Pumping capital into mobile networks described as “enigmatic move”

Published: 11/05/2011 05:00



It is really good news for S-Fone and Beeline, the small mobile networks, that “big guys” have decided to inject money into the networks to help the networks survive and develop. However, bigger networks say the move will not cause any obstacles to them.

Small networks get more money

Several days ago, SaigonTel, the company of Dang Thanh Tam, the third riches stock millionaire in Vietnam, announced the deal of purchasing 35,983,665 shares for SPT, the owner of S-Fone mobile network.

With the deal, SaigonTel will become the biggest shareholder of SPT which holds 30 percent of the chartered capital of SPT, and has seats on the board of directors and board of management. The involved parties have declined to reveal the value of the deal. However, with the new ownership ratio, SaigonTel will have the right to manage SPT’s key running projects, including S-Fone mobile network.

According to the Ministry of Information and Telecommunication, by the end of December 2010, S-Fone had had 1,860,793 subscribers who had been using services. With the figure, S-Fone is considered the 5th biggest mobile network among the seven currently operational mobile networks.

Tran Ngoc Binh, Chair of SPT’s Board of Directors, said the two sides are under the detailed negotiations about the deal; therefore, further information have not been exposed.

Prior to that, Beeline also received good news when VimpelCom announced it will pump 500 million more dollars into Beeline in the years from now to 2013. On May 4, 2011, Gtel and VimpelCom, the partners in the network, released an announcement that they have wrapped up the capital transaction.

The first capital contribution of 196 million dollars has been completed, raising the VimpelCom’s ownership ratio in the mobile network joint venture from 40 percent to 49 percent. The other sum of money worth 304 million dollars would be carried out in the next step, if Gtel-Mobile joint venture can obtain certain business targets and gets the approval from management agencies.

Meanwhile, another small mobile network – EVN Telecom, is not as lucky as its rivals. FPT has officially decided to stop the plan on purchasing EVN Telecom’s stakes. As a result, EVN Telecom still has to look for the investors who can spend money to help the mobile network survive.

Big networks keep indifferent to the move

The move by the “big guys” to inject more money into small mobile networks does not portend a fiercer competition among networks, because big networks do not think that the move would be a threat to them.

Especially, a representative of a mobile network said he cannot understand why investors decided to pour more money into the small networks at this moment.

When asked to make comments about the SaigonTel’s deal of purchasing SPT stakes, he said that the deal would not make any significance to SPT. He said that the game in the telecom market requires billions of dollars and experiences. No one would be capable enough to “play the game” unless the “very very big guys” like the oil and gas group, or airlines.

“It would be not an easy game for anyone, including the rich stock millionaire to play in such a market with stiff competition,” he said.

A high ranking executive of MobiFone said that one can foresee the impacts of the capital contribution of hundreds of millions of dollars to Beeline and S-Fone, if he is informed that Viettel, the third biggest mobile network in Vietnam, has to spend nearly one billion dollars just to develop its 3G network.

Explaining why investors still want to put money into mobile networks, the executive said investors still can see the potentials of the market: tens of millions of subscribers still do not use mobile services.

“However, the problem is that whether the tens of millions of subscribers would fall into the hands of the small networks,” he commented

Pham Ngoc Tu from VinaPhone, one of the three biggest networks in Vietnam, said the move will not be powerful enough to cause any changes in the market.

Meanwhile, an executive of Viettel also said that everyone has got his own market share already, and the ranking in the market will not change even though small networks can get more money.

Buu Dien

Provide by Vietnam Travel

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