Telecommunications Minister Chea Vandeth has been making a lot of calculations in his first two years in the job. The former economics lecturer has been looking hard into the books of phone companies and internet service providers (ISPs) and has discovered the numbers don’t add up.
This month the Ministry of Posts and Telecommunications (MPTC) told ISP King Technologies, which operates under the OpenNet brand, to pay its debts. A ministry spokesman said King Technologies owed more than $6 million between 2017 and 2019 and had not declared an addition $1.8 million between 2018 and 2020.
The Ministry suspended King Technologies’ business license and ordered it to stop selling services to new customers or sign any more business contracts. It said existing customers would not see any disruption to services but one apartment operator in Phnom Penh told tenants their internet had been down for four days due to the firm’s financial difficulties. The building’s managers said OpenNet told them it could not fix a wiring problem until it received permission from the government. Management said they had switched ISP to EZECOM, owned by Cambodia’s Royal Group, which also runs mobile operator Cellcard.
The MPTC and the Telecommunication Regulator of Cambodia (TRC) showed their teeth last year as well, accusing Smart Axiata’s Malaysian-owned rival of illegally laying fibre-optic cables.
Dr Vandeth began his career teaching economics at Cambodia’s first private university, Norton, and founded the American University of Phnom Penh in 2013. He has been a government adviser since 1997 and served as a ruling Cambodian People’s Party MP from 2017 to 2020 before taking on the Telecoms Ministry role.
One industry insider, who did not wish to be named, said Vandeth was pursuing a policy of stamping out corruption whatever the cost.
“He is going after companies with real laws that are on the books but have never been informed or have been overlooked for a little tea money,” the person said. “The new minister is hardcore and against corruption and really wants the TRC and the MPTC to be the premier ministry.”
Former bank executive and venture capital investor Stephen Higgins said the minister was making a welcome clean-up of the telecoms industry.
“For a long period of time, quite a few ISPs haven’t been paying the revenue share and other levies to the government. The ministry is cracking down on this, and I think most fair-minded observers would say that’s appropriate. Why have these levies on the books if you’re not going to enforce them equally on all players?” said Higgins, Managing Partner at Mekong Strategic Partners. “For foreign investors coming in, they want to see a level playing field, so the Minister cracking down here and enforcing the rules is a good thing.”
Higgins said the ministry was taking the right step by allowing troubled companies to transfer customers to other players so long as it was transparent about the process.
OpenNet’s problems are not unique, according to Andrew Kitson, Head of Telecoms Media & Technology, Country Risk and Industry Research at Fitch Solutions.
“These sorts of situations are fairly commonplace in the telecoms sector, especially in emerging markets where private players run out of cash or are unable to scale-up to match a market’s growth,” he said. “Based on examples seen elsewhere, we do not expect OpenNet to suddenly stop operating. As a creditor, the government may have the option of taking over the company or acquiring its assets such as cable systems, data centres and last-mile connections: fixed wireless, copper lines, fibre lines, etcetera. It may choose to continue operating these assets indefinitely or it may sell them on to other players if King definitively defaults on its dues. Either way, there is only a very small risk that OpenNet customers will be cut off without warning.”
The telecoms minister also made his mark by spearheading a push to channel all online traffic through a National Internet Gateway. This provoked protests from UN Special Rapporteurs, who claimed the move was a threat to free speech. Cambodia’s UN delegation in Geneva dismissed the claims saying a similar system is operated by many countries around the world but some say the move may scare off foreign investors.
“International companies doing business in Cambodia will be concerned about the degree to which the state will be able to scrutinize internal and customer generated content such as emails, personal details, banking details etcetera or intervene to block the transit of content that might, even in unintentional ways, fall short of the government’s vaguely-defined requirements,” Kitson said.
The internet gateway’s rollout was expected on February 16 but was delayed due to pandemic-related according to the MPTC.
Note: In the printed edition today, the article had inadvertently quoted Cellcard when it is supposed to be Smart Axiata. We regret the inconvenience caused.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.
