Viettel weathers exchange rate volatility with no small success

Last year, the company’s total after-tax profit from its international markets amounted only to VND500 billion ($22.4 million), going far below its expectations. The reason was the exchange rate volatility experienced throughout the year, which has affected network providers all over the world. In Africa, for instance, exchange rate fluctuations were estimated to account for 32 per cent of Viettel’s expenditure.

With the exception of Africa, Viettel made a profit in all of its foreign markets. The company earned a pretax profit of VND1.235 trillion ($55.4 million) in Asia and VND213 billion ($9.55 million) in America. Notably, after five years of operations, the American market has moved from a loss of VND87 billion ($3.9 million) to a profit of VND213 billion ($9.55 million) in 2015. All figures were reported based on the current foreign currency exchange rate.

In Africa, Viettel reported a growth in revenue. The company achieved impressive annual growth compared to many other multinational telecom firms. For example, Viettel’s longstanding rival the world over, Vodacom—an African mobile communications company that is larger and has more experience—saw its turnover grow only by 2.1 per cent in 2015 and the number of its subscribers grew by 7.2 per cent, one fourth of that of Viettel’s 27 per cent.

Last year Viettel set foot in three big African markets, Cameroon, Burundi, and Tanzania, representing a combined population of 80 million, three times that of Mozambique, Viettel’s only other market in Africa. The expansion has increased Viettel’s international market to 10 nations with a combined population of 270 million, three times the size of the Vietnamese population.

With over 50 million people, Tanzania is Viettel’s biggest overseas market. By hitting one million subscribers in just three months, Viettel’s Tanzanian operation is ranked as the fastest growing affiliate of the company as well as the global telecom industry.

In March 2016, Lumitel (Viettel’s subsidiary in Burundi) has become the leading operator in the country with 1.6 million subscribers, after a miracle growth of one million subscribers in only five months. In Cameroon, Viettel reached two million subscribers in nine months.

With these achievements, Viettel’s Mozambique operation Movitel has been nominated as the “Miracle of Africa”. The company is now the leading operator in terms of infrastructure and subscribers. Movitel was honoured with six international and regional telecom awards.

International telecom experts hailed Viettel’s strategy to quickly expand market size. It is considered a wise decision for the company to step on the international market because market size is the most important factor in achieving success in telecom and retail. In Vietnam, Viettel has been successful with similarly robust investments and expansion in its early stages to become the leading service provider.

The trend of expanding research and development and the use of IT in telecommunications will benefit from Viettel’s large market size. However, launching on three new markets within a short year, between late 2014 and 2015, increased Viettel’s expenditure in Africa from $50 to $230 million. However, a telecom project usually takes between five and seven years to break even, leaving the company feeling secure for the moment.

Viettel’s total overseas revenue increased by 9 per cent, to nearly $1.5 billion in 2015. According to UK-based research and consulting firm OVUM, which specialises in global coverage of information technology and telecommunications industries, the global industry rate was only 2.3 per cent, a fourth of Viettel’s.