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Smart calls for tax transparency

A woman stands under a Cellcard umbrella next to a Smart promotional billboard yesterday in Phnom Penh.
A woman stands under a Cellcard umbrella next to a Smart promotional billboard yesterday in Phnom Penh. Pha Lina

Smart calls for tax transparency

The annual presentation of mobile operator Smart Axiata’s sustainability report yesterday highlighted the company’s tax compliance and contributions, while suggesting more could be done to improve transparency and level the playing field in the telecom sector, where a price war has been escalating since the start of the year.

According to its 2015-2016 sustainability report, Smart generated $262.8 million in revenue in 2016, up by 46 percent since two years earlier in 2014, with its subscriber base growing by 24.6 percent to 8.1 million during that time.

The company’s presentation claimed that by calculating all relevant business activity, Smart contributed $313 million to the Cambodian economy last year, roughly equalling 1.6 percent of GDP.

Thomas Hundt, CEO of Smart Axiata, stated that his firm was one of the largest taxpayers in Cambodia, paying over $65 million in taxes last year, while abiding to international accounting and reporting principles as Axiata, its Malaysian parent company, is a publicly listed firm.

“[Smart] is amongst the largest taxpayers in the country, standing at a whopping contribution of 3.6 percent of national tax income last year,” he said during the presentation to an audience that included high-ranking government officials. “That is clear evidence that Smart has always taken our national responsibilities very seriously – something our customers and shareholders can be proud of.”

He added, however, that Smart’s level of transparency and accountability was not something applied universally across the local telecom sector, which includes six network operators: Smart, Metfone, Cellcard, qb, Seatel and Cootel.

Smart is the only Cambodian mobile operator to post its financials and tax obligations, although Viettel, the Vietnamese army-owned parent company of Metfone, often provides some figures on its Cambodian operations.

“At this moment I would like to highlight the importance and desire for transparency, and certainly also a level playing field amongst all industry players that is not given to the full extent at this moment,” Hundt said.

A price war has been brewing since the beginning of the year, with some network operators offering deep discounts for on-network voice and data services. In January, the telecom regulator called CamGSM, the operator of Cellcard, in for questioning over concerns of predatory pricing after the firm offered an exchange of $1 for $100 worth of voice and data coverage.

Smart responded two weeks later by offering heavily discounted promotional rates that offered subscribers to exchange $1 for $125 worth of voice and data service, while Seatel soon rolled out its own promotional offer to exchange $2 for $2,000 worth of calls and $1 for 2.7 gigabytes of data.

While the Telecommunications Regulator of Cambodia (TRC) has held numerous industry meetings in an effort to end the heavily discounted deals, none of the operators have relented, insisting that the offers are commercially viable while launching even deeper discounts.

Ieng Sunly, undersecretary of state at the Ministry of Economy and Finance (MEF), said the government has legitimate concerns about how much revenue the sector will generate this year.

“While affordability is an important aspect to accessibility of services in Cambodia, it should not come at the cost of impacting the sector and government negatively,” he said. “However, we of course have no intention to harm the operators in Cambodia so we are trying to negotiate with them to see what is best to balance national income.”

While Sunly encouraged other telecom operators to follow Smart’s lead in operating transparently and paying the appropriate levels of tax, he stopped short of calling out other operators for non-transparent business practices.

“When we talk about equality for the operators in Cambodia, especially regarding tax, I encourage Smart to not care about other operators if they do not pay on time or don’t follow the regulations because we are doing the best we can for the industry,” he said.

Kan Channmeta, secretary of state at MPTC, encouraged operators to adopt transparent corporate governance practices to ensure a level playing field across the sector.

“We want transparency from both the government and companies so that we can see the benefits the industry has on the economy and for creating jobs,” he said. “More companies should have events like this to show how they operate transparently.”

The original version of this article mischaracterised Smart CEO Thomas Hundt's remarks by saying he claimed authorities were “complicit” in allowing an unfair playing field to flourish in the telecom sector. While the company suggested the sector did not have a level playing field, it was not directly stated that authorities were “complicit” in this. The company has since indicated that its presentation did not state or imply criticism of the government, but rather “promoted the importance of a level playing field and transparency amongst our peers”. The Post has reworded the article’s lead in this version to more accurately reflect this, and apologises for the error.

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