Foreign telcos dial up capital changes

Smaller players are hoping to gain a foothold in Vietnam’s hypercompetitive telco industry

Hutchison Telecommunication (Vietnam) S.A.R.L, which is teaming up with HanoiTelecom to develop the Vietnamobile network, just received approval to pour $350 million into the network, raising the total investment capital for the Vietnamobile network to over $1 billion.

“Hutchison Telecommunication (Vietnam) S.A.R.L and Hanoi Telecom are also asking to transform their current business cooperation contract (BCC) model into a joint venture form which will mean greater flexibility in management along with increasing their committed investment capital once their disbursement capital exceeds their committed capital,” said a Hanoi Planning and Investment Department officer.

Hutchison Telecommunication (Vietnam) S.A.R.L has invested around $700 million to date after the Vietnamobile operator decided to shift its network technology to e-GSM from CDMA in 2008. Its committed investment capital when licenced in 2005 was $656.9 million.

In a similar development, VimpelCom Ltd, the foreign partner in a joint venture with local GTel Corporation to develop Beeline network, last week announced an additional $304 million would flow into its joint venture.

This will raise its total investment capital to $500 million through to 2013.

“We look forward to re-launching our operations in Vietnam and to strengthening our position in the high-potential South East Asia cluster. We are confident that we will be able to develop our operations in Vietnam in close cooperation with our partner, GTEL, while taking advantage of the scale and scope of the newly enlarged VimpelCom Group,” said Alexey Blyumin, general director of GTEL-Mobile.

VimpelCom’s funding plan would increase its economic interest in GTEL-Mobile joint venture from 49 per cent to 65 per cent. The additional financing and equity increase depend on GTEL-Mobile hitting certain performance targets and gaining further regulatory approval.

VimpelCom has completed the first stage of the financing plan by paying $196 million for newly issued shares and thereby increasing its stake in GTEL-Mobile from 40 per cent to 49 per cent. GTEL-Mobile also completed the process of raising its chartered capital to around $90 million.

“The telecom market remains promising for investors as there is still room for development, even though there is severe competition among operators, especially major market players,” said the Hanoi Planning and Investment Department officer.

Figures from the Ministry of Information and Communication revealed that Vietnamobile and Beeline networks were ranked at the bottom of market share lists. Vietnamobile had only a 3.1 per cent mobile service market share and Beeline a mere 0.16 per cent by the end of last year.

Viettel, VinaPhone and MobiFone could lay claim to a combined 94 per cent market share.