Vietnamobile begs for bailout

Customers register to use services provided by mobile operator Vietnammobile, which has asked for help from the government to avoid bankruptcy.

Pham Ngoc Lang, chairman of the Hanoi Telecom, Vietnamobile's parent company, said the operator was struggling to compete in a telecom's market dominated by three major players.

State-owned mobile operators had been given preferential treatment and more mobile frequencies that allowed them to dominate the market, Lang told journalists at a recent press conference.

Meanwhile, the Ministry of Information and Communications said mobile frequencies were a national resources and had therefore to be managed carefully.

Vietnamobile also claimed that there had been price-fixing among Vinaphone, MobiFone and Viettel.

"We have invested billions of dollars to build a mobile network here but we face a lot of difficulties due to unfair competition. We don't think we can survive," Lang said, adding: "We are now compiling a letter to the government asking for help."

Vietnamobile once pledged to attract 120 million subscribers to become the third largest operator in Vietnam.

After entering the market in April 2009, it quickly became the fourth biggest operator in the country with 10 million subscribers.

In 2010, Vietnamobile was the only new telecoms operator to win the prestigious VICTA 2010 Award for its tariff plan.

Meanwhile, April Gtel Mobile spent $45 million to acquire a 49 per cent stake in the Beeline network, a brand currently owned by Russia's second-largest telecom operator VimpelCom.

VimpelCom claimed it wanted to expand its market in Asia over a 15-year period by some 20 million users, and in 2011 it announced it planned to invest $500 million into the Beeline network until 2013.

Later, the telecom operator said it had transferred $196 million into a joint venture with Gtel which raised Gtel shares in Beeline to 49 per cent.

However at the end of 2011, VimpelCom's financial report revealed that the corporation had lost $527 million in the Vietnamese and Cambodian mobile phone markets.

Addressing their withdrawal, VimpelCom said that this was the corporation's policy to minimise its business in some regions and focus on key markets.

Yet, experts forecast a gloomy future for smaller telecom operators. The Vietnamese telecommunications market is dominated by three major players, VinaPhone, MobiFone and Viettel, which hold a combined 95 per cent of the market share, while Beeline, Vietnamobile, S-Fone and EVN Telecom share a minuscule 5 per cent.

Even before Beeline announced its withdrawal, others mobile networks were already experiencing major problems.

The S-Fone was said to be slowly withdrawing from the market while analysts claimed the company was seeking investment from two foreign partners.