Developing Telecoms | Orascom: we’ve doubled North Korean 3G customers

23 May 2012

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Orascom: we’ve doubled North Korean 3G customers

Monday, 07 September 2009 11:03

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Orascom, the company which bought into North Korea's new 3G market, has reported that customers for Orascom 3G more than doubled in 2Q09. The company has a 75% share in Koryolink, the sole cellular network open to individual customers.

Pyongyang Orascom Telecom has announced that it has doubled the number of customers for its 3G services in the space of one quarter. Despite a fall in Average Revenue Per User (ARPU) the total number of subscribers for its 3G services stood at 47,863 as of the end of June 2009, compared to just 19,208 at the end of March. Orascom's services in 3G started in mid-December 2008, using 3G WCDMA.

The figures indicated that Orascom's strategy was correct: it bought a 75% share in cellular network Koryolink, which for the time being at least has a monopoly when it comes to the networks that individual subscribers in North Korea are allowed to join (the remaining 25% of Koryolink is controlled by state-run Korea Posts and Telecommunications). Since then Orascom has run several promotional offers via Kopryolink: free SMS text messaging and lower connection rates are examples. In turn, these promotions may have affected the ARPU figures - down from US$24.70 in 1Q09 to US$22.80 for 2Q09.

Orascom's figure for earnings in 2Q09 was US$2.5 million. IDG, in a report it has just released, points out that Orascom's total does not allow for interest payments, taxes, depreciation and amortisation. Neither has Orascom disclosed whether the network made a net profit or a loss for the period. IDG is obviously inquisitive regarding this whole matter as it also points out that currency conversions were carried out at the official exchange rate, which can be significantly different from street rates. To be fair to Orascom it does seem unlikely that anyone taking out a subscription to a 25% state-controlled enterprise would do business in anything other than the official exchange rate.

As this report is published, 3Q09 will be coming to a close; Orascom will have spent it expanding sales through offices operated by KPTC. The retail network included two shops at the end of 2Q09 and an additional three KPTC offices where subscribers could buy air-time scratch cards. Plans were for a further six KPTC locations during 3Q09.

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