Investors snub Vietnam telecom market

According to telecom experts, foreign investors rushed to Vietnam several years ago in search for opportunities for investment in the local telecom market, but now they are standing aloof.

This is proven by the data of the U.K.-based Business Monitor Intelligence (BMI). In the second quarter this year, BMI lowered Vietnam’s telecom ratings to 42.5 points from 45 points one year earlier.

A few years ago, many foreign telecom firms set up their representative offices in Vietnam, such as France Telecom, ST Telemedia, and Telenor. Now, the situation is different.

Telenor has shut down its representative office and pulled out of Vietnam. Meanwhile, other telecom companies barely make any move to enhance their presence and are no longer keen on the local telecom market like before.

Recently, Vimpelcome, known for the brand Beeline, has withdrawn from Vietnam, and SK Telecom has divested capital from S-Fone.

ST Telemedia’s spokesman said the company and other telecom firms worldwide are waiting for the equitization of MobiFone to make investment in Vietnam. They have no intention to invest in a new mobile network as the market is already saturated.

However, Vietnam Posts and Telecommunications Group (VNPT) has suggested merger of MobiFone and VinaPhone, rather than equitizing the former. Therefore, the fate of MobiFone is now undecided.

A telecom expert said if the proposal of VNPT got approved, foreign investors would be impacted. If MobiFone, the first telecom firm planned for equitization, was not allowed to go public, investors would have no other plans for doing business in Vietnam, and would likely pull out of the local market to look for other destinations.

As per the White Book on IT and Telecom released last Tuesday, in late 2011, the country witnessed the growth in the number of cell phone subscribers slowing due to the market saturation, staying at 14%, versus the average growth rate of 31.3% in the past five years. As of last year’s end, there were 127.3 million mobile phone subscribers nationwide.