VietNamNet Bridge - Vietnamese telecommunications companies are finding it hard to tap into unexploited markets.

Viettel, the military telecom group, began making outward investments nine years ago, not only in South East Asia, but also to African countries. 

Of the seven markets it is present, Viettel can only make profits in four – Laos, Cambodia, Haiti and Mozambique. In 2014, the telco made a profit of $156 million from overseas projects out of $1.2 billion in revenue.

Viettel had to wait five years to see the profit from the investment project in Cambodia, and waited three years in Laos and Haiti. 

The business results were more satisfactory in Mozambique, when it began making profits after six months of investment. However, it  make the heaviest investment there, roughly $400 million by 2020.

It is expected that by the end of 2015, Viettel would recover 80 percent of $600 million (VND12 trillion) worth of investment capital it has tapped into outward projects. 

However, if considering statistics released by Viettel Global, the subsidiary in charge of Viettel’s outward investments, the total investment capital in eight markets, is higher, at VND34.885 trillion, or $1.7 billion. Of this, the capital arranged by Viettel is VND28.241 trillion, or $1.4 billion.

In 2015-2017, when Viettel plans to penetrate another eight markets, it would need $1.25 billion more, while over 50 percent of which will be loans.

An analyst commented that Vietnamese telcos make right decisions when making outward investments as the domestic market is getting saturated. However, the risks in unexploited markets are high.

He said there were about 1,500 licensed telcos all over the world, but only 500 can make profit, and the profit is sometimes modest with low ARPU (average revenue per user) in accessible markets.

In Haiti, for example, the expected ARPU is just $2.5 a month. In the US, every subscriber can bring $60 a month in revenue to mobile network operators. However, there is no more opportunity in the US and developed countries. Therefore, telecom groups have to squeeze into less attractive markets.

The analyst noted that in general, big telecom groups only target markets with the ARPU of over $10 a month. This was why Singtel, Telecom Malaysia and Vodafone gave up Haiti though they tried to exploit the market.

Meanwhile, Viettel poured capital into Haiti and continues seeking opportunities in other markets. Viettel’s CEO Nguyen Manh Hung said Viettel was striving to become one of the world’s largest 10 telecom groups by 2020, with 600-800 million customers.

NCDT