Lao Telecom Firms’ Price-Fixing To Secure Profits In 2012

Lao Telecom operators are forecasting higher earnings this year after agreeing to set the minimum mobile phone call rate at 800 kip per minute.

LTC, ETL, Star Telecom and VimpelCom Lao reached the agreement at the end of last year, saying call rates would not fall below the minimum except on special occasions. This has enabled them to revise their revenue growth forecasts for 2012.

Cell phone users will have to pay at least 800 kip per minutes as telecom firms eye greater revenue this year.

The agreement to set a minimum call rate prevents operators from engaging in price wars, which could ultimately lead to the collapse of the industry in Laos as prices spiral downwards.

According to a report last month from Star Telecom, which operates the Unitel network, it is targeting revenue of about 1.2 trillion ki p (US$150 million), or 36 percent growth, this year. The company has introduced a number of services that inform customers about the economy, and social and cultural issues.

This year Star Telecom’s main focus will be on installing 500 3G base stations nationwide. The Lao-Viet joint venture expects to recruit 400,000 additional customers this year.

Lao Telecom and ETL expect to announce their 2011 earnings and business plan for 2012 this month. Officials from the two telcos forecast revenue growth of more than 10 percent this year now that competition in the industry has eased.

Lao Telecom Firms' Price-Fixing To Secure Profits In 2012Lao Telecom officials said the Lao-Thai joint venture’s 2012 revenue target is 777 billion kip (US$97 million), an increase of about 13 percent compared to 2011. Last year the company earned 686 billion kip (US$85 million), down from 728 billion kip (US$91 million) in 2010.

Last year’s fall in revenue was due to strong business competition as telecom operators repeatedly lowered their service charges through various promotions, company officials said.

ETL officials said the company expected an earnings increase of more than 10 percent in 2012 following the agreement on the minimum cell phone call rate. The company earned about 448 billion kip (US$56 million) in 2011.

Officials also said their earnings forecast was higher for 2012 after the rollout of ETL’s 3G network at the end of last year, as the upgrade will enable the provision of more services and attract more customers.

ETL had planned to list on the Lao stock market at the end of 2011 but this was postponed due to unfavourable external economic conditions.

The Lao Securities Exchange Chairman and CEO said ETL would be listed on the market some time this year, but could not say when.

VimpelCom Lao, which operates Beeline, was unavailable to provide a growth forecast for 2012, but is actively launching a number of promotions to attract customers.

Source: Vientiane Times

 

Telecom Firms

Monthly Newsletter