VP Telecom abandons Nokia, joining hands with Samsung

VP Telecom has reportedly decided to “abandon” Nokia for fear about the dark future of the mobile phone manufacturer, to become the distributor of Samsung products, according to Buu Dien.

Prior to that, local newspapers reported that Nokia had chosen three distributors for the three regions in Vietnam. FPT would distribute Nokia products in the north, while PetroSetco (VP Telecom) would cover the central region and the east of the southern region and Lucky would be in charge of the Mekong River Delta.

The choice of Nokia was commented as an effort to reorganize its distribution network after a lot of happenings, especially the collapse of Dong Nam – a big distributor. The move was also believed to improve the competitiveness through new distribution channels.

Buu Dien newspaper has quoted its sources as saying that VP Telecom would not distribute Nokia any more, but distribute Samsung products in Vietnam. Huynh Van Thi, Managing Director of VP Telecom on June 22 told the newspaper that there has been such a rumor. However, he said: “We will not make comment about the information before a clear policy is laid down.”

On June 21, 2012, Buu Dien emailed some questions to the communication unit of Samsung Vietnam to find out whether VP Telecom would become the distributor for Samsung, and whether VP Telecom has to terminate the contracts signed before with other mobile phone manufacturers, if this comes true.

A communication officer said he would forward the questionnaire to the persons on the right position to answer. However, Buu Dien had not got the reply by late June 22.

The information that VP Telecom intends to break the cooperation with Nokia was released at the “sensitive moment” for Nokia, which is meeting misfortune.

The mobile phone manufacturing group has released the figures showing the big losses of the group in the last two months, which were much higher than forecasted. The group still cannot say for sure when the situation would be improved.

In an effort to cut down expenses in the context of unprofitable business, Nokia plans to lay off 10,000 more workers–the work which is believed to be completed by the end of 2013.

IDC, in its report, pointed out that by the end of 2011, Nokia, for the first time, had only held less than 50 percent of the mobile market share in the home country of Finland.

By the end of the first quarter of 2012, Nokia had lost its position as the world’s leading mobile manufacturer to the hands of Samsung. It has been facing big difficulties in selling low cost products in newly emerging markets – the main source of profit for the company.

In Indonesia, for example, Nokia’s market share has dropped from 52 percent in early 2010 to 24 percent by early 2012, according to IDC.

Analysts believe that the VP Telecom’s decision to abandon Nokia may relate to the current difficulties of the manufacturer. Meanwhile, the opinions from well informed circle say that VP Telecom has not been satisfactory with the fact that it has to share the “territory” with FPT and Lucky.

Meanwhile, if VP Telecom really stops cooperation with Nokia as rumored, FPT would benefit from this. With the leave of VP Telecom, Nokia is likely to allocate more “land” to FPT, while distribution has been bringing a big proportion in the total turnover of FPT.

Samsung once appointed FPT as its distributor in Vietnam. However, the cooperation between Samsung and FPT came to an end on December 25, 2009.

Source: Buu Dien