New age for VN’s telecoms

Many domestic telecom companies do not lack capital and it is easier for them now to access advanced technology, Thang said. Le Nam Thang, Deputy Minister of Information and Communications, said Vietnamese telecommunications companies now have the necessary conditions to develop by themselves. These conditions include capital, experience and workforce.

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

However, three of these four investors have already withdrawn quietly from the market, with Comvik International Vietnam AB (CIV), a Swedish Telecom operator belonging to the Kinnevik Group, being an example.

In 1995, under the flagship of Millicom International Cellular SA, CIV, together with Vietnam Mobile Services (VMS), the company established the Mobifone network in Vietnam under a Business Cooperation Contract ( BCC ), with capital contribution of 200 million USD.

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

However, this cooperative relationship only lasted until the end of 2005 when the BCC was terminated.

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

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

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

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

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

Under the deal, Gtel Company paid around 45 million USD for the buyback after year-long negotiations. The mobile service provider will launch a new brand to replace Beeline.

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

"However, the company accounts for just an 8 percent 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 Vietnam.