Sunday, October 16, 2011

The "war" in the telecom market in Laos

Last week the there phone operators Lao Telecom, ETL and Unitel cut their lines with Beeline, the recently rebranded former Tigo. The reason was apparently a Beeline promotion during the boat racing festival for free SMS. Some weeks ago the government urged the providers to stop certain marketing campaigns where they offered free service such as SMS and SIM cards. The 4 operators agreed to stop it. Now Beeline seems to violated it and the competitors too the harsh measures. So what does it mean: First of all, the government said it is concerned about dropped tax revenues. Lao Telecom what is the market leader reported a drop of 19 percent in revenue. But if you take a closer look, then you will see that actually LTC is the most vulnerable company because of it"s poor performance. Some weeks ago shareholder Thaicom announced that they consider to pull out, because of the difficulties they have with their partner in revenue performance. It seems that too much money is lost in certain channels at LTC, as usual. ETL may face the same problem, while Unitel is a Vietnamese company that may loose their money in the homeland (and has a more strategic reason to be in the Lao market then revenue in the first place). So why the alliance against Beeline, if there is not even a government order? Because it is too convenient for them. Competition is not really established in Laos, and if a company find a way to hurt the competitors, they will do it. In a still developing market happens what happend in the bank sector in Vietnam before: Too many players with agressive marketing were first destroying their own market and then themselves. What Laos has to learn is how a market works, and what regulations are neccessary to allow MANY players to be in the market, not just a few. No idea why Beeline committed nearly suicide with the SMS promotion, maybe the big boss was out of the country and the subordinates thought they were smart (happens more often than you might think). For now, nobody except Beeline subscribers can call Beeline. And Beeline itself is very poor in communication. They call it a technical problem. What is a lie.
They risk their business, because nobody will register with them if they don't fix the problem now (and talks are announced for this week, not earlier) In addition, the government announced that from November on all subscribers must be registered. Not sure yet if there will be a limit for SIM cards as well. We will see how the governments measures and involvement in a market, where it is not just the regulator, but also a player, will effect the purely private companies. We know from Vietnam, that there is still a priority: state owned first, then local, then foreign companies. Since Laos is a small country where foreign investment is often more strategic based then in current revenues, it might be a problem to make it even more difficult to invest.


  1. well; in a couple of years unitel took 15%of market share,and as lao pdr is a small conutry with low growth in telecom subscriber, we can assume that the 3 telco lost some revenues to unitel.also these 3 telco were sitting on their business. until unitel came, no real offers for adsl and 3g.competition is good,they fight on the price which is good for consumers but also u need new looks like they discovered very lately internet mobile, and we still don t have a real effort on dsl. my 2 cents

  2. This is not about 'government policy' as all four operators are either fully or partly owned by the Lao government. It's between the people in the government who arranged the deals (and the payouts they receive) who are the ones fighting with each other; there are probably different ones with an interest in one or more of the telcos. The government itself doesn't seem to care or step in to force them to resolve their differences. Maybe they are trying to force Beeline out of the market altogether. Millicom must be rubbing their hands in glee having managed to sell their loss-making investment in Laos to the Russians!