Logo of Phnom Penh Post newspaper Phnom Penh Post - Tariffs may prompt Thaicom move

Tariffs may prompt Thaicom move

Tariffs may prompt Thaicom move

Steep price cuts by mobile operator Hello may prompt Thaicom to sell its majority stake in Mfone, according to investment firm Cambodia Capital.

Cambodia Capital claims Hello’s drop in the tariffs it charges customers this year has heavily impacted Mfone’s operations, as well as those of other smaller telecoms in the Kingdom.

“The possible exit by Thaicom has been driven in part by the recent adoption of aggressive price-cutting by the third-largest operator, Hello,” Cambodia Capital said in a report this week.

“Hello, backed by their deep-pocketed Malaysian parent, Axiata, has stated that they intend to remain in the market and drive out smaller operators,” the report said.

Cambodia Capital said that while the firm did not expect to see the effects of Hello’s price cuts so quickly, the industry – and Mfone, in particular – was already feeling pressure as a result of those cuts.

“If the larger Mfone is already feeling the pinch, it is probable that the other smaller operators are also being hit in [the second quarter of 2011] by this major player slashing tariffs. This could drive more rapid consolidation than we had previously expected.”

Last Friday, Thaicom CEO Suphajee Suthumpun reportedly said that the firm was considering pulling out of Cambodia, where it owns 51 percent of Mfone, as well as Laos.

Hello in the first half of 2011 introduced tariff plans charging a flat flee for unlimited monthly calls, which drew criticism from domestic rivals, who claimed they violated a Ministry of Post and Telecommunications prakas regarding minimum pricing per minute.

The company has since defended itself, saying it pushed forward with its pricing plans only after the ministry refused to enforce the prakas as other operators were cutting prices.

Regardless, Hello CEO Simon Perkins this week downplayed the effect his price cuts were having on the industry.  He said an overcrowded sector and aggressive pricing regimes over the past two years had finally started to take their toll on some Cambodian mobile operators.

“It’s not just us. It’s the whole market,” he said. “We followed what the rest of the market was doing. Probably because we’re a bit bigger it’s had an impact.”

Perkins also attempted to temper Cambodia Capital’s claim that Hello had previously said it sought to drive smaller players out of business.

“Axiata is committed to this market 100 percent. Cambodia is a strategic operation that we will defend and grow whatever it takes,” he said, though the intention of eliminating competitors was “a step too far”.

Mfone CEO Yap Wai Khee yesterday defended his company by claiming price competition had affected most telecom players in Cambodia, as at least part of the subscriber base is price sensitive.

At the same time, he pointed to the difference between subscribers that chase low tariffs and more loyal customers, saying the latter group lends stability to Mfone.  

He said any effect felt by the industry was the direct result of companies choosing to not offer such low tariffs, which created “a non-level playing field for operators”.

Mfone recently launched an unlimited pricing plan very similar to that of Hello. When asked about that move, Yap Wai Khee said he had previously called for the elimination of such plans to no avail. When his company’s subscriber base continued to decline, “Mfone decided to regain its subscriber market share through re-levelling the playing field.”

MOST VIEWED

  • Angkor Wat named as the top landmark for the second year

    Travel website TripAdvisor has named Cambodia’s ancient wonder Angkor Wat as the top landmark in the world for the second year running in their Travelers’ Choice Award 2018, an achievement Cambodian tourism operators expect will attract more tourists to the Kingdom. The website uses traveller

  • Hun Sen detractors ‘will die’

    Prime Minister Hun Sen on Wednesday said those who curse or insult him would eventually die without a plot of land to bury their bodies after being killed by lightning, suffering the same fate as those who recently died in Thmar Baing district in Koh

  • New US bill ‘is a violation of Cambodian independence’

    After a US congressmen introduced bipartisan legislation that will enact sanctions on Cambodian officials responsible for “undermining democracy” in the Kingdom, government officials and the ruling Cambodian People’s Party on Sunday said they regarded the potential action as the “violation of independence and sovereignty

  • NOCC to contest petanque, tennis axe

    The National Olympic Committee of Cambodia will lobby hard over the next few weeks for the inclusion of the Kingdom’s most productive medal-earning sport, petanque, along with vovinam and tennis after the disciplines were left out of the initial list of 30 preferred sports for