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Mfone towers not so sweet a deal any more for holders

An Mfone tower on a roof in Phnom Penh
An Mfone tower on a roof in Phnom Penh last month. The bankrupt company’s towers remain dormant, waiting for a buyer. HONG MENEA

Mfone towers not so sweet a deal any more for holders

Nearly a decade ago, Meng Chor inherited a rooftop rental agreement with a telecommunications firm after buying a property on Mao Tse Toung Boulevard.

For $300 a month over a 10-year lease, the contract allowed the company that later became Mfone to keep the cell tower on top of his building. The tower is one of more than 1,000 across the country, most located in the provinces. It was a good deal. All Chor had to do was sit back and collect the money.

But when the company went bankrupt in January, five months before Chor’s lease expired, the payments abruptly halted. He said no one consulted him. One day, workers arrived to remove a battery from the tower, leaving a thin, 15-metre-high skeleton on his roof, lifeless, strapped down tight from all four sides.

“It does not matter for me whether to renew the contract or to stop, but I just want to have a clear discussion,” he said, adding that without a new contract and resumed payments, he wants the tower dismantled and removed from his building. He’s not alone.

Mobile towers litter the skyline of Phnom Penh; and much like the overcrowded telecommunications market from whence they sprang, their differences are not so easily distinguishable from one provider to the next, blending in to the clutter of the capital’s rooftops.

Though invisible to the naked eye, the Mfone towers remain dormant, put to sleep, waiting to be sold off in bankruptcy proceedings and woken by a new provider.

The owners who rented space for them have not been paid since the company collapsed.

“I just wait and see,” said an Mfone rooftop lease holder in Tuol Kork district who declined to be named. The property owner’s 10-year lease was renewed in October, and bumped to $500 a month from the original agreement of $300. Not one of the new payments has arrived.

Those with rented rooftops are a microcosm of the Mfone case. With creditors lying in wait for more than $160 million in dues, the challenge for Mfone bankruptcy administrator Ouk Ry is finding an interested party to purchase the towers, one of the failed telco’s most expensive assets. Asked about the value of the towers, Ry said it’s “what the market determines”.

On the one hand, existing telecommunications companies don’t need the added infrastructure because they have their own, said Kevin Der Arslanian, an analyst at China Market Research Group.

“Towers sit side by side, and buying back most towers serves no purpose to the other operators,” he said.

But with more than 70 per cent of the towers in the countryside, Der Arslanian says bargains could be had.

“Mfone might have towers in unique locations that offer coverage in regions where other telcos have patchy networks,” he said.

Representatives for mobile providers qb and Smart declined to comment on their potential interest. Beeline and Mobitel did not immediately respond to similar requests.

Where the property owners who let space to Mfone stand in the pecking order of post-bankruptcy payouts is hard to say.

Their individual claims pale in comparison to Mfone’s largest single creditor, Chinese telco provider Huawei, which is claiming $65 million.

Ry, the administrator, said that leaseholders had initially been notified about the process after the bankruptcy and via announcements in the local press. With over 1,000 creditors, varying from scratchcard sellers and the rooftop owners to large technology providers like Huawei, a nine-member panel has been established to represent all claimants at creditor meetings.

In theory, all creditors can stake a claim. In reality, they might not get what they want.

As for rooftop lessors, “once we find a buyer we will definitely contact them”, Ry said.

Former Mfone employees were the first to be paid on July 24, and even they were allotted only 10 per cent of the 4.4 million they demanded.

Ry said then that the employees would be paid the remaining 90 per cent of what they were owed upon the sale of the towers. On Wednesday, he said he was close to finalising deals with potential buyers and should know more in a few weeks.

The sooner the better for tower holders.

“They called us to have a meeting but nothing has been solved so far,” said the homeowner in Toul Kork district. “They need to solve the problem for us.”

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