Archive for the ‘Orascom Telecom Holding’ Category

Foreigners now allowed mobile phones in the DPRK

Tuesday, January 22nd, 2013

UPDATE 1 (2013-1-28): The Koryo Tours Facebook Page has an image of the KoryoLink poster at Sunan Airport:

Koryo-link-for-foreigners

ORIGINAL POST (2013-1-22): According to NK News:

According to Richie Fenner, a tour manager at China based Young Pioneer Tours who reported the news today, explained that GPS enabled devices are allowed in the country. He told us:

“When we were coming in on the train, they asked us to show us our phones. The customs official asked if the first one he looked at had GPS, which it didn’t, so he handed it back. But then with the iPhones and other modern phones when we told them they had GPS, he just handed them back and gestured that we just put them in our bag.”

Thinking that the phones might just be sealed upon the group’s arrival to Pyongyang, Fenner explained that to his surprise the local guides explained a new policy meant that foreigners can now keep their cell phones in their possession. But that didn’t mean they could be used. Fenner explained, “Wthout a North Korean sim card, the phones are useless. I asked if we could get North Korean SIM cards and our guide said that it might be possible in the future”.

American tourist Sato Shi who joined the tour group by plane (U.S. citizens may not take the train) confirmed that the policy has been applied to the airport, too. “When we went to the customs they were checking our bags, saw my cellphone and then just gave it back to me and said “Hey, just keep it with you”.

Smartphones such as the Apple iPhone and Samsung Galaxy are a rare commodity in North Korea. Fenner explained that his North Korean colleagues were very interested in trying them and playing games throughout the tour. “It’s all very new for them, I don’t think they’ve seen iPhones and Smartphones before”.

Given the lack of SIM cards and network access, the Young Pioneer tour group explained they could only really use their phones to take photos, play games, and use as an alarm. Young Pioneers today explained on their website that the news shows North Korea’s intent to “make tourism easier and a larger part of the economy”.

Xinhua reports some additional details:

“Just fill a registration form at the Customs with your phone’ s IMEI number, you can bring your own phones to DPRK,” said a unnamed Egyptian technician.

“If you want to make international calls, the WCDMA 3G mobile phone owners can purchase our Koryolink SIM card, which costs 50 euro,” the technician said.

For decades before, foreigners visiting the DPRK must leave their cellphones at the Customs and can pick them up on departure.

“We have tried hard to negotiate with the Korean security side, and got the approval recently,” said the Egyptian, noting that “it has nothing to do with the Google trip.”

In fact, foreigners still can not really use the Koryolink 3G network, with no internet access allowed yet. The Koryolink staff said that the mobile internet service for foreigners will be opened soon. “It is not a technical problem, we just wait for the DPRK authority’ s approval.”

There are 1.8 million Koreans using 3G cellphones across the country since 2008, which supports MMS and video call. But their mobile phones can neither make international calls nor connect to the Internet. Furthermore, Koreans and Foreigners can not make calls between each other due to their SIM cards set by different segments.

Kyodo offers video of people purchasing the KoryoLink SIM cards:

NK News reports the new price structure:

1. Purchase: These cards will be valid indefinitely and can be used for repeat visits. The cost for these will be 50 euro with a nominal amount of prepaid call money included.

2. Two Week SIM Card “rental”: Costing 50 euros, these cards can be used for two weeks before becoming invalid. They include 30 euro of prepaid service.

3. One month rentals: These cost 75 euro and include 55 euro of prepaid service.

Call rates:

– China and South East Asia- 1.43 Euro a minute

– Russia- 0.68 Euro a minute

– France and Switzerland- 0.38 Euro a minute

– UK and Germany- 1.58 Euro a minute

Other rates including the U.S have yet to be confirmed

UPDATE: A friend sent in a picture of the rates (2014). the rates do not appear to have changed:

Koryolink-intl-rates-2014

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KoryoLink update

Sunday, November 18th, 2012

Although KoryoLink’s corporate performance no longer appears in Orascom shareholder reports, Naguib Sawiris has given an interview in Forbes in which he offers some business details:

Sawiris has a 75% stake in Koryolink via his Orascom Telecom Media & Technology (OTMT) unit, with the remainder held by a company under the Ministry of Post & Telecommunications. He says revenues in 2012 should reach around €186 million ($145 million), with an average revenue per user of €8.6. The network only permits domestic calls and locally hosted data services. A separate cell network is available for foreigners in North Korea.

FORBES: How many subscribers does Koryolink have? How extensive is your coverage in DPRK?

NAGUIB SAWIRIS: Koryolink currently has more than 1.5 million subscribers. Coverage includes the capital Pyongyang in addition to 15 main cities, more than 100 small cities, and some highways and railways. Territory coverage is around 14%, and more than 90% population coverage. The subscriber base has been increasing at a very healthy rate from 950,000 at [year-end] 2011 to an estimated 1.7 million at [year-end] 2012.

FORBES: Under your joint venture with the Ministry of Telecommunications, when will Koryolink lose its exclusivity? What will happen after this period ends?

NS: Exclusivity was granted for a period of 4 years from launch. After the expiry of exclusivity in Dec. 2012, Koryolink received written confirmation that for an additional period of 3 years (until 2015) no foreign investors will be allowed in the mobile business. However, we are continuing to expand our network and services to further solidify our position [in order] to be ready for any possible competition.

FORBES: What is your role in the construction of the Ryugyong Hotel? What other real estate interests do you have in DPRK?

NS: This is a special investment that we are maintaining through our banking subsidiary in the DPRK, where Orascom has the right to operate this facility. The construction, repair and facade installations have all been completed last summer. We are planning to relocate Koryolink headquarters into the tower very soon to bring life to the building. There are no other real-estate investments in the DPRK, however, Orabank, our banking arm in DPRK, is actively working towards developing mobile-related businesses and projects.

Chris Green offers some great information (about which I have long wondered)  on the process required to acquire a cell phone:

First, the individual wishing to obtain a cell phone must go to his or her local Communications Technology Management Office (통신통화관리국 or CTMO; in provincial capitals only) or a subordinate arm of the same (in smaller cities) to obtain a three page application form. This form, once filled in, must be stamped by the Ministry of Public Security officer assigned to the individual’s workplace or, for those without official workplaces, attached to his or her local people’s unit.

Having paid off the public security official in cigarettes or cash (more often the former, according to this author’s sources, because it arouses less friction) he or she must submit the stamped form to the CTMO or equivalent, whereupon it is sent, with all the speed one would expect of the North Korean transportation network, to the Ministry of Communications in Pyongyang. At this point there is little else to be done but go away and pitch the proverbial tent, because at best it takes a month for the staff in the revolutionary capital to process the application.

Assuming, and it should not be assumed, that those checks done in Pyongyang don’t yield any incriminating evidence of wrongdoing (don’t forget, the North Korean legal system makes every adult a criminal in one way or another, something which can come back and haunt any individual whenever “rents” are desired), the individual will eventually be ordered back to his local communications office, whereupon he will be handed a payment form. He or she must then take this form to a bank, and engage with the separate, and no less inefficient, bureaucracy therein in order to pay the majority (though not all) of the cost of a phone and Koryolink network activation fee.[1]

The payment form, duly stamped by a functionary at the bank, must then be taken back to the CTMO or equivalent, whereupon it can be exchanged for half the stamped application form originally sought from the ministry in Pyongyang. Here, finally, the individual reaches a watershed moment: this form can actually be exchanged for a cellular telephone!

However, the pain is actually quite a long way short of being over. In a moment of uncharacteristic efficiency, the actual cell phone shop is often directly outside the communications office, but in a moment of karma-balancing inefficiency, it doesn’t open much, carries a limited amount of product and is pitifully understaffed. As a result, queues are long, as are waits. Assuming an individual lives long enough to reach the front of such a queue, he or she is finally offered the opportunity to hand over another $70-$100 and depart the scene with a brand new phone.

Writing in the Daily NK, Kim Kwang-jin explains how people are getting around this burdensome regulatory process:

Therefore, the source said, “Middlemen in larger cities are getting multiple phones activated in random people’s names and then taking them to smaller cities to sell. Alternatively, households that don’t have any problem getting that kind of approval are mobilizing the names of their entire families to get phones, which they are then selling on to the middlemen.”

“The end users are buying these cell phones for $300 to $500 from the middlemen or from private sellers. This saves them having to go to the trouble of applying to Koryolink,” he added.

A basic Koryolink phone can be purchased officially for roughly $270- $300, excluding bribes and extraneous costs. The price of one of these semi-legal phones depends on duration of use and model. The best product, the T1, a clamshell design, is the latest and costs more than $500. The next mid-range model is the T3, another clamshell; there is also a similarly priced phone with a slide design. The budget offerings are the T95 and T107. Differences in price are mostly attributable to differences in sound quality rather than the designs, sources assert.

In addition, there are also phones available for use within individual provinces. These products, which are similar to the so-called “city phones” that were briefly permitted in the late 90s but soon got withdrawn, cost just $70 at the time of writing.

Geoffrey See of Choson Exchange also offers some insight on Ora Bank’s mobile-related business projects:

However, it appears that Naguib, Chairman of Orascom, might have other ideas. In his words, “Orabank, our banking arm in DPRK, is actively working towards developing mobile-related businesses and projects.” The 3G network provides a platform for a range of other services that emerging market economies would need including remittances and payments through mobile banking and mobile payments. Given the primitive development of the services sector, mobile provides an opportunity for Orascom to upend the services industry in North Korea.

This was something I was originally looking at in North Korea. Payments are currently messy in the country. On a previous trip, I remembered an account of a North Korean trying to pay the handphone bill. Apparently the payment went to the wrong account, and the North Koreans spent the morning calling and shouting at some people to make the mistaken beneficiary return the money so that the payment could go to the right account. For what mobile banking and payments could potentially look like in North Korea, check out M-pesa.

Read the full story here:
Pyongyang Calling For Egyptian Telecoms Tycoon Naguib Sawiris
Forbes
Simon Montlake
2012-11-18

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Koryo Tours visits the Ryugyong Hotel

Wednesday, September 26th, 2012

The most recent Koryo Tours newsletter contains the first photos of the Ryugyong Hotel (inside and from the top)!

See the newsletter here. It contains some useful information on the project:

On Sept 23rd Koryo Tours’ staff were taken to the top of the enigmatic and oddly iconic 105 storey Ryugyong Hotel in Pyongyang – we were the first foreigners allowed to take pictures there and are able to print a handful of shots of the ground floor and the open air viewing platform more than 300 metres up.

The view was incredible and breathtaking indeed! The inside of the building still has substantial work to be done but the structure of the lobby and dining area and conference room (all on the ground floor) were visible, sources at the site suggest 2 or 3 more years until projected completion at which time hotel rooms, office space, and long term rentals will be available.

Amazing photos!

Koryo Tours also just finished a film in the DPRK: Comrade Kim Goes Flying.

You too can join the Koryo Tours email list by sending them your contact info: info@koryogroup.com

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KoryoLink update (sort of)

Friday, August 17th, 2012

It is getting harder to know specific information about the DPRK’s mobile phone network…such as how many subscribers have signed up or how revenues/profits are doing.

In December 2011 Orascom Telecom finalized a demerger and the KoryoLink portfolio (the DPRK’s 3G mobile phone network) was transferred to a new holding company, Orascom Telecom Media and Technology Holding S.A.E. (OTMT).

According to the Orascom Q1 2012 shareholder report (p15):

Under the terms of the VimpelCom transaction, VimpelCom, Weather II and OTH agreed on a demerger plan (the Demerger”) pursuant to which the Company‟s investments in certain telecom, media and technology assets (the “SpinOff Assets”), which were not intended to form part of the VimpelCom business going forward, would be transferred to a new company, Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”). The Demerger was performed in accordance with the guidelines of the Egyptian Financial Supervisory Authority and in particular decree no. 124 of 2010 and was completed in December 2011. The split of OTH shares by the way of the Demerger resulted in OTH shareholders holding the same percentage interest in OTMT as they held in the Company. The Demerger plan was initially approved in a shareholders meeting dated 14 April 2011 and subsequently on 23 October 2011. Approval from the Egyptian Financial Supervisory Authority was received in December 2011.

As a result of the Demerger, during November and December 2011, ownership of the following Spin-Off Assets was  transferred from the Company to OTMT:

[…]

75% ownership in CHEO Technology Joint Venture Company, together with all other assets and businesses located in
North Korea;

95% ownership in Orabank NK;

[…]

Other than the reference above, the Q1 report does not mention KoryoLink or even the DPRK. As you would expect, KoryoLink is not mentioned in Orascom’s Q2 2012 Shareholder Report either.

OTMT (the new holding company) has a web page, however it contains remarkably little information. Here is what it has to say about KoryoLink:

Koryolink

A joint venture between OTH [Orascom Telecom Holdings] and the state-owned KPTC [Korea Post and Telecommunications Company] and included as part of the assets held by OTMT following the demerger. OTMT holds, a 75% stake in [Cheo Technology Joint Venture Company] with KPTC. The company is North Korea’s only 3G Mobile operator. By June 2011, Koryolink’s network covered more than 75% of North Korea’s population (estimated at 24.5 million).

Being the first company of its kind and scale in North Korea, koryolink established many precedents; a first of its kind call center to provide customer service; a launch announcement in major newspapers and on radio despite almost non-existent marketing and advertising industries; and the implementation of a koryolink advertising billboard, the first of its kind in Pyongyang.

KPTC is the “Korea Post and Telecommunications Company” which is nominally controlled by the DPRK’s Ministry of Post and Telecommunications.

This OTMT page shows five financial reports for the year, however, only one of them is in English (an audit by Deloitte in June 2012). All the other reports are in Arabic. The audit report includes aggregate financial information from “CHEO Technology (KoryoLink)”; however, it does not contain any detailed company information. Hopefully this will change in the future.

The OTMT web page does not mention OraBank at all.  According to this organization chart, however, it appears to be held by a separate holding company under the OTMT umbrella, the Oracap Holding Co./Oracap Far East Ltd.  I have not been able to find out much more than that.

Additional information welcome.

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Lankov on the North Korean economy

Saturday, July 7th, 2012

Andrei Lankov highlights in a recent Asia Times article some observations (qualitative data) that indicates the DPRK has seen significant growth in recent years. He is careful to qualify his observations with caveats that the level of growth in the country as a whole (as opposed to Pyongyang) remain more difficult to determine.

More expensive shops stocking luxury goods are becoming more numerous as well. Gone are the days when a bottle of cheap Chinese shampoo was seen as a great luxury; one can easily now buy Chanel in a Pyongyang boutique; and, of course, department stores offer a discount to those who spend more than one million won on a shopping spree. One million won is roughly equivalent to US$250 – not a fortune by the Western standards but still a significant amount of money in a country where the average monthly income is close $25.

The abundance of mobile phones is much talked about. Indeed, North Korea’s mobile network, launched as recently as late 2008, has more than one million subscribers. It is often overlooked that the old good landline phones also proliferated in the recent decade. A phone at home ceased to be seen as a sign of luxury and privilege, as was the case for decades. Rather, it has become the norm – at least, in Pyongyang and other large cities.

The capital remains badly lit in night, but compared with the norm of some five or 10 years ago, the situation has improved much. The electricity supply has become far more reliable, and in late hours most of the houses have lights switched on.

Of course, this affluence is relative and should not be overestimated: many people in Pyongyang still see a slice pork or meat soup as a rare delicacy. The new posh restaurants and expensive shops are frequented by the emerging moneyed elite, which includes both officials and black/grey market operators (in some cases one would have great difficulty to distinguish between these two groups). In a sense, Pyongyang’s prosperity also reflects the steadily growing divide between the rich and poor that has become a typical feature of North Korea of the past two decades.

Nonetheless, those foreign observers who have spent decades in and out of Pyongyang are almost unanimous in their appraisal of the current situation: Pyongyang residents have never had it so good. It seems that life in Pyongyang has not merely returned to pre-crisis 1980s standards but has surpassed it.

And how can we explain these developments? Lankov offers three theories:

The first seems to be the growth of private economic activity. Estimates vary, but most experts agree that the average North Korean family gets well over half its income from a variety of private economic activities.


The second reason is the gradual adjustment of what is left of the state-controlled economy. Nowadays, North Korean industrial managers do not sit by helplessly when they cannot get spare parts or fuel from the state – as was often the case in the 1990s. Instead, they try to find what they need, often getting the necessary supplies from the private market.


The third reason is, of course, Chinese economic assistance and investment.

Read the full story here:
North Korea’s pools of prosperity
Asia Times
Andrei Lankov
2012-7-7

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DPRK cell phone imports rise in 2010

Wednesday, January 11th, 2012

According to the Korea Herald:

North Korea imported six times more mobile phones in 2010 than in 2009, a media report said Wednesday, indicating growing mobile penetration in the reclusive country.

North Korea bought 430,000 mobile phones from China in 2010, up from 68,000 phones the previous year, according to Washington-based Radio Free Asia (RFA). In 2010, the country spent US$35 million on importing mobile phones, seven times more than the $5 million outlay in 2009, the report said, citing recent data from the United Nations.

The number of mobile phone users in the communist country has grown rapidly in recent years, from about 90,000 at the end of 2009 to 430,000 a year later and more than 800,000 in the third quarter of last year, the report added, referring to data from Egypt’s Orascom Telecom.

Read the full story here:
N. Korean imports of mobile phones jumped 6 times from 2009-2010: RFA
Korea Herald
2012-1-11

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Koryolink offers mobile access to “Rodong Sinmun”

Monday, November 28th, 2011

According to the Daily NK:

North Korean cell phone users are now reportedly able to read the news and views of the Chosun Workers’ Party on the move.

Chosun Shinbo, a publication run from Japan by the General Association of North Korean Residents in Japan (Chongryun), announced the news on Saturday, saying, “Koryolink, Chosun’s 3G cell phone service provider, has begun a service allowing the reading of Rodong Shinmun, one of the major newspapers, on cell phones.”

Chosun Shinbo also announced its own plans to set up a mobile service in the near future.

The Rodong Shinmun cell phone application is just the latest in a long line of interesting developments in the Koryolink story. Last January the company introduced a multimedia messaging service (MMS). Later in the year it also introduced a video call service, which received a positive reaction from younger users.

As expected, Chosun Shinbo claimed that many North Korean citizens are enjoying the new service on the way to work. One Pyongyang man was quoted by the paper as saying, “It’s very convenient being able to read the news every morning on my mobile phone. You can also go back and read all the news from a few months ago, too, which is great.”

Another resident of the North Korean capital reportedly commented that reading the news on their phone is the first and most important thing they do in the morning.

Interestingly, Chosun Central TV ran a program on November 7th including content teaching mobile phone users of the social etiquette they needed to follow, telling them to avoid bothering people nearby by lowering the ringtone or setting the device to vibrate mode, and to avoid speaking too loudly.

The Wall Street Journal also covered this development.

Read the full story here:
Rodong Shinmun on the Move
Daily NK
Cho Jong-ik
2011-11-28

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Orascom releases Q3 2011 sharholder report

Friday, November 18th, 2011

You can read the full report here (PDF).

Since I am behind on numerous commitments at the moment, I am not going to write much about this.  However, the report’s contents have been widely covered:

1. North Korea Tech (Martyn Williams) and here.

2. Reuters

 

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Orascom plans to offer mobile Internet service in DPRK

Wednesday, October 19th, 2011

Via Geoffrey See at Choson Exchange:

On my last trip to Pyongyang, I had the opportunity to catch up with some Egyptian expatriates from Orascom Telecom Holding over popcorn and whiskey. They were also kind enough to bring our team clubbing into the wee hours of morning.

Orascom Holdings is three companies each headed by a different brother of the Orascom family. Orascom Telecoms is headed by Naguib Sawiris, while the resorts arm Orascom Development is run by Samir Sawiris, and the construction arm Orascom Construction by another brother. All three brothers have stakes in different assets in North Korea, with the infamous Ryuggyong Hotel owned by Samih Sawiris. As of May 2010, when I had met Samih Sawiris in Switzerland, he had yet to visit Pyongyang. Recent pictures from Pyongyang indicate that this has changed.

The most exciting development to us was Orascom’s 3G Internet service which was still under the testing phase. The plan is to roll out this service in the near future, although the service will only be available to resident foreigners in the initial phase. Approval for this service to be provided on a larger-scale to North Korean citizens, in any censored form, has yet to be given although the infrastructure to do so is in place. For foreign residents in Pyongyang, the service could offer cost-savings of up to 60-80 percent over current satellite internet offerings. There is no information on what security trade-off such a service might entail.

We also discussed text advertising and the current mobile service business. While text advertising is possible, there has yet to be approval for the company to run such a service. Currently, handsets cost Euro 50 each and there is a monthly subscription fee of 900 Won (we are not sure how this cost scales with usage). For reference, the unofficial exchange rate has fluctuated around 2500 to 3500 Won to 1 Euro this year.

Click here to see previous posts about Orascom and cell phones in the DPRK.

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Orascom publishes 2nd quarter 2011 report

Sunday, August 14th, 2011

Read the full report here (PDF).

According to the Daily NK:

North Korea’s rapidly burgeoning cell phone user numbers have surpassed 660,000, according to Egyptian operator Orascom Telecom’s half-year earnings report for January-June, 2011.

As of March, the last time Orascom released a similar report, the number of subscribers stood at 530,000, meaning that the company has officially added 130,000 additional users in just three months, an extraordinary performance given prevailing economic conditions, the price of phones and official controls.

The figures look even better over a 12 month period; at the same point last year, there were just 184,531 subscribers. Although things are likely to slow as time passes, this still puts the era of a million subscribers, which would represent around 4% of the population, within sight.

The causes of the rapid increase in user take-up include a rapidly expanding network, that the authorities encourage Party cadres to make use of the phones, and that they are of increasing importance to those doing business in the market. In addition, the company has been working to target young people with a number of additional services including MMS and Video Call.

According to the earnings figures, as a result of these efforts Orascom made $61 million from its North Korea venture in the first half of the year, an increase of 160% on last year.

Commenting on the success, company CEO Ahmed Abou Doma noted, “Our operation in North Korea continues to display tremendous growth with a subscriber base that has more than tripled compared to the first half of 2010, the growth of which impacted revenues which increased 164% year-on-year.”

However, there is another story behind the official earnings that could serve to give investors pause. First, the earnings are based on the official USD exchange rate, 135 North Korean won, instead of the market exchange rate, which stood at far removed at 2540 North Korean won in Pyongyang on August 2nd.

Second, the report notes the introduction of what it calls the ‘Euro Pack’, a bundle which offers new subscribers “voice minutes and VAS in return of fees that could only be paid in Euros”, a concept which Orascom says is proving popular, but which certainly reflects the uncertainty inherent in dealing with the North Korean currency.

Martyn Williams has more here.

At least one report claims that the older mobile phone network (pre-Orascom) has finally been closed down.  Now Orascom is the sole mobile phone provider.

Read the full story here:
Orascom User Numbers Keep Rising
Daily NK
Chris Green
2011-8-11

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