Joint Venture to Start Privatization of Gov’t Phone Service

The government is planning a joint venture with a local company to partially privatize the state’s management of phone services.

Cambodia Telecom will be the result when the partial privatization is complete, but it will take at least one year more, Minister of Posts and Telecommunications So Khun said Tuesday.

The Phnom Penh-based company, AZ, is expected to take control of the ministry’s telecommunications department, which ultimately will operate all domestic fixed-line and international gateway service, So Khun said.

“Before the 1998 election, the government decided to form a joint venture with AZ to create a public enterprise,” So Khun said after a meeting on the ministry’s first semester review and future action plans. “This is just a beginning of negotiations. It will take at least one more year to set up the new enterprise.”

AZ representatives could not be reached by phone Tuesday. So Khun declined to describe AZ.

The minister said the creation of Cambodia Telecom is part of the ministry’s privatization efforts. It follows the 1997 subdecree that recommended the ministry create two separate public enterprises on telecommunication and postal services to enable the ministry to be a regulatory body.

Establishing Cambodia Tele­com is expected to encourage competition in both domestic and international telecommunications, which could lead to price reduction, industry experts say.

AZ and the ministry reached a draft agreement on shares and services earlier this year, but the details have not yet been finalized, So Khun said.

So Khun said the ministry will control 51 percent of the joint venture’s assets and the rest will be owned by AZ. He de­clined to say how much money will be invested in the new entity.

“We haven’t finalized it yet,” Ministry of Posts and Telecom­muni­cations Secretary of State Lam Pou An said. “The Ministry of Finance has to evaluate the assets and determine the ministry’s share of capital investment.”

Officials said Cambodia Tele­com would expand the ministry’s fixed-line services—currently restricted to Phnom Penh—nationwide, and establish a new international gateway.

Officials said that AZ will need to find a foreign partner to create the joint venture because it has no experience in telecommunications. “We knew that AZ and NTT [a giant Japanese telephone company] negotiated on the investment in the past, but it broke up,” Undersecretary of State Koy Kim Sea said Tuesday. “We don’t know if the local company is negotiating with other investors, but it would need an experienced foreign partner.”

Currently Australia-based Tels­tra operates Cambodia’s international network under a 10-year agreement with the ministry that ends October 2000.

Telstra’s country representative Andrew Hankins declined to comment Tuesday on the planned joint venture.

Royal Telecam International, owned by Mobitel’s parent company, the Royal Group, also has a license to start operating an international phone network in No­vember 2000, Koy Kim Sea said.

In domestic services, Camintel, the result of another ministry joint venture project, with Indonesia-based Indosat, offers fixed-line service in 20 provinces. Thai-based Shina­watra operates nationwide fixed wireless service.

So Khun said Cambodia Tele­com would take over Telstra’s international network but the ministry is negotiating with Cam­intel to decide if it would remain as a competitor or be absorbed in the planned joint venture.

Steve Yanuar, Camintel’s director, said that Indosat hopes to be a majority share-holder of Camin­tel to make the company more profitable. Right now, Indosat owns 49 percent of the company.

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