Mobile Operators Told to End Price Promotions

The government has ordered the country’s seven mobile phone operators to abide by a law that sets minimum prices for calls, ultimately ending their lucrative top-up and bonus deal promotions, according to an order sent from the Council of Ministers to phone companies and the Telecommunication Regulator of Cambodia (TRC).

The operators have until Thursday to comply with the order, which aims to increase government revenues, sources in the mobile phone industry said Tuesday.

Penalties for non-compliance range from fines to revoking a company’s license.

Most of Cambodia’s operators offer bonuses to subscribers, with the country’s two largest firms, MobiTel and Smart, offering some of the most lucrative.

MobiTel, owned by local conglomerate Royal Group, has offered 100 percent top-up bonuses, while Smart, which is owned by the Malaysia-based Axiata Group Bhd, has offered customers up to 500 percent.

The order banning the practice, dated November 21 and signed by Council of Ministers Secretary of State Khem Russyda, says the body had approved a request by the ministers of posts and telecommunications and finance to implement the regulations.

The order was reportedly announced last week at a closed-door meeting between officials from the telecommunications regulator and mobile operator executives, who were told to remove any advertising, products and materials that violate the law.

The law referred to is a 2009 directive, known as Prakas 232, which sets minimum prices for calls made on the same network to 4.5 cents per minute and for cross-network calls to 5.95 cents per minute. The directive also limits bonus promotions, or top-up deals, to not more than 50 percent of the rates and to a limited number of deals per year.

One source with direct knowledge of the recent decision said the government appears to be losing millions of dollars in revenue shares as a result of an ongoing price war between the mobile phone operators.

“It seems they are quite serious about this now,” the source said.

Earlier this year, a price war raged as operators began offering lucrative deals to subscribers.

The telecommunications regulator attempted to tame the market by implementing the law and the then-nine operators signed an agreement to abide by the rules.

But MobiTel and Smart entered an all-out price war and blamed each other for using the top-up bonuses to obtain a larger market share.

MobiTel CEO Ian Watson and Smart CEO Thomas Hundt did not respond to requests for comment.

(Additional reporting by Matt Blomberg and George Styllis)

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