Last update 1/13/2011 6:10:47 PM (GMT+7)

Why is Beeline keeping quiet?

VietNamNet Bridge – Beeline was once considered the guy that roused Vietnam’s telecom market when it launched noisy advertisement campaigns and marketed dirt cheap service packages. However, the name “Beeline” has disappeared from the market for the past six months. Why?

About 30 Beeline simcards were seen collecting dust on the shelf of Nguyen Thi Lan’s shop on Chua Lang Street. Lan said that these days she cannot sell any simcards.

Beeline simcards were once the best sellers. Lan related that in July and August 2009, when Beeline debuted and offered dirt cheap service packages, its simcards were top sellers .

In fact, if comparing with the other telecom service providers, Beeline still offers the lowest charges for inner-network calls. Subscribers of the Big Zero package, for example, have to pay 1199 dong per minute. The Big&Kool package is even offering lower rates at 900 dong per minute for both inner network calls and calls to other networks.

However, despite its low rates, Beeline is still sinking.

According to Thoi Bao Kinh Te Vietnam newspaper, two months after launching the Big Zero package, Beeline announced that it sold 2 million simcards and 1 million simcards were activated. Six months later, Beeline said 2 million subscribers were using its services. Other telecom service providers also confirmed that about 1 million Beeline subscribers regularly contacted their subscribers.

However, Thoi Bao Kinh Te Vietnam quoted its sources as saying that presently, the actual number of operational Beeline subscribers is less than 100,000, or 20 times lower than the previous year.

Why have subscribers left Beeline?  After conducting a survey, the newspaper found out that the quality of calls is bad and prevents subscribers from making calls, even in the inner cities.

What does Beeline need?

It is undeniable that the name “Beeline” could be very redoubtable to any telecom company in Vietnam.

The surveys conducted by magazines and market survey firms showed that just two months after making debut, awareness of the “Beeline” brand was very high, at 78 percent.

The high level of brand awareness combined with dirt cheap service packages launched by Beeline at that time, once worried other telecom companies. Viettel, for example, expressed its worries that Beeline’s cheap service packages would “spoil the telecom market of Vietnam”. Therefore, telecom companies asked the management agency several times to apply floor prices, in an effort to prevent Beeline from offering ridiculously cheap services.

However, presently Beeline is unable to continue expanding its network and further develop its network infrastructure. Some sources said that the foreign partner of Beeline, the Russian VimpelCom Group, is considering withdrawing its capital.

Also according to Thoi Bao Kinh Te Vietnam, VimpelCom Group does not lack capital, and it even wants to inject more capital in the joint venture. However, if VimpelCom Group increases its capital contribution in the joint venture, it will hold the controlling stakes – something that GTel, the Vietnamese partner, does not wish to see happen.

Another solution is that both the Vietnamese and foreign partners increase capital, so that GTel can raise its capital contribution in the joint venture. However, sources said that GTel is not sure that it can arrange capital. Therefore, the plan to develop the network as previously planned has been delayed.

Source: Thoi bao Kinh te Vietnam