Beeline books $500m charge after overestimating market

Don Weinland
Phnom Penh Post
Thursday, 15 March 2012

VimpelCom, the Netherlands-based parent company of Cambodian mobile operator Beeline, booked an impairment charge of US$527 million on its operations in Cambodia and Vietnam, according to a 2011 company report.

Employees of the mobile operator Beeline take part in a promotional campaign in Phnom Penh’s Dangkor district. Photo by Heng Chivoan

The impairment, or revaluation of VimpelCom’s assets in the two Southeast Asian countries, highlighted the company’s over-valuation of the markets, which it entered in mid-2009.

Intense competition among Cambodia’s eight active operators, as well as the government’s willingness to continue issuing operating licences, had led to the company’s over-estimation, Tokyo-based Sullivan & Frost analyst Marc Einstein said yesterday.

“They have by far the deepest pockets of any operator in the [Cambodian] market, and they probably thought they could just fight it out. But that’s not the case,” Einstein said.

As of November, Beeline had 630,000 subscribers, an increase of 100,000 since July, according to numbers obtained by the Post.

The operator had lost subscribers between March and July of last year, the Post reported.

Given the operator’s backing, Beeline might remain in the Cambodian market for now, Einstein said.

“They’re probably not in a rush to leave, but they have operations all over the world that they could be paying attention to,” he said.

Beeline, along with Mfone, qb and Excell, were the Kingdom’s four smallest operators with 1.45 million subscribers among them in November, according to numbers obtained by the Post.

Excell subscribers have remained flat since early last year at 40,000, and qb added 10,000 customers between July and November with 90,000, the numbers showed.

Metfone, Cellcard, Hello Axiata and Smart Mobile account for more than 90 per cent of the Cambodian market by subscriber numbers with about 13.5 million subscribers, although analysts have said the numbers are inflated.

Insiders said the market should see substantial merger and acquisition activity in 2012.

Beeline general manager Gael Campan declined to comment.