Hun Sen Signed Off on Mfone Customers Deal

Prime Minister Hun Sen approved a decision in January to transfer hundreds of thousands of customers from the bankrupt mobile phone operator Mfone to the country’s largest telecommunications firm, MobiTel, despite a court injunction preventing Mfone from offloading assets.

According to a statement released yesterday by the Telecommunication Regulator of Cambodia, the decision was made by the prime minister in order to ensure that Mfone’s customers were not abandoned as the company collapsed, and could be provided with another service in the country.

“The Ministry of Posts and Telecommunications…received the high recommendation from Prime Minister Hun Sen, who agreed and allowed Mfone’s proposal to transfer all its subscribers and access codes to CamGSM Co. Ltd. on a temporary basis to protect its users,” the regulator said in the statement, which was signed by Lay Marivo, the regulator’s deputy director.

CamGSM operates under the MobiTel brand in Cambodia and is owned by Royal Group, whose chairman is Kith Meng. Mfone is owned by Thaicom, whose holding company, Shin Corporation, was founded by former Thai Prime Minister Thaksin Shinawatra.

Mr. Meng and Mr. Thaksin have long been on close terms with Mr. Hun Sen.

The statement also said the telecommunications regulator, which is supposed to be an independent body that has authority over spectrum and fair price setting for telecoms operators as well as implementing all legislation set by the telecommunications ministry, would follow advice given by Mr. Hun Sen on what to do with Mfone’s operating license.

“The Telecommunication Regulator of Cambodia will make further decisions in accordance with the court’s final decision and Prime Minister Hun Sen’s advice on the matters of distributing [Mfone’s] frequencies as well as its operating license in the future,” the statement said.

Asked about the prime minister’s involvement in transferring Mfone’s subscribers to MobiTel amid the court injunction, Mr. Marivo said Telecommunications Minister So Khun had met with Mr. Hun Sen on January 14 and that the decision to transfer the subscribers was signed on January 16.

The first injunction was filed against the company on October 18.

“Samdech Hun Sen approved the proposal to transfer subscribers and access codes to CamGSM,” Mr. Marivo said. “Samdech is not involved only with Mfone, but all operators…because the government is a decisionmaker to provide frequencies to mobile phone operators.”

The transfer of subscribers was announced by MobiTel on January 11 and instantly raised concerns among the companies that claim Mfone owed them money, and that the terms of the court injunction had not been respected.

Since it filed for insolvency on January 9, Mfone has left a trail of debt totaling more than $160 million among at least 1,000 creditors. Among those creditors are Norwegian energy firm Eltek, which claims $3.73 million, and Chinese technology giant Huawei, which claims $65 million.

On October 18, the Phnom Penh Municipal Court issued an injunction against Mfone on behalf of Eltek, and on January 17, it did the same on behalf of Huawei. But that did not stop Mfone’s 400,000 subscribers from being transferred over to MobiTel, which some believe was one of the bankrupt company’s most important assets.

Chan Sophal, president of the Cambodian Economic Association, said a fairer way of deciding how to offload Mfone’s subscribers would have been to let other operators bid from them competitively.

“In fairness, there should have been an auction for everyone to buy the subscribers of Mfone to guarantee free and fair competition,” he said.

It remains unclear whether MobiTel paid any money for Mfone’s subscribers, and executives at both Mfone and MobiTel have consistently declined comment on the matter.

However, Kuoy Thunna, the lawyer for Eltek—the firm that helped Mfone develop satellite technology and is owed millions of dollars—said it was inappropriate for the prime minister to involve himself in the decision on the firm’s customers while it was still going through the courts.

“I understand that the recommendation by the prime minister is illegal because he has no right to be involved with this business and the court case because he is a political leader,” Mr. Thunna said.

Ouk Ry, the court-appointed administrator appointed to liquidate Mfone’s assets, declined to comment yesterday.

Ian Watson, CEO of MobiTel, said that he was unaware of Mr. Hun Sen’s involvement in the decision.

“I know nothing about this. All I know is that the ministry allowed the temporary access of Mfone subscribers to MobiTel,” he said.

After transferring the company’s customers, the ministry revoked Mfone’s license on March 18 and also announced that the company still owes the government $743,322 in outstanding fees.

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