France Telecom seeks stake in Cambodian market

France Telecom seeks stake in Cambodian market

France Telecom has moved to acquire a minority stake in Cambodian mobile operator Mobitel as it continues to extend its reach into emerging telecoms markets.

The Mobitel negotiations are understood to be at an early stage, but if successful would advance the French incumbent’s strategy of expansion into new territories across the Middle East, Africa and south east Asia as it seeks to offset static revenue in its home market. The Cambodian market still has much untapped potential, but with nine operators already licensed is becoming highly competitive.

Daniel Yu, an analyst with Pyramid Research, said that although overcrowded, the Cambodian mobile telecoms sector is still attractive to foreign investors due to its low penetration levels and relative absence of good quality fixed network infrastructure.

He also cited the country’s recent political stability as an asset for outsiders.

“France Telecom’s potential investment in Mobitel makes sense because it is the largest operator in the country with about half of the market share,” said Yu. “There is also its recent refinancing through the Bank of China, giving it the capital needed for network expansion.”

The France Telecom discussions are taking place in the wake of the merger between Cambodian cellco Applifone, branded as Star-Cell and owned by TeliaSonera Asia Holding, and rival Latelz Co, which operates as Smart Mobile. This new venture will trade under the Smart Mobile name, and have 850,000 (15%) of the country’s mobile subscribers.

Yu said: “The merger between Star-Cell and Latelz Co is a good sign, showing the market going into consolidation.”

He said Mobitel’s dominant position in the mobile market appears to be driving smaller players to strengthen their standing particularly through mergers or acquisitions.

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