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.