Cable & Wireless resets Vietnam project HANOI - Cable & Wireless Plc said on Tuesday that due to Vietnam's dimming economic prospects the firm and its state telecoms partner were restructuring a landmark multi-million dollar deal. Roger Barlow, C&W's general director in Vietnam, said Asia's financial crisis had hit the country and that a $207 million contract with Vietnam Posts & Telecommunications (VNPT) needed to be adjusted to ensure good returns. The contract involves installing lines in the capital Hanoi. ``Cable & Wireless is working with VNPT towards a start up in the middle of this year which will take into account the changed economic circumstances,'' Barlow said in an interview. ``As for any start up, we need to manage costs very carefully... (we) are attempting in a difficult economic climate to make it cost effective,'' he added. Cable & Wireless signed a 15-year business cooperation contract (BCC) last August for the line installations but construction work has yet to commence. In November 1997, France Telecom and Japan's Nippon Telegraph & Telephone Corp signed similar deals to install lines in Ho Chi Minh City and Hanoi, respectively, but little work has been reported. Another licence -- which would bring cumulative investment in the four projects to around $1.2 billion -- to install lines in west Ho Chi Minh City had been expected to go to Australia's Telstra. It is unclear when or if that deal will be signed. Although communist-ruled Vietnam has opened to foreign investment over the past decade, the provision of telecom services has remained tightly controlled and mostly off-limits, with BCCs the only investment option. BCCs are normally short term and offer limited management rights in return for shared revenue but no equity. ``Last year and this year so far the Southeast Asia financial crisis began to bite in Vietnam so the market... is not as strong as it was,'' said Barlow. ``This has caused a number of telecoms companies... to sit down with VNPT and say 'the size of the pie is smaller now, how can we solve it?','' he added. But Barlow said he was optimistic a new business plan and financial projections would be agreed and that the first tranches of C&W investment could begin in June or July. Telecommunications growth in Vietnam has slowed -- after peaking at 30 percent annually in the mid 1990s -- but the country is still recognised as the second fastest growing market in the world. Telephone penetration remains low at 2.3 per 100 residents, official figures show. Barlow said BCCs were not ideal and that Vietnam was indicating it may eventually allow foreign investors more direct involvement in the telecoms sector. Last November the state telecom regulator, the Directorate General of Posts & Telecommunications, said Vietnam would allow foreign-invested joint ventures to resell telecoms services. ``It's probably too early now, but I would expect the resale of basic services, or even switching, in the year 2000,'' Barlow said. Reuters - April 13, 1999.