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Mfone $65 million in debt

Mfone $65 million in debt

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People sit outside an Mfone store in Phnom Penh. The telco owes at least $65 million to creditors. Photograph: Heng Chivoan/Phnom Penh Post

People sit outside an Mfone store in Phnom Penh. The telco owes at least $65 million to creditors. Photograph: Heng Chivoan/Phnom Penh Post

Failed Cambodian telco Mfone owes at least $65 million to multiple creditors that sources say include the government.

A court injunction to freeze Mfone‘s assets, obtained by the Post yesterday, shows Mfone owes Chinese telco provider Huawei Technologies more than $65 million.

Phnom Penh Municipal Court judge Sin Visal has banned Mfone from selling any of its assets that are equal to the value owed to Huawei.

Mfone, which filed for bankruptcy just weeks ago, had a previous injunction from Norwegian company Eltek Valere, which it owed $3.7 million.

Fellow Cambodian mobile operators Hello Axiata and Latelz have also threatened legal action for hundreds of thousands of dollars in unpaid interconnection fees.

The Post has also learned Mfone owes unpaid taxes to the Ministry of Posts and Telecommunications. The ministry could not be contacted at the time of print to confirm this.

A source at Mfone has revealed the company does not have the finances to pay back the amount owed and is  awaiting a further decision from the court as to how creditors should be repaid.

“Mfone cannot afford that amount of money; that is why they have referred it to the government. The government put it through to the court, and right now we are awaiting a decision,” Mfone business development manager Sim Saren said.

Thai telco Thaicom, which owns a majority stake in Mfone’s parent company, Shenington Investments, had  tried to sell its Mfone holdings before filing for insolvency.

Thaicom would not comment on the amount owed or the asset value of Mfone, preferring to refer to Mfone and the Cambodian authorities instead.

Asking not to be named, a source at Huawei said it had supplied metals to Mfone to be used for the installation of antennas in Cambodia.

“The reason is that Mfone signed a contract with us to supply the materials, and they [should] obey the contract.”

A source said the materials supplied to Mfone had been imported from China and supplied to Huawei Cambodia.

Huawei’s lawyer, Kuoy Thunna, said there were two reasons for freezing the assets of a business: to pay back, or escape from, debt and to prevent the transfer  of debt into the names of family members.

“Debt-holders never want to repay, so the court needs to curb first, and then order them to sell for repayment,” Thunna said.

“I think the decision is good, and I ask for it to be implemented in accordance with this verdict.”

According to Mathew Rendall, a partner with the Phnom Penh-based legal firm Sciaroni and Associates, it is unlikely that creditors will receive all the money owed, and contracted suppliers may find themselves as  lower-priority creditors.

“Ordinarily, there wouldn’t be anything left over, as their debts outweigh their assets — that’s why they go bankrupt,” Rendall said.

“My understanding is that first listing would be employees’ salaries. Second, I think, is government taxes, third would be secured creditors and fourth would be unsecured creditors.

 “If it is just a mere contract, then they would come last in that priority.”

Minister of Posts and Telecommunications So Khun refused to provide any information relating to Huawei Technologies’ claim.

Mfone expects a decision from the court on bankruptcy in mid-February.

 

To contact the reporters on this story: Rann Reuy at [email protected]
 

Daniel de Carteret at [email protected]

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