Crowded market hurts Hello

Photo by: Julie Leafe
A Hello top-up card is displayed for sale along with competing brands Metfone and Cellcard in Phnom Penh.

via Khmer NZ

Thursday, 26 August 2010 15:01 Jeremy Mullins

MALAYSIA-based Axiata Group saw revenue at Cambodian mobile subsidiary Hello decline 14 percent compared to the second quarter of last year, even as the firm’s global revenue rose 19 percent.

Declining revenue is a condition shared by most of Cambodia’s mobile operators, Hello Chief Executive Officer Simon Perkins said yesterday.

“It’s the same situation for all in this environment,” he said.

He said that intense competition in the mobile-phone sector was negatively affecting Hello’s bottom line.

Cambodia’s mobile-phone sector is generally considered overcrowded.

Nine operators provide mobile-phone services in a market that experts have said could support at most four or five.

This year, Hello has conducted a “cleanup of non-revenue generating SIM” that led to a 46 percent drop – on paper – in quarter-on-quarter subscriber numbers, according to a presentation accompanying yesterday’s statement of results.

Statistics from the Ministry of Posts and Telecommunications obtained previously showed the firm slid from third spot to fourth in the market in terms of active domestic subscribers, from 910,077 in March to 491,146 at the end of June.

“Competitive pressure impacted revenue ... [and] cost-control tightened further,” Axiata said yesterday.

It also said that Hello’s profits had dropped 10 percent last quarter compared to the previous quarter, though it did not attach a figure.

Axiata turned a global profit of US$214.58 million during the April-to-July quarter, up 18 percent from $181.72 million for the same quarter in 2009.

Its revenues also increased 19.6 percent to $1.22 billion from $1.02 billion during the same period.

But Axiata struck an optimistic tone for the remainder of the year.

It said in a press release that a balance needed to be made between future growth and immediate profits.

“In some cases, we need to reinvest our profits to ensure we can compete effectively and grow our future revenue,” Axiata Chairman Azman Mokhtar said in the release.