The ministry told VNPT and Viettel to temporary keep the old tariffs until the end of this month while negotiating with other telecom firms on more appropriate tariff adjustments.

Head of MIC's telecom department Phan Hong Hai said the ministry has already sent a letter to VNPT and Viettel, also asking for an explanation of price hikes for rental of backbone transmission lines - which smaller telecom firms must rent if they want to realistically compete in the market.

The move follows a series of proposals to the ministry from mobile operators such as Vietnamobile and Beeline bemoaning the sizeable hike in backbone transmission rental prices from VNPT and Viettel.

VNPT, which owns Vinaphone and MobiFone, and Viettel, are the sole owners of the country's backbone transmission route, a core network that provides paths for exchange of information between different sub-networks.

According to Trinh Ngoc Lam, chairman of Ha Noi Telecom which is the operator of the fledgling Vietnamobile, VNPT and Viettel had sent a letter to Vietnamobile informing them about a hike of approximately 300 per cent for the core network rental fee.

Lam said the hike would severely impact the operations of Vietnamobile, which has been struggling to boost its base of about 10 million subscriptions.

Concerning speculation about price fixing between VNPT and Viettel, a VNPT representative said there was no under-the-table agreement between the two firms on the price hike.

Luong Manh Hoang, director of Viet Nam Telecom National (VTN), a subsidiary of VNPT, said the two firms raised the rental price at the same time and his company had to do it to keep the business profitable.

Meanwhile, Viettel said that as it had acquired the bankrupt telco EVN Telecom – one of the country's biggest owners of a core network with 40,000 optical telecom cables, it had to raise the tariff because the previous price set by EVN Telecom was too low.

Vietnamobile last month planned to seek a bailout from the Government to stave off bankruptcy as the operator was struggling to compete in a telecom market dominated by three major players.

Meanwhile, Gtel Mobile on April spent US$45 million to acquire a 49 per cent stake in the Beeline network, a brand currently owned by Russia's second-largest telecom operator VimpelCom.

Even before Beeline announced its withdrawal, others mobile networks were already experiencing major problems.
The S-Fone firm was said to be slowly withdrawing from the market while analysts claimed the company was seeking investment from two foreign partners.

The Vietnamese telecom market, which has 135 million phone subscriptions, is dominated by the three major players of VinaPhone, MobiFone and Viettel, which hold a combined 95 per cent market share, while Beeline, Vietnamobile, and S-Fone share a minuscule 5 per cent.

Source:VNS