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VietNamNews

Exits signal new age for VN telecoms

Update: September, 21/2012 - 10:40

 

Clients register for Viettel services in Ha Noi. Vietnamese telecom companies are no longer reliant on foreign partners, resulting in the withdrawal of foreign-invested companies from the domestic telecoms market. — VNS Photo Truong Vi
HCM CITY (VNS)— Vietnamese telecom companies were no longer reliant on foreign partners, resulting in the withdrawal of foreign-invested companies from the domestic telecoms market, said an official in a report published by Vietnam Investment Review.

Le Nam Thang, deputy minister of Information and Communications, said Vietnamese telecommunications companies now had the necessary conditions to develop by themselves. These conditions included capital, experience and workforce.

Many domestic telecom companies did not lack capital and it was easier for them to access advanced technology, Thang said.

In other words, the withdrawal of foreign partners from the Vietnamese telecommunications market had instigated itself, he said.

In the past, foreign-invested telecommunications enterprises such as Comvik, SK Telecom, VimpilCom, and Hutchison Telecommunications penetrated deeply into the Vietnamese market.

However, three of these four investors have already withdrawn quietly from the market, and Comvik International Viet Nam AB (CIV), a Swedish Telecom operator belonging to the Kinnevik Group, typifies the trend.

In 1995, under the flagship Millicom International Cellular S.A. CIV together with Viet Nam Mobile Services (VMS), the company operated the Mobifone network in Viet Nam under the Business Co-operation Contract (BCC), with capital contribution of US$200 million.

Thanks to this partnership, Mobifone became one of the major mobile telephony operators in Viet Nam and provides GSM and GPRS services to close to 2.5 million customers, with turnover of $400 million in 2005.

However, this co-operative relationship was ended at the end of 2005 together with the end of the BCC.

The withdrawal of SK Telecom (a South Korean wireless telecommunications operator controlled by the SK Group) and VimpelCom (a Russia-based international operator) was different from Comvik International Viet Nam AB.

These two companies decided to stop their operations in Viet Nam due to ineffective business.

After nine years of ineffective operations in Viet Nam, SK Telecom in partnership with the Saigon Post and Telecommunications Services Corporation was forced to withdraw from the Vietnamese telecommunications market.

Similarly, VimpelCom also had to say good bye to the Vietnamese telecommunications market after ending its GTel Mobile joint venture with partner Gtel Transmit and Infrastructure Service One Member Company Limited.

In April this year, VimpelCom had to sell its 49 per cent stake in the Beeline brand to Gtel, making the latter a wholly locally owned firm.

Under the deal, Gtel Company paid around $45 million for the buyback after year-long negotiations, and would not use the Beeline trademark within six months of the transfer. The mobile service provider will launch a new brand to replace Beeline.

At present, the Hong Kong-based Hutchison Telecommunications International Limited was the only foreign-invested company operating in the telecommunications industry in Viet Nam, Vietnam Investment Review said.

"However, the company accounts for just an 8 per cent market share, and is having difficulties developing infrastructure to provide 3G services," the paper added.

Vo Tri Thanh, deputy director of the Central Institute of Economic Management, however said that the withdrawal of foreign investors in the telecommunications area should prompt a review of the domestic market as well as competitive activities in order to make proper adjustments for better development.

"The Vietnamese telecommunications market still has a lot of potential to exploit, and is still attractive to many foreign companies and corporations involved in the telecommunications area," Thanh said.

Thanh's judgement was proved by the fact that British Telecommunications and Thailand's True Corporation recently expressed their interest in developing their businesses in Viet Nam. — VNS

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