Possible caps on investment by foreigners concern telcos

Mobile-phone handsets are displayed at a Mobitel mobile-phone shop in Phnom Penh. Firms in the sector say they are concerned that a new telecoms law will limit foreign ownership. BLOOMBERG

(Post by CAAI News Media)

Tuesday, 06 October 2009 15:01 Steve Finch

Companies describe parts of draft telecoms law, including relicensing issue, as vague in final meeting before formally submitting feedback to government

MOBILE phone executives were due to finalise a joint private-sector submission Monday afternoon on a forthcoming telecoms law that contains a provision that some have said appears to limit foreign ownership within the sector.

In a meeting with Australian law firm Allens Arthur Robinson, company heads from the Kingdom’s mobile providers were due to put the finishing touches to a response that is due to be passed on to the government.

Marae Ciantar, head of Allens Arthur Robinson in Cambodia and Thailand, said late last week that a provisional nine-page response earlier obtained by the Post could be revised during the meeting.

That document, which was collated from the private sector’s comments prior to Monday’s meeting, describes Article 34, which “permits the Minister [of Posts and Telecommunications] to impose limits on the level of ownership in the telecommunications sector” as “vague” in its current form.

It goes on to suggest that such a provision might contravene World Trade Organisation rules, which it says prevent Cambodia putting caps on foreign ownership in the sector from January 1 this year, except on land.

With a high level of foreign ownership in the sector, companies have said they remain worried about the government’s intentions.

“There is genuine concern over this point,” said Hello CEO Simon Perkins before the meeting Monday. “If a cap is imposed on foreign ownership, then the owners may have to sell part of their share-holding.”

Hello is majority owned by Kuala Lumpur-based Axiata.

“Putting a bar like this on existing licences is not fair and will definitely impact future investments by current investors,” Farouq Abu Saleh the chief operating officer of Cambodia Advance Communications Ltd (CADCOMMS), which operates the qb brand, said Monday.

Mobitel courts investors

Market leader Mobitel is being restructured as Luxembourg-based Millicom International sells its majority stake to Cambodian-based Royal Group, but the company is reported to have spoken to a number of foreign investors about the deal – tipped to be completed by the first quarter of 2010 – including France Telecom and NTT DoCoMo of Japan.

Royal Group’s Chief Financial Officer Mark Hanna was not available for comment Monday.

The telecoms law would establish a regulator for the sector and clarify rules on a number of issues, including pricing, interconnectivity, infrastructure sharing and a transition period following initiation of the legislation.

The transition period will require all companies to obtain new licences, which is “the private sector’s most significant concern”, according to the feedback in the Allens Arthur Robinson document seen by the Post.

Transitional period

The draft states that companies will be given 12 months to apply for a new licence “upon the receipt of the announcement by the Telecommunications Regulator of Cambodia”.

“There is no guarantee that the new licences will actually be issued or that, if issued, that they would recognise the existing rights of the applicable operators,” the private sector document says.

Monday afternoon’s meeting was not concluded by the time the Post went to press, but Marae Ciantar said earlier that the final draft of the feedback would be submitted to the government in the near future.

Smart Mobile CEO Thomas Hundt declined to comment on the specifics of the draft law or his company’s feedback Monday.

“Yes, we have some points we would like to clarify or discuss that should be adapted, and I think the majority of operators have given comments,” he said.

“Now it is a matter for the private-sector working group to come up with a common view.”

ADDITIONAL REPORTING BY NATHAN GREEN