Vietnam-Russia Telecommunication Joint Stock Co project officially being licensed was a new sign in attracting foreign direct investment (FDI) in Vietnam’s telecommunication sector.
The withdrawal of VimpelCom, SK Telecom and the difficulties in the operation of Hutchison Telecommunications Co has partly impacted the investment trends of the foreign investors in the telecommunication sector in Vietnam. Many investors consider the Vietnamese telecommunication market a fertile destination for the development of content services, broadband Internet services based on new technology platform 3G and 4G, rather than merely making a capital contribution to build network infrastructure to provide basic telecommunications services.
According to Tony Foster, executive director Freshfields Bruckhaus Deringer law firm, there are some signs showing the drop in the interest of foreign investors in the field of telecommunications services in Vietnam. However, there are still many investors showing their interest in commercial cooperation or joint ventures in a number of other telecommunications sectors such as establishment of data centres and Internet.
The evidence is that according to the statistics of the Overseas Investment Department (Ministry of Planning and Investment), in the first nine months of 2012, total FDI in the field of information and communication continued to increase, with 54 newly granted projects and 13 others registering to raise investment capital, with a total investment of over $400 million. Of these, the most notable is Vietnam – Russia Telecommunication JSC project (a joint venture between Alltech Telecom Ltd, Vietnam Post and Telecommunications Group – VNPT and Cyprus-based value-added service solutions provider), with a total investment of $375 million.
This project was signed in late 2010. By that time, according to Evgeny Roytman, president of Alltech Telecom Group, this project would take about 5-7 years to achieve its goal on internal rate of return (IRR). Once in operation, the project would provide mobile broadband Internet services on the new technology 4G/LTE.
However, the time for the project to officially be put into operation depends pretty much on Vietnam’s general roadmap on the implementation of 4G/LTE technology licensing. Ministry of Information and Communications has just granted 4G/LTE technology trial licenses for five enterprises.
After receiving the trial license for this technology, VNPT has partnered with Alltech Telecom to test the system and 4G/LTE service in Vietnam. Alltech, in addition to investing in the Vietnamese market, has also taken steps to prepare for the deployment of 4G/LTE technology in a number of other markets such as Cambodia, Laos and Burma.
Not having specific projects like Alltech Telecom, recently, many investors from France, Japan and Finland have also studied the investment opportunities in the field of Internet, data services, mobile content services in Vietnam through the B2B working with Vietnamese enterprises.
According to Marc Cagnard, Commercial Counsellor cum Director of the French Chamber of Commerce and Industry in Vietnam (UBIFRANCE), in 2012, UBIFRANCE will hold about 350 French enterprises to involve in learning the Vietnamese market. These businesses are keen on participating in the Vietnamese market within this year, of which about 15percent are now operating in the field of information technology and telecommunications.
The reason behind the foreign investors’ high appreciation of the opportunity to participate in the fields of Internet, data services, mobile content services market in Vietnam is that Vietnamese market is evaluated to have more opportunities compared with the mobile telecommunications market.
Regarding the Internet market, the number of service users is still relatively low, especially broadband Internet. According to the statistics of Vietnam Internet Network Information Centre, by the end of August 2012, the number of Internet users reached about 35.4percent of the population and the number of new broadband subscribers reached 4.35 million.