Mobile operators eye Vietnam as next source of growth
SINGAPORE - As Vietnam transforms from a communist backwater into a modern market economy, its telecommunications sector is shaping up to be the next battleground for cellphone operators seeking growth markets in the Asia-Pacific region.
The country's telecoms market is tightly regulated, with limited foreign participation, but potential investors are betting that Vietnam's ambition to join the World Trade Organization by the end of 2005 will usher in reforms to open up the sector.
Vietnam is in the midst of a reform program to redesign its economy from an insular, centrally-planned system to an internationally integrated one based on market mechanisms.
"The potential for growth in Vietnam is there and is a lot higher than other developing markets should the government liberalize," said Eleana Liew, an analyst at research firm Gartner.
At the end of 2004, about six out of every 100 people in Vietnam owned a mobile phone, according to Gartner's data, sharply lower than mature markets like Singapore where penetration is close to 100%.
Mobile penetration in Vietnam, which has a population of 80 million, is expected to reach 17% in 2009, but Liew said liberalization would allow it to reach a much higher level.
ST Telemedia Ltd., 100%-owned by Singapore's state-owned investment company Temasek Holdings Ltd., already has plans for Vietnam after an unsuccessful joint bid for a 47.7% stake in India's Idea Cellular earlier this year.
"With a large population size, low teledensity and strong government commitment to the development of the telecommunications industry, Vietnam is an attractive investment consideration for ST Telemedia," a spokeswoman said.
"We look forward to participating meaningfully in the Vietnam market and contributing to the development of its information-communications industry," she said.
In fact, the company may be setting up an office in Vietnam within the next two months to position itself for the expected liberalization, an industry source told Dow Jones Newswires.
ST Telemedia owns a 42% stake in Indonesia's second-largest telecom company PT Indonesian Satellite Corp., or Indosat, and a 50% stake in StarHub Ltd. (T54.SG), Singapore's No. 2 mobile company by customer base.
Competition To Ramp Up
Under a limited Vietnamese business cooperation framework, South Korea's SK Telecom Ltd. (017670.SE) and Hong Kong's Hutchison Telecommunications International Ltd. (2332.HK) are already operating in Vietnam through separate joint ventures with two of the country's six mobile phone operators. Vietnam's four other mobile phone operators are state-owned.
Telecommunications companies like Nokia Corp. (NOK) and Ericsson have also recently bagged multimillion dollar contracts with local mobile phone operators to expand their networks.
New entrants eager for a share of Vietnam's mobile pie are likely to face ramped up competition from next year.
As part of its preparations to join the WTO, Vietnam signed a Bilateral Trade Agreement with the U.S. in 2001, that will allow more foreign firms to enter the telecommunications market through joint ventures from the end of 2005.
"There are now a lot of regional telcos ... that might also be interested in a stake in an immature market like Vietnam," said OCBC Investment Research analyst Winston Liew.
Singapore Telecommunications Ltd. (T48.SG), or SingTel, Southeast Asia's largest phone company by market capitalization, also sees Vietnam as a potential source of growth.
SingTel, majority owned by Temasek, has spent about S$20 billion over the past few years to bolster its presence in Asia, but earlier this year was outbid by United Arab Emirates-based Emirates Telecommunications Corp., or Etisalat, for a 26% stake in state-owned Pakistan Telecommunications Ltd.
"SingTel continues to assess opportunities in Asia Pacific, including Indochina," a SingTel spokesman said. He declined to say if plans are underway to enter the Vietnamese market.
"Vietnam is just the right fit for what SingTel may be looking for, which is an immature, untapped market with a large population," said OCBC's Liew.
Analysts say Telekom Malaysia Bhd (4863.KU) and PT Telekomunikasi Indonesia are also potential investors in Vietnam.
By Jessica Tan - Dow Jones Newswires - September 13, 2005.
Motorola views Vietnam as promising market
HANOI - Motorola considers Vietnam to be its promising market, Jay Andersen, Vice President of Sales and Operations for Motorola Networks Asia, has said.
"Vietnam has a low mobile penetration rate relative to other Asian countries. It holds tremendous growth opportunities for Motorola. We are committed to this market, and look forward to delivering more advanced mobile technologies to the end users in Vietnam," the Vice President said at a press briefing in Hanoi recently.
Mentioning Motorola's appointment of David Knapp as the General Director of Motorola Vietnam, the Vice President said the newly-appointed General Director is expected to help strengthen Motorola's leading market position as a key telecommunications equipment provider in Vietnam.
David Knapp said that Motorola will work closely with mobile operators in Vietnam to identify and implement appropriate network technologies in preparation for the next stage of telecom growth in the country. This includes the introduction of wireless, wireline, wifi and WiMAX solutions that will help improve the operators' overall network performance and efficiency.
Motorola has been operating in Vietnam since 1994 and was one of the first global telecommunications companies to commence operations in Vietnam. Since then, Motorola has made remarkable contributions to the development of the country's telecom industry.
Vietnam News Agency - September 13, 2005.
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