Foreign telecoms recommit

Some foreign investors in the Vietnamese telecommunications industry have decided to increase their investment capital, which has surprised some.

Two foreign newcomers in the Vietnamese mobile market, Hutchison Telecommunication (the investor of Vietnamobile) and Gtel Mobile (the investor of Beeline), have been said to begin to face financial difficulties.

Even so, foreign partners including Hongkong-based Hutchison Telecommunication and Russia’s Vimpelcom completed all necessary procedures to increase their legal capital or investment capital.

Nguyen Van Tu, deputy director of Ha Noi’s Department of Planning and Investment, said Vietnamobile had sent an application to increase its investment capital by US$350 million.

If so, Hutchison’s investment capital in the Vietnamobile company would reach $1 billion, of which $700million was already disbursed.

In addition to pumping in more investment capital, partners of Vietnamobile also completed paperwork to convert to a joint stock company from the current business co-operation contract.

Unlike Vietnamobile, Beeline did not increase the investment capital but the legal capital in order to expand its contribution to the current joint venture.

Under a signed agreement to set up Gtel Mobile joint venture between Russia’s Vimpelcom and Viet Nam’s Gtel, the former contributed 40 per cent, equivalent to $267 million of the joint venture’s total legal capital while the latter made up 60 per cent.

A source at Vimpelcom said the company planned to inject an additional $500 million into the Gtel Mobile Joint Venture by 2013.

Independent market analysts, however, said the foreign telecom investors’plans to increase capital sources in the Vietnamese telecom industry would be considered carefully and then approved by the authorised agencies.

This is due to Viet Nam’s current legal regulations that allow foreign investors to contribute a maximum 49 per cent to the joint ventures’ capital.

Alexey Blyumin, general director of Gtel Mobile, said that Vimpelcom had great expectations for its business in Viet Nam and its position in this market and in the Southeast Asian region.

Market experts said that the domestic telecom market was facing fierce competition but still had potential to develop. However, foreign investors who came late to the market like Hutchison and Vimpelcom should have proper investment strategies to ensure that they had advanced technology and capital, if they want to find a firm foothold in the market.

Tags: Vietnam Telecom, Vietnam telecom maket