November 12th 2010, James Barton
The Bank of China has agreed to loan a total of US$591 million to Cambodia’s largest mobile operator, in a financing agreement unprecedented in the Southeast Asian nation’s history.
The operator in question is CamGSM, which owns two of Cambodia’s mobile brands – MobiTel and Cellcard – and is itself a subsidiary of the country’s largest private conglomerate, Royal Group.
The loan will fund a five-year contract with Huawei to provide infrastructure and services. The US$500 million deal is one of a series of agreements between Cambodia and China that have a reported total value of around US$6.4 billion.
The large number and massive value of the deals has raised questions over the strength of China’s influence in Cambodia, an issue that was recently highlighted by US Secretary of State Hilary Clinton. Speaking in Cambodia last month, Clinton urged the country to pursue a foreign policy that was not “too dependent” on China.
Royal Group aims to use some of the money loaned from China to refinance an existing loan from Standard Bank and Australia and New Zealand Banking Group – specifically, a bridging loan of US$421 million that the conglomerate used to acquire a majority stake in CamGSM last year.
CamGSM was reported to have nearly 2.5 million subscribers in the third quarter, making it Cambodia’s largest mobile operator.