With 3G coverage increasing and demand for 4G services starting to appear, Cambodia’s telecoms industry is increasingly starting to adopt the independent towerco model. The development of Cambodia’s telecommunications infrastructure is under way, but the government is doing its part to support growth through new regulations. The stage is set for sustained telecoms and tower market growth in Cambodia.
TowerXchange: Please introduce yourself and give us some details on your background.
Phillip Wong, Country Managing Director, edotco Cambodia:
I served as CFO at Hello Axiata Company Limited from 2009 – 2012, and then CFO at Smart Axiata Co. Ltd from 2013. Before joining Axiata, I was Vice President and General Manager of Alcatel-Lucent for South East Asia where I oversaw business operations. Prior to that I was CFO of Alcatel for Singapore and the South East Asia Region. I have worked extensively in the Asia Pacific region, across six countries and have significant experience in the integration and merging of new businesses and overseeing organisational change.
TowerXchange: How is the development of the Cambodian tower market progressing? How complete is coverage, how mature is the 3G overlay?
Phillip Wong, Country Managing Director, edotco Cambodia:
The MNOs in Cambodia (Metfone, Smart, Cellcard) have a total of 21.39 million subscribers, 97.7% of which are prepaid subscribers; the overall ARPU in Cambodia is US$2.5. 3G services now cover 50% of the country, and interest in 4G services is increasing with various operators beginning to deploy 4G infrastructure. There has been a recent shift in the market with the entrance of three Chinese operators. There is currently a total of 9,000 towers in Cambodia, with an expected growth rate of 3% in 2016. edotco is the market leader with a portfolio of 1,700 towers; our main competitor is Camtower Link, the second licensed tower sharing company in this market.
TowerXchange: How quickly are new towers going up in Cambodia? Is it a good market for tower manufacturers and construction subcontractors?
Phillip Wong, Country Managing Director, edotco Cambodia:
The top three operators already cover over 90% of the populated areas. As a result tower growth is expected to be limited, unless they move aggressively on 4G/LTE. However, the new entrants providing mobile services will still require towers. It remains to be seen whether they will opt for tower sharing or building new towers. The potential for growth in the tower market is significant if they choose to go with new tower rollouts.
TowerXchange: We understand that the grid is one of the biggest challenges in the Cambodian market. Are a significant proportion of sites off grid or on unreliable grid connections?
Phillip Wong, Country Managing Director, edotco Cambodia:
Energy remains a big challenge in the Cambodian market however it has improved recently and now only an estimated 20 to 25% of all sites are off-grid.
Energy remains a big challenge in the Cambodian market however it has improved recently and now only an estimated 20 to 25% of all sites are off-grid
TowerXchange: What energy equipment is typically installed on sites? Are backup DGs or battery banks widely used? Is power a pass through?
Phillip Wong, Country Managing Director, edotco Cambodia:
There are two main types of site: grid and off-grid. On grid sites the operator applies for a grid connection from EDC (Electricité du Cambodge) the government provider, and private grid providers. All sites use batteries for backup but DGs are used for off-grid sites and important sites such as MSC/BSC sites and hub sites. The power in the Cambodian tower market is a pass through.
TowerXchange: Is there much opportunity for small cells, DAS and IBS in this market?
Phillip Wong, Country Managing Director, edotco Cambodia:
Yes, some operators are investing in IBS and small cells, however the cost of IBS is quite high so the number of deployments are still relatively low. Operators are focussing their investments in IBS at strategic areas e.g. airports, shopping malls, five star hotels and high-rise condominiums.
TowerXchange: What is the current regulatory framework around infrastructure sharing? Can you share any insights into regulation of towercos’ equity ownership?
Phillip Wong, Country Managing Director, edotco Cambodia:
The regulatory framework acknowledges the benefits of infrastructure sharing between operators, including reduced duplication of investment, ability to build coverage more quickly, lower operating costs, and more efficient use of resources. The Cambodian regulator also supports 100% foreign ownership to encourage investment in the country’s telecommunications infrastructure.
TowerXchange: Do you expect any regulatory changes in the near to midterm to further support telecoms development?
Phillip Wong, Country Managing Director, edotco Cambodia:
Currently a new telecommunications law is being drafted and it is expected to come into force in the first half of 2016.
Some of the proposed provisions undermine regulatory certainty and investment potential; they will also require universal service responsibility which will increase costs. The government should encourage infrastructure sharing on commercial terms with operators, and they should be free to enter into sharing agreements. The regulator should also look into mandating infrastructure sharing in cases where operators have not shared their towers.
TowerXchange: What do you think are the top four changes required to aid the development of the Cambodian tower market?
Phillip Wong, Country Managing Director, edotco Cambodia:
Mandating infrastructure sharing would be a good starting point. Beyond that, new structure types such as pylon trees, and camouflaged structures should be introduced into the market. Towercos should also start to provide managed services for operators including the operation and maintenance of both passive and active infrastructure and equipment; this could enable considerable savings and overall increased efficiency. Finally the number of In-building solutions (IBS) and DAS should be increased to improve the quality of services in larger populations centres, especially the capital, Phnom Penh.
TowerXchange: How do you think the Cambodian tower market will change over the next 3-5 years?
Phillip Wong, Country Managing Director, edotco Cambodia:
I expect there will be some consolidation between the operators, and a few of them will not survive. This will definitely have an impact on the towerco market. I believe that more operators will adopt the tower sharing model and this will result in increased tenancy ratios, which will benefit everyone. It’s also possible that tower rental pricing may be impacted due to increasing competition in the tower market. As the tower model is embraced in Cambodia the need for new tower builds should start to decrease year by year. I also predict that towercos will increasingly provide value added services such as managed services and monitoring systems to optimise operations.
