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Betting on Cambodia
Impoverished and with a weak infrastructure, Cambodia may not be the obvious choice for advanced wireless services. But after signing its first contract with a Cambodian operator in 2005, Ericsson is betting on the Southeast Asian nation.
October 18, 2006
Hans Karlsson, country manager for Ericsson Thailand and responsible for the Indochina region, is busy overseeing the opening of the company's first office in the capital Phnom Penh. Up to 80 local workers at different levels may soon be trained to represent Ericsson in Cambodia.
Ericsson is the sole supplier for 2G player Telecom Malaysia International Cambodia (TMIC), and has several other prospects in the market, Karlsson says. TMIC is Cambodia's third-largest operator, with 200,000 customers, and is pushing aggressively to grow.
Ericsson is also courting at least one other telecom newcomer that expects to roll out a 3G mobile network in 2007. Ericsson's High-Speed Packet Access (HSPA) technology, also known as Turbo 3G, is an obvious contender for that project, Karlsson says.
Cambodia has 14 million citizens, but only 32,500 fixed lines. By comparison, there are 1.2 million mobile users - up from 900,000 just two years ago. The vast majority use pre-paid services.
That makes mobile services the logical path forward as Cambodia seeks to develop its telecommunications infrastructure. With a total mobile penetration of about 10 percent today, Ericsson expects 40 percent of Cambodians to carry mobile phones in two or three years.
Despite its poverty, Cambodia tends to have a lot of money in circulation. That makes actual purchasing power stronger than its Gross Domestic Product may suggest.
In 2005, Ericsson Thailand and Indochina earned USD10 million, which represented only a small part of the Bangkok-based office's total revenue. That could grow significantly when Cambodian businesses tap into 3G services.
Opening a local office was a logical move for Ericsson as the company seeks to increase its presence in Cambodia.
"We view this as a good market," Karlsson says. "And I think Ericsson is perceived by operators here as a company that can take end-to-end responsibility. This is not an easy country to work in."
Uncleared mine fields outside Phnom Penh continue to pose dangers to construction crews. Another challenge is finding qualified workers to carry projects forward. So far, most of Ericsson's labor force in Cambodia has been flown from Thailand, a 50-minute plane ride away.
"Ericsson also has many partners, and we develop their workforce as well," Karlsson adds. "We need to train them so they can support us for a long time."
Only two Asian countries have 3G networks today, Singapore and Malaysia. But that picture is changing fast with the Philippines beginning to roll out 3G, and Cambodia following close behind.
Karlsson says the fact that new operators get outside financial backing shows the opportunity that the Indochina region offers.
