Cellcard Mobitel set for $100m expansion loan

Written by Steve Finch

Friday, 13 March 2009 Phnom Penh Post

Cambodia's largest mobile phone operator to receive funds from international lenders as part of $350-million service upgrade over the next three years. Photo by: HENG CHIVOAN Royal Group CEO Kith Meng (left) at Thursday's 2009 Cambodia Outlook Conference at the Phnom Penh Hotel with Larry Strange, executive director of the Cambodia Development Resource Institute. Mobitel expansion Up to $60m loan from private overseas banks up to $40m loan from the IFC $350m total investment in three-year service upgrade project 75pc coverage of Cambodia by 2012 46pc mobile penetration the aim by 2012 Source: IFC and Milicom International ROYAL Millicom Co, the mobile phone company that operates under the brand name Cellcard Mobitel, is due to receive a loan worth up to US$100 million partly financed by the International Finance Corporation (IFC), sources close to the deal confirmed on Thursday. The IFC website said that it will finance 40 percent of the deal - which was signed in July - with private overseas banks lending the remaining 60 percent. Mobitel was unavailable for comment on Thursday regarding the identities of the foreign lenders. "The loan is to help [Mobitel] expand its mobile phone coverage in Cambodia ... this is a long-standing relationship [with the IFC]," a source close to the deal said on Thursday, speaking on the condition of anonymity. The loan would be the biggest issued by the IFC to date in Cambodia. Mark Hanna, chief financial officer at Royal Group, which owns a 38.5 percent stake in Millicom, said the deal had nearly gone through following last year's agreement. "The funds are imminent now," he told the Post on Thursday. Mobitel plans to use the loan as part of a $350 million network expansion project over the next three years to increase network coverage in rural areas, upgrade core network capacity and add new services, Hanna said. The IFC says the project will increase service coverage to 75 percent of the Kingdom's population by 2012. Mobitel reached 62 percent of the country at the end of last year, company data show. In announcing that the loan agreement had been signed last year, the IFC said the funding would also increase employment and spur competition between Cambodia's mobile operators. "[Competitors will be prompted to] invest further in their networks, thereby increasing availability and improving the quality of cellular services ... [which will lead to] lower tariffs," it said. The loan is to help [Mobitel] expand its mobile phone coverage in Cambodia. There are currently six mobile phone operators in Cambodia, the most recent being Viettel, a company owned by the Vietnamese military that held its official launch last month. Mobitel holds a 55 percent share of the Cambodian mobile phone market, according to a 2008 financial report Millicom International Cellular SA, a Luxembourg-based global mobile phone company that owns a 95 percent stake in Royal Millicom Holdings, the company that holds the remaining 61.5 percent share of Royal Millicom. CamShin is second in the market with an 18 percent share, closely followed by TMIC with 15 percent. Despite the huge investment Millicom International is planning for Cambodia, at the end of last year it warned that the deteriorating world economy meant the Cambodian mobile market looked uncertain for 2009. "In the short term, Cambodia is being affected by the global economic situation which has impacted the disposable income of middle- and lower-income consumers," it said. "This means that revenues are no longer growing at the top line on a quarter-on-quarter basis." Twenty-nine percent of Cambodians had mobile phones at the end of 2008, the Millicom International report said, adding that it expects that figure to increase to 46 percent by 2012. In Asia, Millicom International also operates mobile phone service networks in Laos and Sri Lanka. ADDITIONAL REPORTING BY GEORGE MCLEOD