Smart Mobile and Star-Cell Agree to Merge

As heightened competition in the telecommunications sector continues to squeeze earnings, mobile telephone operators Smart Mobile and Star-Cell announced yesterday that they had agreed to merge and operate together under the Smart Mobile brand name.

The announcement came after Star-Cell’s parent company, Telia­Sonera Group, which is based in Sweden and Finland, announced in October it had written down Star-Cell’s value by more than $100 million.

The deal, the terms of which have yet to be announced, is subject to approval by the Ministry of Posts and Telecommunications.

“Smart Mobile will become with this combination one of the market leaders with more than 850,000 subscribers, and aims to be a market leader both in subscriber base and new subscriptions,” Smart Mo­bile’s parent company Latelz Co Ltd wrote in a statement yesterday.

TeliaSonera Asia Holding BV, whose majority shareholder is TeliaSonera Group, will own 25 percent of the new company after the deal goes through.

Industry sources say the agreements could be followed by further consolidations in the sector.

Board members for the consolidated company have yet to be selected.

Last month, mobile telephone operator qb, owned by Cambodia Advance Communications Ltd, also made an offer for Star-Cell for an amount in the region of $40 million.

“The Cambodian mobile market has been characterized by fierce competition and high churn rates, and a consolidation was inevitable,” TeliaSonera’s chief financial officer Tero Kivisaari said in a statement yesterday.

Kirill Mankovsky, chief marketing officer for Smart Mobile, said a lack of trustworthy data on subscriber numbers in Cambodia meant it was difficult to say how much of the market Smart Mobile now holds. Though the company will likely join MobiTel and Metfone as one of the market’s biggest players.

“It’s really hard to comment on that [market share], as we don’t have all the data on all the operators,” he said, declining to say how much the deal with Star-Cell was worth.

“This we cannot comment on at the moment,” he said, adding, “We are glad that we are pioneers of the consolidation process.”

Star-Cell CEO Tolga Gedikoglu declined to comment on the deal, saying only that Smart Mobile would “be one of the top players” in the market once the deal goes through.

Telecommunications Minister So Khun said yesterday that he was unaware of the merger agreement but said he expected more companies to follow suit with similar deals.

“I heard two or three other companies want to merge,” he said with elaborating.

Beeline’s parent company Vimpelcom announced last week that revenues at the company slid 9.1 percent during the third quarter, and Hello’s parent company Axiata Group last month reduced the value of its intangible assets by RM49 million, or about $15.5 million.

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