Kuala Lumpur-based Axiata, the parent company of Hello, blames highly competitive Cambodia mobile market for drop in second-quarter income
HELLO'S revenues fell 17.4 percent in the second quarter on increased competition in the sector, the mobile-phone operator's majority stakeholder, Axiata, announced in a statement Thursday.
While the Kuala Lumpur-based company recorded a 44 percent rise in net profit overall to 526.8 million ringgit (US$149 million) in the quarter up to the end of June, its Cambodia operations suffered from a "challenging" business environment, the statement said.
"Major operators are facing intense competition on pricing, and new operators are offering free SIM cards and free minutes to capture market share," it stated.
Telekom Malaysia International (Cambodia), which operates under the brand name Hello, is among the top three operators in the Kingdom in a market that has increased to nine companies this year.
Hello's Cambodia CEO, Simon Perkins, said the operator had reduced tariffs to compete with the rest of the sector, citing a difficult start to 2009.
"[Reduced rates] had an effect on our revenue for Q2," Perkins said, declining to break down the company's revenues for the period.
Thursday's statement by Axiata did not disclose financial data for the Kingdom.
Millicom International SA, the majority shareholder in market leader Mobitel, which recently announced that it planned to sell its stake to local partner Royal Group, has also cited an overly competitive market for downward pressure on its revenues for this year, although the Royal Group has denied any impact on its own finances.
In a bid to compete with promotions including free SIMs, Perkins said Hello had offered customers refill bonuses. He added that further tariff changes would be announced next week "which will benefit ... existing customers and further reward them for loyalty, and appeal to new customers".
Hello controls approximately 15 percent of the Cambodian market, according to private-sector data.
Perkins said the company was already seeing "a good improvement in revenue in Q3" on the back of launching BlackBerry push email services earlier this year, which has been followed by the introduction of the 3G BlackBerry Bold handset that went on sale Thursday.
"We have had to increase our stock of handsets to keep up with the demand," he said.
Regionally, Axiata announced it had reached nearly 100 million users in markets that include Bangladesh, Cambodia, Indonesia, Malaysia and Sri Lanka, representing growth of close to 100 percent since the second quarter of last year.
Axiata's shares rose 0.7 percent on the Kuala Lumpur stock exchange Thursday.