MobiTel, Smart Fight It Out Over Prices

With competition rife in Cambodia’s telecommunications market, two of the country’s largest mobile phone operators have engaged in a battle over prices and are at odds over the tactics being used to gain market share.

On Friday, the Telecommunication Regulator of Cambodia (TRC) ordered all mobile phone companies to abide by a 2009 law that sets minimum prices for the cost of a call.

Smart, which the Malaysia-based firm Axiata Group Bhd owns, says the government decision is unfair to consumers and goes against the notion of a free market. But MobiTel, which is owned by the Cambodian conglomerate Royal Group, says Smart has offered deals so cheap it has engaged in unfair business practices.

“What forced the issue was Smart’s 500 percent bonus, which is just crazy. If anybody’s to blame for this, it is Smart,” MobiTel CEO Ian Watson said Tuesday.

Though stating that MobiTel welcomed competition in the market, Mr. Watson said the tactics employed by Smart were not creating a level playing field for all firms fighting it out in Cambodia’s heavily saturated market.

“What they were doing is unfair competition,” he said.

On Monday, both Smart and MobiTel released statements stating they had agreed to withdraw their special offers to customers. Since mid-February, Smart has advertised a 500 percent top-up bonus—300 percent for calls and SMS, and 200 percent for Internet. At the end of 2012, MobiTel began offering a similar deal where customers received a 100 percent top-up bonus.

Though not mentioning MobiTel by name, Smart CEO Thomas Hundt said Tuesday his company could not be accused of operating unfairly and said it was up to the other companies to compete. He also said that rather than banning firms from offering bonuses, the government should let the market operate freely.

After Smart announced its 500 percent top-up bonus had been canceled, thousands of its customers expressed their discontent with the company’s decision on the firm’s Facebook page. Many of the posts blamed MobiTel for the TRC’s recent decision to tell all of the country’s operators to abide by the 2009 proclamation stipulating that 4.5 cents is the minimum price per minute for calls made between the same network and 5.95 cents per minute for cross-network calls.

“Customer feedback is speaking a clear language. No one can blame us for operating unfairly,” Mr. Hundt said. “If the competition is not operating as efficiently as us, then they need to work on efficiency,” he said.

Mr. Hundt said that Smart would appeal to the government to review the 2009 proclamation.

“We are a reputable company and we are following the law. We want the government to review this prakas to reflect the consumer interest, which, at the end of the day, should be the highest interest the government should be following,” he said.

Mr. Watson denied that MobiTel had any influence in the TRC’s decision to regulate the market.

“It’s the government, not MobiTel. They regulate the market. MobiTel gets treated equally, just as any other operator in Cambodia,” Mr. Watson said. “We don’t have an ax to grind. We haven’t fueled any escalation of a price war. We’ve always conducted ourselves to the highest standard in the market.”

It is not the first time MobiTel has taken aim at firms offering ultra-cheap deals. In 2009, it criticized Beeline, which at the time was owned by VimpelCom Ltd., of selling below-cost calls and accused the firm of unfair business practices. As a result, MobiTel refused to connect its network with Beeline’s.

Minister of Posts and Telecommunications So Khun on Tuesday defended the government’s decision on Friday to insist all firms in the market respect the minimum prices for making calls.

“This is not taking sides or leaning toward anyone. It is just for the good of everyone. We just want all companies to offer an appropriate, affordable price for everyone, improve their quality and services and expand their network coverage,” he said.

In February, operators Smart Mobile and Hello, which is owned by Axiata, merged. The company rebranded itself as Smart and claims to have more than 5 million customers, making it the second-largest firm in the market. Metfone is officially the largest operator in the market while MobiTel claims to have 4 million subscribers, making it the third-largest operator in the country, according to government figures.

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