Domestic market nearly saturated, time to make outward investments

VietNamNet Bridge – The Military Telecom Company Viettel has won the bid and received a license to exploit the mobile telecommunications market in Mozambique in the southeast of Africa. As such, within just two years, Viettel has expanded its investments into many countries in the world with its committed investment capital of up to hundreds of millions dollars.
According to Viettel Global, an international investment capital, Viettel plans to raise its total investment markets in 2010 to six, while it is still seeking more markets in Asia, Africa and Latin America.

Seeking more and more new markets

In February 2009, Viettel officially inaugurated its first mobile network in a foreign country, Metfone, in neighboring Cambodia. Eight months later, Viettel launched Unitel network in Laos.

2009 was the difficult year for both the world and Vietnam’s national economies due to the impacts of the 2008 global financial crisis. However, even when setting up two new networks in Cambodia and Laos, Viettel was still quietly searching for more markets.

Viettel conducted a negotiation on purchasing 60 percent of stakes of Teletalk in Bangladesh. After that it negotiated to purchase 70 percent of stakes of Teleco in Haiti.

Teletalk is the smallest mobile network in Bangladesh which had one million subscribers out of 50 million subscribers in the country. However, to date, Viettel has not revealed any information about Teletalk. As for Haiti market, Tong Viet Trung, Deputy Director of Viettel, said Viettel will inject $300 million in the market. 

According to Trung, Viettel is designing the infrastructural system, upgrading the existing fixed line system in order to put it into operation soon in Haiti. As for the mobile phone network Viettel, they will build more than 1000 BTS (base transceiver stations) and will officially provide telecom services in the country by the first quarter of 2011.

In early November, a senior official of Mozambique informed that the country has agreed to grant a license to Viettel allowing the company to exploit the mobile market.

Several plans to conquer foreign markets have been set up and executed by Viettel, a rather young telecommunications group in Vietnam. What has prompted the telecommunications group to make so heavy outward investment?

The ambition of obtaining a 1-billion-consumers market 

There is a common characteristic of all the markets Viettel is targeting. These are all underdeveloped economies with low average per capita income. These are the countries which do not have advantageous geographical positions with many mountains, natural calamities, or political uncertainties.

However, Viettel still decided to spend hundreds of millions dollars to do business there. Why?

In the domestic telecom market, the competition among service providers has become very stiff with the existence of seven service providers. The domestic market is believed to have come closer to the saturation.

Viettel now is considered one of the three biggest mobile phone networks in Vietnam with the high number of subscribers. However, the service fees are already approaching production costs and cannot be lowered further. Meanwhile, the incomes from service providers mainly come from popular services (call, message), while the income from other services remains modest.

Therefore, Viettel has decided to make investment in the markets which have a lower density of mobile phone service users.

But why the countries with disadvantageous geographical positions and political uncertainties? - “It is simply because the profitable markets all have been exploited already,” said Deputy General Director of Viettel Nguyen Manh Hung, adding that only difficult and risky markets have been left.

However, Hung said that telecom services are needed everywhere, even in the countries with uncertainties, civil wars and natural calamities. Therefore, Viettel still decides to develop services in the countries.

Viettel hopes that by 2015, the group will obtain a market with one billion consumers.

Source: Thoi bao Kinh te Vietnam