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Product sales a likely strategy for Kingdom’s new telecom

Product sales a likely strategy for Kingdom’s new telecom

XINWEI Telecom Enterprise Group is preparing China’s first foray into the Cambodian mobile services market, a possible foot in the door for China’s technology companies, officials and experts say.

The Ministry of Posts and Telecommunications issued Xinwei with an operating licence last year, and the group was waiting for approval to build communications towers in the Kingdom, Sea Nareth, the ministry’s director of radio frequency management and licensing, said yesterday.

The MPTC issued the licence in August, according to Xinwei’s company website.

Xinwei would operate on a Chinese-developed interface known as TD-SCDMA, Sea Nareth said, claiming the technology would allow the company to be one of Cambodia’s first providers of fourth-generation wireless services.

Experts have long deemed Cambodia’s mobile service market overcrowded and increasingly unprofitable.

Tokyo-based Frost & Sullivan analyst Marc Einstein said Xinwei’s interest was probably based on technology sales rather than mobile service profits.

China is home to two of the world’s biggest telecom products and services companies, Huawei Technologies and ZTE Corporation.

Xinwei, relatively unknown outside of China, could be looking for easy markets for mobile phones and telecom systems, Einstein said.

“They may have got this licence to create a market for Chinese telecommunication products in Cambodia.”

Chinese aid to developing countries has often carved out niches for the continued marketing of products and services. The relative ease in obtaining a mobile operating licence in Cambodia mases it a good candidate for such a strategy, Einstein said.

TD-SCDMA technology, used only in mainland China, could be an obstacle to entering the Cambodian market. Future customers would be able to use phones provided only by the company,  Smart Mobile chief executive Thomas Hundt said.

“This creates a big hurdle, given the  dominance of GSM and W-CDMA handsets in Cambodia”, Hundt said, adding that far fewer phones were available with the technology.

Despite some claims that the Xinwei would be a forerunner in 4G services in Cambodia, Hundt said TD-SCDMA was not a fourth-generation technology. It also lacked roaming capability, he added.

Camintel, which became the ninth licensed mobile operator in October, had yet to make a final decision on what services it would provide in Cambodia, CEO Kang Nam-kook said yesterday.

The low entry barriers threaten the profitability of existing operators, Kang said, adding that mergers and acquisitions were inevitable.

“Ten telecoms cannot live together,” he said.

Unless Xinwei planned to take part in market consolidation, its entry could  cut into already depleted revenues, Jeffery Tan, a Malaysia-based telecoms analyst at OSK, said yesterday. “The entry of a new player only adds to value destruction for the sector,” Tan said.

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