Resurgent mobile deals could hurt margins, analysts say

September 2nd, 2013 , The Cambodia Daily

‘Top up $2 and get 30 free minutes daily for 20 days. Top up $5 and expand the same offer for a month. And, for a $10 recharge, that half-an-hour freebie lasts 50 days.”

Mobile operator Beeline, which announced the promotion in August, called it “another amazing offer to our subscribers”. But it’s an amazing offer in a market flooded with amazing offers.

Four months after the Ministry of Post and Telecommunications scrapped a publicly unpopular restriction on lucrative mobile phone promotions – the order was an attempt to stave off a price war – the battle is raging once again.

While popular among consumers, the bonuses and promotions will inevitably reduce the operator’s profit margins, analysts and market observers say. In the long run, those who can’t afford to keep up with the pace will fall by the wayside.

“Directionally, we are headed towards the last men standing,” Anthony Galliano, CEO of Cambodian Investment Management, said in a recent interview. “I am surprised at the ferocity of the promotions, which will probably accelerate the pruning process.”

In January, local operator Mfone filed for bankruptcy, and analysts predict the market will shrink further to three or four players. …

Ministry statistics released in March show that Cambodia, which has a population of about 14.6 million, had 19 million mobile phone subscribers in 2012. Many users have more than one phone.

Viettel, parent of operator Metfone, had the largest market share, counting 9.5 million subscribers in 2012. Latelz, parent of Smart, counted 3.2 million last year.

Smart merged with Hello in February, increasing the number of subscribers to more than five million. Cellcard parent CamGSM counted three million subscribers in 2012, according to the Ministry’s statistics. …

In April, Vimpelcom, the sixth-largest provider of telecommunication services in the world, announced that it had sold its entire indirect stake in the company that runs Beeline to a local partner, Cambodian tycoon Huot Vanthan, after reviewing the value of operations. …

“The bonuses and promotions do reduce margins since they reduce the possible revenues that can be generated if these freebies were not offered, while costs are the same,” Minaev said. “In the short run this can be a favorable tactic to attract customers, but it has an adverse affect on a company’s profitability when it becomes constantly practised.”

Ian Watson, CEO of Cellcard, said the practice is profitable, but “it just reduces the margin, and anybody who says it doesn’t is lying, basically”.

Anne Renzenbrink
http://www.phnompenhpost.com/business/resurgent-mobile-deals-could-hurt-margins-analysts-say

Ministry Cancels Telco Limits

May 7th, 2013 , The Phnom Penh Post

An often flouted and publicly unpopular restriction forbidding Cambodia’s telecoms from offering lucrative mobile phone promotions was scrapped on Sunday, just two weeks after it was introduced.

In a letter from the Ministry of Posts and Telecommunications (MPTC), signed by Minister So Khun, it announced a halt to the implementation of the decision made between the Telecommunication Regulator of Cambodia (TRC) and all phone operators on April 22, when eight out of nine operators agreed to stop the promotions that violate a 2009 interministerial prakas. …

Moa Chakrya, director of the TRC, said fmost of the operators agreed on what the prakas said, but Sunday’s announcement by the MPTC did not provide any restrictions on the use of promotions on those mobile operators. …

Minimum tariffs for within- and cross-network calls have also caused disputes among the operators and the TRC. Moa Chakrya yesterday did not say whether or not the tariffs should be cheaper or more expensive than currently required in the prakas. …

Rann Reuy and Anne Renzenbrink
http://www.phnompenhpost.com/2013050765438/Business/ministry-cancels-telco-limits.html

MobiTel, Smart Fight It Out Over Prices

May 1st, 2013 , The Cambodia Daily

With competition rife in Cambodia’s telecommunication market, two of the country’s largest mobile phone operators have engaged in a battle over prices and are at odds over the tactics being used to gain market share.

On Friday, the Telecommunication Regulator of Cambodia (TRC) ordered all mobile phone companies to abide by a 2009 law that sets minimum prices for the cost of a call.

Smart, which the Malaysia-based firm Axiata Group Bhd owns, says the government decision is unfair to consumers and goes against the notion of a free market. But MobiTel, which is owned by the Cambodian conglomerate Royal Group, says Smart has offered deals so cheap it has engaged in unfair business practices. …

On Monday, both Smart and MobiTel released statements stating they had agreed to withdraw their special offers to customers. Since mid-February, Smart has advertised a 500 percent top-up bonus-300 percent for calls and SMS, and 200 percent for Internet. At the end of 2012 MobiTel began offering a similar deal where customers received a 100 percent bonus.

Though not mentioning MobiTel by name, Smart CEO Thomas Hundt yesterday said his company could not be accused of operating unfairly and said it was up to the other companies to compete. He also said that instead of banning firms from offering bonuses, the government should let the market operate freely. …

Joshua Wilwohl and Kaing Menghun
http://www.cambodiadaily.com/news/mobitel-smart-fight-it-out-over-prices-21085/

Telecoms Regulator Calls For Price Meeting

May 1st, 2013 , The Phnom Penh Post

The Telecommunication Regulator of Cambodia (TRC) is calling all mobile phone operators to attend a meeting next week in order to reconsider the costs for within-and across-network calls, after disputes over bonus promotions in Cambodia’s crowded telecoms market.

TRC director Mao Chakrya said that for the meeting on Thursday next week he would discuss the “cost base” of phone calls to which all operators’ representatives agree on, in order to avoid having costs below the agreed price. …

In an effort to tackle price disputes between the mobile operators and to set minimum tariffs, the Ministry of Economy and Finance and the Ministry of Posts and Telecommunications signed the Inter-Ministerial Prakas Number 232 on Minimum Tariffs of Mobile and Fixed Telephone Services and Interconnection Fees in December 2009.

According the prakas, the minimum cost of calls within a network is 4.5 US cents per minute. …

Rann Reuy and Anne Renzenbrink
http://www.phnompenhpost.com/2013050165340/Business/telecoms-regulator-calls-for-price-meeting.html

Long-overdue Consolidation of the Kingdom’s Mobile Telecoms Market May Have Operators Feeling Hopeful, but Challenges Remain

April 15th, 2013 , Southeast Asia Globe

After years of immersion in a vicious price war, battle weary and capital-haemorrhaging [sic] mobile operators in Cambodia’s oversaturated telecommunications sector may finally have reason to breathe a sigh of relief; 2013 might be cited as the year the tide turned. …

Tarred by legal threats, unfair competition practices, trash-talking in the media and engagement in cripplingly expensive advertising campaigns, the industry’s ugly side has reared its head on several occasions since the market started overcrowding in 2006. Yet recent and long overdue consolidations in the market have some chief executives trading their swords for confetti, handshakes and electric-light breakdancers.

With over five million subscribers, Smart is now the second-largest operator in the country behind Metfone, owned by Viettel, a military-backed Vietnamese-owned telecommunications firm. Smart plans to expand its network and operational coverage throughout Cambodia and reinvigorate investors to develop infrastructure, says [Thomas] Hundt. [CEO of the repackaged brand ‘Smart’]. All the while the merger removes interconnection fees between Hello and Smart mobile users – a blessing in a market that operators claim is under-regulated and where complaints have been filed against companies that have not paid interconnection fees. …

With the industry reduced to six active operators, experts and mobile operators agree that the two developments have birthed new life into a market that, until now, has sustained multimillion-dollar losses each year. Revenues from phone usage in the Kingdom remain low, while an infant smartphone culture yields limited capital from data plans. …

The merger followed hot on the heels of Thaicom’s announcement that its lawsuit-laden subsidiary Mfone, which had been operating in Cambodia for two decades, was insolvent. …

“I think that this had to happen… The market can now begin to move at a level with more sustainable competition finally, and in the long term we won’t see any more of these crazy price wars,” said Marc Einstein, an independent telecom analyst. “I think in a market the size of Cambodia, in terms of population and GDP [gross domestic product], you can only have three, maybe four operators for the sector to be sustainable.”…

“I would say that because of the initial rush of entrants, the equipment was improved substantially, but… now quality is definitely toward the bottom compared to Thailand or Vietnam,” Einstein said. …

At first, services improved. But as huge promotions became the industry standard, the price of a domestic call dropped to just $0.01 per minute, far below Thailand’s $0.05 to $0.06 per minute and around $0.15 per minute paid in Hong Kong. …

“The problem is that, even at six players, there is still going to be a price war at a high level of competition,” said Dimitry Bushik, chief commercial officer at Excell, one of Cambodia’s mobile operators. …

Philip Heijmans
http://sea-globe.com/united-we-stand/

Government tells telcos off

April 8th, 2013 , The Phnom Penh Post

The Telecommunication Regulator of Cambodia (TRC) of the Ministry of Posts and Telecommunications issued warning letters to mobile operators Beeline and Smart over their recent advertisement, stating it violates the Inter-Ministerial Prakas, or edict, signed in 2009.

The separate letters, obtained by the Post last week, were approved by TRC’s president Mao Chakrya on March 1, stating that the companies did not comply with Inter-Ministerial Prakas number 232 dated December 7, 2009. …

In response to price disputes and to set minimum tariffs, the Ministry of Economy and Finance and the Ministry of Posts and Telecommunications signed the Inter-Ministerial Prakas No 232 on Minimum Tariffs of Mobile and Fixed Telephone Services and Interconnection Fees in December 2009.

In paragraph one of article 4, the edict states that “minimum tariff of calls within one network shall be 4.5 cents per minute.” Later on the Prakas also says: “advertisings on on-net tariff must not be lower than 50 per cent of the tariff contained in Paragraph 1 of Article 4.” …

May Kunmakara and Anne Renzenbrink
http://www.phnompenhpost.com/2013040864932/Business/government-tells-telcos-off.html

Beeline In Negotiations with Potential Buyer

March 28th, 2013 , The Cambodia Daily

VimpelCom, the parent company of local mobile operator Beeline, is looking to sell the majority share of its Cambodian assets and has entered into negations with a possible buyer, according to a document obtained yesterday.

“VimpelCom intends to dispose its entire indirect 90.0 percent stake in Sotelco Ltd. (“Sotelco”), its Cambodian operator. As of 31 December 2012, sales negations with a potential buyer we’re in progress,” VimpelCom said in its annual filing with U.S Securities and Exchange Commission (SEC). …

Joshua Wilwohl
http://www.cambodiadaily.com/business/beeline-in-negotiations-with-potential-buyer-16275/

Axiata to offer free Wikipedia for mobiles

March 21st, 2013 , The Phnom Penh Post

AXIATA Group Berhad, parent company of local telecommunications provider Smart, and Wikipedia operator the Wikimedia Foundation announced a partnership to offer Wikipedia on mobile devices free of data charges to Axiata customers throughout Asia, a press release said.

“Wikipedia is free as such already, but notwithstanding the customers are charged for the data volume they consume while accessing Wikipedia through their mobile device,” Smart CEO Thomas Hundt told the Post.

“Upon implementation, Smart subscribers, and the subscribers of other Axiata networks across Asia likewise, will not be charged for the data volume consumption while browsing Wikipedia pages. …

According to data from the Ministry of Posts and Telecommunications, sales of SIM cards in Cambodia reached 19.7 million last year, a 21 per cent increase to 2011. The number of internet users increased 60 per cent, reaching 2.7 million last year. …

Anne Renzenbrink
http://www.phnompenhpost.com/2013032164545/Business/axiata-to-offer-free-wikipedia-for-mobiles.html

Mobile Operator Beeline Reports Large Drop in Subscribers

March 7th, 2013 , The Cambodia Daily

The number of subscribers to the mobile operator Beeline plummeted by more than 400,000 in the fourth quarter of last year—the single-largest drop for the carrier since it entered the Cambodian market in mid-2009—while the average revenue per user (ARPU) increased slightly, the company’s quarterly financials released Wednesday show.

The report, by VimpelCom Ltd., Beeline’s Amsterdam-based parent company, states that the number of customers sank from 1.02 million to 598,000 between October and December.

VimpelCom spokesman Bobby Leach said the drop is because the company decided to rid itself of “inactive” users. …

In April, VimpelCom sold its Vietnamese operations a month after it devalued it and its Cambodian assets by $527 million. …

Joshua Wilwohl
http://www.cambodiadaily.com/business/mobile-operator-beeline-reports-large-drop-in-subscribers-12934/

Investment options for Cambodian telcos

February 20th, 2013 , The Phnom Penh Post

With Myanmar’s telecom industry showing signs of gradually opening, operators in Cambodia’s overcrowded telecom market see opportunities for potential investment.

But in stride with the market’s latent potential come challenges, industry experts say, and lessons learned locally need to be applied overseas.

“Myanmar remains one of the last frontiers and least touched telecom markets,” said Anthony Galliano, CEO of Cambodian Investment Management. …

According to Ashraf Mokhtar Sahab, chief commercial officer at Beeline, the firm would not relocate to Myanmar and believes in the Cambodian market, but a possibility would be to extend the business.

“Myanmar has a much bigger population, so that is actually a quite significant opportunity right there,” he said.

The Myanmar government has asked interested parties to submit an expression of interest for two nationwide telecommunication licences. …

Anne Renzenbrink
http://www.phnompenhpost.com/2013022061463/Business/investment-options-for-cambodian-telcos.html

The great mobile shake-out

February 5th, 2013 , Bangkok Post

Mobile phone subscribers in Cambodia have had little to complain about in recent years. With six new operators entering the market since 2006, the result was oversaturation and an all-out price war as eight operators fought for a foothold in a country with fewer than 15 million people. …

“Most of the telecom companies in Cambodia were backed by large, wealthy companies. The aim [at that point] became for operators to build up their subscriber bases and a pricing war was started,” said Atip Rittaporn, the former chief executive of the now-insolvent Thaicom Plc subsidiary Mfone.

But that model was not sustainable for operators, who have to pay a revenue tax of 7-10% to the government as well as absorb high operating costs as revenues continued to dwindle. …

Malaysia’s largest telecom company, Axiata Group Bhd, operating in Cambodia under the Hello banner, announced on Dec 13 that it had agreed in principle to acquire the local operator Latelz Co Ltd in a deal worth $155 million.

Lawsuit-plagued Mfone declared only a few weeks later that it was insolvent, having to liquidate all its subscribers to former competitor MobiTel. …

Simon Perkins, chief executive of Hello Axiata, said Hello’s acquisition of Latelz, which operated as Smart in Cambodia, would allow his company to double its network coverage as well as give it enough total subscribers to become the second largest operator behind CamGSM’s MobiTel. …

Indeed, mobile operators have skipped out on paying hundreds of thousands of dollars owed to one another in interconnection fees. Such was the case in July when Hello, Smart and Vietnamese-owned Viettel (Cambodia) Pte filed several complaints to the government claiming that CamGSM, which operates under the MobiTel brand, owed them collectively more than $1.5 million. …

Bangkok Post Staff
http://www.bangkokpost.com/business/telecom/334187/the-great-mobile-shake-out

Tough times for telecom bosses in 2012

January 1st, 2013 , The Phnom Penh Post

The year 2012 has seen a number of changes of personnel within different companies in Cambodia, particularly in the telecommunications sector, but also in the insurance and banking industry.

According to In Channy, ACLEDA Bank’s CEO and vice chairman of the International Business Chamber Cambodia, the changes did not represent any irregularities. …

Sarah Thust and Anne Renzenbrink
http://www.phnompenhpost.com/2013010160558/Business/tough-times-for-telecom-bosses-in-12.html

Telecom Group Vimpelcom Hires Adviser to Help Sell Beeline

November 7th, 2012 , Reuters,, The Cambodia Daily

United Arab Emirates-telecoms group Vimpelcom has hired Standard Chartered to advice it on the sale of its business in Cambodia, Laos, Burundi, Zimbabwe and the Central African Republic, two people familiar with the matter said.

New York-listed Vimpelcom wants to focus on its largest markets of Russia and Italy, while reducing its debt, the people said. …

Vimpelcom operates in Cambodia under the brand name Beeline. …

Reuters
http://www.cambodiadaily.com

Beeline Appoints Second Boss in Three Months

July 28th, 2012 , The Cambodia Daily

Mobile operator Beeline announced Friday the appointment of the company’s second new general-director in less than three months. Said Abbadi, who formerly worked as CEO of Newroz Telecom in Kurdistan, started as Beeline Cambodia’s new boss on July 17, the company said in a statement.

The change comes two weeks after Beeline announced the departure of Siddhanta Kothari, who left the same position after just two months in the job. …

Joshua Wilwohl, P. 13
http://

Beeline General Director Exits after Two Months

July 5th, 2012 , The Cambodia Daily

Mobile operator Beeline yesterday announced the departure of Siddhanta Kothari as its general director of Cambodian operations after just two months in the job.

According to the statement, Mr. Kothari had been seated in the position for a fixed two-month term to “ensure the sustainability of the company” after replacing Beeline’s general manager, Gael Campan, on May 4. …

Philip Heijmans, p. 23
http://

Beeline Weighs Future Options in Cambodia

May 16th, 2012 , The Cambodia Daily

VimpelCom Ltd., the Russian mobile telephone operator that runs the Beeline brand in Cambodia, is reviewing its assets in Cambodia to decide whether it should stop doing business here or merge with another firm in the country, an official at the company said yesterday.

“We will conduct a thorough review of each of the company’s assets to determine where we want to elevate capital,” Bobby Leach, communications director at VimpelCom, said by telephone from the company’s headquarters Amsterdam. When asked whether Beeline plans to leave Cambodia or whether the company would be sold, he said: “We have several options, but we have not completed the analysis.” …

Joshua Wilwohl, P. 21
http://

Beeline Mobile Operator Changes Management

May 12th, 2012 , The Cambodia Daily

The Dutch mobile telephone operator Beeline has replaced its general manager Gael Campan with Siddhanta Kothari, who previously worked in Vietnam as chief financial officer of GTel Mobile JSC, a subsidiary of Beeline’s owner VimpelCom.

Beeline spokeswoman Nhem Socheata said on Friday that the change in management at the company took place on May 4, just two months after VimpelCom reported a fourth-quarter net loss of $386 million and opted to sell off its Vietnamese assets. …

Joshua Wilwohl, P. 1
http://