The new cellular carrier run by the North Korean government to compete with Koryolink is being run by a local Internet service provider, according to a source in Pyongyang.
The ISP, called Byol (별) or Star, is targeting the wireless service at North Koreans.
Star currently offers wired Internet connections to foreigners in Pyongyang at a rate of 600 euro (US$660) for a 1Mbps line with unlimited data, according to a subscriber.
But the city’s relatively few foreign residents and tourists won’t be offered service from the new cellular carrier, the source said.
That simplifies operation as Koryolink offers a two-tier service, with foreigners able to access the Internet and make international phone calls while local users are restricted to domestic calls and websites.
It was not possible to immediately verify the claims.
Kim Il Sung Square in Pyongyang in May 2014 (UN Photo)
Orascom Telecom, the majority owner of North Korean cellular network Koryolink, is facing major problems getting its money out of North Korea and now has new competition from its partner, the government, in the form of a rival cellular network.
The new network was recently launched in competition with Koryolink and the two parties are currently discussing merging the two networks.
Its disclosure came as a surprise — it hasn’t been mentioned in the past in state media reports or other dispatches from the country.
The revelations were included in Orascom’s quarterly financial report, which was published on Wednesday, and also blames the tightening grip of international sanctions for its problems.
A woman speaks on a cellphone in Pyongyang on September 5, 2010 (Photo: Roman Harak / CC-by-sa-2.0)
The Egyptian company that runs North Korea’s sole cellular network appears to be finally confronting one of its biggest problems in North Korea: the value of its money there.
Egypt’s Orascom Telecom and Media Technology (OTMT) said on Tuesday that it is delaying the filing of its latest quarterly financial report while it attempts to agree with the North Korean government on the value of its cash held in the country.
At the center of the problem is the exchange rate for the North Korean won and rules on money transfers.
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
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.
Total subscriptions to the Koryolink network (Graphic: North Korea Tech)
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.”
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.