Smart Handed Injunction in Dispute With qb

Smart, Cambodia’s second largest mobile operator by subscribers, has been accused of destroying the reputation and financial interest of the much-smaller operator qb, and has been given a court order to cease communication with qb customers and halt promotions luring customers away from qb, according to a court document obtained Thursday.

The court order paves the way for qb to file civil and criminal charges against Smart, which qb may pursue within the next two weeks, said a source with direct knowledge of the dispute.

On Monday, the Phnom Penh Municipal Court ordered Smart employees and its partners to cut off contact with qb customers, and to cease any advertising aiming to lure subscribers away from the operator, according to the order, dated May 19 and signed by Judge Pich Maren.

Smart is part of the Malaysia-based Axiata Group Berhad, while qb is the brand name of Cambodia Advance Communications Co., a 100 percent foreign-owned firm.

The decision, referred to as a preservative relief, orders Smart to “Prevent all staff, sale agents, retail and wholesale dealers, business partners and staff of the parent company of Smart Axiata Co. Ltd. from…making unsolicited calls or contacting by any means via SMS-MMS-website (social media and other promotions) or meeting, making false allegations and promotions luring customers of Cambodia Advance Communications Co. Ltd. with immediate effect.”

It “orders Smart Axiata Co. Ltd. to immediately cease all forms of false promotion and allegation luring customers, which damages the reputation of Cambodia Advance Communications Co. Ltd. (CADCOMMS).”

The order follows a May 12 complaint filed by qb against Smart, accusing Smart of malicious business practices.

The complaint came after qb and Smart decided on April 25 to end a long-standing agreement that allowed qb customers to tap into Smart’s network when they were roaming, states the order.

It says that before the termination agreement was carried out on May 2, qb began receiving calls from customers who asked for explanations as to why Smart was contacting them to switch to Smart’s network.

“On April 28, 2014, CADCOMMS received many complaint calls from its customers to ask for an explanation and confirmation on a statement of Smart Customer Care Services staff who called to CADCOMMS’s customers [and said that] CADCOMMS’ customers will lose their service because Smart terminated the roaming agreement with CADCOMMS, and Smart will offer new Smart SIMs with the same number free of charge for special numbers to CADCOMMS customers,” says the order.

“Smart also offers $50 to customers of CADCOMMS if they come to swap to Smart SIMs at any sale store of Smart. Smart also did inform to all customers of CADCOMMS to swap SIMs quickly because CADCOMMS is going out of business,” it continues.

The order goes on to say Smart’s tactics resulted in a waste of financial and human resources for qb, as well as destruction of its business.

“This bad faith and malicious outbound call campaign of Smart has caused real and significant financial damage to [qb’s] brand and value, the malicious act and bad act of Smart makes CADCOMMS concerned that Smart will never stop its bad action toward CADCOMMS, although CADCOMMS [gave] a chance to Smart to…stop such acts,” states the order.

The order is likely to be followed by a civil complaint, and then a criminal complaint if there is enough supporting evidence, said the source with knowledge of the proceedings, who declined to be named because of the sensitivity of the matter.

“[Qb] can sue for damages and take criminal action for defamation,” the source said, adding that qb has obtained signed statements from customers saying that they were contacted by Smart and told to switch networks.

Smart CEO Thomas Hundt said Thursday that he was not aware of the court order and declined to comment.

“I cannot comment on it because I am not aware of it,” he said.

When asked if he was aware of the allegations made by qb, Mr. Hundt declined to comment.

Officials at the Phnom Penh Municipal Court also declined to comment on the matter.

Michael Fitzpatrick, qb’s chief marketing officer, confirmed the court order.

“I can confirm the order has been issued. And the essence of it is to protect our customer base. It places us in a very difficult position if I were to comment further,” he said.

Smart is one of Cambodia’s largest mobile operators, trailing only Metfone in its customer base. Last year, it merged with Axiata-owned operator Hello and claims to have more than five million subscribers.

Qb is one of the smallest mobile operators with about half-a-million subscribers, and in July shuttered a number of its retail showrooms and, according to former employees, laid off nearly half of its workforce.

(Additional reporting by Ouch Sony)

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