State-owned fixed-line company Telecom Cambodia’s (TC) plan to join the Cambodia Securities Exchange (CSX) has been postponed indefinitely due to poor financial performance, and the company will need to redesign its business plan to improve operations, an official at the Ministry of Post and Telecommunications said yesterday.

Sarak Khan, secretary of state at the Ministry of Post and Telecommunications, told the Post yesterday that he had been surprised by TC’s financial performance, adding that if the ministry had been aware of the situation, it would have tried to find a better solution.

“The ministry has informed the government of the delays because the company’s financial situation is not good,” Khan said. “It is worse still when the transit fee, a major source of revenue for TC, is deducted from this year.”

Revenue from transit fees – the service fee for connecting to alternate provider networks – is charged by the TC at one cent per minute.

According to Khan, revenue from transit fees account for about $17 million annually, more than 50 per cent of TC’s total revenues.

According to a report from international audit company KPMG, which audited the company’s financial performance, TC’s revenues have decreased each year since 2008, excluding the transit fees.

In 2011, TC lost about $14.4 million, and it lost $10.2 million in 2012. During the past five years, deducting transit fees, a total of $57 million was lost.

TC’s primary services are its fixed-line phone service and its internet service. According to the Ministry of Posts and Telecommunications, there are only 39,000 TC fixed line service users – seven per cent of the total market share.

TC internet service users come to just over 3,500, or less than one per cent of market share.

“It is like a snake eats a frog,” said Khan. “You need to discover new products and services in order to stay competitive.”

Ming Bankosal, director general of the Securities and Exchange Commission of Cambodia (SECC), said any company that fails to make a net profit in the last three years of operation will be barred from joining the country’s bourse.

According to a projection from Japanese development agency JICA, which invested $27 million in TC, the company will continue at a loss for the next few years but may recover after 2017, if the right policies put in place.

Tong Yang Securities Cambodia, an underwriter of TC, declined to comment.

TC’s former director general, Lao Saroeun, was accused of corruption and stepped aside from his position earlier last month.