This time, Inside Mongolia features an insightful interview with Koji Kurushima, CEO of Mobicom Corporation. In this interview, we delve into the opportunities for foreign investment in Mongolia's telecommunications sector, as well as Mobicom’s journey from its past achievements to its future ambitions.

How attractive is Mongolia's telecommunications sector for foreign direct investment, and do Mongolian telecom companies need further foreign investment?

The telecommunications sector in Mongolia presents a compelling investment opportunity, largely due to the initial foreign investments, such as those from Japanese and Korean companies. Over the years, telecom companies in Mongolia have become deeply embedded in society. While there may not be an immediate pressing need for additional foreign investments, the long-term outlook is optimistic due to the nation's growing population and economic development. However, global telecom markets can be capital-intensive because of infrastructure costs, so an investor’s perspective plays a crucial role in determining whether the sector is attractive.

As for whether Mongolian telecom companies need further foreign investment, it depends on the specific goals of the companies. While these companies are well-established, the decision to seek further investment will ultimately depend on their strategies for growth.

Opportunities do exist in certain areas, such as apps, services, and platforms, but the companies' own objectives largely drive the need for foreign capital.

Are foreign companies interested in investing in Mongolia, particularly in the telecom sector, and what makes Mongolian telecom companies unique to investors?

Foreign companies may indeed be attracted by Mongolia's growing population and economic potential. However, investing in telecom infrastructure can be expensive due to the significant capital required. From an investor’s viewpoint, areas like mobile applications, services, and platforms might present less expensive investment opportunities as they can be sold globally through app stores like Apple Store or Google Play without requiring heavy infrastructure costs.

Mongolian telecom companies, on the other hand, may not scream “investor magnet” at first glance. Their enterprise values, built over decades, demand deep pockets even for minority stakes, and quick returns aren’t guaranteed. But here’s the kicker: when local companies need fast funding, foreign capital becomes the ace up their sleeve. These companies shine in their ability to draw both financial investors chasing high returns and global telecom operators hungry for cross-border market expansion. For operators, such investments are a gateway to forming strategic alliances, scaling customer bases, and extending global reach, making Mongolia’s telecom sector a surprisingly enticing play for the right investors.

Is the regulatory environment in Mongolia challenging for investors, especially in telecom?

The regulatory environment in Mongolia can be challenging, though this varies by sector. In the telecom space, companies must adhere to licensing regulations, meaning market entry is restricted. With only five telecom companies, the limited number of licenses makes it hard for new entrants to break in. Moreover, concerns around the transparency and consistency of government policies, especially related to economic stability and long-term planning, could deter investors. Clarity from the government on its vision is crucial to boosting investor confidence.

Mobicom stands as a successful example of foreign investment in Mongolia. Since becoming a subsidiary of KDDI, how much capital has the Japanese telecom giant invested in Mongolia through Mobicom?

Since becoming a subsidiary in 2016, KDDI has invested over $300 million into Mobicom, focusing on network expansion and if considered from its birth more than $1 billion.

This investment includes not only KDDI’s direct capital but also revenue reinvested from the business itself. As Mobicom generates income through customer payments, it reinvests these funds into further network development, ensuring a sustainable investment cycle.

Moreover, KDDI has shared extensive technological expertise with Mobicom, particularly in advanced technologies like 4G and 5G. Given Japan's leadership in technology, KDDI has enabled Mobicom to access cutting-edge solutions. Additionally, exchange programs allow Mobicom employees to work at KDDI’s facilities in Japan, gaining hands-on experience in a global context, which is then applied to improve local business practices.

In recent years, the Government of Mongolia has prioritized the digital transformation of the country. In alignment with this goal, how much support does the government extend to telecom companies?

The Mongolian government has prioritized digital development, exemplified by the "E-Mongolia" initiative, which seeks to digitize public services. While the government provides support for digital initiatives, telecom network investments mainly rely on the private sector. The Universal Service Fund, for instance, helps extend coverage to underserved areas, and the government also solicits feedback from telecom companies to ensure policies align with market needs.

Let’s move to the second part of the interview. Could you walk us through Mobicom’s past goals and future plans?

Founded in 1995, Mobicom initially focused on 2G voice services. For a decade, it was the sole operator in the market. With the arrival of competitors in 2005-2006, Mobicom shifted its focus to improving connectivity. The introduction of 3G brought internet access to mobile phones, and by 2016, 4G revolutionized data speeds, greatly impacting social media usage in Mongolia. Today, Mobicom continues to enhance its network, expand its enterprise services, and improve its data infrastructure, especially in response to the increased demand for IT solutions post-pandemic.

Looking ahead, Mobicom aims to continue expanding network coverage, particularly in underserved areas of Mongolia. While its network has grown significantly, demand remains high in certain regions. The company is also working on expanding its network capacity to meet rising data usage demands. Additionally, Mobicom is focused on supporting businesses with IT solutions, helping them optimize operations and expand into global markets.

In recent years, the Internet of Things (IoT) has emerged as a hot topic, often referred to as the Internet's new era. Does Mobicom have any plans for IoT?

Mobicom is deeply involved in IoT through its connectivity services, such as powering point-of-sale (POS) machines in retail and exploring IoT applications in rural areas for services like water and electricity meters. By enabling remote data collection, Mobicom is helping businesses optimize operations and reduce the need for manual data collection, even in sparsely populated regions.

Could Mobicom expand internationally, and what challenges would it face?

Mobicom has explored the possibility of expanding into Central Asia, where market similarities, including shared cultural aspects and the widespread use of Russian, could ease communication. However, international expansion would require approval from the parent company, KDDI, and would pose challenges related to integrating Mobicom's brand and infrastructure into new markets.

Thank you for your time and for sharing your valuable insights with us.

Thank you. Happy New Year to you all.