing to pay for a license and invest in the market in terms of technology and service it is also the decision of the operators,” he said.

But he pointed out that, while in five or ten years demand for mobile Internet services will increase, most mobile business is still voice-related, with high data traffic appealing to a minority of consumers.

In “the short term, there is no benefit in the business case. We would say it’s bit ambitious,” Mr Easwaramony said.

Simon Perkins, CEO of Hello Point, said that by the time 4G demand increases to a significant level, several other companies will have made the necessary steps to catch up.

He said that many Cambodians simply will not be able to afford the new handsets to access the new technology.

Mr May brushed aside arguments about handsets. Several companies, including Samsung, have already released the 4G phones, with more expected to launch this year.

“I’m not worried about the opposition. I am interested in growing the market,” he said.

 

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