World’s Most Cutthroat Cell Market?
Image Credit: Matt Wakeman

World’s Most Cutthroat Cell Market?

 
 

Ngo Menghorn is a typical student in Phnom Penh. Like many 23-year-olds in the Cambodian capital, he owns a motorbike, more than one mobile phone and goes through SIM cards like they’re going out of fashion.

‘I don’t remember how many SIMs I’ve used because I always change them out,’ he says, adding that he has probably brought at least 40 in his two years as a mobile user.

His preferred network Mobitel—currently number two by market share—sells SIM cards for less than the value of credit each provides. Mobitel sells SIMs for 5,500 riels each ($1.35) loaded with $6 in call credit amid fierce competition for customers. The catch is credit is only good for a week unless the user upgrades to a more expensive call plan.

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‘It’s hard to contact me because I always change my SIM card,’ admits Menghorn, adding he has taken advantage of promotions on eight different Cambodian operators.

Emptying his pockets, three SIM cards fall out, not including the one in use in his pink Nokia handset. Menghorn’s mobile usage habits in a market of eight operators—this in a country with a population of 15 million people who have an average annual income of just $650, according to the World Bank—are typical.

‘(Before) when companies had promotions…they distributed SIMs for free,’ says Seng Bopha, whose family runs two mobile phone shops in central Phnom Penh. It’s a business model that attempts to attract customers with cheap tariffs in the hope they’ll stay loyal. And although many users stick to the same network used by friends and family members to take advantage of low in-network rates, constantly rotating SIMs, cost-conscious users like Menghorn switch between networks on an almost a weekly basis.

With so many operators competing just to stay alive, attractive promotions are never ending. Typical off-network rates outside of special offers range from $0.05 to $0.08 per minute, but call rates are meaningless because callers rarely pay them. Just over four years ago in-network calls cost $0.20 per minute in Cambodia prior to an influx of new operators in early 2009.

‘Most observers say Cambodia is the most competitive (mobile phone market) in the world,’ says Simon Perkins, CEO of Hello, a Cambodian subsidiary of Kuala Lumpur-based operator Axiata.

Only neighbouring Laos, with four operators and a population of six million, and Hong Kong with its six operators competing for nearly nine million people, come close to Cambodia in terms of mobile phone markets in the region, analysts say.

Although Posts and Telecommunications Minister So Khun claims 86 percent penetration in Cambodia based on the data submitted by the country’s operators, most industry observers agree there are anywhere between five and six million active users, more like about 37 percent usage. With so many SIMs floating around as operators remain motivated to inflate user statistics to attract buyers and mergers—and boost their share price in a bid to survive—Cambodia’s mobile numbers simply don’t add up.

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