Orascom Wins a 3G License - in North Korea

In what can only be described as a surprise announcement, Egypt's Orascom Telecom Holding (OTH) says that it has been granted a 3G phone license in North Korea. The company says that it is the first commercial license, although that is not quite correct as there have been commercial GSM networks operating in the country in the past.

Orascom Telecom says that it intends to invest up to US$400 million in network infrastructure and license fee over the first three years. OTH intends to cover Pyongyang and most of the major cities during the first 12 months of operations.

We are aware of a GSM phone network, which was built at the Rason (formerly Rajin-Sonbong) free trade zone by a private consortium, Loxley Pacific in 2002. Another phone network also covered the capital city, Pyeongyang and the main cities of Hyangsan, Pyeongyang, Gaeseong, Wonsan and Hamheung - although it is not clear who built that network or which technology it used. Our discussions with Loxley Pacific in 2003 confirmed that the company was planning a national network, but did not clarify if it was responsible for the cellular coverage in the capital city.

Both networks were apparently shut down, or at least forbidden to the general public following a train explosion in 2004, which some claim was an attempt on the life of the ruling dictator, Kim Jong-Il.

While no mobile network is now available to the general public, many phones are smuggled across the border with China, where the Chinese phone networks are reported to have an unusually strong signal strength which reaches deep inside the North Korean border zone. People caught using an unauthorised mobile phone face life imprisonment, or even the death sentence.

Plans by South Korean companies to build a CDMA network in the capital city in 2002 were cancelled following diplomatic pressure by the USA.

The new license was granted to OTH's subsidiary CHEO Technology JV Company ("CHEO") which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years.

Posted to the site on 30th January 2008