This is the chapter 11 out of 19 chapters of our Cambodia Investment Guide. Learn the best way to invest in Cambodia. Download the full publication here.
This chapter reviews the telecommunications sector in Cambodia, examining the country’s performance and prospects in this sector while analyzing the current regulatory environment and likely future direction.
The new Law on Telecommunications promulgated on 17 December 2015, is very much a framework law and subject to many new sub-regulations yet to be formulated. Implementation of an industry specific regulatory framework is still a relatively new concept in Cambodia. However, as investor interest in this fast-developing sector continues to grow, the regulatory framework itself has started to progress somewhat. Based on the promulgation of the new Law as above, a number of telecommunications regulations are expected to take eﬀect in the near future with the aim of streamlining the sector and encouraging its further growth.
The development trend in Cambodia’s telecommunications sector remains positive as the industry gains deeper domestic market penetration. One of the key factors facilitating this growth has been a combination of heavy foreign and local investment encouraged by a lack of restrictions or limitations on foreign ownership in this sector.
Governmental eﬀorts to liberalize the market by allowing private investment and promoting competition have also contributed to the success of the telecommunications sector, especially with regard to mobile services. With lower-than-average mobile phone tariﬀs compared to other Southeast Asian countries, mobile services in Cambodia have surpassed the growth of fixed-line systems which remain relatively underdeveloped.
Increasing internet access and greater market penetration of this in Cambodia are also prime factors. Nonetheless, compared to neighboring countries, subscription rates are still very low providing plenty of scope for future investment and development.
On the whole, the outlook for Cambodia’s telecommunications sector looks promising and the sector is primely positioned to enjoy robust growth in the years to come.
The Telecommunication Regulator of Cambodia (“TRC”) was established in 2012. Previously the duties of reviewing laws and regulations and managing the telecommunications market were undertaken by the Ministry of Posts and Telecommunications (“MPTC”).
The TRC is an independent and accountable regulator striving towards a global, competitive, stable and more self-regulating telecommunications industry in order to generate economic growth and address the social needs for the development of Cambodia.
Generally, the TRC is responsible for policymaking. The TRC is vested with regulatory and supervisory authority including the responsibility of issuing and administering licenses and the administration of Cambodia’s radio frequency spectrum.
By way of background, the MPTC simultaneously played the roles of policymaker, regulator and operator of Cambodia’s fixed-line telephone network. Despite the MPTC establishing Telecom Cambodia (“TC”) in January 2006 as a state-owned enterprise, to separate its operational wing, TC remains under the technical administration of the MPTC and the financial administration of the Ministry of Economy and Finance (“MEF”). The absence of a comprehensive telecommunications regulatory framework combined with current industry practice in Cambodia has resulted in the TRC having great discretion over the granting of licenses, determination of terms and conditions attached to these licenses and general policymaking surrounding the telecommunications sector.
The TRC has the following functions and duties;
This law has been promulgated and intended to ensure the use of infrastructure/facilities, networks and the provision of effective, safe and reliable services for the benefit of Cambodian society. The law also seeks to encourage private companies in developing the sector, protect users and promote increased national budget revenues. This law addresses issues such as management competence, use of infrastructure and networks, standards of service, equipment, universal access, a national telecommunications numbering plan, electronic addresses, rules on service pricing, legal and fair competition and the rights of operators and users.
The TRC will have autonomy in administrative and regulatory matters and will be independent of operators and persons related to the telecommunications sector. Only those persons and entities approved by permission letter, certificate or license from the TRC may engage in telecommunications operator services. The MPTC is responsible for networks and infrastructure supporting the sector.
Within one year after entry into force of the new Law on Telecommunications, operators and persons involved in the sector are required to satisfy new conditions set by the TRC to ensure compliance with this law and other relevant regulations in order to apply for authorizations, certificates or licenses.
Despite the developments in the regulatory framework in Cambodia, these are still outpaced by the rapid growth and development of infrastructure in the sector. Consequently, there is usually a disparity between regulations and some of the legal and technical practices in place.
At present, primary regulatory aspects of the telecommunications sector are governed by practices and procedures of the TRC/MPTC which also issue regulations and circulars under old legislation inherited from the United Nations Transitional Authority in Cambodia (“UNTAC”). Some of the recent important regulations issued by the TRC/MPTC include;
Generally speaking, to construct, own, and/or operate a telecommunications network or provide any telecommunications services, a license must be obtained from the TRC/MPTC. Telecommunications licenses follow a fairly standard format with three principal classes;
Currently, a license is required from the TRC/MPTC for the provision of the following services;
The TRC/MPTC currently enjoys vast discretionary powers over the granting of licenses and setting the terms and conditions thereof which vary on a case-by-case basis. These terms are usually confidential between the TRC/MPTC and each licensee constituting a private agreement between the two parties.
There are however, some customary licensing terms and steps required when applying for such licenses. Customary steps for applying for a license may include;
Customary terms may include;
Telecommunications operators are normally required to share both their revenues and dividends with the MPTC. The percentage of revenue and dividends to be shared increases incrementally and reaches around 10 percent over a 10-year period. Older licensees sometimes have to pay a higher revenue share. Licensees that have some fixed-network capability or carry international traﬃc may also be required to share up to 50 percent of their gross revenue with the MPTC or TRC. The exact percentages of revenue and dividends to be shared by operators with the TRC/MPTC vary on a case-by-case basis and are determined by the terms and conditions negotiated between the TRC/MPTC and the operator.
Licenses do not normally contain any roll-out requirements other than to launch public services within one year of awarding the license.
The telecommunications sector in Cambodia is price regulated, and operators are not free to fix prices based on market dynamics. The TRC/MPTC issues detailed tariﬀ schedules for the inter-connection of telecommunications equipment and the provision of telecommunications services.
Normally, the TRC/MPTC controls the radio spectrum and is responsible for awarding frequencies to telecommunications operators. In practice, other governmental departments also share this role, including the ministries of defense, interior, and information.
Radio frequencies are not always allocated in a transparent fashion and there have been instances of operators claiming that the same spectrum has been allocated at least twice. Operators are granted frequency allocations either as a part of their license(s) or through a side letter from the TRC/MPTC.
Similarly, there appear to be a number of mobile licensees having been granted frequency allocations but not having put them to use. The MPTC is now taking steps to re-register all allocations of frequencies and ensure that all frequency allocations are paid.
As per TRC/MPTC records, all of the GSM 2G spectrum has been allocated, and so has the 3G spectrum in the 2,100 MHz band. Spectrum in the 800 MHz band is still available for potential CDMA 2000 or GSM 850 use and also in the 1,900 MHz band.
In late 2007, to promote and facilitate the implementation of privately financed infrastructure projects in Cambodia the government promulgated a Concessions Law which amongst other matters, specifically authorizes the use of a concession contract (e.g., build, operate, and transfer [BOT]; build, transfer, and operate [BTO]; build, own, and operate [BOO] build, lease, and transfer [BLT]; modernize, own, and operate [MOO], etc.) in relation to infrastructure facilities (i.e. physical facilities and systems) for the telecommunications sector, including “telecommunications and information technology infrastructure”.
Cambodia became a member of the World Trade Organization (“WTO”) in 2004. Since then it has been developing laws at a significant pace to deal with matters covered by the WTO regime including laws related to telecommunications.
Cambodia has made certain commitments with respect to telecommunications services as part of its WTO accession treaty and has undertaken to follow these obligations in the WTO’s standard Reference Paper. The Telecommunications Law attempts to follow these standards.
You can download the complete guide for free here.