Consolidation is sure to take place in the mobile phone market this year as the operators conduct quiet negotiations about prices and question which brand name to stick with, and whether the technology of the other companies they acquire will be compatable, competitive and even worth it.
Two personalities almost sure to be involved in whatever happens are Thomas Hundt, CEO of Smart Mobile and Alan Sinfield, CEO of QB, both of whom were kind enough to discuss the topic in different conversations during the last couple of weeks with Stuart Alan Becker.
Smart Mobile CEO sees challenge in huge growth
It is predicted that by 2020 there will be 20 billion internet devices on Planet Earth and every human being will have almost three devices connected to the internet
Smart Mobile CEO Thomas Hundt, who attended the GSMA World Conference in Barcelona, Spain that took place at the end of February this year, returned with interesting predictions for the future and hints at the ramifications for Cambodia.
“By the year 2020 every human will be consuming about 1 gigabyte of data per day,” Hundt said.
“There will be 20 billion internet devices on Planet Earth and that means every human being will have almost three devices connected to the internet. To master such major traffic will be a huge challenge: the networks are not prepared for this and the technology doesn’t even exist yet,” he said.
Hundt doesn’t think everybody in Cambodia will have three internet devices per person, but he’s seen exponential internet growth in Cambodia as more and more people use their mobile devices to check their email and perform other internet activities.
“Since we launched our 3G nine months back, our daily data volume increased by more than 50 times,” Hundt said.
Hundt believes that even though huge numbers of internet users are connecting via their mobile operators, there will nevertheless be coexistence between fixed and mobile networks in the future.
“All our subscribers together are now consuming 50 times more data volume. We have grown in subscribers; we have grown in 3G users, and we grown in data volume per user. We are continuously investing in the latest technology.
Hundt says Smart Mobile will come out with a “dual carrier” service called HSPA+, which offers up to 42 megabits per user.
“Smart Mobile’s 3.75G network, using HSPA+, is the fastest mobile internet network available in Cambodia, offering up to 22 Mbps download speed.Smart Mobile’s 3.75G network is available in all 24 provinces as overlay network to its nationwide 2G (GPRS/EDGE) network.
Smart Mobile meanwhile has more than 2.6 million subscribers, strong number 3 at present, growing fast due its unrivaled tariff offerings, also due to its superior network quality but also due to its consistent and dynamic market appearance.
Smart Mobile continues to invest heavily into its 2G and 3G network, to extend the coverage further but also to grow the network capacity to cater to the continuous growth of subscribers and their demand in voice and data consumption, according to Hundt.
“The new iPad they just launched Friday last week supports HSPA+,” he said.
Build a big network or buy one says QB boss
For Alan Sinfield , CEO of QB, who has an 18 year career in telecoms, including hotspots like Iraq and Afghanistan, Chad and the Sudan, there are only two choices.
“We can either build a big network or buy one,” he said. “If it doesn’t happen we are going to get into a point where our shareholders are going to shelve the buy model and go for the build model.”
During his career in mobile networks, following his earlier years in banking, he’s participated in mobile startups, launches and re-launches, totaling 30 companies in Eastern Europe, Thailand, Vietnam, Korea and Hong Kong.
He served as CEO of a virtual network operator in Qatar in the Middle East. “We started ourselves focusing on products and services, devices, smart phones and a distribution network,” he said.
“It went very well; we launched it and then sold it to the incumbent operator.”
Sinfield arrived in Phnom Penh at the beginning of 2010 and since then has attempted three buyouts of other operators.
“We tried to buy them, not the other way around.”
Sinfield describes QB as the “third smallest” of the nine mobile operators in the Cambodia market.
“We have a pretty solid decent small network but we have not built it out further because the strategy we have been following to date has been to buy.”
He said the way the telecoms market is regulated in Cambodia has had the unfortunate effect of making operators compete on price.
“In a mature market you would fight on a series of values, customer service, products, network coverage. All of these things are what makes up a good robust operator. Here the market is totally price focused. Whoever can give it away at the cheapest price gets the most subscribers,” he said.
Sinfield believes that only one or two operators are making money, and all the others are losing.
“If you don’t make money, you are losing. The country needs more investment in telecoms, there are too many players for a small subscriber base. The only sensible thing for most operators in this market is consolidation. There needs to be less operators fighting for the same small pie,” he said.
“A country of this size with its demographics and stage of financial development and available spending capacity per consumer, four or five operators makes sense in this market. It means you can compete on things more than price, make money, and re-invest the money back into the network.”
Sinfield says if an acquisition doesn’t come, there would be a “Plan B” route to expand the network.
“At QB we have a way forward and a well-developed strategy,” he said.
Sinfield likes the recent creation of a Cambodia telecoms regulator, apart from the MPTS ministry.
“Industries need a strong and robust regulator and I hope the new one brings some strong teeth, because that will really define the market, and how the operators must behave. Strong regulators change the way the market operates,” he said.
“I’m looking forward to this new regulator bringing some proper polices and regulation to the market, certainly around pricing because of the way that has been abused by the operators. Also, spectrum management, license management, and there are other goals of a regulator in ensuring fair and proper competition. That’s what we need to see more of here.”
Sinfield said QB has a good 3G frequency, good coverage in the city, and about 80,000 customers.
QB is owned by a group of investors from the Middle East, the largest of which is from Saudi Arabia.
“My shareholders are extremely astute businessmen, invested in a wide variety of sectors, with a lot of business interests.”