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Vietnam to be Asian springboard for Russian phone firm   2008-07-09 - Reuters

Russia’s second biggest cell phone operator, Vimpelcom, said its mobile phone joint venture with Vietnamese state companies will be a launchpad for an Asian expansion.


Customers browse cell phones at a shop in Ho Chi Minh City.
Vimpelcom Tuesday announced it had secured a 40 percent stake in the GTEL-Mobile venture for an equity investment of US$267 million.

Vietnam’s state-owned Global Telecommunications Corporation (GTEL) and its unit GTEL TSC hold 51 percent and 9 percent of the GTEL-Mobile venture.
Vimpelcom is also considering buying a further nine percent stake in the venture from its Vietnamese partners and has preemptive rights to do so.
“Vietnam will be a key market for us. We will be looking for further development possibilities based on the Vietnamese operations,” Vimpelcom Chief Executive Alexander Izosimov told a conference call.
“In case our Vietnamese partners are interested, it is possible that we will do it together,” he added.
Vietnam licensed GTEL-Mobile to provide GSM-technology services in February this year, and the company now has to build telecom infrastructure.
Vimpelcom said it estimated overall investment in GTEL-Mobile at $1.8 billion within the next five years.
The company is aiming for a 15-20 percent market share in that time, or around 20 million subscribers.
“Entering the Vietnamese market is a strategically comprehensible step,” said Konstantin Belov, a telecoms analyst at Uralsib Bank in Moscow.
“But it is not yet clear how the $1.8 billion investment will be structured and how it will affect Vimpelcom’s results.”
Cambodia next?
Vimpelcom, in which Norway’s Telenor and Russian billionaire Mikhail Fridman’s Alfa Group have large stakes, unveiled plans to set up the venture last September and said it would seek to expand into neighboring markets.
Izosimov said the Russian carrier was interested in particular in Laos, Cambodia and Myanmar where mobile phone penetration is still low.
Alfa Group, through its telecom arm Altimo, owns 90 percent of Cambodian mobile operator Sotelco which has GSM 900/1800 and Wi-Max wireless service licenses.
“We believe the GTEL-Mobile growth dynamics make it an ideal place for us to begin building our international growth platform,” Vimpelcom said in a statement.
In Vietnam, Vimpelcom’s venture will compete with three other mobile phone service providers – Vietnam’s military run dominant operator, Viettel, as well as Vinaphone and MobiFone, owned by state-run Vietnam Posts and Telecommunications (VNPT).
“It will be easier for Vimpelcom to enter new Asian markets with the support of a Vietnamese player.
Companies from the former Soviet Union traditionally have strong positions in Vietnam,” said Stanislav Yudin, a Moscow-based analyst with UBS.


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