How much VimpelCom lost in Beeline project?

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VietnamNet English - 30 month(s) ago 9 readings

How much VimpelCom lost in Beeline project?

VietNamNet Bridge – If it is true that VimpelCom sells its 49 percent stake in Beeline network to the Vietnamese partner Gtel at 45 million dollars, the second biggest mobile network in Russia would incur a heavy loss in the Beeline Vietnam affair.




How much loss incurs for VimpelCom?

According to Reuteurs, on April 23, VimpelCom announced that it has signed an agreement on selling all the 49 percent of its stakes at Gtel Mobile – the company that provides Beeline mobile network in Vietnam.

The provisions of the agreement said that the buyer would pay 45 million dollars for the stakes, in cash. After the deal is wrapped up, VimpelCom would not have any more interests, duties and responsibilities in GTel Mobile. Meanwhile, GTel would have to stop using Beeline brand six months after the day of transfer.

Commenting about the affair, a manager of a mobile network in Vietnam said that 45 million dollars is really a good price for the buyer. Just having to spend 1 trillion dong, GTel would have Beeline in a whole. Meanwhile, if wanting to build up a new mobile network in Vietnam, the sum of money investor has to pay would reach nearly one billion dollars.

“The decision by VimpelCom can be shown as an action to stop loss in the Beeline project. This proves that VimpelCom cannot see any more opportunities for it, and it has to bargain away its stakes, or it would bog down in the project,” the manager said.

To date, VimpelCom has not declared the exact loss in the affair. However, if comparing the sum of money it spent and the sum of money it got, one would see that the loss incurred by VimpelCom is not small.

On July 8, 2008, VimpelCom and GTel signed an agreement to set up GTel Mobile, where VimpelCom held 40 percent of stakes worth 267 million dollars. In April 2011, VimpelCom announced it would inject 500 million dollars more in Beeline by 2013, raising its total investment capital in the network to one billion dollars, if the business goals can be reached and the Vietnamese management agencies accept the investment.

At that time, Michael Cluzel, General Director of GTel Mobile, revealed that Beeline would build 5000 more base transceiver stations nationwide, raising the total number of points of sale to 50,000 and raise the total number of workers to 1000.

The initial capital contribution sum of 196 million dollars has been injected in the joint venture, which has raised the foreigner’s ownership ratio in GTel Mobile from 40 percent to 49 percent.

The other sum of 304 million dollars would be poured later if GTel Mobile can fulfill the business plan and get the approval from competent agencies. By that time, the economic interests of VimpelCom would increase from 49 percent to 65 percent.

If the two sums of 267 million dollars and 196 million dollars have been disbursed as planned, the total investment capital VimpelCom has injected in Beeline has reached 463 million dollars. Meanwhile, VimpelCom has sold the stakes for 45 million dollars only.

Why Beeline met difficulties?

The appearance of Beeline, the seventh mobile network on the Vietnamese market really made the market more bustling. Beeline became a redoubtable rival to bigger networks when it launched the super cheap service package Big Zero.

However, this was not enough to help Beeline cement its position on the telecom market. Analysts noted that in Vietnam, state owned big mobile networks hold 95 percent of the market share. Since they are state owned companies, sometimes they apply the competition measures which “do not aim to making profit”. This is like the boxers in the arena, who do not know what rules they have to follow.

When Beeline entered Vietnam, the market nearly got saturated in the number of subscribers. Therefore, it was really very difficult to expand the coverage area. As Beeline failed to keep the appointment relating to 3G services, it has to be “faithful” to the 1800MHz waveband. This means that Beeline would have to meet big challenges when providing services on the waveband, while others would have to spend less for the investment.

Source: Buu dien

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