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Cell Phone Demand Stays Strong in North Korea

Koryolink, North Korea's only 3G cellular operator, saw sales more than double in the first three months of this year as it expanded its network coverage and enjoyed continued demand for its service.

At the end of March the company had 125,661 subscribers, a gain just under 34,000 subscribers over the quarter, according to majority-shareholder Orascom Telecom. The Egyptian company, which invests in cellular operators in developing nations, owns 75 percent of Koryolink.

"Contrary to initial speculations that the mobile service will be only available to the government officials and elite, the fact is that currently mobiles are used by different segments and levels of society," Orascom said of the customer base.

The network achieved a profit of US$5.8 million in the quarter, before accounting for interest payments, taxes, depreciation and amortization. Orascom did not disclose whether it made a net profit or a loss for the period. The figure is a vast improvement on the US$312,000 EBITDA profit recorded in the first three months of last year.

Quarterly revenues were US$9 million, a jump of 102.5 percent.

Sales were hit by North Korea's revaluation of its currency.

The move, which saw 100 North Korean won devalued to 1 won, caused social unrest, according to reports from the country. Koryolink said sales activity was "practically at a standstill due to uncertainty factors resulting from the currency revaluation," and that it closed its sales outlets for about three weeks.

The North Korean network was launched in late 2008 using WCDMA (wideband code division multiple access) technology and is only the second cellular network in the country. The other, Sunnet, uses older GSM technology and suffers from poor call quality and disconnections, according to users in the capital city of Pyongyang.

At launch the Koryolink network covered Pyongyang but has since been expanded to five additional cities and eight highways and railways.

North Korea is one of the world's most tightly controlled societies. Subscribers to the network are divided by class or type of customer with some unable to place calls to others. Most calls are subject to monitoring by the state's security services as part of an extensive domestic intelligence gathering program.

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