Mobile Phone Service Being Established in NK

8 05 2008

Goodfriends (“Goodfriends”, 2008/06/23) reported that the DPRK has prohibited making long distance calls, except in Pyongyang , at home. This national level regulation is attributed to information security. The DPRK believes long-distance calls made it possible to reveal immediately its starvation and food shortage to international society.

19 May 2008, Cellular News reported that Orascom Telecom has announced the successful completion of the first call on the CHEO network in North Korea. Orascom says that the success of this trial network using WCDMA technology represents the first step in providing coverage throughout the country. CHEO, a subsidiary of Orascom Telecom, is looking to launch its full commercial mobile services within the second half of 2008.

Earlier this year, the company said that it expects to sign up an initial 100,000 subscribers when it launches its new GSM network in North Korea. Speaking on a conference call, CEO Naguib Sawiris said that the service would start in three main cities in the country and the company will then pause to assess the impact. The company aims to spend an initial US$200 million on the network over the next twelve months, with US$100 per year for the two years after that.

Orascom’s license was granted to the company’s subsidiary CHEO Technology JV Company (“CHEO”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years.

Regulators in the country met with their counterparts in China in March to discuss controlling mobile radio frequencies along the border between the two countries. Plans by South Korean companies to build a CDMA network in the capital city in 2002 were cancelled following diplomatic pressure by the USA.

SEOUL (Yonhap) — The groundwork for establishment of a mobile phone service is being laid in North Korea, said an official of an Egyptian company preparing to operate the service in the isolated communist country, according to a Washington-based radio station in early May.

Radio Free Asia (RFA) on May 1 quoted Stefano Songini, investor relations director of Orascom Telecom Holding S.A.E., as saying in an e-mail interview, “Our operation people are currently on the ground working on the deployment of the business.” Orascom is the fourth-largest Arab mobile phone operator based in Cairo, Egypt. Songini, however, said, “We have not officially communicated a launch date for our operations.” Orascom earlier said the service will likely begin in May.

The RFA said the groundwork could mean setting up telecom towers or checking connections among mobile base stations, citing communication analysts in the United States.

Orascom said in a Jan. 30 press release that its subsidiary Cheo Technology was granted “the first commercial license to provide a mobile telephony service” in North Korea. Cheo secured a 25-year license and will invest up to US$400 million in network infrastructure over the first three years, along with service for the capital city Pyongyang and most of the major cities during the first 12 months in operation.

North Korean mobile phones will use the Wideband Code Division Multiple Access system, which can provide coverage of not only voice but also data like music and moving pictures, the RFA added.

Another Yonhap report claims that “Pyongyang tightly controls all means of transmitting information, including cellular phones, and in October executed the head of a factory in front of 150,000 people because he had made international phone calls…”

Currently, foreign diplomats accredited in the DPRK and authorised North Koreans are using the “Sun-Net”, a GSM mobile system with several hundred subscribers and SIM cards on sale for 450 Euros per number.

LP

The Next Investing Frontier: North Korea

Posted by Dennis K. Berman, The Wall Street Journal, December 11, 2007

Lafarge SA’s $13 billion purchase of Egyptian cement company Orascom was billed as a story about a building boom in the Middle East. But the purchase by the Parisian company also involved a little noticed, but potentially fast-growing market: North Korea.

In July Orascom paid about $115 million to buy half of a North Korean concrete maker called Sangwon Cement, which is itself part of Pyongyang Myongdang Trading Corp., owned by the (what else?) government of the “Stalinist hermit state.”

With tensions over North Korea’s nuclear program abating, foreign money is starting to move, carefully, into the country. By any other measure the amounts are trivial — in the tens of millions of dollars — but there certainly is plenty of business and M&A opportunity for brave business people. A spokeswoman for Lafarge said North Korea is a very small piece of Orascom’s total business and didn’t consider it a significant issue.

Lafarge has been pushing international expansion for decades, having established operations in the U.S., China, Ecuador, India and beyond. Life in North Korea may be a touch different, but the opportunity is, perhaps, like none other. Consider the cost of labor there, with monthly wages at around $57.50, compared to about $100 for China, according to one recent Newsweek International story. And there has been such little infrastructure built there that the North is practically begging the South for more foreign investment.

Deal Journal’s prediction: That sometime in the next 10 years, General Electric, Siemens and Hyundai will all be touting the “North Korean opportunity.” For the record, Lafarge was there first.








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