Royal Group Denies Report That Cellcard Seeks Investor

March 8, 2014
Royal Group executives, owners of Cambodia’s leading mobile phone operator Cellcard, vigorously denied the veracity of a London-based media report on Friday that claimed the phone company is looking for investors and wants to sell off its telecommunications towers because it is unable to raise new capital.
On Friday, the London-based online magazine TMT Finance, a telecommunications and finance sector trade publication, published an article citing unnamed sources who claimed that “several” private equity parties are looking at possibly acquiring a stake in Cellcard.
“Sources said the owners, which include Cambodia’s Royal Group, were once again attempting to sell down part of their stake to a strategic investor…. The company needs capital to invest in its network, but the current lenders (including Bank of China) are now maxed out. CamGSM has restructured its loan agreements and now struggles to service its debt,” the report claimed.
CamGSM is Cellcard’s parent company, which is owned by the local conglomerate Royal Group. Royal Group’s chairman is Kith Meng, a close associate of Prime Minister Hun Sen.
Royal Group officials were scathing of the article.

“We are not looking at selling any part of the company,” Cellcard CEO Ian Watson said. “We are in no talks to sell. There is nothing happening.”
Mark Hanna, Royal Group’s chief financial officer, called the report “absolute horse s—.”
The original TMT report, which was modified later on Friday following a request by Royal Group, goes on to say that ANZ Bank was previously hired to search for buyers “for a majority stake in the whole of the CamGSM business” and that CamGSM is looking at “scaling back” its telecommunications towers by selling some of them off.
“This mandate has now ceased, despite both Orange and PT Telkom Indonesia both looking at acquiring the business. Talks eventually fell apart during the due diligence process owing to the valuations, leaving CamGSM capital constrained,” TMT claimed.
“Sources also said that while CamGSM was focused on scaling back its towers opex [operational expenditure] by ‘reducing its dependency on diesel powered systems and migrating onto Hybrid Power with Remote Monitoring Systems’, it had also been holding talks over the sale of its towers, which total 3,000 sites,” according to the report.
“[A] private equity firm has established an infrastructure fund to close out a transaction for the entire CamGSM tower portfolio, with talks ongoing. There are thought to be ‘several’ buyers for the towers in the mix, with Tower Bersama previously having conducted due diligence on the asset. Tower Bersama conducted due diligence but decided not to follow through.”
Royal Group’s CFO Mr. Hanna said the article amounted to “mischief making.”
“Or they are just making stuff up. It’s absolute rubbish and not true at all,” he said.
Mr. Hanna said that Cellcard is actually building more towers and is not reducing its dependency on diesel-powered systems. He said that Cellcard has a solar power system to generate electricity to towers in distant provinces.
“This [information] about our towers opex is not true at all. We’re building 300 more towers this year,” Mr. Hanna said. “And our current sites without access to an electric grid are all run on solar and generators.”
He did admit, though, that CamGSM has some debt with the Bank of China. “There’s some debt with the Bank of China. But it’s not dire,” he said.
Responding to TMT’s assertion that CamGSM’s lenders were “maxed out,” Mr. Hanna said, “Absolutely not.”
As for the discussion with Tower Bersama for CamGSM’s towers, Mr. Hanna said that discussions had taken place in 2011, but that the talks fizzled. “We never got to the stage of a deal,” he said.
Cellcard is Cambodia’s largest mobile operator in terms of revenue, but the third largest in terms of subscribers.