Viettel Corporation, the Vietnamese telecommunications company owned by the Vietnamese

army, has been given permission to operate in Cambodia, according to government sources.

"The government gave a license to Viettel to operate a VOIP [Voice Over Internet

Protocol] on June 2," said Chem Sangva, director, Inspection Department at the

Ministry of Post and Telecommunications (MPTC). "In partnership with the Ministry

of National Defense, Viettel will operate the VOIP system in Cambodia for 35 years."

MPTC Minister So Khun said that Viettel, which will operate under the name of Viettel

Cambodia Pte Ltd Company, is looking for an office and is preparing to set up its

access codes and network for operations.

"We want to have more investment and more competition to make phone calls cheaper,"

Khun told the Post on August 22.

Minister of National Defense Tea Banh said his ministry will cooperate and coordinate

with Viettel to make the operation run smoothly.

"The operation will start very soon," Banh said. "We make business

to make money, if not we will not do it. We will benefit the country, not only the

Ministry of Defense."

Viettel will initially invest US$1 million in setting up the new network in Cambodia,

according to Vietnam News.

Viettel is entirely owned by the Vietnamese military. Its CEO is General Hoang Anh

Xuan. One industry source who requested anonymity said the company was growing rapidly

within the Vietnamese market and had negotiated attractive financing from vendors

who sold it much of its network equipment so that it had a manageable debt load.

In Vietnam, Viettel is viewed as a low-cost provider and has been very aggressive

in its pricing schedule. At present it offers mobile, internet and fixed line services.

It is speculated that Cambodia wants to build a link to Vietnam's mobile subscribers

and that Viettel will be used as a gateway.

According to an article in the Vietnam Post, there are anywhere from 11 to 17 million

mobile phone users in Vietnam. Figures vary, as turnover is high and there are discrepancies

in the reporting process.

VOIP is the communications system that lets people make telephone calls via computer

over the internet. At present, many internet cafes in Cambodia offer these services

without a license.

Sangva said the illegal use of cheap overseas calls at internet cafes is causing

the government to lose more money than it did from the abusive use of local Thai

telephone networks along the Cambodian-Thai border in provinces such as Banteay Meanchey

and Battambang.

"About 50 percent of internet cafés and about 90 percent of overseas

calls via the internet are operating without licenses," Sangva said. "They

will face the law very soon; the Prime Minister gave us the green light to fight

them."

He said the VOIP to be operated by Viettel will cost the same as those illegal operations

and he believes that illegal operators will stop their activities by themselves and

people will turn to use the legal one.

On March 31, the Council of Ministers adopted the draft telecommunications law, which

has 18 chapters and 103 articles. The draft was sent to the National Assembly and

after it becomes effective MPTC officials will have the right to crack down and punish

offenders who have been operating illegally.