S-Fone is still in a bind

At its seven-year foundation anniversary in July 2010, S-Fone once declared it had 7.5 million subscribers and was the fourth largest player in local telecom market. However, according to Ministry of Information Communications (MIC) figures, by the end of 2010 S-Fone had just 1.9 million subscribers with only 530,000 new subscribers in 2010.

With its current capacity S-Fone cannot compete with other small networks like Vietnamoble or Beeline, let alone giant players Viettel, VinaPhone or MobiFone. Vietnamobile, operated by Hanoi Telecom in cooperation with Hongkong-based Hutchison,  now has a wide subscriber pool of 12 million while Beeline, operated by the Global Telecommunications Corporation (GTel) and Russia’s Vimpelcom Group, has over six million subscribers and 4,000 transceiver stations.

Alongside limited finance, S-Fone faces difficulties associated with technology. If continuing using CDMA technology which was proven less effective in Vietnam with three operators using the technology were found continually counting losses S-Fone must upgrade the technology and enrich terminal equipment pool.

According to Qualcomm deputy chairman in Asia-Pacific region John Stefanac, CDMA technology could be evolved into WCDMA version (3G) or LTE version (4G). If S-Fone wants a technology change, it would need a hefty sum.

When Vietnamobile shifted from using CDMA to GSM technology, its foreign partner Hutchison reportedly poured an additional $500 million into the project, bringing its total investment to around $1 billion. Meanwhile, S-Fone’s total investment capital was just $230 million.

Deputy general director Ton Minh Thong at Saigon Postel (SPT) - the operator of S-Fone network – said whether S-Fone makes a technology shift or not depended on the strategic partner S-Fone picked.

Former MIC deputy minister Mai Liem Truc attributed CDMA technology inefficiencies at S-Fone to business cooperation contract limitations.