Cambodian company discussing imminent acquisition of Luxumbourg-based Millicom International’s 58.4 percent stake in Mobitel Cellcard

Photo by:

Heng Chivoan

A mobile-phone user walks past a vendor of Cellcard credit top-up cards on Sunday in Phnom Penh. Royal Group is in negotiations that could see it take complete control of Cambodia’s biggest mobile operator.

ROYAL Group is in negotiations to buy out Luxembourg-based Millicom International Cellular's majority stake in Cambodia's largest mobile phone company, Cellcard Mobitel, a source close to the deal told the Post.

Speaking on condition of anonymity, the source said on Saturday that the deal would result in a partial or complete takeover by the Royal Group - a deal that could be finalised in the next few days as both sides attempt to reach agreement over the sale price.

Millicom International owns a 95-percent stake in Millicom Holdings, the company that owns a 61.5 percent stake in Mobitel - which gives the Luxumbourg company a 58.4 percent share overall - with Royal Group in control of the remaining 38.5 percent share.

Royal Group hopes to acquire Millicom International's stake, but it remained unclear Sunday whether Millicom would retain any financial interest in Mobitel, the source said.

The source added that a Royal Group delegation travelled this month to London to discuss the buyout with Millicom.

In a report released Tuesday announcing its financial results for the first quarter, Millicom International announced that it was reconsidering its Asian investments, which include Sri Lanka and Laos, along with Cambodia.

"We have taken the decision to carry out a strategic review of our Asian assets, which could lead to a full or partial divestment of our business in the region," the company said without referring specifically to Cambodia.

We have taken the decision to carry out a strategic review of our Asian assets.

Millicom International was not immediately available for further comment on Sunday.

Following last week's announcement, Millicom International shares rose on both the Nasdaq and Nordic OMX exchanges. The stock increased to US$48.36 on the Nasdaq exchange Friday, up 3.8 percent, and climbed 4.31 percent on the OMX the same day.

In its first-quarter report, Millicom said that Mobitel had added more than 52,000 subscribers this year up to March 31, giving the company a total subscriber base of 2,172,569. This represented year-on-year growth of 16 percent, the lowest rate of the company's three Asian operations. Millicom's operations in neighbouring Laos increased 76 percent last year. The company's Asian interests recorded a 7 percent increase in profits in the first quarter to $68 million.

Mobitel is the leading provider of mobile phone services in Cambodia, with Millicom recording a 55-percent share of the total market at the end of 2008, although the market has become increasingly competitive with the introduction of new mobile phone companies this year - including Viettel of Vietnam in February - with more expected to launch in the near future.

Royal Group is understood to want to execute a more aggressive expansion plan as it looks to increase its reach into rural areas where mobile density is still low and remains only 29 percent in the whole country, according to Millicom International figures for last year. That figure is expected to increase sharply to 46 percent by 2012, the International Finance Corporation said, which concluded a $40 million loan as part of a $100 million financing package to Mobitel last month.