Orascom Telecom, the Egypt-based mobile network operator, says its subsidiary in North Korea, Koryolink, has acquired 100,000 subscribers in its first year and expects to add millions more in the next five years.

The expansion plans come as the isolated east Asian country of 24m, which says it wants to be considered a “mighty and prosperous nation” by 2012, steps up efforts to attract foreign investment .

Pyongyang’s economic ambitions come in the face of tough international sanctions on its nuclear arms programme.

“We see that there is a very big plan for an economic boom,” said Khaled Bichara, chief executive of Orascom. “They are really looking to have, by 2012, a much stronger economy. We believe that mobiles and eventually international communication will definitely be part of this.”

Koryolink, a pre-pay system, has been available in Pyongyang and Nampo, the capital’s port, since December 2008. To help expand the network from there, Mr Bichara said North Korea was laying fibre-optic cables in the provinces.

Orascom was installing its most technologically advanced 3G network in North Korea, he said. The 2010 target for user numbers was ambitious but Mr Bichara declined to put a figure on it.

“I think if we achieve the target of this year, that will be a big milestone,” he said. “The number will be big enough to make Koryolink look like a significant company for us because the revenues per customer are interesting and we believe that this business will have customers in the millions within the next four or five years.”

Mr Bichara said the subscription figures showed that mobile phones were not limited to elite members of the military and communist party, as many observers had speculated.

However, the handset price of €140 ($195) put a mobile phone out of most people’s grasp.

So far, Koryolink offers only a basic voice and text messaging service. International calls and roaming services are not provided but Mr Bichara said starting them would be simple given the sophistication of the network being installed.

Koryolink is a joint venture in which Orascom has a 75 per cent stake. The rest is owned by Korea Post & Telecommunications Corp, the state fixed-line provider.

Orascom says it is also investing in the country’s tourism, banking and transport sectors.

Last month North Korea announced that it was forming a state development bank to encourage foreign investment, on the instructions of its leader, Kim Jong-il.

Another body, Korea Taepung International Investment Group, will attract foreign funds to the bank. The fact that Taepung’s deputy head is a prominent Korean-Chinese businessman has sparked suggestions that the bank will focus on China.

North Korea is also looking beyond Asia, even seeking to increase the number of tourists from its arch-foe, the US.

In February, a North Korean trade delegation is due to visit Europe, according a Paul Tjia, a Dutch consultant who is organising a European business delegation to Pyongyang in May.

He hopes to take 10 to 15 potential investors.

One of the most successful sectors for Mr Tjia, founder of GPI Consultancy, has been IT outsourcing.

“It is a surprising fact but the level of IT knowledge is high and they are very aware of the latest software,” he said.

Source:ft.com