The Vietnamese telecommunications market is shaped by the dominance of three big players – VinaPhone, MobiFone and Viettel. But now Samsung may join forces with businesses to develop IT.
Samsung Group leaders recently expressed their willingness to invest in the telecom sector in Vietnam.
Vu Tri Dung from the Marketing Faculty of the Hanoi Economics University said this is Samsung’s backward vertical integration development strategy. When the lead market develops well, it will make backward vertical integration, not only to provide terminal devices, but also strive to become a network service provider.
However, the expert thinks Samsung wouldn’t do this alone, but may join the telecom sector in Vietnam by teaming up with some businesses, possibly one of the three big telecom players, or Beeline, the telecom brand which left Vietnam some years ago, or any other business.
“No one would build a network from A to Z because it would be very costly to develop. I don’t think Samsung will develop a network, but it would specialize in providing terminal devices,” Dung said.
“The telecom market is saturated, but information technology has been developing very rapidly. Samsung will jump into the telecom sector and develop IT,” Dung said
The expert said Beeline, a brand of Russian VimpelCom, once put high hopes on its investment in Vietnam, but it could not compete with the three big Vietnamese players.
Before leaving Vietnam, Beeline had 187,000 subscribers, accounting for 0.17 percent of the market share. Its ARPU was $0.7-0.9 per subscriber, which meant revenue of less than $2 million a year.
The cost to maintain 4,000 BTS throughout the country alone was $40 million ($10,000 per station per annum). In addition, it also had to pay other expenses on marketing, operation and maintenance. Beeline incurred heavy losses.
“Samsung must have learned the lesson and it will have other calculations,” Dung commented.
The biggest strength of Samsung is the strong brand. It also has powerful financial capability and terminal devices. It understands Vietnamese customers as it has been in Vietnam now for a long time.
However, a telecom expert said there was no need to worry about Samsung’s competitiveness if the South Korean conglomerates make investments in telecom. The three Vietnamese mobile network operators are dominating the market and Samsung won’t be able to change the situation.
He believes that telecom sector is not the major goal for Samsung, because the sector, which requires huge investment in infrastructure, is no longer attractive, and that Samsung may eye the IT sector.