Gmobile Still Fraught with Difficulties

VIR | Fri, Aug 30, 2013 02:04:00 PM Share this on

Young Gmobile is struggling to compete with its much larger competitors after brand owner GTel Mobile converted into a wholly-owned enterprise.

In April 2012, GTel Mobile, a joint venture between Global Telecommunication Corporation and Russian leading mobile phone operator VimpelCom, bought 49 per cent stake of the Russian partner for $45 million, turning the joint venture in a wholly state-owned business.

For around a year now the new brand was still struggling, despite the company’s total assets of $238 million.

In the last year, Gmobile took significant steps to bolster operational efficiency. Unfortunately, these efforts only yielded modest returns.

One such example was Gmobile’s roaming deal with VinaPhone which allowed subscribers of the former to use the latter’s network in areas outside Gmobile cell coverage.

This deal, however, failed to meet the company’s expectations.

Under the agreement, Gmobile paid VinaPhone VND450 per minute for all of their subscribers who used the VinaPhone frequency. While this was only about a third of the standard charge per minute for calls, when the company included promotion and other costs, they found they lost money on these callers.

Apart from the deal with VinaPhone, Gmobile worked hard to expand their network, but with little effect.

Currently, Gmobile has only around three million subscribers, with an ambitious goal of six million by the end of 2013.

A major reason behind the company’s poor performance and its roaming deal with VinaPhone was its limited frequency resources.

“Gmobile is limited to the 1,800 MHz waveband, while the larger networks have all the 900 MHz, 1,800 MHz, and 3G. This is a tremendous disadvantage for us,” said Gmobile general director Nguyen Van Du. He added that the company was proposing the Vietnamese government for a more balanced distribution of wavebands.

When asked about the rumour that Gmobile would merge with state group VNPT’s VinaPhone or MobiFone, Du said that because of their state-owned capacity, the decision to do so would be above their heads.

VNPT also refused to comment on any possible merger.


Source: VIR