Government Readies for Telecom Takeover

In a ceremony marking the expiration of the government’s 10-year contract with international telecommunications provider Telstra, Prime Minister Hun Sen stressed that starting today, the government will have full ownership and assume full responsibility for the thousands of phone lines and other infrastructure set up by Telstra.

But that is not entirely true. Minister of Posts and Telecom­munications So Khun said Mon­day the government will have help from AZ Distribution Co, a little-known company based in Phnom Penh. The government appointed AZ as its partner in the ministry’s new public enterprise, Cambodia Telecom.

“We need to follow the prime minister for a while, but I will tell him in a letter what we need to do,” So Khun said after the ceremony. “The deal with AZ is 50 percent finished. Everything with AZ is still going on.”

So Khun said the ministry is now awaiting a decision by the Council of Ministers to approve the public enterprise. He said he expects Hun Sen to change his mind after he shows him the AZ proposal.

So Khun said the ministry needs to share responsibility with AZ or let AZ be solely in charge of the international gateway because it is easier to get financing with AZ aboard than if the government managed the telecommunications system alone.

Opposition lawmaker Son Chhay, chairman of the National Assembly’s commission on tele­communications, has called the government’s decision to partner up with AZ a big mistake, noting that Telstra had done a good job and fulfilled all contract requirements. Son Chhay is out of the country and could not be reached for comment Monday.

So Khun acknowledged in January that the government would need an experienced, internationally recognized partner to manage operations because AZ had no experience in telecommunications.

But So Khun said Monday the Ministry of Finance is providing $2 million for training so ministry staff members and AZ employees can learn how to take over operations.

Ministry officials said Australia-based Telstra failed to make an official request for a contract extension, while Telstra officials said they repeatedly notified the ministry of their intentions to renew the contract.

According to the original contract signed in 1990, Telstra agreed to develop all the necessary systems for international telecommunication and to give 51 percent of the revenues to the government, while the company received 49 percent. During the contract period, Telstra made $100 million, while the government took in $200 million.

Telstra’s total investment in Cambodia over 10 years amounts to almost $30 million, including a telephone exchange system with a capacity of 2,000 lines, installation of 5,000 local lines and 173 public payphones.

Telstra also set up a system to provide international voice and data services to more than 200 countries. One satellite established by Telstra links Cambodia to the rest of Asia and Europe, while another satellite connects Cambodia to North America.

Andrew Hankins, general manager of Telstra, said the ceremony Monday was a cause for celebration, but it also marked a day of sadness.

“It is the end of an era for our company in Cambodia,” he said.

A new company called Tele2, formed by Royal Group and Millicom International, will also begin offering international phone service on Nov 1, said Meng Kith, head of Royal Group. Tele2 will give Cambodian customers  a choice between long distance companies for the first time.

Meng Kith said he does not yet know what the rates will be because they are waiting for government regulators to decide. So Khun said he expects  rates to fall 10 to 15 percent once the deal with AZ is completed.

Hun Sen thanked Telstra for coming to Cambodia in 1990 at a time when the country was seen as a risky place to do business because of political instability and weak infrastructure. The contract with the government does not affect Telstra’s Big Pond Internet service.

Hun Sen said a feasibility study will be completed by the end of this year to establish a new fiber transmission network that will be put in place with help from Germany.

 

 

 

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