CHAPTER 3: VIETTEL'S INTERNATIONAL BUSINESS STRATEGY AND
3.1. Viettel's global standardization strategy
In 2006, Viettel Group decided to extend its business to overseas looking for more potential markets. Viettel Global was established October 2006 with a vision and responsibility of turning Viettel into a strong telecommunications group on international stage.
After 9 years of development, Viettel Global is one of the biggest Vietnamese overseas investors. It is now operating 9 telecommunications companies in 9 countries across Asia, Africa, and Asia with total population of over 175 million and 13 million customers. Its total revenue for 2014 was US$1.2 billion.
Viettel embrace a sustainable investment strategy that balances the benefits of corporate, governments, the people, and customers. We invest in strong network infrastructure covering nationwide and widespread supplying chain to every village so that our services are accessible to all people in those countries regardless of their locations and income conditions. Besides, thanks to the long-term experience from operating telecom business in Vietnam and firm financial foundation of Viettel Group, we can master and apply the latest technology and diversify our services.
Viettel Global is proving its competences through the success of its subsidiaries when most of them taking the leading positions in their national telecom markets in term of subscribers/ revenue/ infrastructure, for instance, Metfone in Cambodia, Telemor in Timor-Leste or Movitel in Mozambique.
By the end of 2017, nearly 40 million customers from international markets used Viettel’s mobile services, broadband Internet, landlines, and wireless phones. As mentioned earlier, as of June 2018, Viettel attained profit in 8 markets, of which 3 markets including Laos, Cambodia and Timor-Leste has returned the initial Capital investments. To date, Viettel Global is generating profits of four-to-five times higher than the initial investments in these three markets (Thanh Thu, 2018). Encouragingly, Viettel was the top telecommunications provider in terms of market share in five countries, including Cambodia, Laos, Timor-Leste, Mozambique, and Burundi (Viettel Global, 2017).
Viettel Global’s revenue from telecommunication services on foreign markets has grown rapidly and continuously. The annual growth rate was 21.5% in 2016, which was more than double that of 2015, and increased by 2.5% at 24% in 2017 (Viettel Global, 2017). The number of customers in foreign markets was 13% in 2017, which was four times higher than that of the global average (about 3%). New African markets continue to see strong growth rates at 1,343% for Viettel Tanzania, 43% for Viettel Cameroon 43%
and 42% for Viettel Burundi (Minh Anh, 2018). In Myanmar - the newly penetrated market, Mytel (also known as Telecom International Myanmar Co) had more than 2 million subscribers just in over a month after the official launch on June 9, 2018, surpassing Viettel Global’s target of 2 to 3 million subscribers in the whole 2018 (Tu An, 2018), contributing to Viettel’s business achievements on foreign markets.
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3.1.1. Selecting target markets and target groups of customers
Prior to the decision to invest in and penetrate into the international market, Viettel Global had conducted intensive research on the potential and development of telecommunication market in different regions o f the world. The data compiled in 2015 on mobile-broadband telecom services, one of Viettel Global’s strengths, showed that there were over 7 billion mobile cellular subscriptions worldwide, up from less than one billion in 2000 (ITU, 2015). Correspondingly, the annual growth rate was over 14%. Also as of 2015, the number of mobile cellular subscriptions per 100 inhabitants worldwide was 46.1 while that of developed countries was 81.3. Whereas, these figures for the Asia- Pacific region and Africa were only 42.3 and 17.4, respectively (ITU, 2015).
According to Viettel Global (2015), the number of mobile subscriptions in the world between 2015 and 2019 is forecasted to increase by 1.3 billion (from 7.2 billion by the end of 2015 to 8.5 billion by the end of 2019), equivalent to an annual growth rate of 4.2%. In this period, the 20 fastest-growing markets are predicted to be emerging markets in Africa and the Central and South Asia. With the highest growth rate of 7.4% annually, Africa is considered a high potential market.
Forecasted annual growth rates of mobile subscriptions in the world and by region, (2015-2019)
The World West Europe East of Europe North America Latin America&Caribbean Southeast Asia&Oceania Middle East Middle&South Asia Africa
4.20%
0.90%
1.90%
3.00%
3.10%
3.90%
4.30%
5.10%
7.40%
Source: Viettel Global (2015)
The first factor that Viettel Global considered when selecting a target country was the potential of telecommunication Service business and its political, cultural and social
environment. They can have different impacts on the telecommunication market development.
Subsequently, the competitive environment, potential competitors, threats from substitute Products or pressures from customers and suppliers and so on were weighed up. In addition, the natural environment factor that has an impact on input, output and the speed of implementation was also taken into account.
In South Asia, Laos, Cambodia, Timor-Leste, and Myanmar are the markets with high potential and low barrier to entry. In addition to the advantage of similarities in the cultural, social, and natural environment, the density of mobile cellular subscriptions of these countries is low compared to the regional average and those of the Philippines and Vietnam. More importantly, the annual growth rates of subscriptions in these countries were very high.
Table 2. Mobile cellular subscriptions per 100 inhabitants
Country 2005 2010 2015 Average
annual growth rate (%) ASEAN
Cambodia 8.0 57.0 134.4 32.6
Laos 11.4 64.1 55.9 17.2
Timor Leste 3.2 42.6 110.9 42.6
Myanmar 0.3 1.2 78.2 74.4
Vietnam 11.4 126.1 128.6 27.4
Philippines 40.3 88.7 115.8 11.1
AFRICA
Cameroon 12.9 43.2 79.5 19.9
Burundi 2.1 19.1 49 37.0
Mozambique 7.2 29.9 71.9 25.9
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Tanzania 7.5 45.5 73.6 25.7
3.1.2. Market penetration and investment strategies
In early 2018, Viettel Global established 10 subsidiaries and joint ventures in 10 foreign markets, of which 4 subsidiaries and branches were directly invested by Viettel Global. The others were joint ventures between Viettel Global (holding more than 40% of charter Capital) and major local enterprises.
Table 3. Viettel Global’s subsidiaries, their brands, and methods of investment in 10 countries
Country Enterprise Brand Method of investment
Cambodia Viettel (Cambodia) Pte., Ltd Metfone Direct investment Laos Star Telecom Co., Ltd Unitel Joint venture Timor-Leste Viettel Timor Leste
Unipessoal Lda.
Telemor Direct investment into Viettel branch
Myanmar Telecom International Myanmar Co
Mytel Joint venture (49%)
Cameroon Viettel Cameroun Nexttel Joint venture Burundi Viettel Burundi S.A. Lumitel Direct investment Tanzania Viettel Tanzania Ltd. Halotel Halotel Joint venture
Mozambique Movitel, SA Movitel Joint venture
Peru Viettel Peru SAC Bitel Direct investment
Haiti Natcom SA Natcom Joint venture