Viettel international investment remains profitable despite exchange rates

According to UK-based OVUM - a market-leading research and consulting firm specializing in global coverage of information technology and telecommunications industries – the global industry rate was only 2.3%, a fourth of Viettel’s.

The group achieved impressive annual growth compared to many other multinational telecom firms. For example, Viettel’s familiar rival in many markets, Vodacom – an African mobile communications company which is larger and has more experience than Viettel -- saw turnover grow only 2.1% in 2015. Vodacom’s subscriber numbers grew 7.2%, one fourth of that of Viettel’s 27%.

Last year Viettel launched operations in three big African markets, Cameroon, Burundi and Tanzania. The three have a combined population of 80 million, three times of Mozambique, Viettel's other market in Africa.

The expansion has increased Viettel’s international market to 10 nations with a combined population of 270 million, three times the Vietnamese number.

With a 50-million population, Tanzania is Viettel’s biggest market overseas. By hitting one million subscribers in just three months, it is ranked the fastest growing affiliate of Viettel as well as the global telecom industry.

In March 2016, Lumitel, Viettel’s brand name in Burundi, has become the leading operator in this country with 1.6 million subscribers due to the miracle growth of one million subscribers after only five months. In Cameroon, Viettel also experienced success by reaching two million subscribers in nine months.

Previously, with the significant achievements in Mozambique, Movitel has been nominated as the “Miracle of Africa.” It is the leading operator in terms of infrastructure and subscribers. Movitel was honored with six international and regional telecom awards.

International telecom experts have hailed Viettel’s strategy in quick market expansion. It is considered a wise decision for Viettel to join the international market because market size is the most important factor in achieving success in telecom and retail industries.

In Vietnam, Viettel was successful with robust investment and expansion strategy in the early stages and has quickly become the leading service provider.

The trend of expanding research and development and use of IT in telecommunications will undeniably benefit from Viettel’s large market size.

However, launches in three new markets within a year between late 2014 and 2015 increased Viettel’s expenditure in Africa from US$50 million in 2014 to US$230 million in 2015. Usually a telecom project takes five to seven years to break even.

Profits from Viettel’s international markets have not met expectations. Its net profit last year was only VND500 billion despite the fact that profits from other markets were good -- VND1.235 trillion from Asia and VND213 billion from America. After five years of operations, the American market has moved from a loss of VND87 billion to a profit of VND213 billion in 2015.

Furthermore, exchange rate volatility has affected network providers all over the world. In Africa, for instance, exchange rate fluctuations were estimated to account for 32% of expenditure.

All figures were reported based on current foreign currency exchange rate. Viettel’s business figures in Africa are based on local currencies and yet show good growth.