Vietnam Telecommunication Q2 2011

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According to the Business Monitor International (BMI) report on Vietnam telecommunication performance in the 2nd quarter of 2011, this quarter sees no changes in Vietnam’s order on Asia Telecoms Business Environment Rankings, standing still on the 17th place due to a low rewards rate compounded by a quite high risks level.

Though mobile market has still been dominated by three giants Viettel, Vinaphone and MobileFone, the competition is increasingly intense among these three, which promises a significant decrease in Average Revenue Per User (ARPU) in the near future, possibly nose-diving to only 3.51$/user in 2015. The numbers of mobile phone subscribers are on sharp rise as well; however, that the proportion of inactive users still accounts for a considerable part in all is a thing needed to seriously take into account. Up till the 2nd quarter of 2011, among nine mobile operators, the mobile market leader still belongs to Viettel with 33.8% market share, followed by Vinaphone and MobileFone with 27.2% both.

When it comes to the promotion of value-added mobile services, a massive injection of funds is put into building 3G infrastructures through regional approach, in case of VNPT subsidiaries and through international contracts, in case of Viettel. Other operators like EVN telecom, Hanoi telecom, etc are also serious in supporting this type of services by different strategies. Nevertheless, it is seen that those mobile operators are not efficiently utilizing value-added services since 3G subscribers mainly use their connection to just access the Internet and download the music, as MIC Department of Radio Frequency Chief Doan Quang Hoan said. “They are unlikely to recoup the investment within 5 years if 3G services still grow at the current pace”.
Other categories of mobile-related services such as mobile marketing, online payment, video calling all show a good pace of development despite the fact that it is not as good as expected.

As mentioning about the wireline industry, the fixed-line sector is seen to follow a light decrease, particularly reducing by 2 millions in the number of fixed-line subscribers. This fact arguably forces 3 main major fixed-line players – VNPT, Viettel and EVN Telecom to foster expansion projects further. Ministry of Information and Communication (MIC) also took action through the issuance of new network operating licenses, leading to the appearance of the nineth fixed-line operator in 2010, G-Tel. Strategies to develop long-distance services as well as fixed wireless are seemingly paved to focus more on rural areas, together with the issuance of new government regulations.

A big gap of growth rate in rural and urban areas also takes place in Internet sector. However, such sector generally sees a dramatic increase in the number of Internet users, projected to hit approximately 32,000,000 users at the end of this year. The growth rate of broadband subscription will be definitely high as well, coming with the upgrade of broadband network and the expansion of international internet bandwidth. IPTV, corporate data services and other supportive services are gradually present in megacities like Hanoi, Ho Chi Minh and Da Nang.

Telecommunication policies and regulations are commonly governed by Ministry of Information and Communications (MIC) with the purpose of unifying and modernizing the legal structure of the whole market. In the early of 2011, a number of big events occurred considerably marked the industry development. In February, MobiFone underwent the privatization procedures in order to enhance the competitiveness and attract foreign investors. EVN Telecom is also for sale which is a part of a plan to privatise the state owned operator.

Vietnam possesses good indicators of telecommunication penetration in terms of fixed-line, mobile and broadband industry. However, eventually Vietnam telecommunication market is likely to reach saturation; therefore MIC has urged operators to diversify their business operations and focus on delivering actual better quality services rather than race to each other like they are seemingly doing right now.

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