Telcos weigh up market with cautious eye

September 22, 2012 | 11:00
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Competition in Vietnam’s telecom sector is taking twists and turns as foreign companies scrutinise the evolving market, with some dropping out.

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>> Gmobile the new name in the game

GTel’s Gtel Mobile just announced its plan to use new brand Gmobile to supersede the Beeline trademark from September 17, putting an end to its connection with Russian partner VimpelCom.   
But of four foreign players that have entered Vietnam’s telecom markets, Comvik, SK Telecom, VimpelCom and Hutchison Telecommunications, only Hong Kong-based Hutchison Telecommunications remains at this time.

“Some businesses left the market or merged into other firms, nothing abnormal in business practices,” said Le Nam Thang, Deputy Minister of Information and Communications (MIC). “ When the market develops to a certain extent, strong firms could survive while some others are either incapable or failing to make full use of their capacity and had to leave the market.”

While some foreign companies depart, others have expressed interest in the Vietnam market, including UK’s British Telecom and Thailand’s True Corporation. “Vietnam’ telecom market still features immense potential and is drawing attention from foreign telecom players,” said Vo Tri Thanh, deputy director of Central Institute for Economic Management.  

Sweden’s Comvik was the first foreign investor hooked into a business cooperation contract (BCC) in Vietnam’s mobile telecom services market,  injecting $200 million into MobiFone back in 1995.

By  teaming up with Comvik, MobiFone had grown into a heavyweight player with 2.5 million subscribers and $400 million revenue in late 2005. But that same year, this Swedish partner bid farewell to MobiFone when the BCC expired.

Unlike Comvik, South Korea’s SK Telecom and VimpelCom withdrew from Vietnam after business results fell below expectations.

In 2010, SK Telecom, which had partnered with Saigon Postel to develop S-Fone network, bowed out of Vietnam after nine years of disappointing results.

And after three years of operation in Vietnam, Russia’s VimpelCom in April, 2012 bid farewell to local partner Gtel in the joint venture Gtel Mobile, which operates Beeline network.

Hutchison Telecommunications, which is the partnered with Hanoi Telecom to operate Vietnamobile network, has also faced a number of hardships in business operation.

In 2008, after over a year in operation, Vietnamobile had to convert its technology from CDMA to GSM on the back of CDMA poor performance. The move, however, had yet to entail Vietnamobile breakthroughs in market development.

At this time, Vietnamobile which holds around 8 per cent of total market share, is in a fix as it does not have enough 3G broadband lines to operate effectively. It has yet to reach an agreement with leading military-run telecom group Viettel in sharing the latter’s 3G broadband.

Vietnamobile is turning to MIC support to help it reach an agreement with Viettel. Head of MIC’s Telecom Department Pham Hong Hai said: “Hanoi Telecom and Viettel should sit together to seek rectification. The Telecom Department will support if negotiations come to a deadlock.”

By Thu Huyen

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