Smart Axiata Cambodia has seen off robust competition in the country’s telecoms sector to emerge as one of the industry’s key players. CEO Thomas Hundt discusses the shifting market and how his firm has stayed ahead of the curve
“Telecoms is a game of scale,” said Thomas Hundt, CEO of Smart Axiata Cambodia, one of the country’s leading names in the telecommunications industry. The affable German has been with the firm since 2008, just as it was starting out, and has watched the sector swell to unrelenting levels of competition before contracting to more manageable levels of rivalry.
“It has been an extremely crazy market for the past few years: at the peak we had nine mobile operators, and now it has cooled to just three major players and a few smaller ones,” he said. This evolution, Hundt explained, was all about scale: since the industry has an exigency on investment, only the companies with a sizeable market share and ample financial backing can stay afloat.
“When I started here in Cambodia, 2G was mainstream. Then, around 2010/2011, 3G was the state-of-the-art technology. And now, four years down the road, we have 4G. And industry-wise, we’re already talking about 5G, maybe some time around 2020.” At each juncture, significant investment was needed to upgrade infrastructure. Today, Smart’s network extends across 98.5% of Cambodia, and rolling out such connectivity took more than seven years with total investments in excess of $400m. Smart is close to 100% for 3G across the country and 25% for 4G, which they hope to extend to 50% by the end of the year.
Hundt puts these whirlwind changes down to the “demand from the consumers that is growing so fast”. Five to ten years ago, it was all about making telephone calls, which is fine for a 2G network. However, the rise of the smartphone meant that 3G was needed for browsing, checking emails and taking in Twitter. Now, with on-demand video consumption, 4G is the way forward.
“In Cambodia we have the lowest cost per gigabyte probably in the world. For $1 you can get 1.5 gigabytes of data,” he said, adding that this is a result of that intense competition, which drove down prices.
However, building a brand is a lot more challenging than simply investing in infrastructure, Hundt said, adding that anyone with a thick wallet and the necessary licences can, in theory, erect antennae and sell coverage. What separates Smart from its competitors are the puzzle-like small pieces that combine to form its service.
Smart currently offers its customers life insurance, has reacted to consumers’ hunger for mobile internet by allowing them to exchange call credits for additional data, and even has an exclusive deal with Bangkok Airways that sees the airline handing out free tourist SIMs to every passenger heading to Cambodia.
Last year, the company launched Smart Music, Cambodia’s first music-streaming service, and in 2014 signed an exclusive deal with Universal Music for Cambodian distribution rights. This has also allowed them to host some big names in music, including Demi Lovato and Jessie J, at gigs in Phnom Penh.
“The concerts are not necessarily about brand building – of course they are a little – but it’s also about bringing international artists to Cambodia, putting history to past and showing the modern Cambodia,” Hundt said.
Raising Cambodia’s profile is a mission Smart takes seriously, being one of the country’s largest employers. Hundt estimates that Smart contributes to 1.5% of Cambodia’s GDP and directly employs more than 1,000 people. But following an investigation in 2014, the company found out that it indirectly “provides salaries” for more than 66,000 people. “We are also one of the biggest taxpayers – happily so, as long as everyone else is paying theirs,” Hundt said, in a wry acknowledgement of the rather wide gaps in the country’s taxation system.