Phone war stops, frustration remains in Laos

http://www.chinadaily.com.cn/xinhua/2011-11-23/content_4464774.html

VIENTIANE, November 23 (Xinhua) -- Laos' phone war came to a sudden end on Wednesday as three local telecom operators lifted their boycott and restore their connections with Beeline, which had been at the center of an ongoing dispute regarding telecom regulations.

VimpelCom, one of the world's biggest telecom providers operating under the Beeline brand name in Laos, had been disconnected from Lao Telecommunications Company (LTC), Enterprise of Telecommunications Lao (ETL) and Star Telecom Co. Ltd. (UNITEL) since October 13.

Beeline's relations with the three rival operators turned sour after it was found to be offering special promotions in breach of an agreement instigated by the Lao Ministry of Posts and Telecommunications that limits competition between operators.

This resulted in cross-network call blocking to and from Beeline numbers by the other three operators. Since mid-October, Beeline numbers had only been able to contact others on the Beeline network, making life difficult for all phone users. Incoming calls to Beeline numbers from abroad were similarly affected because LTC controls most of the international lines.

In August, the Ministry of Posts and Telecommunications ordered telecom companies in Laos to stop offering special promotions, such as free call credits, sim cards and messaging services, in order to increase profits. On October 6 all four telecom operators had agreed to stop offering such promotions in a move to shore up falling revenues in the fiercely competitive market.

The boycott was aimed at forcing Beeline to halt its free call promotion and comply with the agreement.

The Ministry of Posts and Telecommunications had twice staged urgent meetings between the four operators but both failed to reach any agreement.

However, in the latest round of negotiations the four operators agreed to revise fixed mobile phone service charges, which will provide an opportunity for them to conduct marketing campaigns that will not adversely affect revenues and impact negatively on the operations of other operators.

VimpelCom entered the Lao market in March this year, when it acquired a 78 percent stake in Millicom Lao Co. Ltd., then operating as Tigo, with the remaining 22 percent owned by the Lao government. In June, the business name was changed to VimpelCom Lao Co. Ltd, shortly followed by the rebranding to Beeline. As of the end of May, the company had more than 500,000 subscribers and held a market share of approximately 27 percent.

It is unclear just how deeply the boycott has affected Beeline' s customer base and business performance. VimpelCom reported its customer base stood at 500,000, down from 536,000 in the second quarter in Laos. However, the company declined to provide updated figures or more information related to the situation when contacted by Xinhua.

What is clear is that the boycott affected phone users in a multitude of ways. Many had to buy additional sim cards, which cost around two U.S. dollars, just to remain contactable, frustrating businesses and individuals alike.

Hatsatdy, 32, who works for a foreign company, told Xinhua, "I changed my Beeline number after I found out about the issue, but it was hard for me to get in contact with my boss, friends, and family members. I got the feeling that these companies didn't really care about us."

Andy, 36, an English national working for a local company, said the telecom operators shouldn't hold such influence over people's lives.

Khammoun, 46, self-employed, said: "It was not a big deal for me. As I have four mobile phones and numbers, people can get me anytime they want. In Laos many people are prepared with more than one number, just in case there's no signal from one operator. All my family members have at least two numbers at hand."

According to information provided by telecom operators to the Ministry of Posts and Telecommunications, a staggering ten million mobile phone numbers are in use in the country of just over six million people.

An insider analysis of the Lao telecommunication industry suggests that it lacks a strong foundation to support fast growth, and that clear and adequate policy regarding licensing for new entrants, infrastructure sharing, interconnection, and universal access must be set up before it can expand to the next level, otherwise the market will collapse.

LTC reported in February that its pre-tax revenue of about 733 billion kip (around 91 million U.S. dollars) for 2010 was 19 percent lower than targeted and a drop of 17 percent from 2009.

According to the state-owned Vientiane Times, ETL's reported income of 422 billion kip (about 53 million U.S. dollars) for 2010 was about 90 percent of its target, but down 8 percent compared to 2009.

The ministry also reported that tax contributions from the telecommunications sector totaled about 1.6 trillion kip (around 199.2 million U.S. dollars) in 2010, down from over 1.93 trillion kip (about 240 million U.S. dollars) in 2009, leading it to enforce stricter regulations on telecom operators to ensure fair marketing campaigns are used.

VimpelCom is a major Russian telecommunications services operator, offering a wide range of wireless telecommunication services and fixed broadband in Russia and former Soviet Union countries such as Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia and Kyrgyzstan. The company also has subsidiaries in Vietnam, Cambodia, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic, Italy and Canada.

The decision by the Russian firm to enter the Lao market was part of its plan to expand its operations in Asian region. The company already has telecommunications operations under the Beeline brand in Vietnam.

Of the other three operators, LTC is a joint venture established in 1996 between the Lao government and Shenington Investment Thai, which hold 51 percent and 49 percent respectively. ETL is 100 percent owned by the Lao government from 2000, while UNITEL, set up in 2008, is 51 percent owned by the Lao government and 49 percent by Vietnam's Viettel Global.