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Exchange, interest rates take bite out of Viettel's global operations

Exchange rate fluctuations and sharply rising expenses have left the international arm of Vietnam's largest telco reeling as profits continue to plunge.

Viettel Global’s total business sales reached nearly VND14.9 trillion (about $667 million) in 2015, with post-tax profit of VND500 billion. This marked a significant drop from the previous year when the group's foreign investment company made post-tax profit of $2.3 trillion (more than $103 million). This is the lowest profit after tax Vietnam’s largest teleco has made in the last four years.

According to a report by Viettel Global JSC on the 2015 business results for Viettel Group's regions, business sales in the African market reached nearly VND4.9 trillion (over $220 million), rising 25 percent compared with 2014, but the group’s post-tax profit fell by VND2.6 trillion (about $117 million), three times more than in 2014.

Exchange, interest rates take bite out of Viettel's global operations

Exchange rate fluctuations dragged on Viettel's foreign investment profit in Africa. Photo by VIR

The Southeast Asian market did not incur a loss but business sales dropped over nine percent to VND6.2 trillion (about $278 million). Post-tax profit was only VND1.2 trillion, declining nearly 28 percent compared with 2014.

Latin America enjoyed a slight increase in business sales and profit reached VND213 billion ($9.6 million), an increase of VND 87 billion from 2014.

A Viettel Global representative said that exchange rates, interest rates and goods prices were the main factors affecting business operations. The report showed that expenses for financial activities in 2015 were higher than in 2014, with the exchange rate variance five times higher and interest rate expenses 1.5 times higher.

Viettel Global reported a net loss from exchange rate variance of more than VND600 billion (nearly $27 million) in 2015. The African market witnessed significant devaluation of domestic currencies against the US dollar, affecting Viettel’s investments in Africa.

Viettel Global JSC is under management of the Vietnam Military Telecommunications Group (Viettel), Vietnam’s largest mobile network operator. Viettel is a state owned enterprise and operated by the Ministry of Defence.

Viettel Global is responsible for investing in foreign markets and currently operates mobile networks in Laos, Cambodia, Timor Leste (Southeast Asia), Mozambique, Cameroon, Tanzania, Burundi (Africa) and Haiti (Latin America).