Lewes, DE -- (ReleaseWire) -- 04/04/2014 -- The telecom sector in Laos still has issues to address. The rate of regulatory reform continues to be well behind wider industry development, even for a developing economy like Laos. The delays in reform have the potential to derail the good progress already made if the process is not speeded up. An insight into this situation was provided in 2011 with the effective isolation of the local Beeline business by the other three mobile operators, Lao Telecom, ETL and Unitel. The Ministry of Post and Telecommunications (MPT), acting in its regulatory role, took the side of the three operators in the dispute. After a long stand-off Beeline was finally reconnected by the other operators. It was clear however that the underlying issues had not been resolved.
On a business front it is fair to say the business is booming on the back of a strong local economy. In the last five or six years there has been a noticeable shift in the economic and social outlook for Laos. After a number of decades of having to struggle with a poorly performing economy and a commercial environment that was in desperate need of reform, there is now positive news being reported on many fronts for this nation of just over six million people. Most importantly, a significant number of hydro-electric power projects and mining ventures have become reality, with more set to come on line, and even more possible projects are in the pipeline. Laos is finally moving forward in what might be described as a confident fashion. At the same time there has been progress in the strengthening of both the national telecommunications infrastructure and its regulatory regime, although this has not always gone smoothly. One of the major challenges has been the effort to attract more foreign investment into the sector and this remains tightly linked to reform of the regulatory regime.
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The building of the country’s infrastructure continues to be a priority. By early 2013 fixed-line teledensity was still low at around two telephones per 100 people, with limited growth occurring in that segment of the market; over the last decade or so, however, the Lao mobile market has been moving forward in a sustained fashion in what had become a highly competitive market. But, as already noted, the market ran into problems in 2011/2012 that resulted in a major setback not just to Beeline but to the overall market. By early 2013, after overcoming the lost momentum, the market seemed to have to have largely sorted itself out. (However, the available statistics were contradictory.) Mobile penetration had passed 90%, the annual growth rate was holding up well. A particularly strong performance by Unitel, the military-owned operator that has been reinvigorated by the formation of a joint venture with Vietnam’s Viettel, has seen this operator take over number one position in the country’s mobile market. In the meantime, Beeline’s subscriber numbers had declined dramatically, although it was suggested that the operator was concentrating on higher value customers.
Internet services in Laos continue to lag. This remains a major concern in terms of the overall social and economic development of the country. The good news is that the 2011/2012 period saw a boom in mobile broadband internet services, although it has been hard to get reliable statistics on this part of the market. The expansion of internet and especially broadband into the provinces and the rural areas is high on the government’s list of development priorities.
While more foreign investment is needed to boost the telecom sector, the government must also be judicious in selecting and licensing new operators to ensure that it gets the best value out of the investment. The joint venture formed by the government with Thai company Shinawatra back in 1996 let the five-year period of market exclusivity granted to Lao Telecom pass without any serious attention to infrastructure building. When the market was finally opened up to competition in 2002, foreign capital finally started to flow. The mobile phone market took off in early 2003, with the number of subscribers increasing sevenfold in the two years following.
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