OBG talks to O. Batchuluun, President and CEO, Telecom Mongolia

Interview: O. Batchuluun

What opportunities exist for the Mongolian fixed-line telephony industry in the future?

BATCHULUUN: Mongolia’s fixed-line telephony market has followed the global trend of decreasing revenues and relevance in the face of mobile phone expansion. However, the fixed-line telecoms market, at least in Mongolia, still has room to grow.

The nomadic culture of our people makes them hard to reach and many have no access to telephone services. However, once urbanisation gathers pace in and around Ulaanbaatar, and major mining towns are developed, nomadic people will begin to switch to fixed dwellings, creating new opportunities.

How is the ongoing privatisation process of Telecom Mongolia progressing?

BATCHULUUN: The government has been discussing this privatisation process for five years. It is not an easy issue to address because Telecom Mongolia is the entire network of Mongolia’s telecommunications sector and it involves a strategically important state policy.

In 2007 a decision was taken to divide Telecom Mongolia and create Netcom in order to streamline certain activities. This was a major step towards preparing the company for privatisation, and we were able to partially privatise, with Korea Telecom (KT) as our other shareholder. At that time the government pledged to issue and grant us a 3G mobile licence, but unfortunately this has not yet been implemented. We and our partners are looking forward to finally receiving this licence because it will enable us to compete in the mobile sector and will serve as a boost towards privatisation.

A 3G mobile licence will also enable us to provide customers with traditional IT services, such as mobile internet, cable and internet protocol television. Because of our strengths in infrastructure and capacity, we have the customer base and the room to create a market that can compete effectively with mobile operators. We are fully prepared for privatisation and are on the priority list of companies to be privatised in the near future. However, because of the 3G licencing issue, plans have been delayed. But the privatisation process will go ahead with or without a 3G licence.

A decade ago we had 90% of the total revenue generated in the Mongolian telecoms market. In recent years this has dropped to only 8-9%. The remaining 90% is generated by mobile operators. Despite this, our workforce has remained the same – almost five times that of all mobile operators combined. This shows some of the major changes needed in order to streamline and prepare the company for successful privatisation.

How would you assess the significance of foreign operators exiting the Mongolian mobile telecoms market, in particular Korea Telecom (KT)?

BATCHULUUN: In the case of KT, the decision to exit the Mongolian telecommunications sector was based on a number of factors. First, there is aggressive competition among cellular telephony operators. Second, 82.2% of the approximately 3m people of Mongolia are mobile phone users, showing a higher mobile penetration rate than the world average.

In addition, when compared to KT’s other investments, the Mongolian telecommunications market is quite small, and perhaps Mongolia was therefore no longer viewed as a primary objective for them. It should be made clear that this was more of a company decision rather than due to market factors.

What is the next stage of the development of Mongolia’s communication and technology sector?

BATCHULUUN: The next chapter is to create domestic content. In 2010 we organised an online forum to discuss what strategies should be developed to promote e-business and local content. We support the development of web and mobile-based software solutions. Furthermore, to support both national software programmers and the information, communication and technological agency, we set up a number of training centres specifically for iPhone and Android handsets.