Gtel Mobile’s growth stutters

Hailed as a potential competitor to Viettel and VNPT, Gtel has so far had little impact on Vietnam’s mobile market                Photo: Le Toan

Last year saw Vietnam’s biggest merger and acquisition deal in telecommunications sector in which Vietnam’s Ministry of Public Security purchased a 49 per cent stake worth $45 million from a joint venture between Russia’s VimpelCom Group and Vietnam’s Gtel Mobile Company.

This deal was expected to shake up the Vietnamese telecommunications market, and Gtel Mobile was predicted to be strong enough to compete with two state-run giants Viettel and VNPT.

However, Gtel Mobile’s operations have witnessed almost no development since then, despite major efforts.

Gtel Mobile announced its new Gmobile brand name several months after the deal was done, replacing the previous Beeline brand, with a new slogan Thinking New and Doing New.

However, since then Gmobile’s subscription base has failed to increase to the predicted five million targeted by Gtel Mobile’s leaders.

The network’s subscription is currently around 3.2 million users.

At present, Gtel Mobile still has to rent Vinaphone’s wavelength to offer calls and text services and other services in localities beyond Hanoi and Ho Chi Minh City.

Additionally, Gtel Mobile only possesses a 2G system and has yet to be provided with 3G or 4G systems, while the firm’s rivals own far more advanced network infrastructure.

Gtel Mobile’s key strategy seems to be based on offering cheap-price fee packages and opening retail outlets showcasing and selling its products.

Previous major shareholder VimpelCom had already invested almost $500 million between 2008 and 2012, prior to the deal being inked.

The take-over was spurred by VimpelCom’s declining share value and lack of capital sparked by Europe’s economic crisis.

VimpelCom initially stated that after many years of investment it wanted to hold a majority stake in the joint venture. However, this was infeasible as Vietnam still bans foreign partners from holding a controlling stake in a telecommunications joint venture.

Moreover, Gtel Mobile’s frequency band also remain s less competitive. It currently has a frequency band of 1,800 MHz, while other operators have frequency bands of 900 MHz, 1,800 MHz and 3G.

Gtel Mobile’s chairman Nguyen Van Du said that during the establishment of the joint venture, the Vietnamese side had yet to invest any money into it. However, he claimed the Vietnamese partner possessed major assets and had a workforce of thousands of workers.