Mongolia: Ringing the changes

Mar 19 • News • 1387 Views • 1 Comment on Mongolia: Ringing the changes

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

Underlining the rapid evolution under way in Mongolia’s telecommunications sector, the state-run, land-line telecoms provider is cutting back while the main mobile players are introducing new features and announcing major international partnerships.

In January, Mongolia Telecom Company (MTC) announced it would need to lay off 200 workers due to “an increase in cell-phone usage”. It also said that the country’s landline users – concentrated in the country’s capital, Ulaanbaatar – would face increased charges of MNT20 ($.02) rather than MNT15 ($.01) per minute.

The moves reflect the increase in the country’s mobile penetration rate to 100% in 2011 from just 30% in 2006. In the same period, mobile subscribers have risen from 721,000 to 2.75m and landline subscribers have fallen from 195,000 to 135,000. In 2010, the mobile segment brought in some 73% of the total income of the information and communications technology (ICT) sector, with MNT471bn ($354.67m) in revenues.

To highlight the impact of the recent expansion in the cell phone industry, MobiCom – Mongolia’s top mobile provider, with an estimated 1m subscribers – signed a long-term cooperation agreement with major Russian provider Rostelekom in December 2011.

Under the deal, MobiCom and Rostelekom will deploy a new cross-border optical link with a total capacity of 4×10 Gbps. Construction is expected to be completed by August 2012. The new link will enable interconnection between Mongolia and Russia, while also connecting Mongolia to Europe.

“The MobiCom corporation is positioning to integrate its operation with the global broadband internet access based in Europe in order to build an international call network system for the current and future needs of Mongolian customers. Another advantage regarding the cooperation deal with Rostelekom is new network capabilities,” D. Bolor, the former general director of MobiCom, told local media.

In another sign of the mobile-based telecoms sector’s growing maturity, MobiCom’s main rival Unitel, which has an estimated 400,000 subscribers, announced in late 2011 that it was launching its “GreenBerry” mobile mail service under a cooperation deal with US-based firm SEVEN Networks. The service will implement cloud computing technology, which provides software, data access and storage resources from remote servers.

To remain competitive, the country’s third main provider, Skytel, which currently has around 230,000 subscribers, held an Android operating system application development competition in November 2011. Several applications proved successful, underlining the potential for the smartphone segment. Approximately 25% of MobiCom’s subscribers are already using smart phones and tablets that utilise the iOS, Android and Windows operating systems, according to the firm.

“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,” said Bolor. “To support growth in 3G services, we have started importing new handsets, particularly smartphones that use the latest Android operating system.”

Officials from MTC say the state-run firm, which was partially privatised in 2007 with 40% sold to South Korea’s Korea Telecom, needs such innovative services to keep itself viable on the dynamic and competitive playing field, adding that it will need further government assistance.

According to O. Batchuluun, the president and CEO of MTC, “The government pledged to issue and grant us a 3G mobile licence, but unfortunately this has not yet been implemented. We and our partners are looking forward to finally receiving this licence because it will enable us to compete in the mobile sector and will serve as a boost towards [full] privatisation.”

Batchuluun added that while MTC’s revenues have dropped from 90% of the market to 8-9% in the past decade, it still employs more than five times the number of people than all the mobile operators combined.

In 2008, the Communications Regulatory Commission issued 3G mobile licences to the country’s four mobile operators, Mobicom, Skytel, Unitel and G-Mobile. Provision of 3G services began in 2009, and by late 2010 had been extended beyond Ulaanbaatar to Darkhan and Erdenet. Mongolia has around 17,900 km of fibre-optic cable, most of which is owned by the Information Communication Network Company, a state-owned enterprise.

However, in the world’s most sparsely populated country, coverage is inevitably an issue. With 51% of mobile phone users living and working in rural areas, it is expected that nomadic and semi-nomadic people will increasingly use either solar-powered solutions or 3G networks and newer technologies for communications and internet access.

As Mongolia’s telecoms market matures rapidly, care will need to be taken to ensure the long-awaited full privatisation of MTC goes smoothly. If it does, foreign investors will be more encouraged to participate in the sector’s growth.

Related Posts

One Response to Mongolia: Ringing the changes

  1. […] Reposted from The Oxford Business Group […]

Leave a Reply

Your email address will not be published. Required fields are marked *

« »