Small-scale telecom companies are facing challenges due to market saturation and the dominance of several big players.

Beeline network withdraws from Vietna

The issue has became more prominent since Gtel Mobile spent USD45 million to buy a 49% stake in the Beeline network, a brand currently owned by Russia’s second-largest telecom operator VimpelCom. In the next six months, the Beeline name will be changed.

VimpelCom claimed it wanted to expand its market in Asia over a15 year-period by some 20 million users, and in 2011 it announced it planned to invest USD500 million into the Beeline network until 2013. Later, the telecom operator said it had transferred USD196 million into a joint venture with Gtel which raised Gtel share in Beeline to 49%. However the end of 2011, VimpelCom’s financial report revealed that the corporation had lost USD527 million in the Vietnamese and Cambodian mobile phone markets.

Addressing their withdrawal, VimpelCom said this it was the corporation's policy to minimize its business in some regions and focus on key markets.

Nguyen Van Du, Deputy General Director of Gtel Mobile assured Beeline customers that "The company will only change owners to ensure business continues to run as normal. Our customers' and partners' rights remain the same."

However, experts forecast a gloomy future for smaller telecom operators. The Vietnamese telecommunications market is dominated by three major players, VinaPhone, MobiPhone and Viettel which hold a combined 95% of market share, while Beeline, Vietnamobile, S-Fone and EVN Telecom share a miniscule 5%.

Even before Beeline announced its withdrawal, others mobile networks were already experiencing major problems.

The S-Fone was said to be slowly withdrawing from the market while other analysts claimed the company was seeking investment from two foreign partners. S-Fone has gained approval from the Ministry of Information and Communication to end its use of CDMA technology and adopt a 3G (HSPA) network.

EVN Telecom has already been transferred to Viettel while the proposal by Hanoi Telecom to the Ministry of Industry and Trade to purchase EVN Telecom's 3G broadband and network infrastructure has yet to receive a response.

Smaller mobile companies seem to have hit a brick wall in the Vietnamese market. When Beeline first entered the market it used a discount strategy including free calls between network users which failed to prove profitable, while the turnover from callers ringing other networks had to be shared with the major companies.