Egyptian businessman Naguib Sawiris has taken over as CEO of the parent company of Cheo Technology, which runs North Korea’s Koryolink 3G cellular telephone network.
Sawiris assumed the top job at Orascom Telecom Media and Technology (OTMT) after the former CEO, Ahmed Abou Doma, stepped down for personal reasons. He had been CEO for less than a month, taking the job on October 1.
Earlier in October, Sawiris made his latest visit to Pyongyang.
He arrived in the North Korean capital on October 12 and left two days later. During his trip, he met with DPRK Premier Pak Pong Ju at Mansudae Assembly Hall and, as is customary, presented a gift for Kim Jong Un, the Korean Central News Agency (KCNA) reported. The news service did not release details of the talks, but it did release some images.
Naguib Sawiris meets DPRK Premier Pak Pong Ju at the Mansudae Assembly Hall in this October 13, 2014, image from Korean Central News Agency
Sawiris has been visiting North Korea since before Koryolink launched service in the final days of 2008.
On a visit in January 2011, Sawiris met with Kim Jong Il and Jang Song Thaek, who was then Vice Chairmen of the National Defense Commission. Jang was put to death by Kim Jong Un in December 2013, accused of being a counter-revolutionary.
Naguib Sawiris stands between Kim Jong Il and Jang Song Thaek in this January 2011 photo from KCNA.
With Sawiris back in charge at OTMT, an analyst told Bloomberg the company’s biggest need is to raise money and the renewed involvement by Sawiris is seen as a sign he is committed to doing that and growing the company.
“I am eager to take the chance to turn around this unfortunate hindrance into an opportunity to personally lead a new take-off for OTMT with an ambitious new growth strategy,” he said in a statement.
OTMT was created was Sawiris sold the majority of Orascom Telecom’s operations to Russia’s Vimpelcom. Koryolink and a Lebanese cellular network were not part of that transaction and were put under OTMT.
Subscriptions to Koryolink, North Korea’s only 3G mobile phone network, have just passed the 2.4 million mark, according to the latest figures from the operator.
The figure represents a significant slowdown in growth in the last year over the previous year and points to the first big spurt in subscriptions being over. The carrier might have to start working harder to continue attracting new users.
At the end of June, the network had just over 2.4 million subscribers, according to Orascom Telecom Media and Technology, the Egyptian company that owns 75 percent of the company.
The last time the company announced subscriber data was in May 2013, when it said Koryolink had hit 2 million users. That puts growth at 400,000 subscriptions in just over a year. In contrast, Koryolink added a million subscribers in the 15 months prior to May 2013.
Total subscriptions to the Koryolink network (Graphic: North Korea Tech)
Koryolink had released detailed quarterly financial and service information until the beginning of 2012 when a corporate reorganization at Orascom led to much less detailed earnings releases.
The service is operated by Cheo Technology, a joint venture in which Orascom holds a 75 percent stake and North Korea’s Ministry of Posts and Telecommunications holds the rest. It launched in the final few days of December 2008 and its signal now covers most populated areas of the country and major roads and railways.
Typically, users have access to domestic calling, text and picture messaging and a domestic intranet service. International calls and Internet access are banned, except for resident foreigners, tourists and selected elite members of society.
Even with the restrictions, which are similar to those on home telephone lines, cellphones have become a common sight in Pyongyang and other major cities.
However, access to the service requires foreign currency — something not often available to poorer homes, especially in rural areas — and the price of the handsets and phone service is relatively expensive.
A recent report by Radio Free Asia said shops are springing up in parts of China near the North Korean border that offer cheap handsets compatible with North Korea’s network. But buyers need to bride border guards to let the phones into the country and then bride officials to let them register the phone on the Koryolink network.
If the service is expensive for North Koreans, it’s even more expensive for visitors. Koryolink began offering tourists Internet access via 3G in 2013 and charged 150 euro for 2GBs of data and 400 euro for 10GBs. The SIM card and international calling came at an additional charge.
The service has resulted in a number of posts to Twitter, Facebook and Instagram from points across North Korea. Last year, photographer David Guttenfelder was named Time Magazine’s top Instagram photographer thanks to his series of posts from the country. At the time he was working for the Associated Press.
Last week, reports emerged that said Koryolink is now deactivating SIM cards issued to tourists as they leave the country. The policy, which appears to be new, has closed a loophole that would have allowed the cards to be smuggled back into North Korea and given to local citizens. That would have provided them with unrestricted Internet access.
North Koreans used cell phone messaging to independently organize a soccer group, surprising authorities, according to a new report on cell phone usage in the country.
The soccer club was apparently organized by a group at Kim Chaek University of Technology in Pyongyang, and could be one of the reasons that pushed authorities to launch a regional cell phone service that was more restrictive than previous offerings, said the report by Kim Yonho, a journalist with the Voice of America.
The report, “Cell Phones in North Korea,” was earlier this month by the U.S.-Korea Institute at SAIS, the Johns Hopkins School of International Studies. Kim is a long-time reporter on North Korea having worked for Radio Free Asia before joining VOA.
His report walks through numerous aspects of cellular telephony in the DPRK, including the technical side of the network, the phones and the operator Koryolink. But perhaps the best parts are anecdotes from North Koreans.
There’s the tale of the man who couldn’t afford a cell phone and so couldn’t get a girlfriend, the ease with which one can get a cell phone under a fake name through a broker hanging around on the street outside telecom offices, and the importance of cell phones even in rural areas among those involved in trade.
Kim based much of his report on a series of interviews with 12 defectors who are now living in South Korea. While interviewing defectors can sometimes result in a skewed view of North Korea, the reality of reporting on the country is that they are one of the few sources of first-hand information. Kim acknowledges his sample size is small, but adds he tried to confirm much of what was said with additional interviews with experts.
According to Kim’s reporting, cell phones have amplified the gap between the haves and have-nots and become an instant symbol of wealth. This has also led some users to be attacked for their handsets and, in one case, a thief was killed when he attempted to steal a phone from the house of a regional police chief.
The use of cell phones to independently organize, as was the case with the soccer players, appears to be a relatively rare incident but it underlines one of the risks to the government of giving people mobile phone access.
This is one of the most interesting questions surrounding the launch of mobile telephony in North Korea: when the government relies on strict information control to keep its citizens in order, why voluntarily provide a new way to communicate?
Kim’s work delves into this and the surveillance that takes place on the network.
According to one of Kim’s sources, who was an agent for the Ministry of People’s Security, all calls and text messages are recorded by the Communications Interception Bureau of the Ministry for State Security. The source told Kim he was able to look up call records as part of an investigation but only after approvals from multiple government agencies. Agents only have access to the logs for “crimes of national importance,” Kim’s source told him.
The report is well worth a read for the multiple anecdotes and understanding it brings to several issues that come from Kim’s interviews.
Orascom Telecom Media and Technology (OTMT), the Egyptian company that owns a 75 percent stake in North Korea’s on 3G cellular network operator, has apparently been doing very well in the North Korean market.
A recent audit report by Deloitte says the company’s assets in North Korea stand at US$512 million, of which $422 million is sitting in cash. The figures were obtained using the official exchange rate on September 30. Due to currency controls imposed by the government, that cash isn’t readily available to OTMT to withdraw from the country.
“North Korea has implemented currency control restrictions and, in particular, rules surrounding the repatriation of dividends to foreign investors. Additionally, the local currency of North Korea is not tradable outside the country. Such restrictions limit the level of dividends that can be paid to the company from its North Korean operations,” Deloitte auditors wrote in their report.
The $512 million amounts to almost half of the assets of OTMT, but Deloitte notes that management says it does not anticipate needing the money to bankroll operations elsewhere.
It said OTMT is “not currently dependent on, and does not expect to become dependent on its operations in North Korea to provide cash flow to service its obligations, meet committed CAPEX obligations or continue its operations.”
The North Korean 3G network is operated by CHEO Technology and branded under the Koryolink name. Orascom began service in December 2011 in collaboration with North Korea’s Ministry of Posts and Telecommunications, which holds the remaining 25 percent in the company.
The company’s own figures show the service has received an enthusiastic response from those wealthy enough to afford the phones and monthly payments needed to use it. Earlier this year, OTMT signed up its 2 millionth customer. (North Korea’s population is around 25 million.)
Earlier this month, press reports said OTMT had decided to freeze investment in North Korea because of problems getting its money out of the country. That is untrue, OTMT said in a statement to the Egyptian Stock Exchange last week, but it doesn’t have plans to make any more investments either.
“Orascom Telecom Media and Technology Holding S.A.E. announced today that recent reports in some media sources claiming that OTMT is freezing its investment in North Korea are entirely inaccurate,” the company said in the statement.
“Where OTMT currently has no plans for new investments in North Korea, the company is open for new opportunities in this market, in which it has been investing for six years. The company has not announced any intentions to freeze investments in the North Korean market.”
North Korea’s Koryolink cellular network has hit the 2 million subscriber mark, majority owner Orascom Telecom said this week.
The landmark was reached in late May, 15 months after it surpassed the million subscriber mark.
Koryolink launched its 3G cellular service in the final days of December 2008 and in the last four years has expanded service to cover all major towns, highways and railways in North Korea.
“When we first acquired the license in North Korea, people thought the service will only be provided to a few privileged individuals,” said Naguib Sawiris, Executive Chairman of Orascom Telecom Media and Technology in a statement. “We are very proud today to witness our subscriber base in North Korea increasing at a growing rate, emphasizing the right of the North Korean citizens in DPRK to communicate.”
OTMT owns 75 percent of the company with the remainder in the hands of North Korea’s Ministry of Posts and Telecommunications. The company uses the Koryolink brand name but is legally called Cheo Technology.
While access to the service has gone far beyond the “few privileged individuals” mentioned by Sawiris, mobile phones remain out of reach for many North Koreans due to the price.
North Korean citizens are offered voice, text message and web browsing service on their phones, but North Korean regulations prevent them from direct international communications or Internet service. Foreigners in the country have a different class of service that allows international connectivity, but shuts off access to most domestic phone lines.
Koryolink recently began offering prepaid SIM cards for foreigners in the country on a short visit. Data cost between 150 euro for 2GBs to 400 euro for 10GBs, with an additional 10 euro monthly charge for the SIM card, according to reports.
But within weeks of the service being launched, it was reportedly scaled back.
In its statement, OTMT said the restrictions have been relaxed, but it’s unclear if the carrier means the original ban on short-term visitors using data or the most recent change in restrictions after the service launched.
“It is worth noting that through recent decisions of the North Korean government, restrictions on availing internet connections through mobile phones for foreign visitors have been reduced, allowing Koryolink to also offer some data services through its network,” it said.
Koryolink did not reply to a request for clarification.
Koryolink, North Korea’s sole 3G cellular service provider, is close to hitting the 2 million subscriber mark.
The news was disclosed this week by the Koryolink CEO Ezz Heikal in Pyongyang and later confirmed by the company’s head office in Cairo. It means that Koryolink will have roughly doubled its subscriber base in the last 15 months. Koryolink hit a million subscribers in early February 2012.
Only a few years ago it would have been unusual to see anyone in Pyongyang speaking on a cell phone, but that all began to change in December 2008 when Koryolink launched its service. It’s now available across Pyongyang, in all major cities and along main road and rail routes around the country.
Subscribers are offered voice, text message and web browsing service on their phones, but North Korean regulations prevent citizens from direct international communications or Internet service. Foreigners in the country have a different class of service that allows international connectivity, but shuts off access to most domestic phone lines.
Koryolink is operated by Cheo Technology, which is a joint venture between Egypt’s Orascom Telecom Media And Technology Holding (OTMT) and North Korea’s Ministry of Posts and Telecommunications. OTMT holds a 75 percent stake and the North Korean government owns the remaining 25 percent.
Visibility into the company’s North Korean operations has suffered in the last year since Koryolink ownership was transferred from Orascom Telecom to OTMT. The former owner published a detailed quarterly report with subscriber and financial data, but most of that disappeared when ownership was switched to OTMT.
Here’s a graph of subscriber growth. Because of the ownership change, quarters from Q1/12 are approximate and some data is missing, but this gives a good idea of the overall growth.
The news agency said a USB modem and SIM card to access the Internet will cost 75 euro and 150 euro (US$100 and $200) respectively, and that’s without data charges.
Data will cost between 150 euro for 2GBs to 400 euro for 10GBs, with an additional 10 euro monthly charge for the SIM card, Xinhua said quoting an unnamed technician at Koryolink.
The technician was quoted as saying Twitter, Skype and conventional Internet would be accessible from cell phones, iPads and other devices after registering at the Korea Communications Center. The KCC is in downtown Pyongyang and it’s unclear from the Xinhua report if the same cards and registration will be available at Sunan Airport.
“We have tried more than one year to negotiate with the Korean side, and got the approval recently,” said the technician, noting again “it has nothing to do with the Google trip.” — Xinhua News Agency, February 24, 2013.
The technician also told Xinhua that Koryolink will try to get approval from the North Korean government for services more suited to short-term visitors.