~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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[Year 2001]

Vietnam licenses US$230m phone project

HANOI - Saigon Post and Telecommunications (Saigon Postel) said on Friday it received a license for a US$230 million project to develop Vietnam's third mobile telephone network with a Singapore-based South Korean joint venture. Trinh Dinh Khuong, Saigon Postel's general director, told Reuters he received the Planning and Investment Ministry license on Tuesday for the 15-year project with SLD Telecom using Code Division Multiple Access (CDMA) technology.

SLD Telecom is a joint venture between South Korea's SK Telecom, LG Electronics and Dong Ah Elecomm. Khuong said the foreign partners would contribute US$219 million to the project and Saigon Postel the remainder. He said the partners would establish an affiliate to launch the network from mid-2002. "We will open tenders (for equipment) later this year and installation will start from early next year," Khuong said. He said the system would be installed in Vietnam's commercial hub Ho Chi Minh City and capital Hanoi next year, and would cover most of the country by its third year of operations.

The new system will challenge two existing nationwide mobile phone networks, Vinaphone and VMS-Mobifone, controlled by Vietnam Posts and Telecommunications Corp (VNPT). These use the Global System for Mobile Communications (GSM) technology. Saigon Postel was once wholly-owned by VNPT, which now holds 18 percent of the 87 percent state stake in the firm. Earlier this year, state media reported that VNPT had sought to prevent licensing of the SLD venture, arguing it could satisfy demand alone and saying telecommunications were a national security issue.

The Saigon Times Daily newspaper said the CDMA system would have a broader bandwidth than existing GSM systems, allowing for quicker data transmission and Internet access using the wireless application protocol (WAP). Khuong said the CDMA project would face tough competition from Vinaphone and Mobifone. "This will force us to do better in after-sales service, in reducing costs and providing better quality," he said. One disadvantage was that the CDMA technology was not compatible with GSM handsets, he said. "We will either import CDMA phones or set up assembly lines here to wrap CKD components," he said. Partners in the CDMA project have targeted 100,000 subscribers by the end of the first year of operations and double the figure by the end of the third year. They forecast a rise to between 700,000 and one million by the 15th year.

The Saigon Times Daily said the Korean firm would transfer ownership, assets and technology to Saigon Postel once the project period expired in 2016. Currently there are 1.03 million subscribers to VNPT's Vinaphone and Mobifone networks. VNPT has forecast its users to grow to 2.2 million by 2005. Under a trade pact signed with the United States last July and expected to be ratified later this year, Vietnam committed to gradually opening its telecoms market to joint venture services.

Reuters - September 21, 2001.