How To Get A Cell Phone In North Korea

Via the Petersen Institute for International Economics, an interesting article on cellular telephony in North Korea:

Perusing through articles from our friends at Sino NK, I found an oldy but a goody on North Korean bureaucratic inefficiency at its most groan-inducing. Late last year, Christopher Green wrote on the process required for North Korean citizens to procure a private cell phone. Not surprisingly, it’s a doozy: multiple trips to the provincial Communications Technology Management Office, flurries of rubber stamps, months of waiting, and rent extraction along every excruciating step.

Besides time commitment, Green picks up on some of the more insidious barriers to entry that this process poses for a North Korean citizen. It requires one to be able to travel freely (provincial offices can be far away), possess rolls of hard foreign currency, and distribute enough cigarettes along the way to give Don Draper a nicotine headache. Cleary, such a process still favors the upper echelons of society with time and cash to spare.

Yet a lot can change within a year, especially when we are talking disruptive technology. Despite the expensive bureaucratic slog described above, Koryolink, the DPRK’s sole 3G provider 75% owned by Egypt’s Orascom Telecom Media & Technology (OTMT), reported surpassing 2 million subscribers in late May 2013. Only fifteen months prior it was at a million members, translating to a 4% gain of the total population at an average of almost 67 thousand new subscriptions per month. As far as I know this claim has not been audited, but there is no denying the writing on the wall.

This is a transformation — about as rapid as things get in North Korea — currently dominated by three primary stakeholders:

  • Orascom. Since 2008, the telecom company has enjoyed monopolistic market control completely sheltered from foreign competition, a sweet deal which has been extended into at least 2015. In a 2012 Economist article, Orescom claims to have earned an 80% gross margin on operations in the DPRK, making it by far the most profitable market for the company.
  • Chinese handset makers. While you can occasionally see a traitorous Samsung Galaxy on the streets, the majority of phones flooding North Korea are ZTE and Huawei. The Global Times (in Chinese) estimates that China will export five-hundred thousand handsets to North Korea in 2013 alone, 100,000 of which will be smartphones. And yes, while North Korea now does have their very own Arirang, numerous reports suggest part—or all—of the phone is made in China too.

Despite what sounds like a nice little set up for all parties involved (well, except consumers) it’s easy to see this as the fancy pewter tableware that slowly poisons the royalty. The regime must play a dangerous game, balancing the temptations from rent extraction and international suitors looking to get in on the action with the explosive change widespread cellphone use could bring. If there’s anything more lucrative — and dangerous – than a battle for North Korea’s cellular market share, I don’t know what it is.

This entry was posted on Tuesday, November 12th, 2013 at 1:50 am and is filed under North Korea.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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