Beeline was once
considered the guy that roused Vietnam’s telecom market when it launched noisy
advertisement campaigns and marketed dirt cheap service packages. However, the
name “Beeline” has disappeared from the market for the past six months. Why?

About 30
Beeline simcards were seen collecting dust on the shelf of Nguyen Thi Lan’s
shop on Chua Lang Street. Lan said that these days she cannot sell any
simcards.

Beeline
simcards were once the best sellers. Lan related that in July and August 2009,
when Beeline debuted and offered dirt cheap service packages, its simcards were
top sellers .

In fact, if
comparing with the other telecom service providers, Beeline still offers the
lowest charges for inner-network calls. Subscribers of the Big Zero package,
for example, have to pay 1199 dong per minute. The Big&Kool package is even
offering lower rates at 900 dong per minute for both inner network calls and
calls to other networks.

However,
despite its low rates, Beeline is still sinking.

According
to Thoi Bao Kinh Te Vietnam newspaper, two months after launching the Big Zero
package, Beeline announced that it sold 2 million simcards and 1 million
simcards were activated. Six months later, Beeline said 2 million subscribers
were using its services. Other telecom service providers also confirmed that
about 1 million Beeline subscribers regularly contacted their subscribers.

However,
Thoi Bao Kinh Te Vietnam quoted its sources as saying that presently, the
actual number of operational Beeline subscribers is less than 100,000, or 20
times lower than the previous year.

Why have
subscribers left Beeline?  After
conducting a survey, the newspaper found out that the quality of calls is bad
and prevents subscribers from making calls, even in the inner cities.

What does Beeline need?

It is
undeniable that the name “Beeline” could be very redoubtable to any telecom
company in Vietnam.

The surveys
conducted by magazines and market survey firms showed that just two months
after making debut, awareness of the “Beeline” brand was very high, at 78
percent.

The high
level of brand awareness combined with dirt cheap service packages launched by
Beeline at that time, once worried other telecom companies. Viettel, for
example, expressed its worries that Beeline’s cheap service packages would
“spoil the telecom market of Vietnam”. Therefore, telecom companies asked the
management agency several times to apply floor prices, in an effort to prevent
Beeline from offering ridiculously cheap services.

However,
presently Beeline is unable to continue expanding its network and further
develop its network infrastructure. Some sources said that the foreign partner
of Beeline, the Russian VimpelCom Group, is considering withdrawing its
capital.

Also
according to Thoi Bao Kinh Te Vietnam, VimpelCom Group does not lack capital,
and it even wants to inject more capital in the joint venture. However, if
VimpelCom Group increases its capital contribution in the joint venture, it
will hold the controlling stakes – something that GTel, the Vietnamese partner,
does not wish to see happen.

Another
solution is that both the Vietnamese and foreign partners increase capital, so
that GTel can raise its capital contribution in the joint venture. However,
sources said that GTel is not sure that it can arrange capital. Therefore, the
plan to develop the network as previously planned has been delayed.

Source:
Thoi bao Kinh te Vietnam