Published: Friday 5 November 2010
Region: Asia Pacific
Cambodia’s largest mobile operator has secured over half a billion dollars in loans from Chinese banks to help fund a network contract with Huawei, reports the Financial Times. The deal is understood to be the largest financing project of its kind in Cambodia’s history, and has led to questions over the levels of Chinese influence in the country. CamGSM, a subsidiary of Royal Group (Cambodia’s largest private conglomerate) and owner of the MobiTel and Cellcard mobile brands, has borrowed US$591 million in loans arranged by the Bank of China, and will enter a five-year US$500 million equipment and services contract with Huawei. The contract is part of a package of China-Cambodia deals - ranging from energy exploration to agriculture and infrastructure construction – reported to be worth around US$6.4 billion in total. According to the report, the flurry of deals comes days after Hillary Clinton, US Secretary of State, said during a visit to Cambodia that the Asian country should maintain a foreign policy that was not “too dependent” on China.
CamGSM is Cambodia’s largest mobile operator with almost 2.5 million subscribers in Q3, according to Wireless Intelligence data. Royal Group, its parent, will use part of the US$591 million Chinese bank loan to refinance a US$421 million bridging loan from Standard Bank and Australia and New Zealand Banking Group, notes the Financial Times. That loan helped Royal Group last year to buy the majority stake in CamGSM held by Luxembourg-based Millicom International Cellular, giving it 100 percent control. Although it has not commented on the latest deal, Huawei often offers financing deals to secure contracts. It is understood that the vendor has a US$35 billion standing credit line in place with the China Development Bank.