Logo of Phnom Penh Post newspaper Phnom Penh Post - Metfone stake up for grabs: sources

Metfone stake up for grabs: sources

An employee grabs a Metfone SIM card for a customer at a Phnom Penh store.
An employee grabs a Metfone SIM card for a customer at a Phnom Penh store. Sovan Philong

Metfone stake up for grabs: sources

Viettel, the Vietnamese military-owned operator of Cambodia’s biggest telecom firm, Metfone, is looking to sell a stake in its Cambodia operation to raise capital for its other global ventures after the company reported its lowest growth in earnings since 2012, according to international media reports.

During a general shareholder meeting last week, the state-owned telecommunications giant reportedly announced that it was considering divesting from its operations in Cambodia and other overseas subsidiaries.

“The group is considering the sale of part of the holdings in these companies while they have good valuation. We will use the proceeds to acquire new businesses. So it does not conflict with our strategy of targeting a global presence,” the online financial news platform Deal Street Asia quoted an unnamed company representative as saying.

If Viettel goes ahead with the stake sale, the company would offer no more than 49 per cent of Metfone’s operations, leaving the Vietnamese generals with a controlling share, according to media reports. The equity sale would signal the company’s first retreat from a foreign market.

A Phnom Penh-based industry insider, speaking on the condition of anonymity yesterday, said Viettel has been quietly seeking investors to buy into its Cambodian operations for some time now.

“They have been trying to find investors for Metfone for a while,” the source said. “But their business is not doing too well, nor does anybody want to be a minor shareholder while the majority is held by the Vietnamese military.”

Metfone is Viettel’s largest operations outside of Vietnam, and claims to hold the biggest share of Cambodia’s mobile phone market, with upwards of 8 million subscribers. Metfone generated $256 million in revenue last year, according to one media source – about 40 per cent of Viettel’s overseas telecom turnover.

In April, Brand Finance, a London-based consultancy service, calculated that Metfone’s brand value had grown to $94 million last year, up nearly 10 per cent over the previous year.

Metfone’s parent company, however, has seen mixed results as it expands global operations. In 2015, Viettel Global – the group’s international investment unit – generated $660 million in sales revenue, while net profits slumped to $22 million – its lowest bottom line since 2012.

Nearly half of the losses were in Africa, where Viettel’s four subsidiaries experienced strong sales growth last year, but suffered $10.4 million in losses due to volatile foreign exchange markets in the region. The company also saw leaner earnings in its three Southeast Asian markets – Cambodia, Laos and East Timor – where net profits declined by 28 per cent last year to $5.5 million.

Nevertheless, Viettel is still trying to expand in the region and last month reportedly entered final negotiations to form a $1.5 billion joint venture with two companies in Myanmar to bid for the country’s fourth and last telecom licence.

Anthony Galliano, CEO of Cambodian Investment Management, said Viettel could be looking for an investor in Metfone as the company – which has built a strong ISP franchise and nationwide mobile network coverage in Cambodia – assesses the capital costs of further expansion.

“Metfone’s strategy, not unlike the parent’s international strategy, is total population and territory coverage for voice and data,” he explained. “In order to do this, the capital expenditure, including equipped base stations and tens of thousands of kilometres in fibre optic cable, is a massive investment.”

“The challenge in telecoms is rapidly depreciating equipment and investment demand in new technology to deliver fast data services to subscribers seeking high-speed internet delivery,” he continued.

Galliano said “it would be timely” for an outside investment in Metfone as the company faces the prospect of diminishing returns on investment.

“So it may be a matter of sell high, or at a high point, before the valuation goes south,” he said.

Neither Viettel nor Metfone could be reached for comment yesterday.

MOST VIEWED

  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Takeo hand-woven silk items provide local high-quality alternative to imports

    After graduating from university and beginning her career as a civil servant at the the Ministry of Economy and Finance, Khieu Sina found time to establish a business that aligns with her true passion – quality hand-woven Khmer goods. Her product line, known as Banteay Srei,

  • Sub-Decree approves $30M for mine clearance

    The Cambodian government established the ‘Mine-Free Cambodia 2025 Foundation’, and released an initial budget of $30 million. Based on the progress of the foundation in 2023, 2024 and 2025, more funds will be added from the national budget and other sources. In a sub-decree signed by Prime Minister Hun Sen

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,