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Cellcard’s latest offer raises pricing concerns

A Cellcard employee talks on a phone at the company’s head office in Phnom Penh.
A Cellcard employee talks on a phone at the company’s head office in Phnom Penh. Hong Menea

Cellcard’s latest offer raises pricing concerns

Cambodia's telecommunication regulator summoned CamGSM, the operator of Cellcard, in for questioning yesterday over concerns that the company was engaged in predatory pricing.

The questioning comes just days after Cellcard unveiled its Osja Xchange plan, an offer that allows customers to exchange $1 for $100 “of value for voice and data coverage with an additional bonus of 30 minutes of voice calls every day”.

The 14-day package effectively allows subscribers to use up to 1,429 minutes of voice and 5 gigabytes of data for just $1, according to a company press release.

By comparison, other major mobile network operators advertise basic offers to exchange $1 for $30 of on-net calls and SMS, and internet data. According to Metfone’s website, $30 is equivalent to 600 minutes of voice and 1.5 gigabytes of data.

Im Vutha, spokesman of the Telecommunication Regulator of Cambodia (TRC), which sets industry regulations and handles disputes, said Cellcard was called in so that the TRC could investigate whether the mobile operator the company was offering an unprofitable product at far below market value.

“The promotion campaign added a huge bonus and these discounts have become increasingly competitive recently,” he said. “So we summoned Cellcard and told them to submit a profitability statement.”

While the regulator has yet to decide on whether the offer should be scrapped, or if any regulations had been broken, Vutha said all mobile network operators would soon be required to submit profitability statements to ensure that there was no market manipulation or price collusion.

“As the regulator, our job is to protect the benefit of users and service providers,” he said. “We just worry that tough competition can affect other operators and bigger players with big subscription bases can knock the smaller operators out of the market.”

He added that while none of the three major mobile networks previously consulted with the government before launching promotional packages, Cellcard’s Osja Xchange was “suspicious”.

“We want to avoid a monopoly in the market, because if that happened we are afraid that it would damage consumers,” he said. “We need to make sure that operators are providing quality service.”

Cellcard, a company owned by Kith Meng’s conglomerate Royal Group, could not be reached for comment yesterday.

While discounted promotions in the Kingdom’s competitive telecommunications market are nothing new, industry insiders have warned that the market was becoming eerily similar to 2012 and 2013 when operators engaged in price wars that led to losses and insolvencies.

The consolidation that followed left the industry with three large mobile network operators Smart, Metfone and Cellcard and three smaller players.In response to the regulator’s call on Cellcard, Smart yesterday issued a statement declaring that while market competition was beneficial to consumers, “it should not distort the market as prices set too low will stunt infrastructure growth, rendering the industry unsustainable in the long-run”.

The statement added that according to its internal analysis, optimal prices for the industry should equal $1 for 1.5 gigabytes of data. Anything below that, it said, was likely unprofitable and would lead to a significant drop in telecommunications infrastructure investment.

“Significant reductions in prices will inevitably lead to significant reduction in investments as returns will be less, thereby reducing service expansions and ultimately government resources – a scenario which ultimately benefits no one,” it said.

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