VimpelCom Exits Cambodia, Laos Next?
Russia's Vimpel Communications (VimpelCom) announced on April 19 that it has sold its entire indirect stake in Sotelco (branded as Beeline Cambodia) to its local partner Huot Vanthan . The possibility of exiting Cambodia was flagged up in late 2012 as part of VimpelCom's plan to focus on its more profitable businesses. The divestment chimes with BMI 's view that the Cambodian telecoms market has long lost its lustre, and VimpelCom's departure also deprive s us of a valuable source of operational data.
VimpelCom had a 90% stake in Sotelco, which was purchased for US$28mn from Altimo in July 2008. The Russian operator did not disclose the value of the sale to its local partner, who is the chairperson and CEO of Cambodia's First Investment Specialized Bank . Sotelco has been struggling in Cambodia's mobile market - BMI estimates that it had 6% market share in Q212, an equivalent of 1.1mn subscribers. By Q412, VimpelCom reported that its subscriber base had declined to 597,000. Further signs of a deteriorating business include Sotelco's ARPU reaching US$1.6 in 2012, down from US$2.9 in 2011 and US$3.5 in 2010, and the churn rate surging to 210% in 2012, up from 128% in 2011 and 167% in 2010. VimpelCom reported that the weak performance was due to competition and the halting of bundle offers in light of network congestion.
We have seen a number of significant developments in Cambodia's mobile market in the past year. Besides VimpelCom's exit, Thailand's Thaicom has also retreated from the country, initially by a failed sale to a local company before filing Mfone into insolvency ( see our online service, February 18 2013, 'Thaicom Finds Stability In Laos' ). Meanwhile, Axiata acquired Latelz 's Smart Mobile in December 2012, reducing the number of operators to seven ( see 'Consolidation Taking Off In Cambodia', December 13 2012 ). BMI believes that further consolidation is likely. Mfone had agreed to transfer its subscribers to Mobitel , and we believe that Sotelco's assets would be better utilised by another telecoms operator.