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Rush to 5G Likely to Boost Digital Content Subscriptions in Cambodia

April 8, 2020

Filippo Giachi

VP – Asia, Middle East & Africa

Cambodia may be one of the least developed countries in South East Asia in terms of its current mobile infrastructure and smartphone penetration, but it could soon become one of the most advanced if ambitious operator plans to launch fifth-generation (5G) networks this year were to be realised.

Total mobile phone connections in the country stood at 21.2m in January 2020, up 3.7% since January 2019. Just over half the population own smartphones according to a survey conducted by German market researcher Growth From Knowledge (GFK) which calculated that device sales by value in the Kingdom grew 33% in 2018 as average selling prices jumped 17%.

Mobile bandwidth is limited for now, with data speeds averaging around 15.2Mbps according to Ookla tests, up 6.1% in 2019 compared to 2018. Figures released by the Cambodian government’s Ministry of Posts and Telecommunications calculate that only 43% of mobile phone accounts had 4G connections in 2018, with mobile network operator (MNO) Cellcard having only rolled out its 4G LTE infrastructure in 2017. To plug the gaps in its coverage, rival Smart Axiata (Smart) continues to invest around US$70-US$80m a year in improving 4G infrastructure.

In contrast, the average download speed of Cambodia’s fixed broadband infrastructure has increased by 32% to 20.9Mbps in 2019, leading to a 3% rise in the volume of web traffic originating from laptop and desktop computers which now represent almost 70% of the total (and mobile phones 29%) according to figures compiled by Statcounter.

Leapfrogging into 5G

Yet despite its small size and immature 4G infrastructure (or perhaps because of it), Cambodia is on track to become one of the first countries in South East Asia to roll out faster 5G mobile networks which will eventually deliver mobile speeds of up to 1Gbps. However, coverage and availability are likely to be limited to major cities such as Phnom Penn, Siem Reap and Sihanoukville initially.

Some of that impetus is being driven by a long-standing partnership between the Cambodian government and Chinese equipment manufacturer Huawei. The latest iteration involves the Cambodian Ministry of Posts and Telecommunications fitting out its data centre and offices with the latest ICT Huawei equipment and funding a 5G technology training programme.

Smart has completed 5G trials using Huawei equipment, for example, and is now awaiting government approval to roll out full commercial services according to reports. Rivals Metfone (a subsidiary of Vietnamese telco Viettel) and Cellcard are currently testing their networks using Huawei and ZTE hardware. Kingtel (formerly Emaxx Telecom) has ambitious plans to site 3,000 Huawei 5G base stations in Cambodia over the next two to three years, with 5G connectivity expected to be commercially available and accessible for more than 90% of the country’s population by 2021.

Video Streaming on the Rise

Cambodian MNOs see 5G as a way to deliver the mobile bandwidth, reach and low latency they need to give more consumers access to high definition video content, online/cloud gaming and eSports tournament participation. A handful of major international OTT streaming video streaming companies already rub shoulders with a small number of local companies. iFlix, for example, launched in Cambodia in 2017 having signed an exclusive three-year distribution partnership with Smart. Its management promised iFlix would work closely with local television producers to promote original Khmer content, with plans to offer Khmer subtitles on its entire catalogue by 2018 while dubbing more popular films and TV shows into the local language. An iFlix subscription is priced at around US$3 a month, while content can also be downloaded for offline viewing – a key advantage in a country with low average mobile connectivity speeds.

Netflix and Amazon Prime Video debuted after implementing their respective global expansion programmes in 2016. The US$8 a month Netflix charges for its basic package looks costly in a country with relatively low disposable incomes. Neither firm has made much effort to incubate local content for the Cambodian audience or made it easy for subscribers to pay using methods other than credit or debit cards (which less than 1% of the population own).

Documentary streaming platform iwonder launched in 2019 as part of its broader SEA expansion initiative (which also includes Vietnam, Thailand, Laos, Myanmar, Indonesia, Malaysia and the Philippines). The service is priced at US$5 a month (US$50 a year) for access to over 1,000 documentaries and current affairs programmes in more than 50 genres, including entertainment, history and politics. It is also available via a partnership with iFlix.

All four international players compete with homegrown SOYO, a subscription-based video-on-demand (VOD) service from Sabay Digital that offers a mixture of free and paid-for content with prices starting at 50 cents a week and rising to US$2 a month. Cambodian TV company SingMeng too provides an OTT TV package that combines live TV, fixed broadband Internet and other SVOD services for around US$17 a month. Video streaming app JaiKonTV adds Khmer dubbing and subtitles to movies sourced from producers in other Asian countries (TVB, Media Corp, GDH, Sanlih, Primework & Kidsmith and iMBC etc) available with subscriptions to Smart mobile and fixed broadband packages starting at US$2 a week.

MNOs Lead the Way in Cambodia’s Nascent Gaming Industry

MNOs also see an opportunity to deliver more gaming content to subscribers via 5G. The country has a thriving electronic sports (ESports) league, driven by the ESports Federation set up and endorsed by the National Olympic Committee of Cambodia in 2014. Smart has funded the mobile gaming subscription platform developed by Cambodian startup GoGames and was scheduled to host the country’s first PUBG mobile tournament this month [March 2020], with participants picked from subscribers to the operators PUBG Mobile Unlimited data package.

Cellcard hosted the Mobile Legends Southeast Asia Cup in Sen Sok City last year and has partnered with Netease Games to bring battle royale game Rules of Survival to the country. Elsewhere gaming studio Sabay Osja publishes desktop and mobile games customised for the Cambodian market while Siem Reap-based DirexPlay has produced a library of mobile titles.

Navigating Cambodia’s Shifting Payment Landscape

While telcos are in a strong position to control and monetise the video and gaming content delivered over their networks, they must first circumnavigate Cambodia’s attachment to cash and the fact that 92% of mobile phone accounts in the country are pre-paid.

Only 18% of the country’s population has an account with a financial institution, less than 1% a credit card and just under 6% a mobile money account according to World Bank financial inclusion data. Few citizens are currently used to digital transactions, with just under 4% of the population making online purchases and paying bills online last year.

While cash remains the predominant form of financial transaction (accounting for an estimated 60% of all payments), a gradual shift to digital payment systems is underway, encouraged and fostered by the Cambodian government, major banks and Fintech startups, many of them hosted in mobile apps.

That evolution is expected to be driven by the younger, more internet-savvy segments of the community. Around 62% of Cambodians are aged between 16 and 64 with GSMA Intelligence estimating that the number of Internet users jumped 15% to 9.7m between 2019 and 2020 to represent 58% of the total 16.6m population.

As the payments market fragments to incorporate many different types and methods of transaction, Cambodia’s telcos, MNOs and content providers must be flexible enough to adapt to customers’ preferences,  and make it easy for them to buy video streaming subscriptions and game downloads from any device.

Direct Carrier Billing an Opportuniy to Tap on Unbanked of Cambodia

Direct carrier billing (DCB) has an important role to play in delivering that convenience and ease of use. SOYO, for example, has provided flexible billing arrangements that allow subscriptions to be paid for through Cellcard, Smart and Metfone mobile phone accounts as well as Sabay Coin, ACLEDA and Pay&Go eWallets, and the Wing! money transfer platform. And the exclusive deal iFlix signed with Smart should also help drive adoption of the Malaysian video streaming platform amongst a subscriber base estimated at 7.5m.

Cambodia’s is at the cusp of change, and a well developed digital ecosystem can undoubtedly augment the development efforts in the country.

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