VietNamNet Bridge – Four foreign investors once arrived in Vietnam to do business after they believed that the market had great potentials for them to exploit. However, only one of the four still can stay there.

Making noise when arriving, keeping quiet when leaving

Gtel Mobile has announced that Gtel Mobile would replace Beeline brand on the telecom market, officially putting and end to the cooperation between Vietnamese Gtel Mobile and Russian partner in VimpelCom joint venture.

Comvik, SK Telecom, VimpelCom and Hutchison Communications – the big guys in the world - once arrived in Vietnam with ambitious business plans. Of these, three have quitted the market, sooner or later.

Comvik was the first foreign investor which jumped into the Vietnamese telecom market when it signed a business cooperation contract (BCC) with Vietnamese MobiFone in 1995. With the cooperation of Comvik which then poured 200 million dollars to develop the mobile network, MobiFone rapidly became a big telecom service provider with 2.5 million subscribers and 400 million dollars worth of turnover in 2005.

However, the foreign partner had to say goodbye to Vietnam in 2005, when the BCC terminated.

Unlike Comvik, both SK Telecom and VimpelCom had to leave the Vietnamese market after their failed to seek profits there.

In 2010, after nine years of ineffective operation, SK Telecom, the foreign partner in the BCC to develop S-Fone network, quietly left the market. The network has shifted to operate under the mode of joint venture instead of BCC.

Like SK Telecom, VimpelCom also had to separate with Gtel in the Gtel Mobile joint venture – the operator of Beeline network, even though its ambition had not been fulfilled. Despite the powerful capital and technology fundamentals, VimpelCom still could not upgrade the Beeline’s ranking on the market after three years of operation.

Commenting about the leave of the foreign partners, Le Nam Thang, Deputy Minister of Information and Communication affirmed that the decisions were made absolutely because of the economic reasons.

Unclear future for those who stay

As such, Hong Kong’s Hutchison Telecommunications, the operator of Vietnamobile network, remains the only foreign investor in the domestic telecom market. However, it’s obvious that the operator has been facing a lot of difficulties with the modest market share of eight percent.

In 2008, Vietnamobile decided to use GSM technology instead of CDMA, because CDMA could not bring profit. However, despite the timely decision, Vietnamobile still cannot make a breakthrough in the market.

Especially, Vietnamobile fears it does not have sufficient 3G frequency band to develop services effectively, after EVN Telecom, the Vietnamese partner of Vietnamobile in the project on providing 3G services, was merged into Viettel.

To date, sources said Vietnamobile still has not reached any agreement with the military telco – Viettel – the new owner of EVN Telecom – about the sharing of the 3G frequency band.

As such, Hutchison Telecommunications have fallen into dilemma. If it quits the market at this moment, it would not be able to take back the investment capital immediately like VimpelCom could. Meanwhile, if it stays, it would have to wait for the support from the Ministry of Information and Technology.

Opportunities still available

Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management CIEM, affirmed that the Vientamese telecom market remains potential enough and it still can attract the attention of foreign telecom groups.

British Telecom from the UK and True Corporation from the Netherlands have expressed their willingness to seek business opportunities in Vietnam.

Meanwhile, Stepen W F Sun, Chief Representative of Hutchison in Vietnam, has affirmed the group’s determination to make long term business in Vietnam.

Compiled by C. V