Court Issues Injunction Over Mfone Debt

The Norwegian energy firm Eltek Valere won an injunction from the Phnom Penh Municipal Court earlier this month against the Thai-owned mobile operator Mfone after it filed a complaint claiming that Mfone had failed to pay $3.73 million in service charges, court documents obtained Friday show.

The injunction comes as two other mobile phone companies—Hello Axiata Co. Ltd. and Latelz Co. Ltd.—have threatened to sue Mfone unless it pays back hundreds of thousands of dollars allegedly owed to them in interconnection fees.

“Mfone did not complete nor implement its contract with Eltek because until now the company did not pay for the equipment needed for its GSM network,” the complaint filed by Eltek on October 9 states.

“Despite this, [Eltek] tried to negotiate with the firm and many times informed them of the debt through their lawyer, but Mfone has not agreed to pay and even used tricks to delay talks many times until Eltek could not take it anymore,” it states.

After reviewing Eltek’s complaint, the Phnom Penh Municipal Court on October 18 ordered Mfone to provide the court with an assessment of its inventory and also banned the company from selling any of its assets until the situation with Eltek is resolved.

“The Phnom Penh Municipal Court decided to issue these warrants based on the case provided by the plaintiff,” the injunction, which was signed by presiding Judge Sin Visal, states.

In work that was completed in 2009, Eltek helped Mfone to develop satellite technology for its mobile phone network, according to the complaint filed by Eltek.

That complaint also cited a letter signed by Mfone’s former CEO, Yap Wai Khee, on September 5, 2011, addressed to Eltek’s head office in Singapore, stating that the firm was unable to make the payment due to an ongoing restructuring of Mfone’s debt in Cambodia. The letter also suggested paying the balance in monthly installments of $10,000 per month.

Kouy Thunna, the lawyer representing Eltek, said Mfone had one month from when the injunction was issued to pay up before it decides to file a lawsuit.

“I have already discussed it with the ownership [at the regional office] in Singapore and they decided that they will file a complaint with the court to seize the property of Mfone in order to pay back the debt, but we will give them a little more time,” he said.

Atip Rittaporn, managing director at Shenington Investments, the holding firm for Mfone, said he was aware of the injunction, but is uncertain about how the firm will proceed.

“I got the information on Thursday and it came as a surprise to me. They [Eltek] have been quiet and then we get the information on Thursday,” he said. “All along, and even last week we have been in talks with them, but nothing concrete has come from it.”

“We are definitely in debt and are trying to reach a conclusion to determine what is next,” he said.

Minister of Post and Telecommunications So Khun reiterated yesterday that the government would not intervene in the many financial troubles facing mobile operators in Cambodia.

“I know that there are some companies that are having problems in the courts, but I think that they just need to fight it out with one another,” he said.

Thaicom Public Company Ltd., the majority shareholder in Mfone, has publicly stated on several occasions this year its intent to sell Mfone. And in May, it made the decision to devalue the company by $1.31 million.

According to Thaicom’s financial statement from the first half of 2012, Mfone’s profits this year have dropped 50 percent to $1.34 million compared to the same period in 2011.

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