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Telcos called to pay debts

Traffic passes in front of Ministry of Posts and Telecommunications headquarters in Phnom Penh.
Traffic passes in front of Ministry of Posts and Telecommunications headquarters in Phnom Penh. Moeun Nhean

Telcos called to pay debts

Frustrated with the lack of compliance, the government has given the Kingdom’s mobile operators an ultimatum: declare their company revenue shares and settle all outstanding debts owed to the government by the end of the month or face swift and severe punitive action.

The announcement, released yesterday by the Ministry of Posts and Telecommunications (MPT) and Ministry of Economy and Finance (MEF), and signed by Prime Minister Hun Sen, states that the government is prepared to take unprecedented measures to penalise those telecoms that fail to pay their dues to MPT.

It said the government would start by publicly naming and shaming all delinquent operators, as well as their board directors, using various media channels.

If that fails, it promises to “take legal action such as freezing the company’s bank accounts, closing down the frequencies, freezing import-export activities, banning all public procurement activities, suspending or withdrawing business licence and/or other business legal documents, and finally, filing a lawsuit”.

Contacted yesterday, MEF officials listed on the document said they were members of an inter-ministerial group set up to process disputes, but were not authorised to speak to the press.

However, according to TRC spokesman Im Vutha, the strongly worded announcement was inked to convey the resolve of the government in collecting revenue. He explained that telecom operators are obliged by law to pay taxes as well as additional non-tax revenue annually, but that most are late or unwilling to pay, or manipulate their numbers to evade scrutiny.

“This strict announcement will strengthen the efficiency of revenue collection,” he said. “We have to stop companies that continue to break the law and cheat the government or we will not have the resources to develop critical areas of the economy.”

Cambodia’s has three large mobile network operators – Smart, Metfone and Cellcard – and three small operators – qb, Seatel and Cootel

While Vutha declined to name which companies the announcement was targeting in particular, industry insiders have said certain telecom operators with close government ties have routinely evaded tax and revenue-share payments.

CamGSM, the owner of Cellcard, is owned by influential tycoon Kith Meng’s Royal Group while Global Witness reported last year that the Prime Minister’s daughter, Hun Mana, has a $44 million stake in Viettel, the Vietnamese military-owned operator of Metfone.

An industry insider who requested anonymity said it was unlikely that the announcement was targeting any of the big three operators or those with connections.

“More likely it is one of the smaller operators that are still hanging around,” he said. “However, I know the other telecom operators believe that Metfone fudges their numbers and that they are struggling financially.”

Metfone did not respond to request for comment yesterday, while Cellcard said it would not comment as it was unaware of the announcement.

Vutha said he was unable to disclose how much the government collects from revenue-sharing each year. However, he said under its revenue-sharing model, mobile operators are required to pay 4 percent of their gross revenue to the state for the first five years of operation, and 7 percent after that.

Smart Axiata, a publicly listed company on the Malaysian bourse, said in a statement yesterday that it had already complied with government regulations, although it could not disclose the amount paid for 2016 as its financial statement have yet to be disclosed.

“Smart has always taken our national responsibilities very seriously in terms of being compliant towards paying tax and contributing to government development funds, and we can confirm that we have paid all dues to MPTC and MEF as per the specified requirements,” the statement said, adding that in 2015 the company paid $56 million to the government.

“We commend and support these initiatives as it will result in all operators being treated similarly and competing on a fair basis in terms of offerings and future sector investments,” the statement said.

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