OBG talks to D. Bolor, CEO, Mobicom

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 D. Bolor, CEO, Mobicom

Interview: D. Bolor

How competitive is the mobile market in Mongolia and how will this affect the sector’s growth?

BOLOR: The Mongolian mobile telephony industry consists of four operators, with a total market population of 2.7m people. Compared with China, which has a population of 1.3bn, and only three mobile operators, we find ourselves in a very tough competitive environment. To some extent I would say that competition has become quite dangerous for the industry, because the sector is now experiencing a price war. This can affect the development of mobile operators – as well as the industry as a whole – very negatively.

Information and communication technology changes very quickly. To develop and implement new technologies, operators need to make large investments over a short period of time. If the price wars continue we may not be able to afford future investments to the technology needed to keep pace with global trends in the sector. In my opinion, four mobile operators are too many for the industry; there are too many players. Looking at it statistically, Mongolia’s total mobile customers reached 2.4m in 2011, bringing the mobile penetration rate to above 90%. This rate is above the global average of 72.7%, and our market is already saturated. Mobile networks cover almost 94% of the population and 70% of the country’s territory. In addition, our sector also has a high rate of double and even triple-usage customers subscribing to more than one operator; the double usage rate is around 40%.

What strategies are mobile companies using to increase average revenue per user?

BOLOR: With the sector seeing a price war for voice and SMS services, we are seeing dangerously low prices being offered in the market. As of spring 2011, we have also started testing flat monthly rates for voice and data packages; this is useful for the customers but less so for operators. The telecoms sector is probably the only sector in Mongolia that has kept up with global trends, so operators are focusing on all areas of data and mobile internet. Over the course of 2011, we have introduced 3G and 3.5G services, which helped to develop mobile broadband and boost data transfer services.

This is where the focus needs to be. Traditional voice services are changing and margins are very low, so future revenues lie in mobile internet services such as IPTV, high-speed mobile internet and voice over internet protocol. To support growth in 3G services we have started importing new handsets, particularly smartphones that use the latest Android operating system.

Within the next few years we expect to start rolling out 4G and long-term evolution (LTE) technologies. We are waiting for frequencies to be available to introduce LTE. We expect this to happen around 2014, when the country goes digital and vacates the frequency currently used by television broadcasters. Operators have worked with policy makers to develop the ICT Vision 2021, which will outline the next decade of the country’s ICT development direction and strategy.

How would the privatisation of Telecom Mongolia and its possible entry to the mobile telephony market change the dynamics of the sector?

BOLOR: Telecom Mongolia is one of the biggest companies in the country; it operates nationwide fixed telecommunications and internet services and is one of Mongolia’s largest employers. Its proposed privatisation is an ongoing strategic political issue that started as early as 2000 and continues to this day. Telecom Mongolia’s competitiveness has dropped considerably over the last 5 years. The company is in a very weak position and its market has dropped significantly. The existing mobile operators are far ahead of Telecom Mongolia both in terms of mobile infrastructure and market share. Indeed, the industry is already saturated. In the past 10 years, tenders for mobile licences were announced, but they failed to obtain a licence. Now, over a decade later, the number of mobile subscribers is almost as high as our entire population, and I believe it is too late for another entrant to enter the market.

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The Report: Mongolia 2012

Telecoms and IT chapter from The Report: Mongolia 2012

Cover of the The Report: Mongolia 2012

The Report

This article is from the Telecoms and IT chapter of The Report: Mongolia 2012. Explore other chapters from this report.

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