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NEWS UPDATES 30 August 2009

Cambodian regulator asks new mobile operator to raise tariff

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Cambodian authorities has warned Beeline, Cambodia's newest mobile phone service, to increase its tariffs following a dispute with market leader Mobitel, reported the Phnom Penh Post, citing a letter from the Ministry of Posts and Telecommunications.

Dated August 17, the letter says that Beeline - in a meeting with Royal Group CEO Kith Meng - agreed to raise tariffs from $0.05 a minute to $0.06. Royal Group is due to become the majority shareholder in Mobitel following an agreement this month to buy out Millicom International's stake.

Mobitel was considering shutting down Beeline's access to its infrastructure, the letter said, on the basis that Beeline was selling its mobile services below cost price.

"I would ... like to request [Kith Meng] to open sufficient Trunk Network so as to allow high efficiency of ... traffic between Mobitel and Beeline for the benefit of the customers of both networks," said the letter, signed by Minister of Posts and Telecommunications So Khun.

Beeline - which is run by Russia's Vimpelcom Group - has been given until Tuesday to up its tariffs, according to an industry official who did not want to be named. The company was unavailable for comment Thursday.

"There is no comment, and there are no issues [with Beeline]," Kith Meng said Thursday. It remained unclear whether Mobitel still intended to block its competitor.

The letter was sent to Beeline, Mobitel and the Kingdom's seven other mobile operators in an apparent warning to the sector over increasing competition that has seen companies offer services for free or below-cost price. It is the first time the government has directly intervened in the sector's pricing policies.

On Thursday, in announcing its second-quarter results, Hello owner Axiata of Malaysia bemoaned the distribution of free SIM cards as the reason behind a 17.4 percent drop in revenues. Millicom International has also previously complained about the competitiveness of the Cambodian mobile market, which was the main reason it cited in deciding to sell its stake in Mobitel to Royal Group.

In launching operations in May, Beeline Executive Vice President Vladimir Riabokon said the company would pursue an aggressive investment strategy in a bid to gain half a million users by December.

The company registered 100,000 users in its first fortnight of operations, Riabokon said in May, adding that Beeline was aiming for 20 percent market share within the next three years, which - if achieved - would place it second in the market behind Mobitel.

At the time, Touch Heng, an undersecretary of state at MPTC, welcomed Beeline's low prices.

"The rate [$0.05 for a local call] offered by Beeline is a very good price for users because Cambodians want low prices and a high-quality service," he said.


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