Logo of Phnom Penh Post newspaper Phnom Penh Post - Govt warns Beeline on below-market pricing

Govt warns Beeline on below-market pricing

Govt warns Beeline on below-market pricing

090828_13
Beeline employees take part in a promotional campaign in Phnom Penh in this file photo. The government has warned the company to increase its tariffs to US$0.06 a minute.

Newest entrant to Cambodia’s increasingly crowded mobile phone sector told to raise tariffs after dispute with Mobitel

I request [Kith Meng] to open sufficient Trunk Network so as to allow high efficiency of traffic.

THE government has warned Beeline, Cambodia's newest mobile phone service, to increase its tariffs following a dispute with market leader Mobitel, according to a letter from the Ministry of Posts and Telecommunications obtained by the Post.

Dated August 17, the letter says that Beeline - in a meeting with Royal Group CEO Kith Meng - agreed to raise tariffs from US$0.05 a minute to $0.06. Royal Group is due to become the majority shareholder in Mobitel following an agreement this month to buy out Millicom International's stake.

Mobitel was considering shutting down Beeline's access to its infrastructure, the letter said, on the basis that Beeline was selling its mobile services below cost price.

"I would ... like to request [Kith Meng] to open sufficient Trunk Network so as to allow high efficiency of ... traffic between Mobitel and Beeline for the benefit of the customers of both networks," said the letter, signed by Minister of Posts and Telecommunications So Khun.

Beeline - which is run by Russia's Vimpelcom Group - has been given until Tuesday to up its tariffs, according to an industry official who did not want to be named. The company was unavailable for comment Thursday.

"There is no comment, and there are no issues [with Beeline]," Kith Meng said Thursday. It remained unclear whether Mobitel still intended to block its competitor.

The letter was sent to Beeline, Mobitel and the Kingdom's seven other mobile operators in an apparent warning to the sector over increasing competition that has seen companies offer services for free or below-cost price. It is the first time the government has directly intervened in the sector's pricing policies.

On Thursday, in announcing its second-quarter results, Hello owner Axiata of Malaysia bemoaned the distribution of free SIM cards as the reason behind a 17.4 percent drop in revenues. Millicom International has also previously complained about the competitiveness of the Cambodian mobile market, which was the main reason it cited in deciding to sell its stake in Mobitel to Royal Group.

In launching operations in May, Beeline Executive Vice President Vladimir Riabokon said the company would pursue an aggressive investment strategy in a bid to gain half a million users by December.

The company registered 100,000 users in its first fortnight of operations, Riabokon said in May, adding that Beeline was aiming for 20 percent market share within the next three years, which - if achieved - would place it second in the market behind Mobitel.

At the time, Touch Heng, an undersecretary of state at MPTC, welcomed Beeline's low prices.

"The rate [$0.05 for a local call] offered by Beeline is a very good price for users because Cambodians want low prices and a high-quality service," he said.

MOST VIEWED

  • US think tank warns of China's 'ulterior motives'

    A US think tank on Tuesday warned that spreading Chinese investment in the Indo-Pacific follows a pattern of leveraging geopolitical influence at the expense of the nations receiving investment, including Cambodia. The report looks at a sample of 15 Chinese port development projects, noting that the

  • More than three tonnes of ivory reportedly bound for Cambodia seized in Mozambique

    A total of 3.5 tonnes of ivory reportedly bound for Cambodia was seized by authorities in Mozambique late last week, according to the NGO Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). CITES' information was based on a report from the

  • Defence Ministry denies weapons in smuggling case came from Cambodia

    After a Thai national was arrested last week for allegedly smuggling guns from Cambodia to Thailand, Cambodia's Defence Ministry has claimed the weapons seized during the arrest are not used in Cambodia, despite the fact that both types of rifle seized are commonly found in

  • Shipwreck found off coast of Koh Kong

    Royal Cambodian Navy researchers are working to identify a decades-old shipwreck found earlier this month off the coast of Koh Kong province. Divers found the 70-metre-long wreck on April 4 about a mile from Koh Chhlam island, according to Navy officials. Deputy Navy Commander Tea Sokha,