Q1 2013 Vietnam

Q1 2013 www.businessmonitor.com

VIETNAM TELECOMMUNICATIONS REPORT

INCLUDES 5-YEAR FORECASTS TO 2017

ISSN 1748-4944 Published by:Business Monitor International Vietnam Telecommunications Report Q1 2013

INCLUDES 5-YEAR FORECASTS TO 2017

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: December 2012

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Vietnam Telecommunications Report Q1 2013

CONTENTS

BMI Industry View ...... 7 BMI Industry View ...... 7 SWOT ...... 9 Mobile ...... 9 Wireline ...... 11 Industry Forecast ...... 13 Mobile ...... 13 Table: Telecoms Sector - Mobile - Historical Data And Forecasts ...... 13 ARPU ...... 15 Table: Telecoms Sector - Mobile ARPU - Historical Data And Forecasts (US$) ...... 15 Fixed-Line ...... 16 Table: Telecoms Sector - Fixed Line - Historical Data And Forecasts ...... 16 Broadband ...... 18 Table: Telecoms Sector - Internet - Historical Data And Forecasts ...... 18 Industry Business Environment Overview ...... 21 Industry Business Environment Overview ...... 21 Table: Asia Pacific Telecoms Risk/Reward Ratings Q113 ...... 26 Vietnam ...... 26 Market Overview ...... 29 Table: Vietnam Mobile Market Regional Comparison, 2011 ...... 30 Key Market Developments ...... 30 Market Growth ...... 31 Market Shares ...... 32 Table: Vietnam Mobile Market, September 2012 ...... 34 ARPU ...... 34 Potential New Entrants ...... 34 Mobile Content/Value-Added Services ...... 35 Table: Value-Added Services ...... 37 Mobile Operator Data ...... 38 Table: Vietnam Mobile Market Overview ('000) ...... 38 Table: Viettel ...... 39 Table: VinaPhone ...... 39 Table: MobiFone ...... 39 Table: Gmobile (previously Beeline VN) ...... 40 Table: Vietnamobile ...... 40 Table: S-Fone ...... 40 Table: EVN Telecom ...... 41 Mobile Regional Content ...... 41 Table: Selected NFC Developments, 2011 ...... 44

Fixed Line ...... 49 Fixed-Line ...... 49 Long-Distance Services ...... 50 Fixed-Wireless ...... 51 Broadband ...... 51 Internet ...... 52 Broadband ...... 54 Pay-TV ...... 55 Industry Trends & Developments ...... 58 Industry Trends And Developments ...... 58 Networks ...... 58 Mobile Broadband ...... 62 WiMAX ...... 62 Table: Vietnam 4G Triallists ...... 64 LTE ...... 64 Table: Telecoms Market Developments ...... 65 Regulatory Development ...... 68 Regulatory Development ...... 68 Table: Vietnam: Regulatory Bodies And Their Responsibilities ...... 68 Legislation And Market Liberalisation ...... 68 Regulation ...... 69 Licensing And Spectrum ...... 69 Regulatory Developments ...... 70 Competitive Landscape ...... 72 Competitive Landscape ...... 72 Table: Key Players ...... 72 Company Profiles ...... 73 Vietnam Posts & Telecommunications (VNPT) ...... 73 Viettel ...... 77 MobiFone ...... 80 VinaPhone ...... 84 S-Fone ...... 87 EVN Telecom ...... 90 FPT Telecom ...... 93 Regional Overview ...... 95 Vendor Profile ...... 95 Financial Performance ...... 95 Table: Vendor Revenues (US$mn) ...... 95 Restructuring Efforts ...... 95 Geographical Breakdown ...... 96 Table: Net Sales By Geography (EURmn) ...... 96

Asia Pacific Is The Place To Be ...... 97 Table: NSN Selected Asia Activities ...... 98 Demographic Forecast ...... 101 Vietnam Demographic Forecast ...... 101 Table: Vietnam's Population By Age Group, 1990-2020 ('000) ...... 102 Table: Vietnam's Population By Age Group, 1990-2020 (% of total) ...... 103 Table: Vietnam's Key Population Ratios, 1990-2020 ...... 104 Table: Vietnam's Rural And Urban Population, 1990-2020 ...... 104 Glossary ...... 105 Glossary ...... 105 Table: Glossary Of Terms ...... 105 Methodology ...... 107 Methodology ...... 107 Table: Key Indicators For Telecommunications Industry Forecasts ...... 107 Telecoms Business Environment Ratings ...... 108 Table: Ratings Indicators ...... 109 Table: Weighting Of Indicators ...... 110

BMI Industry View BMI Industry View

BMI View: Although Vietnam's telecoms sector is generally exhibiting declining growth momentum we believe the market still harbours significant potential given that the bulk of consumers are using basic, low- value services. The 3G sector is particularly attractive as consumers have yet to see the benefits of the service, in addition to other hindrances to adoption such as a lack of content. However, the competitive landscape is dominated by state companies, leaving little opportunities for foreign players.

Key Data:

■ Forecasts for Vietnam's mobile, fixed-line and internet sectors as well as mobile operators' ARPUs have been extended to 2017.

■ In spite of the low penetration rate, we continue to expect muted growth in the fixed broadband market, 5.5mn in 2017, due to a lack of network coverage, mobile substitution and high ownership cost.

■ The 3G market will be the outperformer in the Vietnamese mobile market in the next few years with operators looking to recoup their investments. We forecast an average growth rate of 13% between 2013 and 2017.

Key Trends And Developments

Vietnam has reaffirmed its decision to delay the issuance of 4G licences until after 2015. This chimes with our view that operators would again resort to price competition to attract subscribers for their LTE services, replicating their strategy for the 3G sector. According to Vietnam's Radio Frequency Department, Vietnam uses about 20 terabytes (TB) of data a year, well below the global average of 3.8 exabytes (EB, equivalent to 3.8mn terabytes).

GTel Mobile, which operated under the Beeline brand, has renamed its brand Gmobile after using the Beeline name for nearly four years. The new brand focuses on 2G technology, was officially announced on September 17 2012 and was changed in October 2012. Gmobile also changed its logo and slogan, while retaining the characteristic colours of the Beeline brand - yellow and black. The change was due to the withdrawal of Russia's VimpelCom.

Vietnam retained its 16th position in BMI's latest Asia Pacific Telecoms Risk/Reward Ratings with a Telecoms Rating score of 43.8. Although the country's score improved from the previous quarter, we highlight that this was partially due to changes to our methodology. Vietnam's real GDP growth accelerated

from 4.7% year-on-year (y-o-y) in Q212 to 5.4% in Q312, reinforcing our view that the economy is poised for a robust recovery as we head into 2013. We see scope for a robust rebound in private sector investment growth as lending rates decline over the coming months.

SWOT Mobile

SWOT Analysis

Strengths ■ Highly competitive mobile sector.

■ Continued positive growth in mobile sector in 2011 with subscribers up by 5.4%, although the momentum is slowing down.

■ Joining the WTO in 2008 has made Vietnam a more appealing investment centre - stronger growth in the mobile market could be the result of this.

Weaknesses ■ Market's dependency on prepaid services exerts strong downward pressures on ARPU levels.

■ Lack of key strategic investors in the sector's main operators.

■ Although communications are relatively advanced in the larger cities, many rural areas have little or no access to telecommunications services.

■ Dominance of state-owned companies with foreign players retreating due to a lack of meaningful opportunities.

Opportunities ■ Entrance of the eighth operator, Indochina Telecom, as an MNVO and the ninth operator, Vietnam Multimedia Corporation, would raise the level of competition. At the time of writing, both operators had yet to launch their services.

■ The government would allow non-3G licensees to partner with established network operators to provide 3G services.

■ Government approach to liberalise the telecoms industry could see the entrance of more foreign investors.

Threats ■ Nearly one-third of Vietnam's villages lie in mountainous areas and are without access to telecommunications services; this makes the deployment of new network technologies prone to delays.

SWOT Analysis - Continued

■ Aggressive pricing by the country's three leading operators are likely put sustained downward pressure on mobile ARPU levels.

■ Number of inactive mobile subscribers is unknown in what is still a market that lacks transparency and reliable data.

Wireline

SWOT Analysis

Strengths ■ Fixed-line penetration levels and internet user rates are high in major urban centres such as Ho Chi Minh City, Hanoi, Danang and Haiphong.

■ Competition exists in fixed-line and internet access markets; VNPT faces competition from several other state-owned companies and privately owned operators.

■ High levels of literacy and other demographic factors bode well for strong and continued demand for wireline services over the next few years.

Weaknesses ■ Vietnam's fixed-line and internet access markets are dominated by state-controlled operator VNPT.

■ Although alternative broadband infrastructures are currently being explored, broadband growth continues to be highly dependent on DSL.

■ Low fixed-line penetration rates in rural regions limit the scope for DSL broadband growth.

■ Although internet user growth is improving, rural Vietnam still has limited access to internet infrastructure.

■ Broadband tariffs remain high, creating a barrier for low-income subscribers to access.

Opportunities ■ The privatisation of VNPT could help to bring about increased investment revenue and the arrival of new skills.

■ On a national level, broadband penetration rates remain low - this means that the sector has considerable growth potential.

■ Significant opportunities exist to develop alternative broadband technologies, including WiMAX, LTE and fibre; WiMAX and LTE internet services have the potential to raise the level of internet user penetration in rural parts of Vietnam.

SWOT Analysis - Continued

■ Draft Bill of Law on Telecommunication has been put forward for discussion at the National Assembly Steering Committee. If passed, the bill will allow private companies to build network infrastructure for the first time and will open up the telecoms market to foreign investors.

Threats ■ Fixed-line sector may enter a period of decline, with potentially negative consequences for DSL growth.

■ As the market for mobile data services grows, this could have potentially negative consequences for the growth of fixed broadband services.

■ Slower economic growth in 2012 and 2013 could undermine wireline investment and expansion plans.

Industry Forecast Mobile

Table: Telecoms Sector - Mobile - Historical Data And Forecasts

2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 111,57 117,60 122,89 126,57 129,11 131,69 134,32 137,01 No. of mobile phone subscribers ('000) 0 0 2 9 0 3 6 3 No. of mobile phone subscribers/100 Inhabitants 127.0 132.4 137.0 139.6 141.0 142.5 144.0 145.6 No. of mobile phone subscribers/100 fixed-line 1,061. subscribers 776.2 758.7 825.9 886.1 931.8 979.8 1,019.8 4 No. of 3G phone subscribers ('000) 7,800 8,400 19,320 25,116 29,135 32,048 33,650 35,333 No of 3G phone subscribers/100 inhabitants 8.9 9.5 21.5 27.7 31.8 34.7 36.1 37.5

e/f = BMI estimate/forecast. Source: BMI, GSO, MIC, operators

Vietnam's General Statistics Office (GSO) and the Industry Trends - Mobile Sector Ministry of Information and Communications (MIC) 2010-2017 have provided conflicting data on the mobile sector. The GSO reported that there were 117.6mn mobile subscribers at the end of December 2011. By comparison, the MIC said there were 127.3mn subscribers in the same period.

However, this was an improvement from the previous year when the GSO and the MIC said that there were 153.7mn and 115.6mn mobile subscribers respectively in the country in 2010. The improvement came after a drastic revision of data by the GSO in May 2011 where the number of mobile subscribers declined to 112.3mn from 157.8mn in e/f = BMI estimate/forecast. Source: BMI, GSO, MIC, April 2011. We believe the GSO figures, which are operators published on a monthly basis, could be used as a relatively reliable source for monitoring market growth. By contrast, the MIC publishes annual data.

Data from the GSO showed that there were 120.7mn mobile subscribers in Vietnam at the end of September 2012, unchanged from June 2012 and up from 115.2mn in September 2011. Strong competition between operators and aggressively low tariff rates have pushed the Vietnamese mobile industry towards market saturation and declining profitability. Further evidence of a growth slowdown includes operators such as Viettel and the Vietnam Posts and Telecommunications Group looking at overseas markets for additional growth opportunities.

We do not expect the Vietnamese mobile market to return to double-digit growth (at the end of September 2012, the market expanded by 4.8% y-o-y, down from 7.2% the previous quarter), given that the country's subscriber growth is rapidly shrinking. While rural regions possess growth opportunities, the return on investment is comparatively low due to the need for the highest capital expenditure and lower purchasing power.

In this quarter's update, we have extended our expectations to 2017, and we continue to forecast muted growth in the Vietnamese mobile sector in light of the high penetration rate. We expect the market to expand by 4.5% in 2012, down from 5.4% in 2011. We forecast the sector to grow by 3% in 2013 before increasing by 2% annually from 2014 to 2017. By end-2017, we predict 137.0mn mobile subscribers in Vietnam, representing 145.6% penetration rate.

According to the MIC, there were 16.0mn 3G subscribers in the country in May 2012, up from 13.3mn in December 2011. The growth was attributed to the increasing coverage (91.5% of Vietnam via 33,700 BTS) as well as discounts by mobile operators. The MIC and Vietnamese operators do not release 3G operational data on a regular basis. Consequently, there is a lack of new data since our previous update. We have retained our previous forecast of 25.1mn subscribers in the country in end-2013 with operators building on the positive consumer response and continuing their strategy of attracting subscribers. However, we continue to urge operators to bolster their portfolio of local content to meet the unique demand of consumers. By end-2017, we forecast 35.3mn 3G subscribers in the country, representing 37.5% penetration rate.

ARPU

Table: Telecoms Sector - Mobile ARPU - Historical Data And Forecasts (US$)

2010 2011 2012e 2013f 2014f 2015f 2016f 2017f Market average 5.00 4.49 4.11 3.85 3.60 3.51 3.41 3.31

e/f = BMI estimate/forecast. Source: BMI

Given limited available data on Vietnam's mobile Industry Trends - Mobile ARPU (US ARPU rates, particularly after the withdrawal of $) VimpelCom - which published three quarters of 2010-2017 ARPU data - we have largely retained our previous forecasts, although they have been extended to 2017. BMI calculates ARPU, which is expressed in US dollars, as a market average for the sector. Blended ARPU was estimated at US$4.5 at the end of 2011, down from US$5 in 2010. This followed similar patterns with ARPUs of US$5.5 in 2009, US $6 in 2008 and US$6.5 in 2007.

Russia's VimpelCom was the only operator in Vietnam to publish its ARPU data. According to the firm, its Vietnamese operation, GTEL Mobile

(Beeline VN), which has been renamed as Gmobile, e/f = BMI estimate/forecast. Source: BMI, VimpelCom had an ARPU of US$0.9 in the quarter ended March 2012, unchanged from December 2011 but up from US$0.7 in September 2011. Prior data were unavailable, which makes it difficult to identify a trend. Further, VimpelCom has exited the market by selling its 49% stake in GTEL Mobile to its local partner. The Russian operator stopped publishing operational data for its Vietnam business in Q212. Beeline VN's low ARPU reflected the intense competition in Vietnam's mobile market.

We believe that the Vietnam Posts and Telecommunications (VNPT) and Viettel have significantly higher ARPU given that they account for almost 90% of the mobile market in Vietnam. Nevertheless, we

estimate that the average ARPU level for the Vietnamese market should be in the region of US$4.1 at the end of 2012 given the strong level of competition, high dependency on basic 2G services and the occasional aggressive pricing promotion.

Additionally, the market is dominated by prepaid users. Vietnam's mobile operators have been forced to compete aggressively with price and various promotions in order to win customers and maintain market share. The regulator has done little to prevent further escalation in competition or balance the skewed competitive landscape, which is dominated by state-owned companies. Instead, the regulator was reported to believe that domestic players are financially strong enough to support growth in the market. We believe that this could lead to complacency and unwillingness to invest in new products and services.

We envisage ARPU levels in Vietnam to continue to decline over the next five years. Local media reports that 3G tariff rates are lower than that of 2G services reaffirms our view that competition remains intense. We foresee operators continuing aggressive 3G pricing to attract subscribers while the gradually increasing adoption of value-added services would not be enough to significantly boost ARPUs.

We continue to forecast that the market average ARPU in Vietnam will fall to US$3.9 by end-2013 and reach US$3.3 in 2017. However, we could revise our forecasts if the Vietnamese regulator and operators are able to show more concrete efforts to reverse the downtrend.

Fixed-Line

Table: Telecoms Sector - Fixed Line - Historical Data And Forecasts

2010 2011 2012e 2013f 2014f 2015f 2016f 2017f No. of main telephone lines in service ('000) 14,374 15,500 14,880 14,285 13,856 13,441 13,172 12,908 No. of main telephone lines/100 inhabitants 16.4 17.5 16.6 15.8 15.1 14.5 14.1 13.7

e/f = BMI estimate/forecast. Source: BMI, GSO, MIC, operators

Fixed-line data provided by the General Statistics Industry Trends - Fixed-Line Office (GSO) and the Ministry of Information and Sector Communications (MIC) differ. The MIC reported 2010-2017 that there were 17.427mn and 14.374mn fixed-line subscribers at the end of 2009 and 2010 respectively. The GSO said there were 18.1mn and 16.4mn fixed- line subscribers in 2009 and 2010 respectively. By 2011, the GSO reported 15.5mn fixed-line subscribers while the MIC's 2012 white book published in September 2012 said there were only 10.2mn subscribers.

Given that the MIC does not publish fixed-line data on a regular basis, we are relying on the GSO's figures, at least for data after 2010. The number of fixed-line subscribers in Vietnam has been on a e/f = BMI estimate/forecast. Source: BMI, GSO, MIC long-term decline, which we believe is largely due to the popularity of mobile services. However, the recent stagnation could be a sign of stability with a combination of slowing growth momentum in the mobile market sector due to saturation, and a stable base of consumers and businesses that continue to hold on to traditional fixed-line services. While the MIC's data also exhibit a similar trend, its figures show a significantly more aggressive decline. According to the GSO, the number of fixed-line subscribers in Vietnam declined to 15mn in October 2012, down from 15.1mn the previous month.

Consequently, we continue to expect a decline in the number of fixed lines in Vietnam and we do not envisage a reversal in light of the developments in the mobile market, most notably the growing adoption of 3G services. We have slightly adjusted our end-2012 expectations and this has a similar impact on our 2013 forecast. We now envisage 14.3mn fixed-line subscribers in the market at the end of 2013, and we expect this number to decrease to 12.9mn by 2017. Once again, our forecast is based on the data published by the GSO. The MIC's figures have been lower than the GSO's in the last few years, and we expect this trend to continue, unless the two authorities reconcile their data.

Our scenario for Vietnam's fixed-line market that the major players - the Vietnam Posts and Telecommunications Group, Viettel and EVN Telecom (which has since merged with Viettel) - continue

their rural expansion projects to sustain their fixed-line subscriber bases remains. However, we believe that the declining demand is convincing them to channel their capital to more profitable segments such as mobile and broadband. Further, the traditional fixed-line voice service is also under threat from cheaper alternatives such as VoIP. The declining subscriber figures, both from the GSO and MIC, indicates the market's declining attractiveness and operators' unwillingness to commit greater investment.

Broadband

Table: Telecoms Sector - Internet - Historical Data And Forecasts

2010 2011 2012e 2013f 2014f 2015f 2016f 2017f No. of internet users ('000) 26,905 31,159 31,782 32,418 33,066 33,727 34,402 35,090 No. of internet users/100 inhabitants 30.6 35.1 35.4 35.8 36.1 36.5 36.9 37.3 No. of fixed broadband internet subscribers ('000) 3,644 4,085 4,452 4,719 4,955 5,154 5,308 5,467 No. of fixed broadband internet subscribers/100 inhabitants 4.1 4.6 5.0 5.2 5.4 5.6 5.7 5.8

e/f = BMI estimate/forecast. Source: BMI, VNNIC

According to data provided by the Vietnam Internet Industry Trends - Internet Sector Network Information Centre (VNNIC), there were 31.2mn internet users in Vietnam at the end of 2010-2017 September 2012.

Vietnam's internet sector continued to exhibit slower growth in 2012, continuing on from the trend seen in 2011. The average monthly growth rate for 2011 was 1.1%, which was lower than the growth average in 2010 (1.4%). The first nine months of 2012 saw even weaker growth with an average m-o-m growth rate of just 0.2%. Given that the number of 3G subscriptions has surged in the past year, it is possible that the VNNIC does not take into account mobile internet users in its definition. We retain our e/f = BMI estimate/forecast. Source: BMI, VNNIC

previous forecasts, which were downgraded in the previous quarter due to the lower-than-expected growth trajectory. Fixed internet services are experiencing muted growth due to the higher cost of ownership as consumers need to purchase personal computers, namely desktops and notebooks. We expect 32.4mn internet subscribers in Vietnam at the end of 2013, a penetration rate of 35.8%. We expect this number to increase to 35.1mn by end-2017, a 37.3% penetration rate.

Nevertheless, we believe that Vietnam's internet sector offers strong long-term growth potential. On one hand, internet user growth to date has been largely confined to urban centres, but the internet user penetration rate is expected to be approaching saturation in major cities and towns. Rural Vietnam remains comparatively untapped as a result of consumers' lower purchasing power. This means that the ability to achieve higher growth rates in the future will depend on the pace of internet infrastructure development in rural parts of the country and the prices of consumer electronics and internet services.

Vietnam's fixed broadband subscriber market grew by 22.8% in 2010, which was a significant slowdown from 44.8% in the preceding year. The market registered growth rates of 150.3% in 2007 and 58.3% in 2008, but the higher growth momentum could be attributed to a low-base effect. Vietnam's broadband industry hit a rocky patch in the first 10 months of 2011. The market contracted in three of the months, most notably 5.2% month-on-month in June 2011, but rebounded sharply in August 2011 by growing by 8.1% m- o-m. By end-2011, there were 4.085mn fixed broadband subscribers, a 12.1% increase y-o-y.

Like the overall internet sector, Vietnam's broadband industry is experiencing a slowdown. There were 4.317mn broadband subscribers at the end of September 2012, up by 12.0% y-o-y. The average monthly growth rate in the first nine months of 2012 was 0.6%, down from the 1.0% in the whole of 2011. This was due to the contractions in the months ended June 2012 and September 2012.

Although Vietnamese telecoms companies continue to deploy broadband services such as fibre-to-the-x, affordability and coverage remain key concerns in the emerging market. Furthermore, demand for traditional fixed broadband services is increasingly under threat from mobile alternatives due to a lower cost structure. While we believe there will be limited growth potential for the fixed broadband industry in Vietnam in the near future, we retain an optimistic view in light of Vietnam's growing affluence and expanding middle class. While next-generation mobile technologies LTE and WiMAX could cannibalise demand for fixed broadband solutions, companies could generate consumer interest by introducing bandwidth-intensive services such as IPTV or target businesses by offering bundled packages such as cloud solutions.

We expect the growth rate of the Vietnamese broadband market to decline in the next few years as consumers opt for mobile alternatives. That said, declining prices of products and services should help the sector to grow by an average of 4.2% between 2013 to 2017 to bring the total number of fixed broadband subscribers in Vietnam to 5.5mn from 4.7mn.

Industry Business Environment Overview Industry Business Environment Overview

This quarter BMI has adjusted the methodology for our proprietary Risk/Reward Ratings. While the fundamental principles are unchanged, we have expanded the data used to assess the potential and challenges of investing in telecoms markets. As subscriber growth is no longer the key driving force behind market value growth, the majority of markets are now looking at encouraging existing subscribers to increase their spending on services, making factors such as the economic outlook an increasingly important determinant in ranking market opportunities. Future spending ability and our long-term economic views are therefore integral to our adjusted ratings. We have also introduced a more nuanced assessment of market dynamics as one contributing score for the industry rewards.

Asia Pacific's telecoms industry registered a Varying Opportunities telecoms rating score of 56.2, up from 55.6 the previous quarter. The improvement was driven by a Asia Pacific Telecoms Risk/Reward Ratings broad base increase in the various reward and risk scores. However, we highlight that past ratings are not perfectly comparable as we have tweaked our methodology. The countries' rankings have also changed in light of the fine-tuning.

Japan remained the most attractive market in Asia Pacific with a telecoms rating score of 74.9 on a risk/ reward basis. While mature, operators have already turned their focus to extracting greater value from their existing subscriber bases via upgraded and add- on services. The country was one of the first in the Source: BMI region to launch commercial LTE services, and operators have seen positive responses from consumers. However, the outlook for Japan is looking increasingly vulnerable. Besides an ageing population, which bodes poorly for long-term spending on new telecoms products and services, businesses have become increasingly bearish towards current and future business conditions, based on the September 2012 Tankan survey by the Bank of Japan. This could eventually filter down to consumers, leading to reduced discretionary spending.

Australia was ranked second with a telecoms rating score of 73.1. The country's significant land mass means that achieving complete telecoms coverage is a daunting task, although this presents an opportunity for companies to fill in the gaps. At present, the National Broadband Network, which in part aims to bridge the digital divide, is still progressing well. However, the opposition Coalition party has announced that it would revamp the entire project to reduce immediate cost. The trade-off comes in the form of businesses and consumers receiving slower connectivity that requires another upgrade in the future.

The effective and forward-looking Singaporean regulator ensures that the country has a long-term plan and that various stakeholders collaborate on vital developments. Consequently, Singapore has the highest industry risks score in the region. While the country's comparatively small population size places a limit on its industry rewards score, Singapore's strong macroeconomic position has helped it to rank third in Asia Pacific. However, we highlight that, as with many countries in the region, continued global economic weakness would have a negative effect on export-dependent Singapore.

Hong Kong is similar to Singapore in many ways, which include its industry rewards and industry risks scores. Data from the regulator have shown that mobile data consumption remains on a strong growth trajectory, which bodes well for the mobile content industry. The territory was ranked fourth due to weaker country rewards and country risks. Although Hong Kong is also vulnerable to external shocks and we are adopting a cautious take on consumer spending going forward, we expect private consumption to remain the main outperformer, among other growth components.

BMI previously highlighted that South Korea could overtake Hong Kong in our ratings table, although this view has yet to play out. South Korea's nascent LTE market is one of the most vibrant in the region as all three mobile operators have launched nationwide commercial services. The country also has the support of device manufacturers such as Samsung Electronics and LG Electronics. Among the top five countries in the region, South Korea has the lowest country rewards score, and we see room for further downside. The government has so far been able to put off fiscal stimulus to boost a faltering economy. However, this abstinence may not last for long as economic growth continues to slide on the back of slower private consumption growth and a deteriorating trade picture.

China is the highest-ranking emerging market in the Asia's Big Three Asia Pacific region due to its sheer growth potential, Asia Pacific Telecoms Risk/Reward Ratings which is reflected in the country's industry rewards score of 68.8. China's economic imbalances have grown consistently over the past decade, to a point where we now believe they have reached a peak. The coming years should see rebalancing take place, with the current economic structure giving way to a more sustainable and consumer-driven economy, particularly consumer services. However, the telecoms market is dominated by state-owned firms and there is no indication from the government that it is looking to liberalise the industry.

Taiwan was ranked joint sixth with a telecoms rating Source: BMI score of 61.8. The competitive landscape is slightly skewed, although the regulator has been evaluating ways to level the playing field. While the government's bet on WiMAX is increasingly unlikely to generate a significant return on investment, the industry has started to transition to TD-LTE technology.

Malaysia came in eighth position after registering a telecoms rating score of 59.1. The country remains one of the most attractive emerging markets in the region, partially due to a more developed economy. Further, the government has the Economic Transformation Programme (ETP), which aims to turn Malaysia into a high-income nation by 2020. The ETP has identified 12 key economic areas, which include the telecoms industry. Initiatives such as launching e-government, e-healthcare and ubiquitous broadband connectivity are expected to play key roles.

Indonesia is the third most populous country in the world, although its fragmented geography has placed a dampener on the growth potential. As expanding network coverage is a challenging task, operators tend to focus on the more lucrative urban cities instead of pursuing low-value opportunities in rural regions. Meanwhile, the private consumption outlook for Indonesia was robust in H112, supported by strong income growth and increasing access to credit. However, we believe that the Indonesian consumer has hit its cyclical peak, and now see growth in the space slowing modestly in 2013 to 5.5% from 5.7% in 2012.

Although the merger between the Philippine Long Distance Telephone Company and Digital Telecommunications Philippines has been completed, the telecoms market is still in a transitional phase. The National Telecommunications Commission is looking to award a 3G licence in the near future and this could herald the introduction of a new player.

Bangladesh had a telecoms rating score of 50.4 with its country rewards component holding the country back. The allocation of 3G services is expected to take place in the near future, which would provide a much-needed revenue stream for mobile operators. Further, a recent slew of export data suggests that growth is looking set to embark on a sustained recovery. The country registered record export earnings of US$2.4bn in August 2012, having recorded two straight months of positive y-o-y growth in July and August 2012.

Like Bangladesh, Thailand is about to issue 3G licences. This process has been in the making for a number of years but failed to materialise previously due to a myriad of factors. However, the new regulator, the National Broadcasting and Telecommunications Commission, has been so far performing well. A successful 3G auction and prolonged stability in the telecoms industry should see Thailand's telecoms scores improve in the medium term.

Not too long ago, India's telecoms industry was experiencing robust growth, but the market is now struggling with a host of issues. Although its market potential is comparable to that of China, the competitive landscape is overcrowded and operators had resorted to an aggressive price war to sustain subscriber growth. Additionally, legal and regulatory uncertainties continue to plague the sector, which have significantly hampered companies' ability to make long-term investment decisions. Given the convoluted situation, which involves a multitude of stakeholders ranging from the government to foreign companies, we do not expect a resolution in the near future.

At present, Pakistan could still be looking to auction 3G licences before end-2012, although, like Thailand, the process has been repeatedly delayed. A pre-bid conference of prospective 3G consultancy firms was held on September 20 2012, but the regulator has not disclose a firm timeline for the actual auction. Further delays would leave Pakistan trailing behind its regional peers as consumers and businesses would not have access to mobile broadband connectivity.

After tweaking our methodology, Sri Lanka has The Laggards moved up the ratings table to 15th position. The Asia Pacific Telecoms Risk/Reward Ratings market is gradually expanding following the end of the civil war, with the public and private sectors engaging in network expansions and new product launches. However, recovery is a long-term process and this is reflected in Sri Lanka's country rewards score of 26.7, the lowest in the region. Sri Lanka's export growth came in at a new multi-year low of -17.4% y-o-y in July 2012.

There are a number of factors that have resulted in Vietnam ranking near the bottom of our Risk/ Reward Ratings. In addition to market saturation in the mobile industry in light of aggressive price Source: BMI competition by operators, the largest determinant is the dominance of state-owned companies. Foreign operators from countries such as South Korea and Russia have left the market due to a lack of meaningful growth opportunities. Further, there is no independent regulator with the Ministry of Information and Communications responsible for regulating the industry.

Cambodia's overcrowded telecoms industry remains a concern, especially when the government continues to adopt a liberal approach in the issuance of licences. The creation of an independent telecoms regulator, the Telecommunication Regulator of Cambodia, should bring stability into the market by ensuring that policies are free from government influence and agenda, although we caution that it would take a few years before we see significant improvements.

The Laotian telecoms market has exhibited some signs of stability after all the operators agreed to adhere to a minimum tariff rate of LAK800. However, we believe that depressed ARPU rates will persist in the near term, partially due to an agreement to offer lower tariff rates on certain days such as holidays and continued lack of access to credit by smaller businesses and the purported lack of the flow-on effects from investments to the local community. The country is also one of the smallest in our Risk/Reward Ratings, which limits its growth potential. However, the Ministry of Planning and Investment Office has announced the approval of

funds to enhance the country's IT infrastructure, as part of a plan to modernise the country's investment management system, and provide for more efficiency within the business environment.

Table: Asia Pacific Telecoms Risk/Reward Ratings Q113

Rewards Risks Industry Country Industry Country Telecoms Previous Country Rewards Rewards Risks Risks Rating Rank Rank Japan 80.0 66.7 80.0 67.9 74.9 1 1 Australia 68.8 80.0 80.0 68.4 73.1 2 3 Singapore 55.0 83.3 90.0 86.5 71.9 3 2 Hong Kong 55.0 76.7 90.0 65.0 67.1 4 4 South Korea 62.5 57.0 80.0 69.7 64.9 5 5 China 68.8 31.7 70.0 81.8 61.8 =6 8 Taiwan 52.5 60.0 80.0 75.0 61.8 =6 6 Malaysia 52.5 57.0 70.0 71.4 59.1 8 7 Indonesia 57.5 45.0 60.0 64.8 55.9 9 9 Philippines 50.0 46.7 60.0 60.1 52.2 10 13 Bangladesh 52.5 36.7 60.0 56.9 50.4 11 12 Thailand 52.3 32.7 60.0 61.9 50.1 12 14 India 52.5 32.1 60.0 61.2 49.9 13 10 Pakistan 45.0 42.0 60.0 50.5 47.3 14 11 Sri Lanka 45.0 26.7 60.0 57.0 44.6 15 18 Vietnam 44.0 33.3 40.0 64.0 43.8 16 16 Cambodia 40.0 38.3 50.0 45.3 41.9 17 15 Laos 37.5 39.0 40.0 53.2 40.6 18 17

Average 54.0 49.2 66.1 64.5 56.2

Scores are weighted as follows: 'Rewards': 70%, of which industry rewards 65% and country rewards 35%; 'Risks': 30%, of which industry risks 40% and Country Risks 60%. The 'Rewards' rating evaluates the size and growth potential of a telecoms market in any given state, and country's broader economic/socio-demographic characteristics that impact the industry's development; the 'Risks' rating evaluates industry-specific dangers and those emanating from the state's political/economic profile, based on BMI's proprietary Country Risk Ratings that could affect the realisation of anticipated returns. Source: BMI

Vietnam

Vietnam was ranked 16th in BMI's latest Asia Pacific Telecoms Risk/Reward Ratings with a Telecoms Rating score of 43.8. Although the country saw its score improve by 1.4 over the quarter, we highlight that

we have made several changes to our methodology to better reflect the risks and rewards of the region's telecoms markets. While Vietnam's Industry Rewards score was comparable to peers such as Pakistan and Sri Lanka, and it had one of the highest Country Risks scores among Asia's emerging markets, the country was held back most notably by its Industry Risks score.

Vietnam recorded an Industry Rewards score of 44.0, which was only higher than Cambodia and Laos. Although Vietnam is an emerging market, strong competition between mobile operators led to aggressive price competition, which resulted in a high penetration rate. We estimate that the Vietnamese mobile market will have a penetration rate of 137% by end-2012. The lack of growth opportunities is further exacerbated by the dominance of prepaid subscriptions and the fact that 3G services have yet to take off in the country due to a magnitude of reasons such as poor network quality and coverage, a lack of localised services and language barriers. Additionally, Vietnam's fixed-line market is stagnating in light of hefty network expansion costs and mobile substitution effects. Similarly, the fixed broadband market is experiencing sluggish growth, adding only 1.6mn subscribers in the last two years to reach 4.3mn in September 2012.

The outlook of the Vietnamese telecoms market is closely tied to the competitive landscape, which has deteriorated over the years. State-owned operators dominate the fixed-line, mobile and internet sectors, and foreign investors have struggled to erode their dominance. Luxembourg-based Millicom International Cellular, Russia's VimpelCom and South Korea's SK Telecom have withdrawn their investments in the last few years, and Hong Kong's Hutchison Telecommunications International could eventually follow suit. Interestingly, the Ministry of Information and Communication has been reported to be unfazed by the departure of foreign investors as it sees its domestic firms as being capable of driving growth in the market. Vietnam's Industry Risks score of 40.0 is the joint-lowest in the region with Laos.

Vietnam's real GDP growth accelerated from 4.7% y-o-y in Q212 to 5.4% in Q312, reinforcing our view that the economy is poised for a robust recovery as we head into 2013. We see scope for a robust rebound in private sector investment growth as lending rates decline over the coming months. The recent jump in m-o- m headline CPI from 0.6% in August to 2.2% in September has proven to be a one-off scare for policymakers. The latest reading, which saw month-on-month inflation moderate to 0.9% in October, has helped to alleviate concerns that the State Bank of Vietnam (SBV) could be in a tight spot of having to guide monetary policy amid a stagflationary environment. We reiterate our view that the SBV will keep its policy rate on hold at 10.00% through 2012 and for the greater part of 2013. We have upgraded our real GDP growth forecast from 6.5% to 7.0% for 2013, and we expect Vietnam to run a relatively balanced current account with a negligible deficit of just 0.1% of GDP in 2013.

The Vietnamese government's ambitious plan to liberalise the economy in order to attract more foreign investment to support economic growth over the next decade is likely to engender increasing calls for political reform, in our view. Foreign investors, including multinational companies, private equity funds, and investment banks, have long been calling on the government to speed up the privatisation of state- owned enterprises. However, widespread corruption among government officials (especially at the provincial level) has led to concerns that rapid privatisation would only result in an inequitable and improper distribution of state assets.

Market Overview

Despite being an emerging market, Vietnam's mobile penetration is higher than many of its peers in the region due to aggressive price competition between operators. This is clearly reflected in the industry's average ARPU, which was only approximately 25% of the regional average. Although operators have launched 3G services, which should in theory boost their revenue, service adoption has been disappointing due to a lack of suitable content and poor network quality. Additionally, operators have aggressively lowered tariff rates in order to spur interest, which offsets the revenue-increasing property of the data service. Despite the high penetration rate, the market is still expected to experience growth due to consumers' heavy reliance on prepaid subscriptions.

Vietnam Mobile Market Regional Comparison

2011

Data from 18 countries when available. Source: BMI, regulators, operators

Table: Vietnam Mobile Market Regional Comparison, 2011

Vietnam Asia Pacific Postpaid As % Of Market na 32.2 Mobile Penetration (%) 132.4 109.3 Blended ARPU (US$) 4.5 16.3 3G as % Of Entire Market 7.1 30 Data ARPU (US$) na 23.5 5-year CAGR (%) 21.2 15.1

Key Market Developments

■ New subscribers to prepaid mobile services in Vietnam will be charged a one-off activation fee of VND25,000 (US$1.20) per SIM card, reports TeleGeography. According to the VietNam News, the move is aimed at curtailing the temporary use of SIM cards to take advantage of promotions offered by wireless operators. The one-time subscription cost for postpaid services will remain at VND30,000 (US $1.44).

■ Dong Duong Telecom and Vietnam Multimedia Corporation (VTC) have been asked by the country's communications ministry to give an explanation regarding the delay in the launch of MVNO services, according to the head of the ministry's telecoms department, Pham Hong Hai. Dong Duong Telecom and VTC secured MVNO licences in August 2009 and in June 2010 respectively. The telecoms department was instructed to recall the MVNO licences of these firms in 2011. However, the department did not go ahead with this action seeing as these firms had given reasonable explanations. Hai said the ministry would recall the MVNO licences if the firms fail to report any advancement.

■ The Vietnamese government will delay the award of LTE 4G licences until 2015. It concluded that the market is not ready for the high-speed services. Five mobile operators have been running LTE trials for over a year, and the fact that the uptake of 3G services has been slower than expected suggests that the LTE market would experience a similar growth trajectory.

Market Growth

Figures provided by Vietnam's General Statistics Vietnam Mobile Market Growth ('000) Office (GSO) reported there were 120.7mn mobile subscribers at the end of September 2012, which 2009-2012 remained stable into October 2012.

Accurate telecoms data in Vietnam are hard to come by. For instance, the GSO reported there were 157.8mn mobile subscribers at the end of April 2011 but the figure fell sharply to 112.3mn the next month. We believe that the drastic decline could be partially attributed to the removal of inactive subscriptions, a clean-up of subscriber data and an attempt to bring its mobile subscriber data in line with the Ministry of Information and Communications (MIC). Source: BMI, MIC, GSO, operators According to the GSO, there were 153.7mn mobile subscribers at the end of December 2010. However, the MIC 2011 white book reported that there were 111.570mn mobile subscribers at the same period (previously, the MIC said there were 112.691mn). Meanwhile, the MIC 2012 white book, which was published in September 2012, indicated that there were 127.318mn mobile subscribers in the country at the end of 2011. By comparison, the GSO said that there were 117.6mn mobile subscribers.

The conflicting information presents a challenge when it comes to assessing the market share and growth momentum of the Vietnamese mobile market. However, it is clear that Viettel, MobiFone and VinaPhone remain the market leaders with the majority portion of the mobile market. We have used data from the MIC when analysing the performance of the Vietnamese industry and operators. That said, the recent data provided by the GSO suggests it could be used as a more accurate gauge (compared to before April 2011) to measure growth in the Vietnamese mobile market. Further, the GSO publishes monthly data, while the MIC tends to release data on an annual basis.

Although the mobile penetration rate in Vietnam passed the 100% mark in 2009, the market continues to report growth. Multiple SIM ownership and inactive prepaid subscriptions are key factors behind the inflated figures, believes BMI. Nevertheless, assuming that the recent data by the GSO is accurate, there is a strong indication that the mobile subscriber growth momentum in Vietnam is weakening. The number of

mobile subscribers in Vietnam increased by 4.8% y-o-y in the quarter ended September 2012, down from 6.7% in August 2012, 7.8% in July 2012 and 7.2% in June 2012.

Market Shares Vietnam Mobile Market Share Official data from the Ministry of Information and 2011 Communications (MIC) showed that Viettel remained the country's mobile market leader at the end of 2011 with 40.5% market share, up from 36.7% the previous year. By the end of September 2012, we estimate that Viettel had a market share of about 41.8%, representing about 50.5mn mobile subscribers. The operator's position in the market has been boosted by the acquisition of EVN Telecom.

VinaPhone and MobiFone are owned by the Vietnam Posts and Telecommunications Group. VinaPhone is the second-ranked mobile operator EVN Telecom has since being acquired by Viettel. Beeline with 30.1% market share, according to the MIC. has been renamed as Gmobile. Source: MIC This was up from 28.7 in 2010 and 27.2% in 2009. By the end of September 2012, we estimate that VinaPhone remained a distance behind Viettel, given the limited growth seen by the overall industry, with approximately 37mn subscribers, an equivalent of 29.9% market share.

Meanwhile, sister company MobiFone had a market share of 17.9% at the end of 2011. The operator was the market leader up until April 2008, and it had seen subscriber growth until 2010 when its subscriber numbers reached a peak of 32.478mn, representing 29.1% market share. It is difficult to pinpoint the exact cause for MobiFone to experience such a significant loss in subscribers within one year, although reasons could include the removal of inactive prepaid subscriptions and network problems resulting in higher churn. At the end of September 2012, we estimate that MobiFone had a market share of about 16.7%, representing 20.14mn subscribers.

Data from 2011 showed that the remaining 11.6% of the mobile market was shared among Vietnamobile (a partnership between Hong Kong's Hutchison Asia Telecom Group and Vietnam's Hanoi Telecom), GTEL Mobile (which markets under the brand Beeline VN, and was a joint venture between Russia's VimpelCom and Vietnam's GTEL), S-Fone and EVN Telecom.

Vietnamobile was the largest among the four with 8.0% market share in end-2011. This was up from 3.2% in 2010. Vietnamobile has received renewed support from parents in the form of an additional investment of US$350mn, which should help the operator consolidate its position as the fourth-largest mobile operator in Vietnam. Vietnamobile's subscriber base was built on low mobile tariff rates, but the company has not neglected the importance of having comprehensive network coverage. By end-September 2012, we estimate that Vietnamobile had a market share of about 9.1%.

GTEL Mobile has been renamed as Gmobile following VimpelCom's decision to sell its entire stake to GTEL. Gmobile had 3.2% market share, according to the MIC, at the end of 2011. However, this figure differs from the result published by VimpelCom, which said that it had 2.957mn subscribers at the end of 2011, which would give the operator about 2.5% market share. By March 2012, VimpelCom reported that its Vietnam operation had 3.014mn subscribers. However, VimpelCom has stopped publishing the number of subscribers for the quarter ended June 2012. We estimate that Gmobile had a market share of 2.5% at the end of September 2012.

S-Fone had experienced a similar situation where one of its owners, South Korea's SK Telecom, announced in late 2010 that it will exit the market in the next few years. In September 2011, it was reported that S-Fone received approval to change its business structure from a business cooperation contract to a joint venture. Local firm Saigon Post and Telecommunication Service (SPT) will have an 80% stake with the remainder held by SK Telecom. SPT will buy back SK Telecom's stake within two years. The MIC reported that S- Fone had a market share of 0.1% in 2011, down from 0.5% in 2010.

EVN Telecom had 0.2% market share at the end of 2011. The operator had been unsuccessful in generating a profit and was constantly identified as a target for acquisition. Although companies such as Hanoi Telecom and Vietnam Multimedia Corporation had expressed interest in acquiring EVN Telecom due to its 3G spectrum and infrastructure, the government eventually gave the go-ahead for Viettel to purchase EVN Telecom in December 2011.

Table: Vietnam Mobile Market, September 2012

Operator No. of subscribers ('000) Market share (%) Viettel 50,500 41.8 VinaPhone 36,050 29.9 MobiFone 20,140 16.7 Vietnamobile 11,000 9.1 GTEL Mobile (Beeline VN) 3,000 2.5 S-Fone 10 0.0 Total 120,700 100

Figures estimated by BMI. Source: BMI, MIC, operators

ARPU

Given that Vietnamese mobile operators generally do not provide subscriber data, we do not have a detailed picture of the companies' ARPU levels. The only operator to publish ARPU figures was VimpelCom, but the Russian operator has stopped releasing data for its Vietnamese operation after it announced in April 2012 that it would sell its entire indirect 49% stake in GTEL Mobile to its local partner. GTEL Mobile was renamed as Gmobile in September 2012.

Although VimpelCom has published only three-quarters of ARPU data, in addition to the fact that GTEL Mobile was only a minor player in the Vietnamese mobile market, the figures provide a valuable insight into the industry's hostile environment. VimpelCom reported that GTEL Mobile had an ARPU of US$0.9 in Q112, unchanged from US$0.9 in Q411 but up from US$0.7 in Q311. We believe the low ARPU levels are a result intense competition and a long-running price war.

Potential New Entrants

Strong competition and the dominance of state entities have not stopped new entrants to the market. As previously reported the Ministry of Information and Communications (MIC) has shown no signs of curtailing the issuance of mobile network operating licences. In June 2010, the regulator awarded a mobile licence to Vietnam Multimedia Corporation (VTC), with commercial services yet to be launched. The issuance of a network operating licence to VTC came not long after a mobile virtual network operator (MVNO) licence was awarded to the company. In August 2009, the MIC awarded VTC and Dong Duong Telecom (also known as Indochina Telecom) with licences to provide MVNO services. VTC signed a partnership agreement with EVN Telecom in early 2010 and said at that time it would begin offering

services in June 2010. However, it was reported in February 2011 that VTC, noting the strong competition in the country's mobile market, was hesitant to launch commercial mobile services.

Meanwhile, Indochina Telecom was originally expected to offer services in Q110 through Viettel's 2G and 3G networks, but the plan was delayed. BMI believes that this was partially because the company needed to see if WiMAX would be a viable alternative path. VTC and Indochina Telecom reportedly blamed difficulties in developing customer bases and marketing strategies to compete with other providers, with existing telecoms infrastructure, for the delay in introducing services.

The operator's aim to acquire a WiMAX licence was granted in May 2010 after the MIC awarded Indochina Telecom a WiMAX trial licence. Since then, Indochina Telecom had announced plans to deploy more than 100 WiMAX base stations by end-2011 and another 500 in the next few years, as well as signing a network sharing agreement with EVN Hanoi in April to accelerate the expansion process. Indochina Telecom had expected to launch WiMAX services in Hanoi in Q311 before expanding to Ho Chi Minh City in 2012. Indochina Telecom was expected to start providing mobile services in mid-August 2011, according to conditions laid out in its licence, which was awarded in August 2009. In early December 2011, it was reported that Indochina Telecom's mobile licence was extended even though it has been unable to launch services as scheduled. The firm promised the MIC that it would introduce services in the next few months.

As of April 2012, both operators have yet to launch services and local media reported that they are at risk of losing their licences. By July 2012, local media reported that VTC has given up its ambition of entering the market as it believes the investment would not be profitable, partially due to the dominance of the top three operators, believes BMI.

In October 2012, the MIC reportedly sent a letter of ultimatum to Dong Duong Telecom and VTC, urging the two to start operations as soon as possible. The companies have also been instructed to provide a timeframe as to when they expect to commercially provide services.

Mobile Content/Value-Added Services

Since the commercial introduction of 3G mobile services in late 2009 and early 2010, the range and quality of mobile value-added services available has greatly expanded. Despite this, it appears that the actual use of advanced value-added services which utilise data and video remains confined to a small proportion of 3G subscribers. In part this relates to high prices and the limited availability of smartphone handsets and similar 3G devices, although a study by the Nielsen Group of South East Asian consumer interests in buying a smartphone handset during 2011-2012 revealed for Vietnam that 46% of respondents were keen to acquire a smartphone in the next year, while 32% said they would not.

In July 2010, the Ministry of Information and Communications' Department of Radio Frequency Chief Doan Quang Hoan said operators are not effectively utilising value-added services. He also indicated that 3G subscribers mainly used their connections to access the internet and download music. All four 3G operators provide the same services such as mobile internet, video calling, mobile camera and mobile TV. It was believed that operators are increasingly unlikely to recoup their investments within the target five-year period if 3G services continue to grow at the current pace.

In December 2011, Yahoo! published a survey that showed that the mobile internet penetration rate in Vietnam increased to 30% in 2011, up from 19% in 2010. David Jeffs, head of Yahoo! Insights, expects the rate to sharply increase, especially in second-tier cities Danang and Can Tho. According to the findings, Vietnamese consumers used mobile internet for chat, email and search services, unlike other South East Asian countries where social networking websites came out on top.

SMS

Text messaging remains the most widely used value-added service among Vietnamese. Affordability is the main reason for this. Since 2006, mobile network operators have significantly reduced tariffs on SIM cards, which have enabled content providers to buy up these SIM cards and deliver cheap advertising SMS.

However, this has caused complaints from mobile customers, stating that they are constantly being bombarded by advertising text messages. In an effort to stave off the onslaught of unwelcome text messages, MobiFone has created a second promotional account, while Viettel has launched an advertising free sharing policy.

In the case of MobiFone, the promotional account is used only for sending text messages and making calls between subscribers on the same network, while the normal account is used for sending SMS and making phone calls to subscribers of another network, and to use content services provided by content providers. However, mobile content providers say they earn nothing from this policy, and have also suggested that the operators use unfair business practices which cause them serious losses.

In order to compete with the spam, the Ministry of Information and Communications announced a new regulation under which SMS advertisements must carry a code and provide methods for customers to opt out of receiving advertisements. In turn, advertisers must stop their service if requested within a period of 24 hours. Failure to comply will result in some form of penalisation, largely expected to be fines.

Although alternatives such as internet messaging and social networks are gaining popularity, SMS remains an attractive way of communicating due to its affordability and compatibility with feature phones. Operators have taken the extra step to integrate the basic SMS into growing services. For example, in May 2011

Beeline VN rolled out a new Facebook SMS service for its subscribers in the country. The new service will enable Beeline's subscribers to send messages, update status and write wall posts on Facebook, as well as use its other features through SMS. The subscribers will have to pay VND300 for each SMS sent for this service.

Table: Value-Added Services

Date Details MobiFone announced that international roaming service is now available on certain flights. From October 22 2012, outgoing and incoming calls on flights are charged at VND69,900 per minute, outgoing text at VND15,000 per text while incoming texts are free. From November 16 2012, postpaid customers are able to access the internet via Oct-1 data service at VND49,000 per 100KB and VND4,900 per subsequently10KB. The same service will be delivered 2 to prepaid customers from January 1st 2013. Sep- Viettel launched an e-book store with about 2,000 books. Prices range from VND2,000 to VND15,000, and can be 12 deducted directly from the subscriber's mobile account. VinaPhone has started to offer in-flight mobile-phone services on domestic and international air routes, thereby making it the first mobile operator to offer such service in Vietnam. The operator will charge U$$4.3 and US$4.7 for outgoing and incoming calls respectively. The subscribers can also send SMS by paying US$0.8 for each SMS, while subscribers will not be charged any fee for receiving messages. The service is available on several Jul-1 domestic and international flights, including Emirates, Malaysia Airlines and Hong Kong Airlines. The operator is 2 also in discussions to offer its services to more airlines. Vietnamobile has introduced a promotional offer for the Euro 2012 football tournament. The operator is offering Euro 2012 content packages priced at VND500 to VND2,000 per day or VND20,000 for the whole season. The Jun-1 packages will allow subscribers to access images, videos, updates and advice from football experts through 2 SMS. The promotion also features a quiz with weekly prizes and a grand prize of VND200mn in cash. May- Viettel announced an international roaming service for its prepaid subscribers. Subscribers travelling to 12 Cambodia, Laos, Haiti and Mozambique also enjoy a preferential package due to the operator's global presence. MobiFone, in association with media firm Zing, introduced Zing.vn service packages in the country, reports Viet Feb-1 Nam News. The packages enable subscribers to listen to music, download MP3s and watch news. Subscribers 2 can also access the Zing Me social network for a monthly tariff of VND15,000 Viettel and Vietcombank introduced Mobile BankPlus, enabling the operator's mobile subscribers to bank with Vietcombank through mobile devices since January. The service allows Viettel's subscribers to transfer money from one account to another within Vietcombank, as well as pay phone bills and access their account balance and transaction details. Subscribers can access their banking accounts via their mobile phones without Jan-1 connecting to 3G or Wi-Fi. The strategic cooperation would allow both parties to take full advantage of the 2 number of customers and network of both sides, said director of Viettel, Hoang Son. Beeline VN re-launched its Ty Phu package, which offers free on-net calls from the second to the 12th minute. A Dec- SIM card costs VND20,000 and the tariff plan charges VND1,350 a minute for the first minute and from the 20th 11 minute onwards. Dec- Vietnamobile become Vietnam's fifth 3G provider and offers data connection speeds of up to 21.6Mbps. Prices 11 start from VND10,000 a month or VND5,000 a day for 120MB of data. The Vietnam Posts and Telecommunications Group (VNPT) has signed a contract with DTS Communication Technologies Corporation (DTS) to provide MegaERP service in Ho Chi Minh city. According to the terms of the contract, VNPT will provide the network infrastructure, while DTS will provide the service system. The MegaERP Nov- service will help enterprises and organisations to enhance their management ability as well as business operations 11 with low cost as they are not required to invest in hardware or software installation. MobiFone announced that its postpaid subscribers can save 10% on their bills if they make mobile bill payments Nov- via VietinBank's payment system. The payment service was made possible through a venture between MobiFone, 11 Vietnam Payment Solution Joint Stock Company and VietinBank. Oct-1 1 Beeline VN launched its free WebSMS service.

Value-Added Services - Continued

Date Details Oct-1 Beeline VN launched a daily and monthly unlimited GPRS plan. Both options require a VND1,000 registration fee, 1 with the former priced at VND1,500 a day. The monthly plan cost VND30,000 a month. Beeline VN rolled out a new Facebook SMS service for its subscribers in the country. The new service will enable May- Beeline's subscribers to send messages, update status and write wall posts on Facebook as well as use its other 11 features through SMS. The subscribers will be required to pay VND300 for each SMS sent for this service. EVN Telecom signed an agreement with Russian CDMA-450 mobile operator Sky Link to offer roaming services to Apr-1 subscribers. The move will enable the CDMA 450MHz roaming subscribers of both the operators to connect with 1 each other while on a trip to Russia and Vietnam. VinaPhone launches VinaSport service, a new plan for sport fans. VinaSport provides its customers with the information and images about football, tennis, golf, boxing and formula one racing. The service has two fee Mar- packages including a weekly fee package of VND10,000 (US$0.48) and a monthly fee of VND20,000 and an extra 11 VND 2,000 to download messages. VimpelCom's Beeline VN launches the 'Kook Number Service'. The number allows customers to pick a special phone number without having to change SIM cards. Customers can check if numbers are available through SMS Feb-1 and then swap their old number for a new number through text message as well. Numbers are available with the 1 '099' or '0199' prefix.

Source: BMI, operators

Mobile Operator Data

Table: Vietnam Mobile Market Overview ('000)

Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- 09 10 10 10 10 11 11 11 11 12 12 12 110,8 117,9 133,5 142,1 153,7 157,6 112,6 115,2 117,6 118,7 120,7 120,7 General Statistics Office data 00 00 00 00 00 00 00 00 00 00 00 00 Ministry of Information and 98,22 111,5 127,3 Communication data 4 na na na 70 na na na 18 na na na

Source: BMI, GSO, MIC operators

Table: Viettel

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 39,031 40,969 42,626 44,100 46,000 47,600 49,000 50,000 50,500 Market share (%) 36.1 36.7 38.0 39.2 39.9 40.5 41.3 41.4 41.8 Number of net additions ('000) 1,937 1,937 1,658 1,474 1,900 1,600 1,400 1,000 500

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. Sources: BMI, MIC, GSO, Viettel

Table: VinaPhone

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 30,701 32,032 32,874 33,200 34,200 35,400 36,500 37,000 36,050 Market share (%) 28.4 28.7 29.3 29.5 29.7 30.1 30.7 30.7 29.9 Number of net additions ('000) 1,331 1,331 842 326 1,000 1,200 1,100 500 -950

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. Sources: BMI, MIC, GSO, VNPT

Table: MobiFone

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 31,026 32,478 29,621 26,600 24,200 21,050 20,000 20,050 20,140 Market share (%) 28.7 29.1 26.4 23.6 21.0 17.9 16.8 16.6 16.7 Number of net additions ('000) 1,453 1,453 -2,857 -3,021 -2,400 -3,150 -1,050 50 90

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. Sources: BMI, MIC, GSO, VNPT

Table: Gmobile (previously Beeline VN)

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 673 190 380 639 1,700 2,957 3,014 3,120 3,000 Market share (%) 0.6 0.2 0.3 0.6 1.5 2.5 2.5 2.6 2.5 Number of net additions ('000) -483 -483 190 259 1,061 1,257 57 106 -120 Blended ARPU (US$) na na na na 0.7 0.9 0.9 na na

na = not available. Data from June-September 2010, March 2011 and June-September 2012 are BMI estimates. Sources: BMI, MIC, GSO, VimpelCom

Table: Vietnamobile

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 3,670 3,548 5,086 6,624 8,162 9,700 10,100 10,500 11,000 Market share (%) 3.4 3.2 4.5 5.9 7.1 8.2 8.5 8.7 9.1 Number of net additions ('000) -122 -122 1,538 1,538 1,538 1,538 400 400 500

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. Data for December 2011 has been adjusted by BMI due to VimpelCom's result being lower than the regulator's. Sources: BMI, MIC, GSO, operator

Table: S-Fone

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 1,590 591 473 355 236 118 80 30 10 Market share (%) 1.5 0.5 0.4 0.3 0.2 0.1 0.1 0.0 0.0 Number of net additions ('000) -999 -999 -118 -118 -118 -118 -38 -50 -20

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. Sources: BMI, MIC, GSO, operator

Table: EVN Telecom

Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 0 0 1 1 1 1 2 2 2 Total number ('000) 1,551 1,774 1,395 1,017 638 260 0 0 0 Market share (%) 1.4 1.6 1.2 0.9 0.6 0.2 0.0 0.0 0.0 Number of net additions ('000) 222 222 -378 -378 -378 -378 -260 0 0

Data from June-September 2010, March-September 2011 and March-September 2012 are BMI estimates. EVN Telecom has been acquired by Viettel. Sources: BMI, MIC, GSO, operator

Mobile Regional Content

The Asia Pacific region comprises a mix of well-established highly developed countries and emerging markets that are trying to balance economical, political and social issues in order attract investors. As a result, there is a combination of telecoms industries in various stages of technological development and maturity, which gives rise to a wide spectrum of value-added services (VAS) that cater to the diverse needs of consumers and businesses.

As expected, developed countries such as Japan and South Korea are well ahead of the curve with the introduction of next-generation technologies such as nationwide fibre networks, LTE and near field communication (NFC). The presence of high-speed connectivity and increasingly sophisticated devices has lifted the constraints for integration between industries and services that were previously thought to be mutually exclusive. While emerging markets are still primarily reliant on the traditional SMS and voice services for communication, we are seeing a rapidly growing appetite for the latest technologies and services in these countries, which has not been hindered by lower purchasing power.

Shifting Market Warrants New Strategy

As the market approaches saturation, telecoms operators cannot expect to maintain their revenue growth momentum through acquiring new subscribers. Instead, companies need to source for new revenue streams in uncharted territories or engineer means to extract higher earnings from their existing subscriber base. Venturing into new industries or countries is often a costly and risky proposition, especially amid an uncertain global economy that has yet to fully bounce back from the 2008 financial crisis. Consequently, there is an increasing emphasis on VAS, which leverages on telecoms companies' existing infrastructure and knowledge. Furthermore, the ubiquitous nature of telecoms services and their deep integration into the

daily life of consumers and businesses have attracted the attention of other industries. This, in turn, has presented new business opportunities such as mobile payment and e-health.

NFC: The Next Big Thing?

Google launched its mobile payment service, Google Wallet, on September 19 2011, which enables users to perform financial transactions using their NFC-enabled devices. NFC is a wireless technology that allows data transmission between two objects in close proximity, and replacing existing credit cards and coupons is just one of the many possibilities. While Google Wallet is currently only available in the US, Asian telecoms companies have been exploring opportunities to take advantage of the technology.

Japanese and South Korean mobile operators announced in February 2011 strategic partnerships to launch NFC-based cross-border mobile services. South Korea's SK Telecom planned to complete mutual compatibility tests with Japan's KDDI and Softbank Mobile by H111 before launching NFC-based mobile services in both countries by end-2011. Similarly, Japanese mobile operator NTT DoCoMo and South Korea's KT plan to launch commercial services using NFC in their respective markets by end-2012. Although both companies have prior experience with NFC-based services in their respective domestic markets, it is no longer sufficient to have a narrow business scope when the global market is several times larger. In order to ensure that its NFC technology could be widely adopted, the companies have submitted their technological specifications to global industry associations and standardisation bodies. BMI believes that this is an important step to minimise fragmentation, which frustrates consumers and businesses, thereby hindering adoption.

Meanwhile, the South Korean telecoms regulator has formed an NFC alliance that brings together domestic mobile network operators, financial institutions, equipment manufacturers, billing services providers and government organisations. The rationale was to rope in various stakeholders while the market is still in its infancy in order to ensure the entire industry moves in the same direction. The Korea Communication Commission (KCC) went a step further by planning to mandate domestic smartphone manufacturers to offer NFC-enabled mobile phones in the country. The concerted approach is largely due to the potential size of the market. The KCC has reckoned that its NFC mobile industry would generate KRW1.034trn in production revenue, KRW347.5bn in 'added values', as well as create 5,707 jobs in the next five years.

Despite the publicity generated by NFC-based mobile payment services, we believe that companies have yet to devise a definitive business model to generate significant revenue from the technology. Consumers and businesses would expect lower transaction costs or there would be few incentives to embrace another new

system. However, we believe that at present, companies are keen to quickly bring the technology to mass- market status before concocting novel and profitable methods to capitalise on the capabilities.

Table: Selected NFC Developments, 2011

Date Country Details LG Electronics announced plans to launch NFC-based B2B products in 2012. Products, Jan-11 South Korea which include interactive TVs and payment terminals, will be initially launched in Europe. Softbank plans to offer polyurethane stickers to allow iPhone 4 users to use mobile Jan-11 Japan payment services Edy, Waon and Nanaco. China Telecom a launched commercial NFC service in Beijing, which allows users to Jan-11 China make payments on public transport systems and at more than 2,000 businesses. Japan, South KDDI partnered with Softbank and SK Telecom, while NTT DoCoMo teamed up with KT Feb-11 Korea to explore cross-border NFC opportunities. ZTE announced that it will include NFC functionality in all of its next generation Feb-11 China handsets from Q211 after signing a deal with semiconductor manufacturer NXP. SK Telecom launched its Q-Store, which allows consumers to browse items in-store and purchase them online via their mobile handset. Around 200 products such as Mar-11 South Korea consumer electronics products and luxury items are available in the first store in Seoul. Samsung Electronics plan to release two more NFC-enabled Bada-based smartphones in 2011, which it did in August 2011, on top of the Samsung Wave 578 NFC device Apr-11 South Korea launched in February 2011. The Grand NFC Korea Alliance was formed by the Korea Communications Commission, which brought stakeholders such as handset manufacturers, financial institutions, Jun-11 South Korea payment service providers and mobile operators together. FarEasTone announced that it plans to introduce NFC technology after it has launched Jun-11 Taiwan its mobile payment service in 2011. Vodafone New Zealand announced that it was trialling NFC, and plans to roll out Jul-11 New Zealand services in 2012. The Commonwealth Bank of Australia said it plans to launch a mass-market microSD- based NFC service in the next three months. The system will be powered by a microSD card programmed with consumers' banking information and inserted into an NFC- Jul-11 Australia enabled mobile handset. Australian supermarket Coles ran a two-week advertising campaign that allowed consumers to download exclusive digital Coles content such as recipes and cookbook Sep-11 Australia videos via an NFC-enabled handset. SK Telecom introduced an NFC-enabled USIM card that brings NFC functionality to any mobile phone. Besides payments, the USIM also supports peer-to-peer Sep-11 South Korea communications. Chunghwa Telecom, FarEasTone and Taiwan Mobile have agreed to partner to promote NFC-based mobile e-commerce and e-wallet services. The companies have approached HTC, Samsung Electronics, contactless smartcard provider EasyCard, Sep-11 Taiwan VIBO Telecom and Asia Pacific Telecom to join the collaboration.

Source: NFC World, BMI

4G Brings New Opportunities

Next-generation LTE technology has been making its presence felt across the Asia Pacific region as mobile operators progressively roll out commercial services. Hong Kong's CSL New World Mobility was the quickest off the blocks with a limited launch of its LTE/Dual Cell-HSPA+ network in November 2010, which was swiftly followed by Japan's NTT DoCoMo. Operators such as Singapore's M1 and Australia's Telstra have also hopped on the bandwagon in mid-2011. At present, LTE services are largely limited to USB modems due to a lack of compatible mobile devices. However, we expect the situation to begin changing in 2012, and the large-scale launch of 4G smartphones and tablet computers should herald a new generation of mobile VAS.

Mobile devices with 3G connectivity has enabled consumers to engage in activities such as web browsing, email, internet messaging and a vast variety of mobile applications. However, many of these features do not strictly require high-speed mobile internet access promised by 4G. That said, we believe that companies are moving towards introducing data-intensive VAS that fully utilise the ability of next-generation mobile connections. For example, Australia's Optus formed a partnership with FetchTV in May 2011 to launch an IPTV service in the country in H211. The collaboration will go beyond the traditional method of delivering content via a fixed-broadband network by integrating mobile functionality, which will enable subscribers to access the IPTV service on smartphones and tablet computers. BMI believes that Optus' push to develop a multi-device IPTV service is in line with consumers' changing behaviour where mobility is highly sought after, and would spur interest in next-generation high-speed 4G technologies.

Besides services such as video streaming and video conferencing, the machine-to-machine (M2M) market could be one area that could receive more attention from Asian companies following the launch of LTE services. M2M technologies refer to the ability of different devices to communicate and relay information. They can be used in areas such as smart utility metering, ehealth, telematics and digital billboards, and Western European mobile operators and M2M vendors have been actively developing the market to pursue greater adoption. By comparison, the momentum in Asia has yet to gain significant traction, but we see companies increasing their emphasis on the new growth prospect. The Philippines' Globe Telecom launched its first M2M service, a GPS vehicle tracking system, in 2008 and expanded its portfolio further in August 2011 to encompass monitoring of fixed assets, surveillance and security, as well as tracking of various objects ranging from vending machines to tanks.

SMS Still King In Emerging Markets For Now

Although there is growing consumer demand for 3G and next-generation variants in emerging markets, and it is in the general interest of mobile operators to push out data services to offset declining voice revenue in light of decreasing tariff rates due to competition, industry developments tend to be held back by poor planning and lack of foresight from the governments and regulators. Thailand is a prime example after its long-awaited 3G auction, which was supposed to take place in September 2010, was derailed after a legal challenge by state-owned operators. A similar situation exists in Pakistan, where an auction scheduled to happen by end-2011 is looking increasingly unlikely to materialise.

SMS Losing Its Shine Faster In Developed Countries

SMS Count For Philippine Long Distance Telephone Company & Entire Singapore Market, 2007-2011

Source: Infocomm Development Authority, Philippine Long Distance Telephone Company, BMI

Consequently, basic SMS-based VAS still has a vital role to play, especially considering that a significant proportion of consumers in emerging markets are still using feature phones. For example, although 3G services have made their way into China, 2G subscribers accounted for 90% of the total market (as of August 2011), representing 846mn subscribers, according to the Ministry of Industry and Information Technology. A similar situation exists in India, where we forecast that 98% of the 940mn mobile subscribers would still be using 2G subscription by end-2011.

Untapped Population Bring Financial And Telecoms Industries Together

Mobile banking is one area in Asia's emerging markets where there have been significant developments due to rural consumers' lack of access to traditional financial services. The Bangladesh Bank released a guideline on mobile financial services in September 2011 and it aims to bring formal banking and payment services to its unbanked population at an affordable cost. The increasingly prevalent mobile service (49% at the end of June 2011) is an efficient means to raise the accessibility of financial services, particularly in rural regions where mobile operators are currently expanding their network coverage. Reportedly, just 15% of Bangladesh's population has bank accounts. We expect a close collaboration between mobile operators and financial institutions to order to introduce easy-to-use and affordable SMS-based mobile banking services, which could become a profitable venture if a critical subscriber mass is achieved.

While Bangladesh is only starting to embrace mobile banking, the Philippines already has a robust domestic mobile money transfer system, powered by Globe Telecom's GCASH and Smart Communications' Smart Money. The Philippine Long Distance Telephone Company, Smart Communications' parent, reported that 26mn financial-related SMS were sent in 2010, which generated PHP40mn in revenue. The number of SMS increased to 16mn in the half year ended June 2011 and earned the company revenue of PHP21mn.

Besides extending their domestic service coverage - Globe Telecom and its wholly owned unit, G- XChange, partnered with the Philippine Savings Bank and UnionBank respectively in August 2011 - Philippine mobile operators have also set their sights on the significant population of overseas Filipino workers (OFW). Globe Telecom and Smart Communications teamed up with Ericsson to launch an SMS- based international remittance service between Europe and the Philippines. The Ericsson Money Services portfolio was previously available in seven European markets - the UK, Italy, Germany, Spain, France, Sweden and Poland - but Ericsson has connected the Philippines to the loop. The Bangko Sentral ng Pilipinas reported that OFW remittances from the seven countries grew by 5.7% year-on-year (y-o-y) to US $885mn in the January-May 2011 period, which represented 62.0% of the total in Europe.

The basic SMS serves as a convenient and possibly affordable means for OFWs to quickly remit money, and we envisage strong demand for Ericsson's money service, especially if transaction costs are lower compared with traditional third-party international remittance providers.

3G Gaining Momentum

Although the traditional SMS and voice services are still the dominant communication modes, we are starting to see 3G taking centre stage, especially with increasingly more affordable smartphones due to

Google's open Android mobile operating system and low-cost manufacturers hopping on the bandwagon. Sales of smartphones in Vietnam surged by 73% y-o-y to almost 850,000 units in the first seven months of 2011, according to GfK Vietnam. By comparison, sales of feature phone units grew by 24% y-o-y, down from 34% in the same period in the preceding year. While SMS and voice revenue would come under threat, companies could more than offset the decline by adapting to the changing consumer preference by introducing 3G-based VAS catered to consumer needs.

Fixed Line

Fixed-Line Vietnam GSO Fixed-Line The latest official market share figures from the Subscriber Growth Ministry of Information and Communications (MIC) 2009-2012 relate to December 2011, when there were a total of 10.175mn fixed lines, significantly down from 14.374mn in 2010 and 17.427mn in 2009.

The MIC figures remain at odds with those released on a monthly basis by General Statistics Office (GSO) figures, which reported that the number of fixed lines reached 15.5mn in 2011, 16.4mn in 2010 and 18.1mn in 2009. At the end of September 2012, the GSO reported that the number of fixed-line subscribers has declined to 15.1mn before reaching 15mn in October 2012..

Source: GSO The MIC reported that the Vietnam Posts and Telecommunications Group (VNPT) had a fixed- line market share of 68.0% at the end of 2011, which was down from 72.9% in 2010.

In second place was Viettel with 22.3% market Fixed-Line Market Shares share while EVN Telecom was third with 7.9% 2011 market share. The MIC reported that both operators saw their market shares increase in 2011. Viettel overtook EVN Telecom as the second-largest fixed- line provider in the Vietnamese market, which was attributed to the growth of its residential subscribers in rural areas and through enhancements to its base transceiver stations that have improved services. However, we believe that Viettel has further consolidated its position as the second-ranked player after it has acquired EVN Telecom.

Vietnam Multimedia Corporation (VTC) and FPT Source: MIC Telecom entered the market in 2010, according to data from the MIC. While VTC's market share declined by 0.12% in 2010 to 0.06% in 2011, FPT Telecom's market share increased from 0.1% to 0.21% over the same period. Nevertheless, the impact of their entry has yet to be felt by the market.

As we have acknowledged, VNPT remains the dominant operator, despite the presence of numerous operators in the sector and continued encouragement by the MIC to raise competition. The dominance of VNPT relates to its former monopoly status as a state-owned entity, while despite the added competition its continued investment in the expansion of its national fixed-line infrastructure appears to be fading as it retains a market leading position. Price competition between rival operators continued to erode its market as competition intensifies.

Long-Distance Services

In addition to controlling the greater part of the local voice telephony market, the Vietnam Posts and Telecommunications Group (VNPT) was, until 2002, the only body authorised to offer long-distance and international services. However, Saigon Postel (a privatised former subsidiary of VNPT) and mobile operator Viettel have since begun offering domestic and international VoIP services. Meanwhile, Vietnam Data Communication Company (VDC), another VNPT subsidiary, also offers its own prepaid and postpaid VoIP service, which it launched under the brand name 'FoneVNN' in 2003.

The Ministry of Information and Communications (MIC) was expecting to continue regulating residential phone tariffs until the end of 2010. From the start of 2011, operators are to be free to decide charges for all subscribers, although the MIC will continue to set the ceiling price in order to ensure there is a level playing field. Charges for business users are already allowed to be decided by Vietnam's wireline operators. However, they must be within 50% of VND200 per minute for a call and VND20,000 per month for a subscription.

Fixed-Wireless

With the limited availability of traditional fixed-line infrastructure, and with around 70% of Vietnam's population living in rural areas, a number of Vietnamese telecoms operators - including mobile operators - have looked to fixed-wireless access (FWA) as a way of providing fixed-line connectivity. Faced with high levels of saturation in already crowded urban mobile markets, FWA has been seen by Vietnam's mobile operators as a way of supplementing revenue streams. Fixed-wireless services can be launched on existing mobile networks and therefore incur few start-up costs. They are widely regarded as a cost-effective way of providing telecoms services to low-income households.

Mobile market leader Viettel is said to have around 70% of its subscriber base living in rural areas; this indicates the importance of the operator's fixed-wireless business unit. Viettel's postpaid service, HomePhone, was launched in August 2007, a few days after its prepaid service. By offering special discounts, Viettel has sought to increase the number of customers subscribing to its HomePhone service. Press reports suggested that Viettel had over 13mn customers at the end of 2007. Viettel launched a new package for its HomePhone 60 in January 2011. Subscribers would have a tariff rate of VND600 a minute for all internal and external calls. The operator claimed to help subscribers save more than 40% of charges for all calls to mobile users.

Vietnam's fixed-line incumbent the Vietnam Posts and Telecommunications Group (VNPT) also offers a fixed-wireless service called GPhone. The service operates over VinaPhone's GSM network and is charged at fixed-line prices, making it affordable for low-income households. GPhone was launched in two phases, with services initially being launched in eight provinces and cities (including Lau Chau, Thai Nguyen, Ha Tay, Quang Nam, Quang Ngai, Can Tho, Hau Giang and An Giang) in June 2007, and the rest of the country during August 2007. VNPT had outlined a target of 100,000 GPhone subscribers by the end of 2007, and the company announced in July 2009 that it had 1.7mn GPhone subscribers.

Broadband

Internet Vietnam Internet User Growth The latest available figures, as published by the 2009-2012 Vietnam Internet Information Network Centre (VNNIC), are for September 2012 when there were 31.197mn internet users. This was up from 31.035mn in June 2012 and 30.249mn in September 2011.

The Vietnamese internet market grew by 9.3% y-o-y in December 2009. The momentum accelerated to 17.6% y-o-y in December 2010 and a possible explanation for the weaker growth in 2009 could be the effect of the global economic slowdown on the Vietnamese economy. At the end of 2011, the Source: BMI, VNNIC internet sector expanded by 14.1%, which was weaker than 2010, but still a strong performance.

It is important to note that the rate of internet user penetration among young people, and in Vietnam's more affluent urban centres, is already higher than the national average. Our view has been supported by the sharp decline in internet subscriber growth on a q-o-q basis. In the quarter ended September 2012, the Vietnam internet sector expanded by 0.5% q-o-q, down from 0.6% in Q212, 1.0% in Q112 and 3.3% in Q312. In order to ensure that internet user growth continues over the next few years it will be necessary to extend internet access to new demographic groups. This, in particular, relates to providing internet services in rural areas of the country, where fixed-line infrastructure is particularly poor and in some cases non- existent.

One phenomenon that bodes well for continued growth in the number of internet users is the high level of PC ownership which exists in Vietnam. According to a survey conducted by Alcatel-Lucent, some 95% of Vietnamese households now have access to a desktop PC, of which 16% are planning to purchase a laptop. Official figures from the Ministry of Information and Communications (MIC) differ significantly. The regulator announced that there were an estimated 4.881mn desktops and laptops in the country at the end of 2009, a penetration rate of 5.63%. This was a slight increase from 2008, when there were 4.479mn desktops and laptops, an equivalent of 5.19% penetration rate. Calculating as a percentage of households, 13.55% of Vietnamese households had computers at the end of 2009, up from 10.35% in 2008.

The MIC reported that at the end of 2010, there were Vietnam Internet Market Share (%) an estimated 5.319mn personal computers (desktops and laptops) in the country, a penetration rate of September 2012 6.08%. In terms of the number of computers per households, the percentage was 14.76%. In 2009, there were an estimated 4.881mn personal computers in Vietnam, representing 5.63% penetration rate.

Traditionally, affordability has been one of the main reasons behind the slow take-up of internet and broadband services in the market. However, access to PCs and laptops is growing as a number of cheaper models become available in the market. Moreover, as aforementioned through the survey by Yahoo!, accessing internet through mobile devices is Source: VNNIC gaining popularity in Vietnam, and we believe this is a more effective means to increase internet penetration rates in rural areas. Assuming prices of mobile devices and tariff rates continue to fall, we expect the internet penetration to maintain its growth trajectory, with a possibility of acceleration if operators adopt more aggressive methods to pursue subscriber growth.

The latest breakdown of internet service providers' market shares relates to September 2012. The VNNIC reported that the Vietnam Posts and Telecommunications Group (VNPT) was the market leader with 19.457mn internet subscribers, 62.4% of the market, which was down from 67.0% in September 2011. Viettel was second with 5.906mn subscribers after overtaking FPT Telecom in May 2011 (FPT Telecom was the second-ranked ISP between December 2010 and April 2011). FPT Telecom had 3.921mn subscribers at the end of September 2012. Since Viettel has acquired EVN Telecom, the VNNIC has combined the two operators' subscriber figures, which explained the net additions of 511,000 subscribers by Viettel in the month ended February 2012. The remaining 6.1% of the internet market was divided among Saigon Postel Corporation, NetNam, Quang Trung Software City, Saigontourist Cable Television Company and CMC Telecom Infrastructure.

Broadband

Compared to Vietnam's internet sector, the fixed Vietnam Broadband Subscriber broadband segment has been growing at a faster rate, Growth

on average, which is partially attributed to a low- 2009-2012 base effect. The number of broadband subscribers in Vietnam increased by 44.8% y-o-y to 2.967mn in 2009, and reached 3.644mn at the end of 2010, representing an increase of 22.8%. At the end of 2011, there were 4.085mn broadband subscribers. Similar to the broader internet sector, the broadband market experienced weaker growth in 2011 with a growth rate of 12.1%. At the end of September 2012, there were 4.317mn broadband subscribers, up by 12.0% from September 2011, although most of the subscriber growth came in Q112 when 209,000

subscribers were added. In Q212 and Q312, the Source: BMI, VNNIC market grew by only 10,000 and 13,000 subscribers respectively.

The Vietnam Posts and Telecommunications Group (VNPT) had set itself the target of 1.5mn broadband subscribers by the end of 2009; if achieved, this would have provided it with a 50.6% market share. By the end of 2008, VNPT claimed to have 1.31mn ADSL customers, which was equivalent to almost 64% of the total broadband market. In total, VNPT was due to invest US$1bn in broadband development in 2008. The investment was aimed at raising total network capacity to 200Gbps by mid-2008; this was set to rise to 300Gbps at a later date. However, this was not achieved.

According to Antara News, VNPT planned to invest an additional US$1bn in 2009, in order to upgrade its broadband networks and expand its international internet bandwidth. VNPT announced in December 2009 that it planned to increase broadband capacity to over 100Gbps by the end of 2010. The operator's existing network, which covers around 70% of the country, has an existing capacity of 45Gbps. Looking ahead to the next two years, VNPT has expressed plans to provide increased broadband coverage in previously underserved regions. The operator also intends to connect a larger number of public high schools and government offices.

In May 2010, VietNamNet Bridge suggested that VNPT had around 78% of the market, with 2.5mn subscribers, out of the total 3.2mn subscribers. Viettel remained the largest rival with 384,000 subscribers,

representing 12% of the share. FPT Telecom was ranked a close third due to its emphasis on big cities. According to the report, FPT Telecom has been expanding its services to other provinces and outlying cities and planned to expand its network by 18-20 provinces to 40-42 provinces in 2010.

VNPT reported in July 2011 that it had 74.14% of the broadband market in May 2011, which increased to 75% in December 2011, representing approximately 3.1mn ADSL subscribers. This was based on the company's estimates that there were 4.2mn broadband subscribers in Vietnam, out of the 32.3mn internet users. VNPT also announced that internet access is present in all of Vietnam's 63 provinces and cities.

Fibre-to-the-x (FTTx) broadband services became available in Vietnam. FPT Telecom was reported to be the first company to introduce services, which was followed by VNPT and Viettel. CMC Telecom Infrastructure was the latest entrant after launching services in April 2010 using the GigaNet brand. According to VNPT's subsidiary Vietnam Data Communication (VDC), there were seven FTTH service providers in the country by July 2010, with VNPT leading the pack. VNPT had 57.63% of the market, while FPT Telecom had 25.12%. Viettel claimed 13.42% and the remainder was split among the other three providers.

The fastest FTTH-GPON delivers speeds about 200 times faster than ADSL, but the service costs VND30mn a month. However, prices are expected to come down once the technology matures and competition kicks in. Further, growing demand for value-added services such as IPTV, video-conferencing and video-on-demand TV would help the country to achieve its aim of 20-30% of households to connect to broadband internet through a personal computer by 2015. By 2020, Vietnam aims to increase the percentage to 50-60%.

Pay-TV

According to a local media report in May 2012, Viettel said that there were about 4.5mn pay-TV (cable, satellite and IPTV) subscribers in Vietnam, which is low when compared with other countries.

IPTV

State-owned operator the Vietnam Posts and Telecommunications Group (VNPT) first launched IPTV services in Hanoi and Hai Phong in June 2009. At that time, VNPT announced that the offering would arrive in Vietnam's southern provinces and in Ho Chi Minh City in September 2009. The first phase of VNPT's IPTV deployment offering included live TV, VOD, music-on-demand (MOD) and TV-on-demand (TVoD). The second planned phase will add media sharing services, usage data access and e-education among others.

Following the preliminary launch in June 2009, it was reported in September 2009 that VNPT had officially launched its IPTV service under the MyTV brand. From September 2009, the IPTV service was made available in Hanoi, Da Nang and Ho Chi Minh City. However, it was scheduled to be expanded nationwide in October 2009. Subscribers are able to access live TV, VOD, music videos, games, internet and telephony services, and TVoD. After announcing the launch, VNPT's chairman of the board of directors, Pham Long Tran, forecast that, with the strong development of broadband internet and the high demand for entertainment, MyTV would 'boom in Vietnam in the near future'. In August 2010, VNPT extended an agreement with Intel for technology research, development and application to cover 2011.

VNPT said in October 2010 that it was planning to extend its IPTV service to subscribers' mobile handsets. VNPT's MyTV service had almost 150,000 subscribers and the operator planned to expand its reach by end-2011. This announcement came one month after VNPT signed an agreement with Alcatel-Lucent, with the latter providing its end-to-end IP Multimedia Subsystem solution.

Besides traditional pay-TV operators such as VTC, Ho Chi Minh Choice Centre (HTVC), Vietnam Satellite Digital Television (VSTV), Saigontourist Cable Television Company (SCTV), Vietnamese mobile operators have also entered the fray through the IPTV and mobile TV routes in order to capitalise on the industry's growth potential. FPT Telecom re-launched its IPTV service iTV in major urban cities during April 2009 and expects its subscriber base to reach 1mn in 2011, up from 20,000 in Q110. In August 2010, FPT Telecom became the first telecoms company in Vietnam to distribute K+1 and K+ channels. The contract will be implemented after it is approved by the MIC. The two channels air seven big football events in the world and would add to FPT Telecom's existing 60 channels on its iTV.

In July 2010, Saigon Post and Telecommunications followed VNPT and launched an IPTV service. The service consisted of 86 domestic and international linear channels, as well as interactive services such as video-on-demand.

It was initially believed that Vietnam's pay-TV industry would significantly benefit from the participation of French pay-TV provider Canal Plus. Canal Plus partnered with state-owned Vietnam Television (VTV)'s subsidiary VSTV and launched satellite-based K+ service in January 2010. However, although the service has almost 200,000 subscribers, the company is looking increasingly unlikely to meet its target of 1mn subscribers by 2012. Consequently, VSTV slashed the tariff rates of its K+ service in early June 2011 to bring prices more in line with rivals such as SCTV and aims to increase its subscriber base to 500,000, which is the minimum number needed to be profitable.

In March 2011, Hanelcom signed a memorandum of understanding with Dutch-owned company CYMTV to build a new IPTV service in Vietnam. The service, called HanelTV, would be made available for those

with a Hanel set-top box, as well as PC, smartphone and tablet devices. The technology offered by CYMTV uses a private cloud streaming product that enables video content to be securely streamed over the open internet. Services on offer include VOD, news and information, games, karaoke and a community portal.

Meanwhile, US-based Sigma Designs partnered with VTC in April 2011 to develop and market set-top boxes for digital TV, smart energy products and home connectivity solutions. A joint venture called VietSilicon Technology Joint Stock Company was to be created, which will result in the launch of two products in 2011 after leveraging on Sigma Designs' IPTV semiconductor technology and VTC's local content and network.

However, despite the strong support shown by service providers, IPTV has yet to gain significant traction in Vietnam, although it was reported in October 2011 that VNPT's MyTV service had 500,000 subscribers, while FPT Telecom's OneTV had 30,000 subscribers. A reason cited is the poor image quality of IPTV services due to ADSL connections and a lack of consumer awareness. However, operators have been trying to spur consumer interest by bundling IPTV services with fibre broadband in hope that the faster broadband connectivity would improve image quality. In mid-2011, FPT Telecom launched a multimedia bundle based on a VSDL connection, while Viettel introduced fibre and IPTV packages in September 2011 that cost about VND100,000-300,000.

Cable TV

In light of the low pay-TV penetration rate in Vietnam, FPT Telecom and AVG have submitted a joint application to provide cable TV services to the Ministry of Information and Communications. VietNamNet Bridge reported that the two companies have built up a 2,000km north-south transmission backbone, which is expected to be completed by June 2012. If approved, FPT Telecom and AVG could offer low-cost cable TV services in addition to alternative services such as internet and fixed-line on the same coaxial cable.

Meanwhile, Viettel, which already offers IPTV services under its NetTV brand and aims to secure 300,000 subscribers in the next few years, could also enter the cable TV market. Although Viettel has significant presence in Vietnam's mobile, fixed-line and broadband industries through an extensive network, as well as the capital to make further investment, the biggest challenge is securing popular content and competing in a market segment where there are several well-established players such as Vietnam Television and Vietnam Multimedia Corporation. Profit margins are equally squeezed, and we do not believe that the pay-TV market would be a significant revenue generator for Viettel in the short run.

Industry Trends & Developments Industry Trends And Developments

Networks

Following a tender in the early part of the year, it was announced in June 2009 that four Vietnamese companies had won a total of three 3G mobile concessions. These concessions were finally issued to the winning operators in August 2009. The recipients of Vietnam's first 3G licences are military-owned Viettel, the Vietnam Posts and Telecommunications Group (VNPT)'s subsidiaries MobiFone and VinaPhone, and a JV between EVN Telecom and Hanoi Telecom. According to their licence obligations, over the next three years ended 2012 the operators will invest a combined VND33trn in their 3G networks, with a total of 30,000 base transceiver stations. As of June 2010, the operators had deposited VND8.1trn with the Ministry of Information and Communications (MIC), accounting for one-quarter of the total.

Although applications were received from six operators, a lack of available spectrum was the deciding factor behind 3G licences being limited to three. Operating on the 1900-2200MHz band of frequency, the MIC's Deputy Minister Le Nam Thang said splitting the available frequency any further would result in 3G services becoming ineffective and had followed the global norm of four licences.

The other licence applicants were GTEL Mobile (Beeline VN, which has been renamed as Gmobile following VimpelCom's decision to sell its entire stake to its local partner) and Saigon Postel, which is a major shareholder in S-Fone. Although Beeline VN and S-Fone were not granted a concession, they were permitted to partner with one of the four winners to provide 3G services in the country. Meanwhile, in December 2011, Vietnamobile, owned by Hanoi Telecom and Hutchison Telecommunications International, commercially deployed its HSPA+ network in the country. The move has enabled Vietnamobile to become the fifth wireless operator in Vietnam to launch 3G services, reports Saigon GP Daily. The operator aims to cover 94% of the population in Ho Chi Minh City, Da Nang and Hanoi with its new network, supporting maximum download speeds of up to 21Mbps.

MobiFone and VinaPhone appeared to be adopting a regional approach to the deployment of their 3G infrastructures. In August 2009, VinaPhone announced an agreement with Motorola for the deployment of a 3G network in northern Vietnam and parts of Hanoi. Then in September 2009, VinaPhone announced a separate agreement with ZTE for the development of the firm's 3G network in Vietnam's central provinces. Meanwhile, MobiFone signed a deal with Ericsson in September 2009 for the deployment of 3G radio

access network infrastructure in Ho Chi Minh City and in southern Vietnam. In October 2009, VinaPhone became the first operator to launch 3G services, and claimed to have around 7mn subscribers five months later.

In May and June 2009, Viettel signed two separate agreements with Huawei Technologies and ZTE. Huawei was appointed as Viettel's main network supplier while ZTE assumed responsibility for the supply of Soft Defined Radio (SDR) solutions to support the network rollout. In July 2009, Viettel announced a further agreement with Nokia Siemens Networks for the supply of radio network infrastructure. In December 2009, Viettel had begun trialling 3G services in 17 cities and provinces before commercially launch services in early 2010. The operator increased 3G coverage in the south west of the country, installing a further 1,100 3G base transceiver stations in 13 provinces and cities in the region, as of May 2011, and bringing the total number of 2G/3G cell sites in the south west to 7,100.

In June 2009, EVN Telecom and Hanoi Telecom unveiled a VND6trn 3G network and services agreement. At the time of the agreement, the JV unveiled plans to provide 50% of residential areas with 3G coverage over the next three years. In November 2009, EVN Telecom awarded a 3G mobile network contract to Huawei Technologies. According to the terms of the contract, the vendor would be responsible for developing a 3G mobile network including the supply of equipment and technology for the development of the network.

The EVN Telecom and Hanoi Telecom joint venture (JV) finally announced the commercial launch of 3G services in June 2010. The operator initially targeted the roll-out of its service in highly populated cities such as Hanoi, Ho Chi Minh City, Hai Phong, Da Nang and Can Tho. At the time of launch, EVN Telecom had invested VND2trn in the installation of around 2,500 base transceiver stations (BTS) in 63 provinces and cities nationwide, covering 46% of the country's population. Under the second phase of its 3G network deployment, the company planned to deploy a further 5,000 BTS by the end of 2010. The operator expected to register 1mn 3G subscribers within one year of the launch of its services.

3G Subscriber Growth Vietnam 3G Subscriber Growth ('000)

According to local press reports, the demand for 3G 2009-2012 services has been increasing, served by a greater demand for internet access with Vietnam's current fixed-line infrastructure remaining poor. This has been driven by changing work patterns and leisure activities required for faster mobile internet access, as well as the cost of mobile handsets with integrated 3G internet access becoming cheaper. According to a survey published by Yahoo! in December 2011, the percentage of consumers accessing the internet via mobile in Vietnam increased to 30% in 2011, up from 19% in 2010. This growth was largely driven by the second-tier cities of Da Nang and Can Tho, Source: BMI, MIC where consumers preferred mobile internet over fixed alternatives.

Figures relating to the number of 3G subscribers in the market vary according to sources. The MIC reported that there were 7.029mn subscribers at the end of April 2010, while in mid-June 2010, a survey showed Viettel and VinaPhone to have 1.5mn subscribers each. Meanwhile, MobiFone had 4mn 3G subscribers. This is a significant difference from VinaPhone claiming 7mn subscribers in March 2010, while MobiFone had 6mn subscribers. As for Viettel, the operator estimated around 1mn subscribers at launch. Vietnam Business News reported that Viettel had 1.17mn 3G subscribers at the end of 2010.

Discrepancies in the available 3G subscriber figures make it difficult to know how large the market is. Figures released by the MIC could relate to actual 3G service usage, while operators may be counting in terms of 3G handsets rather than 3G services. However, this is unlikely to be the case, as Viettel Deputy General Director Nguyen Manh Hung announced in May 2010 that around 95% of mobile users did not own a 3G handset, while usage of 3G USB laptops remains modest. Such statements would also query VinaPhone and MobiFone's figures, which based on this, would appear over-inflated. Further, Hung believes that until 3G service tariffs fall to US$5 per 1Gbps and laptop prices fall to US$200 per unit, 3G subscriber growth is unlike to rise significantly.

The MIC announced in July 2011 that the number of Vietnam 3G Market Share 3G subscribers in Vietnam has reached the 8mn May 2012 mark. VinaPhone has said the number of subscribers regularly using its 3G services increased to about two million in June 2011 from about 800,000 a year earlier. The growth in the subscriber base was attributed to the introduction of several value-added services including music, news, mobile games and multimedia. Service providers announced that 3G services have helped them boost their incomes and the total revenue generated from these services reached VND3.6trn in 2010.

Anecdotally, we have seen Vietnamese operators Source: MIC struggling to grow their 3G subscriber base. Local media reported in early March 2012 that 3G tariff rates are now lower than that of 2G services. According to VietNamNet Bridge, MobiFone was reported to have triggered the price competition by launching a mobile internet package that comes with unlimited 3G data usage for VND60,000 a month in October 2011. By contrast, a GPRS connection with slower speeds cost twice as much. In light of responses from alternative Vietnamese 3G providers such as Viettel, MobiFone subsequently reduced its price to VND40,000. Subscribers of this package enjoy a maximum download speed of 7.2Mbps for the first 400MB. Usage beyond this level will result in throttled speeds, but users will not have to pay more. MobiFone has also increased the data limit for its alternative data plans.

Measures in the form of aggressive tariff rate cuts taken by Vietnamese mobile operators could have finally kicked off much-needed growth in the country's 3G sector. Local media citing data from the MIC reported that there were 12.8mn 3G subscribers in the country in April 2012, up from 8mn in July 2011. According to the MIC, MobiFone was the 3G market leader at the end of 2011 with 42.1% market share. VinaPhone and Viettel were second and third, with 35.9% and 20.8% market shares respectively. Vietnamobile had 0.84% while EVN Telecom, which has since being acquired by Viettel, had 0.37% market share. Officially, the ministry attributed the growth to the increasing number of BTS, which achieved service coverage of 91.5% of the country via 33,700 BTS. By May 2012, there were reportedly 16mn 3G subscribers in Vietnam.

By May 2012, the number had increased to approximately 16mn, an increase of 20% from December 2011. According to the MIC, MobiFone remained the market leader with 6.74mn subscribers, representing 42% market share. VinaPhone was second with 5.74mn 3G subscribers while Viettel ranked third with 3.38mn. Vietnamobile was the smallest 3G service provider with 113,000 subscribers, representing 0.7% market share. EVN Telecom, which had 49,000 subscribers at the end of 2011, has been acquired by Viettel.

Mobile Broadband

Mobile broadband is attractive as Vietnam has a weak and unreliable fixed-line infrastructure, which makes connecting to the internet difficult. According to the Vietnam Posts and Telecommunications (VNPT), MobiFone and VinaPhone had almost 10mn mobile broadband subscribers in December 2011, with more than 15,000 3G base stations providing nationwide coverage. If true, this indicates the popularity of mobile broadband technology in light of the fact that there is less than half the number of fixed broadband subscribers.

The relatively low level of fixed network infrastructure in Vietnam has meant that wireless technologies are developing as an important platform for delivering fixed broadband services. The two most important technologies are WiMAX or LTE, both of which will be used to offer 4G mobile broadband services.

WiMAX

The Vietnamese government first gave the go-ahead for the launch of a pilot WiMAX project in February 2006. The Ministry of Information and Communications (MIC)'s predecessor, the Ministry of Posts and Telematics (MPT), granted approval for three service providers -VNPT, FPT Telecom and Vietnam Television, Technology, Investment and Development Company (VTC) - to launch the pilot project, which it hoped would encourage development in the country's telecom and internet markets. In March 2006, the Ministry awarded the country's fourth WiMAX licence to military-owned operator Viettel.

The first WiMAX trials began in October 2006 with Vietnam Data Communication (VDC), the wholly owned subsidiary of VNPT, partnering with Intel to conduct the trial in the mountainous province of Lao Cai. Then in December 2006, Viettel announced plans to commence a trial offer of WiMAX mobile broadband service in the city of Hanoi. The pilot network would consist of 10 base transmitter stations (BTS) and would have a capacity of around 3,000 subscribers; it would offer speeds of up to 10Mbps within a 32km range of a BTS.

In January 2007, a WiMAX pilot licence was issued to a fifth operation, EVN Telecom. In June 2007, VDC announced it would begin trialling WiMAX services in the cities of Hanoi and Ho Chi Minh. The year-long trials are understood to have commenced in October 2007, in partnership with Motorola. In November

2008, it was reported by TeleGeography that Motorola had begun rolling out a trial WiMAX network for VNPT in Hanoi and Ho Chi Minh City. Press reports have noted the difficulties which Vietnam's WiMAX licensees have faced when trying to obtain the necessary WiMAX equipment.

Although the pilot programmes were intended to be a pre-runner to the official selection of a number of WiMAX service providers, the government ultimately decided to postpone its decision due to unfavourable market conditions: these included the high cost of the WiMAX CPE equipment, delays in the 3G licensing schedule and the regulatory change caused by the creation of the MIC.

Nevertheless, in March 2008, the MIC gave FPT Telecom, EVN Telecom, Viettel and VNPT new permission to conduct mobile WiMAX pilot programmes in different regions, including the two biggest cities Hanoi and Ho Chi Minh City. Also in March 2008, Saigon Postel Corporation (SPT) was awarded a licence to test WiMAX services. SPT is affiliated with mobile operator S-Fone. SPT subsequently unveiled plans to test WiMAX services in the 2.3GHz to 2.4GHz band across Ho Chi Minh City and one of the neighbouring provinces of Tay Ninh, Binh Duong, Dong Nai, Ba Ria-Vung or Long An.

In February 2009, FPT Telecom announced it had successfully tested mobile WiMAX in the capital Hanoi. The trials were believed to have enabled high-speed internet access, video downloads and the transfer of data and phone calls through wireless internet at speeds of up to 15Mbps, within three kilometres of a pilot WiMAX station.

In April 2010, the MIC announced its intention to invite proposals for a 4G frequency plan in the country. As reported by VietNamNet Bridge, the regulator wanted to ensure that either WiMAX or LTE technology could be used for deploying 4G mobile broadband infrastructures. Given that several operators had already conducted trials of WiMAX services, it was understood that WiMAX would emerge as the preferred technology for developing 4G networks. WiMAX can be used to provide either a mobile or fixed wireless internet service.

In May 2010, Dong Duong Telecom (also known as Indochina Telecom) was granted a permit to trial WiMAX technology by the MIC, reports VietNamNet Bridge. No further information was published at the time, although it is believed that the award of a WiMAX licence could allow Indochina Telecom to establish its own mobile service rather than rely on the network of Viettel, as part of its MVNO licence agreement.

Table: Vietnam 4G Triallists

Operator 4G licence date Pilot launch Vietnam Posts and Telecommunications Trials carried out in Hanoi, Ho Chi Minh City Group (VNPT) Mar-06 and Lao Cai Trials carried out in Hanoi and Ho Chi Minh Vietnam Multimedia Corporation (VTC) Mar-06 City To carry out trials of wireless and wireline FPT Telecom Mar-06 WiMAX Viettel Mar-06 To carry out trials of wireless WiMAX To carry out trials of wireless and wireline EVN Telecom Jan-07 WiMAX Trials to be carried out in Ho Chi Minh City Saigon Postel Corporation Mar-08 and one neighbouring province VNPT, Viettel, FPT Telecom, CMC and VTC Sep-10 To carry out trials of LTE for 12 months

Source: BMI, MIC, operators

LTE

Despite the apparent preference for WiMAX in Vietnam, the government also wanted to pave the way for the deployment of mobile broadband services based on LTE. In September 2010, the MIC granted 4G licences to five companies: the VNPT, Viettel, FPT Telecom, CMC and VTC. According to the terms of the licence agreements, the companies would be allowed to operate LTE networks over a trial period of 12 months. The MIC's Telecommunications Department director said that operators would be required to participate in an auction in order to be granted a 4G licence. They would be able to transfer the frequency bands after receiving the licences. However, only two operators: VNPT and Viettel have to date launched services, albeit on a trial basis. According to licence conditions, operators are required to launch services within a year of acquiring a licence.

After abandoning its plan to acquire EVN Telecom, FPT Telecom was reportedly planning to enter the mobile market by launching an LTE service. However, BMI holds a dim view on the decision to launch next-generation technology in a market where 3G services have yet to gain mass adoption.

It was also announced in September 2010 that VDC and Russia's Antares had reached an agreement to build a trial LTE network. The Russian firm planned to invest US$2mn, while VDC would be responsible for obtaining the licence and securing the infrastructure and equipment. TeleGeography reported that Huawei Technologies would be the 4G equipment vendor for the project. Testing of 15 LTE base transceiver stations began on October 20 2010 in Hanoi and the trial period was expected to last two to three months. According to the next phase, Antares would invest a further US$27mn to establish a joint venture

that would be controlled by Wagner Asset Management, the owner of Antares. The CEO of Antares estimated that the entire project would cost US$400mn and said that concerns regarding Vietnamese laws on foreign ownership would be resolved.

VNPT has to date deployed 15 LTE base stations in Hanoi, Vietnam's capital city, capable of speeds of up to 100Mbps, Meanwhile, Viettel has announced that it has been rolling out LTE equipment in Ho Chi Minh City and Hanoi in cooperation with Huawei Technologies. Viettel announced in May 2011, the successful testing of its new LTE network, showcasing a range of services including video streaming, live TV, HD video calling, video conferencing, and video and TV on demand. However, it does not expect to launch commercial LTE services until 2014 at the earliest.

The MIC announced in February 2012 that 4G services will be put on hold until 2018 to allow mobile operators to recoup their investments on 3G technology. BMI sees little justification for Vietnamese operators to introduce high-speed next generation 4G technology when 3G technology remains comparatively untapped. Introducing the service will likely result in firms lowering their pricing to spur interest, thereby further prolonging the time taken to generate profitability on another expensive project. Vietnam's draft national strategy on telecoms developments has stated that operators should start trialling 4G services by 2014, and companies such as Viettel, VNPT and FPT Telecom have already done so. Furthermore, 4G has yet to reach maturity and compatible devices are broadly beyond the reach of Vietnamese consumers in terms of affordability. BMI agrees with the MIC that pegging itself to regional countries, with regard to launching 4G services, would be a good move, particularly considering that Thailand, India and China only introduced 3G recently, while Pakistan and Bangladesh are looking to auction 3G licences soon.

In late 2012, the MIC reaffirmed its decision to hold back 4G licence auction, although the timeline has been shifted to after 2015. Vietnamese operators have resorted to price competition to attract 3G subscribers and we believe that the industry would go down the same path if it were to introduce LTE services in the near future. According to Vietnam's Radio Frequency Department, Vietnam uses about 20 terabytes (TB) of data a year, which is well below the global average of 3.8 exabytes (EB, equivalent to 3.8mn terabytes).

Table: Telecoms Market Developments

Contract Value (US Date $) Details New subscribers to prepaid mobile services in Vietnam will be charged a one-off activation fee of VND25,000 per SIM card, reports TeleGeography. According to the VietNam News, the move is aimed at curtailing the temporary use of SIM cards to take advantage of Nov-1 promotions offered by wireless operators. The one-time subscription cost for postpaid 2 na services will remain at VND30,000.

Telecoms Market Developments - Continued

Contract Value (US Date $) Details Three Vietnamese telecoms operators have been approved by Prime Minister Nguyen Tan Dung to participate in the Asia Pacific Gateway (APG) regional cable project. The three operators are Viettel, FPT Telecom and CMC Telecom. Permission has been granted to invest in the 10,000km submarine cable. The APG cable, which is slated for completion in Oct-1 2014, will connect a number of countries in the region, including China, Hong Kong, Japan, 2 na South Korea, Malaysia, Taiwan, Thailand, the Philippines, Vietnam and Singapore. The Vietnamese government will delay the award of LTE 4G licences until 2015. It concluded that the market is not ready for the high-speed services. According to Sep-1 VietNamNews, five mobile networks have been running LTE trials for over a year. However, 2 na the uptake of 3G services has been slower than expected. GTel Mobile, which operated under the Beeline brand, has renamed its brand Gmobile after using the Beeline name for nearly four years. The new brand, which will focus on 2G technology, was officially announced on September 17. Gmobile will also change its logo Sep-1 and slogan, while retaining the characteristic colours of the Beeline brand - yellow and 2 na black. The new name took effect from October 2012 Vietnam Posts and Telecommunications Group (VNPT) has been directed by the Ministry of Information and Communications to resubmit its restructuring plan to the relevant authorities within the current year, after rejecting the firm's previous plan. The ministry stated that reforming enterprises in the industry must clearly specify the difference between business and public welfare activity. The aim of the restructuring activity is to enhance Sep-1 competition in the industry while restricting the presence of state-owned firms from other 2 na sectors. The Vietnamese information and communications ministry is to introduce a VND40,000 charge to activate new SIM cards, according to TeleGeography. The fee would cover the Aug-1 registration of new phone numbers. The policy is to be introduced in an effort to limit the 2 na sale of unregistered SIMs, which had led to a shortage of available numbers. S-Fone plans to launch high-speed 3G services, after itsacked employees in July and tried to resurrect itself. The firm secured a permit from the Ministry of Information and Technology in March to switch to 3G standard from CDMA, saidS-Fone's parent company Aug-1 Saigon Post and Telecommunication. S-Fone is expected to offer 3G services in 2013. The 2 na operator also plans to deploy more broadcast stations and expand its broadcast area. Vietnamobile has complained that the country'sgovernment is favouring state-owned operators. The firm has also accused the three state-owned operators MobiFone, Viettel and VinaPhone of price fixing. Vietnamobile claimed it is struggling to survive in the country, Jun-1 despite investing heavily in infrastructure. The firm intends to ask the government for help 2 na regarding its predicament. The Vietnam Posts and Telecommunications Group has decided to stop offering dial-up internet access from July, owing to declining demand for the service. The operator has secured approval from the Ministry of Information and Communications (MIC) to terminate Jun-1 the services from July 15. The move will help the operator to focus on its fibre-to-the-home 2 na 'FiberVNN' and ADSL 'MegaVNN' broadband internet services. MobiFone has selected Nokia Siemens Networks (NSN) to boost capacity and quality of its network. NSN revealed that it has expanded and upgraded MobiFone's packet core network, enhancing its capacity by approximately 50%. Under another contract, the equipment vendor has also upgraded the operator's GSM and 3G radio network using its May-1 Single RAN platform in southern and central Vietnam. The move will help the operator to 2 na better handle the rise in demand for data services from mobile broadband subscribers. The Telecommunication Department in Vietnam has asked the Ministry of Information and Communications to launch the proposed mobile number portability scheme starting from 2014. The country now has enough factors to implement the scheme with six mobile providers, more than 1.5 subscriber per capita and low calling charges, said Deputy May-1 Minister of Ministry of Information and Communications Le Nam Thang during a meeting 2 na with the Telecommunication Department. VimpelCom is to sell its 49% stake in Vietnamese operator GTel Mobile and will cease Apr-1 operational control of the firm. The stake will be sold for US$45mnto GTEL Transmit and 2 na Infrastructure Service One Member Company, a related party of VimpelCom's local partner

Telecoms Market Developments - Continued

Contract Value (US Date $) Details Global Telecommunications Corporation. The CEO of VimpelCom, Jo Lunder, said: 'We have previously outlined our value agenda, within which all of our operations are reviewed to assess their future value to the group. The decision to dispose of our interest in GTel Mobile is a result of this process, which focuses on allocating capital to those markets where we see the best opportunities to generate shareholder value'. The Cambodian-Vietnamese Super Highway Telecoms Network, designed to meet the increasing demand for telecoms services in Cambodia, has been launched by Vietnam Telecom International and Telecom Cambodia. TeleGeography reports that the 260km connection has a starting capacity of 10Gbps and links Phnom Penh to Ho Chi Minh City. It Apr-1 is expandable to Asia, Europe and North America through submarine cable systems and 2 na land cable connections. MobiFone announced that it has installed 3,500 3G and 4,000 2G base stations throughout Apr-1 the country. The operator has also upgraded the 3G base stations to HSPA+ technology to 2 na provide downlink and uplink speeds of 21Mbps and 5.76Mbps respectively. Mobile data network services and solutions provider Aicent announced that Viettel selected its GPRS Roaming Exchange (GRX) and message interworking services to provide the Feb-1 global delivery of mobile data applications and supply SMS and MMS voice, video, and text 2 na interworking services to its subscribers. Swiss electronics manufacturer TE Connectivity announced that its local partner Indochina Telecommunication Technology (ITT) has rolled out its FlexWave Prism distributed antenna system in Vietnam. The move will help to provide mobile services to Vietnam Mobile Services (VMS2) in the Phu My Hung region in Ho Chi Minh City. The FlexWave Prism system deployed by the firm offers mobile coverage and capacity with pole-mounted remote units. The system comprises 20 remote units and delivers 1,800MHz and 2,100MHz Jul-11 na frequencies to offer services for VMS2 subscribers.

Source: BMI, operators

Regulatory Development Regulatory Development

Table: Vietnam: Regulatory Bodies And Their Responsibilities

Regulatory Body Responsibilities Ministry of Information and The Ministry of Posts and Telematics of the Socialist Republic of Vietnam is the state Communications (MIC) administration in charge of policy making and regulatory matters in posts, telecommunications, information technology, electronics, internet, radio transmission and emission techniques, radio-frequency management and national information 18 Nguyen Du infrastructure, management of public services, as well as control over, on behalf of Street,Hanoi,Vietnam government and as stipulated by laws and regulations, the state capital in posts, Tel: +84 4 943 5602 telecommunications and information technology enterprises. Its main functions include: Fax: +84 4 826 3477 Web: www.mic.gov.vn ■ submitting to the government drafts of laws, ordinances, regulations, strategies and development plans on posts, telecommunications and information technology; ■ giving guidance in implementation of laws, ordinances and regulations, as well as development strategies and plans related to posts, telecommunications and information technology; ■ regulating the access to, and the interconnection between, public switched telephone networks and specialised and private networks; ■ regulating the electronics and information technology industry development plan; ■ regulating charges and tariffs in the fields of posts, telecommunications and information technology; ■ planning, assigning and allocating radio frequency spectrum; controlling and monitoring radio frequency spectrum and radio equipment; organising radio frequency, satellite orbit registration and coordination; ■ granting licences in posts, telecommunications, radio frequency and internet; ■ regulating the quality of posts, telecommunications and information technology networks, plants, products and services; ■ regulating numbering resources, codes, domain names and addresses used in the fields of posts, telecommunications and information technology; ■ conducting international cooperation activities in posts, telecommunications and information technology; and as stipulated by law.

Source: BMI

Legislation And Market Liberalisation

The government's telecommunications policy is formally set out in a decision of the prime minister, Decision No.158/QD-TTg of October 18 2001, which ratifies the Vietnam Posts and Telecommunications Group (VNPT)'s development strategy until 2010 and orientation until 2020. The policy decision provides a comprehensive range of sector development objectives and targets, along with key underlying strategies for their achievement.

The government's telecommunications policy recognised the current weakness of the legal structure governing the telecoms sector. In line with its policy, the Government ratified the Ordinance on Post and Telecommunications (the 'Ordinance') on May 25 2002. The Ordinance took effect on October 1 2002 and has replaced the Decree No.109/1997/ND-CP, dated November 12 1997, on network and telecommunications services. The Ordinance is expected to achieve two primary aims: the consolidation of the legal structure into a single law - which means the repeal of the set of contradicting laws and regulations - and to modernise the legal structure and address the important issues that arise in a competitive market structure.

The functions of VNPT are set out in Decree No. 51 (Decree No. 51/CP ratifying the Statute on VNPT). VNPT is active in all aspects of telecommunications, including infrastructure ownership and operation, and provision of telecommunications services.

Regulation

The regulation of the telecommunications sector in Vietnam falls under the responsibility of the Ministry of Posts and Telematics (MPT), which fulfils the dual role of policymaker and regulatory authority. The key functions and responsibilities of the organisation of MPT are outlined in the Government Decree No. 90/2002/ND-CP of November 11 2002. The Decree sets out a wide range of functions and responsibilities under four different groupings. It is noted that MPT exercises regulatory control over post and telecommunications. The MPT has responsibility for drafting laws, ordinances and policies on telecommunications, issuing decisions, directives, rules and technical standards, managing international treaties on telecommunications and radio frequency and issuing and revoking permits in accordance with regulations. The MPT has been succeeded by the Ministry of Information and Communications (MIC).

The direct regulatory body over internet activities in Vietnam is the Vietnam Internet Network Information Centre (VNNIC). The VNNIC is a non-profit affiliation to the Ministry of Posts and Telematics (MPT), established under the Decision No. 372/QD-TCBD, dated April 28 2000, of the DGPT (which later became the MPT). The purpose of the VNNIC is to carry out the functions of managing, allocating, supervising and promoting the use of internet domain names, addresses and autonomous system numbers (ASN) in Vietnam. VNNIC also provides internet-related guidance and statistics related to international activities on the internet.

Licensing And Spectrum

Vietnam's Ministry of Information and Communications (MIC) is responsible for all licensing related to telecoms services. Prior to Vietnam's entry to the WTO, foreign telecoms operators were prevented from making direct investments in Vietnamese telecoms operations. Instead, Business Co-operation Contracts

(BCCs) served as a transitional investment model in the telecoms sector and ensured that the provision of all telecommunications services was based on a system of revenue sharing with local companies. Since joining the WTO, however, the MIC has allowed a number of local telecoms companies to enter into joint ventures (JVs) with foreign partners for the provision of a wide range of communications services, including fixed voice telephony, packet-switched data transmission services, circuit-switched data transmission services, telex services, telegraph services, facsimile services and private leased circuit services. For non-facilities- based services, the foreign capital contribution to these JVs must not exceed 51% of legal capital. Despite these continued restrictions that govern the licensing process, it will be permissible for wholly foreign- owned firms to provide registered telecoms services to Vietnamese organisations and individuals once Vietnam has been a WTO member for two years. Further, three years after Vietnam's WTO accession, foreign companies will be allowed to establish local branches and provide telecoms services, under the condition that the chief representatives of the branches reside in Vietnam.

In order to provide fixed or mobile voice telephony services for which no network infrastructure is required, foreign partners will be allowed to participate in JVs with Vietnamese telecoms firms, with a capital contribution of up to 51%, within the first three years of Vietnam's WTO membership. Once that initial three-year period has passed, foreign operators will be authorised to choose their own local partners when establishing JVs and will be allowed to raise their capital in the JV to 65%. Meanwhile, for virtual private network services and value-added telecom services, some large foreign partners will be permitted to independently provide those services using the network infrastructure of a local operator. Currently, foreign partners wanting to provide such services must select Vietnamese partners and contribute up to 70% of capital in the JV.

For satellite services, the Vietnamese government is committed to expanding the number of companies involved in this field, but only once Vietnam has been a WTO member for three years. In addition, the government will allow foreign partners to connect to underwater optical cable networks, of which Vietnam has membership. Licensed companies will be authorised to sell transmission lines to international telecoms service providers, which have network infrastructure (such as the VNPT, Viettel and EVN Telecom), and also to virtual personal network and IXB service providers such as Corporation for Financing and Promoting Technologies, VNPT, Viettel and EVN Telecom four years after the date of Vietnam's WTO membership.

Regulatory Developments

MNP Could Reach Vietnam In 2014

The Telecommunication Department has urged the Ministry of Information and Communications (MIC) to implement the proposed mobile number portability scheme in 2014. In its meeting with the

Telecommunications Department, the MIC has said that Vietnam has enough factors to implement MNP with more than 1.5 subscribers per capita, six mobile operators and low calling rates. If the policy is applied in 2014, the MIC's telecoms department will manage the scheme. Previously, the MIC was expected to release a draft on MNP in 2011.

VNPT Looking To Merge MobiFone and VinaPhone

The VNPT submitted a draft plan to the Ministry of Information and Communications in April 2012, detailing its proposal to merge its mobile operations MobiFone and VinaPhone. The plan to merge the two operators is a result of the Vietnamese government's new regulation (Decree No. 25/2011/ND-CP that became effective on June 1 2011), which prevents an institution or individual holding more than a 20% stake in one telecoms operator from holding more than a 20% stake in another company operating in the same sector. Consequently, VNPT would either need to divest its stake in one or both operators, or merge the entities. If approved, BMI believes that the competitive landscape and foreign investor confidence would be negatively affected given the potential dominance of VNPT.

In end-August 2012, it was reported that the Ministry of Information and Communications had rejected VNPT's restructuring plan, and has asked the state entity to resubmit another plan for final approval by end-2012. According to the Business Times citing the ministry, reforming enterprises in the industry must clarify the difference between business activity and public welfare activity. The report also stated that there should be at least three major companies in the various sectors of the Vietnamese telecoms industry, which suggests VNPT must at least divest either MobiFone or VinaPhone. Merging the two mobile operators would effectively result in a duopoly with Viettel as the other major operator.

Competitive Landscape Competitive Landscape

Table: Key Players

Ownership Market Vietnam Posts and Local, long distance and international Telecommunications (VNPT) Government (100%) telephony, data and internet VinaPhone Vietnam Posts and Telecommunications (100%) Mobile MobiFone Vietnam Posts and Telecommunications (100%) Mobile Mobile, local telephony, data and Viettel Ministry of Defence internet Joint venture: Saigon Post and S-Fone Telecommunications Service and SK Telecom Mobile Local, long distance and international EVN Telecom Viettel (100%) telephony, data, internet and mobile Hanoi Telecom, Hutchison Telecommunications Vietnamobile International (HTIL) Mobile Gmobile (previously GTEL Mobile) Global Telecommunications Corporation Mobile

Source: BMI, operators

Company Profiles Vietnam Posts & Telecommunications (VNPT)

SWOT Analysis

Strengths ■ Country's leading telecoms operator with presence in fixed-line, mobile and internet sectors.

■ Dominant player in the fixed-line sector and also serves 48% of mobile subscribers through subsidiaries MobiFone and VinaPhone at the end 2011.

■ A clear investment strategy to invest heavily in mobile and broadband services.

Weaknesses ■ Service in rural areas is poor or non-existent.

■ Lack of competition in fixed-line sector has contributed to a limited array of services on offer.

■ New mobile price structure under pressure from competitors.

Opportunities ■ 3G, and eventually 4G, mobile services will provide substantial source of value-added mobile revenue.

■ Deployment of broadband and fixed-wireless networks in short and medium term.

■ Expansion of GPhone fixed-wireless service will help presence in rural areas.

Threats ■ Currently engaged in strong competition with major rival Viettel; this is understood to be putting downward pressure on ARPU levels.

■ Viettel has acquired EVN Telecom.

■ Low cost mobile services from competitors could result in migration away from fixed services.

■ Timescale for restructuring plan currently uncertain and could be delayed.

Company Overview Wholly owned by the government, Vietnam Posts and Telecommunications (VNPT) is the country's main post and telecommunications service provider. VNPT operates the national backbone network that connects the provincial operating companies in 63 cities and provincial areas and - indirectly - controls the country's two leading mobile operators, VinaPhone and MobiFone operate GSM networks.

Strategy The immediate outlook for VNPT is unclear given that it is pressured by the government to undergo restructuring. Both VinaPhone and MobiFone are key revenue generators, and the group would be reluctant to divest either one of the mobile operations. If VNPT's plan to merge VinaPhone and MobiFone receives government approval, its long-term outlook would be significantly boosted given that the two mobile operators account for almost 50% of the market. However, if VNPT is forced to relinquish its control on either of the two operators, we expect the group to seek alternative revenue streams, domestically and internationally. We envisage 3G services to play a part in transitioning subscribers to more profitable data services, and continued network expansion should fuel consumer demand.

Corporate Structure VNPT owns eight state-affiliated companies, eight joint ventures - with other state- owned enterprises as well as with private entities - and 13 other subsidiaries. In addition to VinaPhone and MobiFone, the state companies include Vietnam Telecom National (domestic services), Vietnam Telecom International (international long-distance services) and Vietnam Data Communication Company (data services).

In September 2004, a formal proposal was put forward by VNPT and the Ministry of Post & Telematics to separate the postal and telecommunications activities of the VNPT group. The plan decreed that the national network would be run directly by VNPT, instead of through subsidiaries such as Vietnam Telecom International and Vietnam Telecom National; these were subsequently absorbed into the parent company.

In April 2011, VNPT completed plans to divest its stakes in MobiFone and VinaPhone, which would be submitted to the Ministry of Information and Communications for approval, according to state media Nguoi Lao Dong. The sudden acceleration in VNPT's plans to divest its stake in the two mobile operators is due to the Vietnamese government's new regulation (Decree No. 25/2011/ND-CP that became effective on June 1 2011), which prevents an institution or individual holding more than a 20% stake in one telecoms operator from holding more than a 20% stake in another company operating in the same sector. In June 2011, the MIC announced that it has given the state-owned entity a two-year extension to divest its stakes in the two mobile operators due to the complex structure of VNPT.

In November 2011, the Vietnamese Prime Minister signed a decision that gave the state a dominant stake in five telecoms firms including VNPT. The decision took effect from December 1 2011.

In April 2012, local media reported that VNPT submitted its restructuring proposal to the Ministry of Information and Communications. VNPT has proposed that it will merge MobiFone and VinaPhone into a financially independent unit under the group while offering mobile services under the two brands. The plan will allow network sharing and lower investment costs. If approved, VNPT could start implementing the restructuring process in Q312. There was a lack of updates at the time of writing.

Financial In January 2012, local media citing data from the Ministry of Information and Performance Communications (MIC) reported that VNPT's 2011 total revenue is estimated to be VND120.8trn, up by 18% y-o-y. This would mean that the group exceeded its initial target of VND120trn, but fell short of its revised target of VND130trn. The MIC also reported that the bulk of VNPT's revenue came from telecoms and IT services, which contributed VND103.864trn, making up 86% of the total. Net profit declined to VND10trn, down by VND1.2trn from the previous year. For 2012, VNPT has set a profit target of VND10.3trn.

Operational Networks Developments VNPT awarded Alcatel-Lucent a contract to supply end-to-end IP Multimedia Subsystem (IMS) solution in September 2010. According to the vendor, its IMS solution facilitates the migration of the existing PSTN services in VNPT/VTN to provide improved network performance, security and workforce productivity, as well as new revenue streams and future advanced mobile services.

VNPT selected ZTE's high-end cluster router ZXR10 T8000 in November 2010 to upgrade its internet egress gateway in order to meet the increasing demand for high- speed broadband mobile connections. VNPT was using ZTE's ZXR10 10G platform but the system is facing problems meeting VNPT's growing subscriber base.

In May 2010, Vietnam granted a second telecoms satellite contract to Lockheed Martin Corp, according to VNPT. The satellite would help VINASAT to be less reliant on foreign satellites and enable the operator to cater to the ever growing telecoms market. The total cost of the product was US$260-280mn.

In May 2012, the Vinasat-2 was launched from Kourou, French Guiana. Vinasat-2 is outfitted with Ku band transmission beams to blanket South East Asia and adjacent areas. The satellite weighs approximately 3 tonnes and has a lifespan of 15 years. The satellite will offer direct television broadcasting, telecoms and Internet services. Together with Vinasat-1, Vinasat-2 will help ensure the safe and stable provision of services, intensify the safety of the national telecoms network, and expand the provision of telecoms, audio-visual and internet services across the country. It aims to support

national socio-economic development, natural disaster mitigation and national defence and security.

VNPT's Vietnam Telecom International (VTI) inaugurated a Cambodia-Vietnam high- speed transmission line, a 260km cable linking Phnom Penh and Ho Chi Minh city in April 2012. Via this transmission line, VTI and Telecom Cambodia can provide services such as international private leased circuit (IPLC), IPLC transit and virtual private network (IP/VPN) in Vietnam, Cambodia and other countries in the region.

Over the last five years ended 2011, VNPT has spent a total of US$5bn to expand its fibre optic cable throughout the country. Fibre-optic cable services are offered under the brand name of FiberVNN and from May 2011 offer a maximum speed of 100Mbps while the minimum speed had increased from 512Kbps to 2Mbps, depending on the package. The operator also has an ADSL service called MegaVNN, which saw speeds rise from 2.56Kbps to 10Mbps.

In September 2012, VNPT and China Mobile launched a cross-border optical cable network to connect Vietnam with China. The first stage of the project allows for a maximum data transfer rate of 10Gbps with an upgraded second stage using multiplexing technology permitting a data transfer rate up to a maximum of 40Gbps.

Financial Data ■ Annual Revenue (2009): VND83.253trn ■ Annual Revenue (2010): VND101.569trn ■ Annual Revenue (2011): VND120.8trn

Operational Data ■ No. of Fixed-Line Subscribers (2010): 10.485mn ■ No. of Fixed-Line Subscribers (2011): 10.538mn ■ No. of Internet Subscribers (2010): 19.285mn ■ No. of Internet Subscribers (2011): 19.312mn ■ No. of Mobile Subscribers (2009): 53.375mn ■ No. of Mobile Subscribers (2010): 64.510mn ■ No. of Mobile Subscribers (2011): 56.413mn

Company Details ■ Vietnam Posts and Telecommunications Corporation (VNPT)

■ 18 Nguyen Du Street Hanoi

Vietnam

Tel: +84 (49) 434 936

■ Fax: +84 (48) 255 851

Viettel

SWOT Analysis

Strengths ■ Licence to offer fixed-wireless, mobile and value-added services.

■ Low tariff structure.

■ Nationwide coverage.

■ Mobile market leader.

Weaknesses ■ Network currently has limited capacity.

■ Relatively small fixed-line market share.

■ Behind rivals VinaPhone and MobiFone in terms of 3G subscriber figures, having commenced services relatively late to the market.

Opportunities ■ Nationwide coverage should guarantee substantial market share in the medium term.

■ Won licence to test WiMAX and LTE mobile broadband services.

■ Given the approval by the Vietnamese government to acquire EVN Telecom

Threats ■ Connection difficulties could prompt potential subscribers to opt for alternative networks.

■ Influx of new mobile entrants likely to lead to pricing war.

■ Competition is increasing in the wireline sector.

■ Mobile market is showing signs of saturation.

Company Overview Viettel was incorporated in mid-1989 and joined the Vietnamese telecoms market as the fourth entrant before launching domestic and international VoIP services in 2001. However, its major breakthrough came in 2003 when it began offering local access and internet services and started rolling out a GSM mobile network.

Strategy According to the Ministry, Viettel's stated strategy is to focus on deploying the necessary network infrastructure before commencing commercial services. The operator claimed to have Vietnam's largest 3G network, and the only one in the world to have 86% population coverage at launch. We have seen Viettel implement this strategy of quickly rolling out a comprehensive network in its overseas market, which has yielded significant operational results.

Domestically, Viettel has a strong position in the country's mobile industry, although it faces a strong challenge from main rivals MobiFone and VinaPhone in the 3G market. We expect Viettel to continue increasing efforts to encourage the adoption of mobile data through means such as network upgrades and localised value-added services. While the operator has invested in 4G, we believe that the next generation technology is not necessary for the Vietnamese market.

Corporate Structure Similar to VNPT, Viettel was also one of the five telecoms companies that would see the Vietnamese government hold a dominant stake (more than 50%). The decision was signed by the Prime Minister in November and took effect on December 1 2011. In May 2012, EVN announced that Viettel has officially taken over EVN Telecom.

Financial Viettel generated VND117trn in revenue in 2011, representing an increase of 28% y-o-y. Perfomance Overseas revenue from Cambodia, Laos, Mozambique, Haiti and Peru reached VND10trn, up by 25% y-o-y. Meanwhile, pre-tax profit grew by 23% y-o-y to VND20trn in 2011. Viettel targets a revenue of VND140trn in 2012 and a profit of VND22-23trn.

Operational Mobile Developments In April 2009, Viettel was awarded a licence to operate 3G services by the Ministry of Information and Communications (MIC), along with VinaPhone, MobiFone and a consortium between EVN Telecom and Hanoi Telecom, which will build and develop a 3G network together. The quartet was given three months to develop third-generation wireless services under the 15-year licences. Trials of its 3G service commenced in December 2009, across 17 cities and provinces, and the operator planned to install 100,000 3G base stations during 2010. To catch up with its rivals in terms of subscriber figures, Viettel announced - having commercially offered its 3G service in March 2010 - that in April 2010 it would reduce its 3G registration fee for mobile internet by 50%. The service charge was VND10,000 per month and for D-Com 3G services charges VND30,000 per month. In addition, Viettel offered bonuses of more than VND1mn on D- com 3G services.

In May 2011, Viettel became the first operator in Vietnam to offer its customers trial LTE services. From May 12 to August 31 2011, 240 Viettel mobile subscribers based in Hanoi and Hoh Chi Minh have been provided the opportunity to try LTE services over 4G USB devices.

Viettel and Vietcombank introduced Mobile BankPlus in January 2012, enabling the operator's mobile subscribers to bank with Vietcombank through mobile devices. The service allows Viettel's subscribers to transfer money from one account to another within Vietcombank, as well as pay phone bills and access their account balance and transaction details. Subscribers can access their banking accounts via their mobile phones without connecting to 3G or Wi-Fi. The strategic cooperation would allow both parties to take full advantage of the number of customers and the network of both sides, said director of Viettel, Hoang Son.

Viettel was one of the three Vietnamese operators to be granted permission to invest in the Asia Pacific Gateway (APG) regional cable project. The other two operators are FPT Telecom and CMC Telecom. The APG cable, which is slated for completion in 2014, will connect a number of countries in the region, including China, Hong Kong, Japan, South Korea, Malaysia, Taiwan, Thailand, the Philippines, Vietnam and Singapore.

Financial Data ■ Annual Revenue (2009): VND60.600trn ■ Annual Revenue (2010): VND91.134trn ■ Annual Revenue (2011): VND117trn

Operational Data ■ No. of Mobile Subscribers (2009): 33.219mn ■ No. of Mobile Subscribers (2010): 40.969mn ■ No. of Mobile Subscribers (2011): 47.569mn ■ No. of 3G Subscribers (April 2009): 1mn ■ No. of 3G Subscribers (2010): 1.17mn ■ No. of 3G Subscribers (2011): 2.765mn ■ No. of 3G Subscribers (May 2012): 3.380mn ■ No. of Fixed-Line Subscribers (2009): 3.768mn ■ No. of Fixed-Line Subscribers (2010): 2.633mn ■ No. of Fixed-Line Subscribers (2011): 3.458mn

Company Details ■ Viettel

■ 1A Giang Văn Minh Street Ba Đình

Hanoi

Vietnam

Tel: +84 (4) 255 6789

■ Fax: +84 (4) 846 0486

MobiFone

SWOT Analysis

Strengths ■ Vietnam's third largest mobile operator, reporting around 21mn subscribers at the end of 2011.

■ Market leader in the Vietnamese 3G market with approximately 42% market share in mid-2012.

■ 2010 revenue reached VND36trn, up by 31.5% in the year, despite intense market competition

Weaknesses ■ Overtaken by Viettel having earlier been the market leader for a number of years.

■ Recent customer growth has been driven by discounted tariff strategy.

■ Economic recession has led the operator to report significant discounts.

■ Value of IPO has been reduced by US$1bn due to economic recession.

Opportunities ■ Continued interest in IPO remains, with parties such as France Télécom interested.

■ Value-added services entering the market strengthening its non-voice services portfolio.

Threats ■ Regulatory intervention in terms of prepaid registration and reduced pricing could negatively affect MobiFone's performance.

Company Overview Vietnam Mobile Telecom Services (VMS), a subsidiary of VNPT, operates a GSM-based digital cellular telephone network under the MobiFone brand name. The company was founded in 1993 and was the mobile market leader until April 2008.

Strategy Although MobiFone has lost its mobile market leader position, the operator still controls the bulk of the 3G market, which in theory has a greater revenue-generating ability compared with traditional 2G services. We expect MobiFone to consolidate its position in the 3G market through marketing and promotions, in addition to the launch of value-

added services to further bolster its earnings stream. The potential merger with sister company VinaPhone, if approved by the government, would significantly boost its position in the Vietnamese mobile market.

Corporate Structure MobiFone planned to prepare for an IPO of the company's shares, which was expected to take place in 2009. Between 10-15% was expected to be offered to the public, with a similar shareholding sold to a strategic investor. Further, an additional 19% could be sold off, leaving the government with a majority 51% stake in the operator. Credit Suisse was contracted to act as the operator's financial advisor beating five other shortlisted candidates.

Credit Suisse valued the operator at US$2bn in January 2009, and it was valued at US $1bn lower due to the economic recession. Despite this, MobiFone was understood to be on track to conduct the IPO late in 2009; however, this did not take place. The sale was important to watch as it will be the first of many privatisations planned by the Vietnamese government for the telecoms sector.

France Télécom had expressed interest to purchase shares in MobiFone when the Vietnamese mobile operator undergoes privatisation. The listing failed to materialise in 2010 but the MIC announced in June 2011 that is has given VNPT a two-year extension to divest its stake in MobiFone.

Financial For the year ended December 2010, MobiFone registered a 31.5% y-o-y increase in Performance revenue to VND36.03trn. The figure represented around 35% of the total 2010 revenue of parent Vietnam Posts and Telecommunications (VNPT), the country's state-owned incumbent fixed line operator. MobiFone reportedly earned pre-tax profit of VND5.8trn, a y-o-y increase of 6% compared to 2009, and corresponded to 52.3% of VNPT's pre- tax profit for 2010.

Operational Networks Developments In April 2009, MobiFone was awarded a licence to operate 3G services by the Ministry of Information and Communications (MIC), along with VinaPhone, Viettel and a consortium between EVN Telecom and Hanoi Telecom, which will build and develop a 3G network together. The quartet was given three months to develop 3G wireless services under the 15-year licences.

The operator launched its NGN network in December 2009 as part of a long-term project. Introduced in two phases, the first phase, carried out between 2008 and 2010, would focus on developing NGN applications and a core 2G network, while gradually putting 3G application into big cities. The second phase, from 2010-2012, would focus on the core NGN IP technology and launching 3G nationwide.

In February 2012, Ericsson announced it has entered into an agreement with MobiFone to consolidate the operator's six Regional Network Operation Centres (RNOC) in Vietnam into one Centralised NOC in Hanoi. According to the agreement, Ericsson will,

through its Consulting and Systems Integration expertise, consolidate MobiFone's network operations organisation, and implement a unified Network Management System

In April 2012, MobiFone announced that it has installed an additional 3,500 3G base stations and 4,000 2G base stations in Vietnam.

Mobile

MobiFone introduced reduced prices to its 3G service. In March 2010, MobiFone's 3G promotional programme involved a 30-50% reduction in charges to be applied for many services. From March to June 30 2010, customers registered to use Mobile Internet services with package kits of Surf7 and Surf30 would see charges reduced by 50% to VND40,000 per month and VND150,000 per month respectively. In addition, subscribers to its FastConnect 3G service would not have to pay an activation fee, while FastConnect 2 and FastConnect 3 users will only have to pay 50% of the subscription fee.

In November 2011, MobiFone announced that postpaid subscribers that used VietinBank's system for payments would enjoy a 10% discount until January 31 2012. The promotion was made possible because of a bill payment cooperation between MobiFone, Vietnam Payment Solution Joint Stock Company and VietinBank

In February 2012, MobiFone, in association with media firm Zing, introduced Zing.vn service packages in the country, reported Viet Nam News. The packages enable subscribers to listen to music, download MP3s and watch news. Subscribers can also access the Zing Me social network for a monthly tariff of VND15,000.

In August 2012, MobiFone opened two outlets in Hai Duong and Ha Long city in order to provide and encourage consumers to adopt new value-added services. In the same month, local media reported that MobiFone has signed an agreement with security technology firm ANTC to provide support secure services for vehicle safety, property etc.

MobiFone announced in October 2012 that its prepaid and postpaid subscribers can experience international roaming services on certain flights. From October 22 2012, outgoing and incoming calls on flights will be charged at VND69,900 per minute; outgoing text will be charged at VND15,000 per text; while incoming text is free. From November 16 2012, postpaid customers are able to access internet, via data service at VND49,000 for the first 100KB and VND4,900 per 10KB subsequently. The same service will be delivered to prepaid customers from January 1st 2013. At present, MobiFone is providing services on local and international flights with airlines such as Air New Zealand (New Zealand), BA (British Airways-UK), Etihad Airways (UAE), Libyan Arab Airlines (Libya), EgyptAir (Egypt), Oman Air (Oman), Qatar Airways (Qatar), Royal Jordanian Airlines (Jordan), Saudi Arabian Airlines (Saudi Arabia), TAM (Brazil), Emirates (UAE).

Operational Data ■ No. of Mobile Subscribers (2009): 26.668mn ■ No. of Mobile Subscribers (2010): 32.478mn ■ No. of Mobile Subscribers (2011): 21.050mn ■ No. of 3G Subscribers (2011): 5.605mn ■ No. of 3G Subscribers (May 2012): 6.740mn ■ No. of Mobile Subscribers (2009): 26.668mn ■ No. of Mobile Subscribers (2010): 32.478mn ■ No. of Mobile Subscribers (2011): 21.050mn ■ No. of 3G Subscribers (2011): 5.605mn ■ No. of 3G Subscribers (May 2012): 6.740mn

Company Details ■ Vietnam Mobile Telecom Services (VMS-MobiFone)

■ 811 A Giai Phong Hai Ba Trung

Hanoi

Vietnam

Tel: +84 (4) 864 9533

■ Fax: +84 (4) 864 8534

VinaPhone

SWOT Analysis

Strengths ■ Strong subscriber growth, with a customer base of around 35mn at the end of 2011.

■ Competitively priced tariffs contributing to strong subscriber growth.

■ Government backing in the form of parent company Vietnam Posts and Telecommunications Company (VNPT).

■ Early introduction of 3G services has led to second-ranked position.

Weaknesses ■ Recent customer growth has been driven by discounted tariff strategy.

■ Registration of prepaid subscriber details is expected to dent its market share in the short term.

■ Reduced ARPU rates as a result of an unfavourable customer mix.

Opportunities ■ A merger with MobiFone would consolidate its position in the mobile market.

■ Expansion of value-added services portfolio should encourage greater spending over its networks.

■ National network coverage provides new opportunities for subscriber base expansion.

Threats ■ Net additional growth is slower than rivals leading to the operator retaining its third- ranked position.

■ The government could force VinaPhone to undergo privatisation.

Company Overview A wholly owned subsidiary of VNPT, GPC-VinaPhone operates a nationwide GSM- based digital cellular telephone network under the VinaPhone brand name. The network was launched in June 1996.

Strategy Like MobiFone, although VinaPhone trails behind Viettel in the overall mobile market, VinaPhone is the second largest 3G provider. Together with MobiFone, the two accounted for almost 80% of the 3G market in May 2012. We expect VinaPhone to focus on the nascent 3G industry given that the 2G sector is near saturation point and competition between operators has eroded much of the profitability there. The potential merger with sister company MobiFone, if approved by the government, would significantly boost its position in the Vietnamese mobile market.

Corporate Structure In April 2012, local media reported that VNPT submitted its restructuring proposal to the Ministry of Information and Communications. VNPT has proposed that it will merge MobiFone and VinaPhone into a financially independent unit under the group while offering mobile services under the two brands. The plan will allow network sharing and lower investment costs. If approved, VNPT could start implementing the restructuring process in Q312.

Financial VinaPhone reported revenue of VND28.1trn in 2010, representing an increase of 37.2% Performance y-o-y. Additionally, VinaPhone's revenue accounted for almost 28% of parent company VNPT's total revenue in the year. Value-added services revenue contributed 21% of VinaPhone's 2011 revenue.

Operational Networks Developments In April 2009, VinaPhone was awarded a licence to operate 3G services by the MIC, along with MobiFone, Viettel, and a consortium between EVN Telecom and Hanoi Telecom, which will build and develop a 3G network together. The quartet was given three months to develop third-generation wireless services under the 15-year licences.

Motorola entered into a contract valued at US$70mn with VinaPhone in January 2010 for the expansion of the operator's GSM network. Motorola would deploy 3,000 more base station transceivers for VinaPhone until 2012. The base stations would expand the operator's 2G network in southern and northern provinces of the country.

According to cellular-news in August 2010, VinaPhone installed a base station on the Bach Ho oil drilling rig that can handle more than 500 calls simultaneously within 40km, under instruction from the Ministry of Information and Communications and VNPT.

Mobile

In March 2011, VinaPhone launched VinaSport service, a new plan for sport fans. VinaSport provides its customers with information and images about football, tennis, golf, boxing and Formula 1 racing. The service has two fee packages including a weekly fee package of VND10,000 and a monthly fee of VND20,000 and an extra VND2,000 to download messages.

In August 2011, VinaPhone launched a promotion targeted at cadres of the Ho Chi Minh Communist Youth organisation. Consumers are offered 60 minutes of free calls a month

worth VND70,500 and a 50% discount on downloading ringtones. Subscribers also get 50% discount when calling other cadres registered under the promotion.

VinaPhone started to offer in-flight mobile-phone services on domestic and international air routes in July 2012, thereby making it the first mobile operator to offer such services in Vietnam. The operator will charge U$$4.3 and US$4.7 for outgoing and incoming calls respectively. The subscribers can also send SMS by paying US$0.8 for each SMS, while subscribers will not be charged any fee for receiving messages. The service is available on several domestic and international flights, including Emirates, Malaysia Airlines and Hong Kong Airlines. The operator is also in discussions to offer its services to more airlines.

Operational Data ■ No. of Mobile Subscribers (2009): 26.707mn ■ No. of Mobile Subscribers (2010): 32.032mn ■ No. of Mobile Subscribers (2011): 35.362mn ■ No. of 3G Subscribers (2011): 4.781mn ■ No. of 3G Subscribers (2011): 5.740mn

Company Details ■ Vietnam Telecom Services Company (GPC-VinaPhone)

■ 57A Hyunh Thuc Khang Dong Da

Hanoi

Vietnam

Tel: +84 (4) 835 8815

■ Fax: +84 (4) 835 7502

S-Fone

SWOT Analysis

Strengths ■ Licence to offer fixed-wireless, mobile and value-added services.

Weaknesses ■ Coverage currently limited to 13 provinces and cities.

■ Pricing structure already undercut by Viettel.

■ Continued uncertainty over the future of the company after SK Telecom halted its investment in S-Fone.

Opportunities ■ Continued growth of mobile sector offers opportunity for expansion.

■ Helped by its nationwide coverage, there is the potential for considerably more mobile growth, especially from next generation services.

■ Expanding arsenal of mobile handset models, not to mention non-voice applications.

Threats ■ Falling further behind market leader Viettel and VNPT subsidiaries.

■ Influx of new mobile entrants likely to lead to pricing war.

■ Further investment on hold, including that of 3G, could leave S-Fone vulnerable in the competitive mobile sector.

Company Overview S-Fone operated under a business cooperation contract between Saigon Postel and SLD, a Singapore-based consortium comprising South Korea's SK Telecom, LG Electronics and Dong Ah Elecomm. SLD has no equity in the venture, which is run under a form of build-operate-transfer (BOT) agreement. S-Fone holds a licence to offer mobile, fixed-wireless and value-added services through CDMA2000 1X technology. The operator launched services in July 2003.

Strategy The operator's strategy remains unclear due to the decision taken by S-Fone's JV partner SK Telecom to stop investment as a result of poor results. In its place, a South Korea-based private equity fund Rutter Associates Korea could take its place,

potentially investing around KRW100bn. Funds could be used for network expansion, which is much needed, and the continued upgrade of the operator's current network.

In March 2012, local media quoted the regional CEO of Qualcomm in Indochina and Thailand, and he said that S-Fone has suffered in terms of declining subscribers after losing the support of SK Telecom. Given the dominance of Viettel, MobiFone and VinaPhone, there is an increasing likelihood of S-Fone exiting the market.

Corporate Structure In August 2009, Dow Jones Newswires reported that South Korea's SK Telecom planned to halt further investment in S-Fone. This was confirmed in January 2010, by SK Telecom. It is understood that the decision was due to S-Fone's low profit and subscriber growth. The operator added that it will not abandon its partnership with Saigon Post and Telecommunication Corporation (SPT) in S-Fone. The South Korean operator has reportedly invested around US$180mn in S-Telecom since 2001.

SPT was reported in November 2010 to be seeking a new business partner for S-Fone. Saigon holds an 80% stake in the joint venture and said it will buy into SK Telecom's 20% stake in the next two years before selling 20-30% to new partners. Further to this, it was reported in May 2011, that SPT had filed an application with the Ho Chi Minh Department of Planning and Investment to alter its licence with SK Telecom from the current business cooperation contract (BCC) to a joint venture licence. From September 2011, the BCC will be liquidated. SPT expects to purchase back SK Telecom's stake within the next two years.

Operational Networks Developments S-Fone announced that it will add 1,000 base transceiver stations to provide high quality 3G services, equal to its GSM network, in 2010.

Saigon Post and Telecommunication Corporation, operator of S-Fone, announced in July 2010 that it signed three memorandums of understanding with Samsung, ZTE and Huawei Technologies. The three foreign companies would assist S-Fone in terms of technology, coverage expansion, 3G application, equipment, marketing and training, and voice services.

In March 2012, S-Fone announced that it has decided to switch to HSPA technology on its 800MHz spectrum band in order to maintain its relevance in the highly competitive mobile market. S-Fone's plan to switch from CDMA to HSPA has been confirmed by an official from Vietnam's Ministry of Information and Communications. In August 2012, it was reported that S-Fone plans to launch high-speed 3G services, after it sacked employees in July 2012 and tried to resurrect itself.

Operational Data ■ No. of Mobile Subscribers (2009): 4.587mn ■ No. of Mobile Subscribers (2010): 591,000 ■ No. of Mobile Subscribers (2011): 117,600

Company Details ■ S-Fone

■ 97 Nguyen Thi Minh Khai Ben Thanh

District 1

Ho Chi Minh City

Vietnam

Tel: +84 (8) 404 0079

■ Fax: +84 (8) 925 4287

EVN Telecom

Company Overview EVN Telecom used to be the telecoms arm of Electricity of Vietnam (EVN) and the country's second CDMA operator. EVN Telecom launched its services at the end of February 2006, making it the country's sixth commercial operator. The operator was the largest CDMA operator in Vietnam using the 450MHz band. In April 2009, EVN Telecom and Hanoi Telecom received a joint licence to build and operate a 3G network in Vietnam.

EVN Telecom was licensed to provide fixed- and leased-line services, internet, international connectivity and domestic and international VoIP. The operator was estimated to be the second largest provider of fixed-line services (after VNPT), with a market share of almost 15% at the end of 2007.

Corporate Structure It was announced in January 2011 that the purchase of a 49% stake in EVN Telecom by the Corporation for Financing and Promoting Technology (FPT) had been approved by Vietnam's prime minister, as part of a plan to privatise the state-owned operator. The state would retain a 50.6% stake in EVN Telecom, while a 0.4% stake would be sold to EVN Telecom's employees. EVN and FPT hoped that the cooperation would help the former improve its position in the telecoms sector, while opening up opportunities for FPT to enter the wireless sector. However, further to this, on April 15, FPT announced it would not purchase the stake in EVN Telecom, resulting in the loss of VND700bn, which would have greatly benefited EVN Telecom. According to FPT General Director Truong Dinh Anh, a change in government regulations (reducing its proposed holding from 60% to 49%) and contract terms were viewed as no longer suitable.

In December 2011, the Vietnamese government has given the go-ahead for market leader Viettel to acquire EVN Telecom in spite of strong opposition from Hanoi Telecom. This was after Vietnam's deputy minister of information and communications, Le Nam Thang, announced in October 2011 that EVN Telecom should be merged with a state- owned telecoms company.

In January 2012, it was reported that EVN Telecom was merged into Viettel. EVN Telecom subscribers were required to re-register in order to use the market leader's network. In May 2012, EVN announced that Viettel has taken over EVN Telecom.

Operational Networks Developments In January 2007, EVN Telecom became the first operator in Vietnam to secure a spectrum for the deployment of its 3G services, as well as gaining an agreement in principle from the government to develop mobile WiMAX in 2007. The government announced that it would offer spectrum to EVN Telecom over the 1,900MHz frequency band for 3G deployment alongside the operator's existing 450MHz spectrum.

A fibre-optic cable is also being constructed, which will reach 80 districts nationwide and raise transmission capacity of the national optic transmission axis to 100Gbps, regional line capacity to 10Gbps and local transmission capacity to 2.5Gbps.

In November 2009, EVN Telecom awarded a 3G mobile network contract to Huawei. Under the terms of the contract, the Chinese vendor will be responsible for developing a 3G mobile network including the supply of equipment and technology for the development of the network. The network, with an initial coverage of 46%, was expected to be commercially available from April 30 2010.

Perhaps as a result of the economic downturn, EVN Telecom announced in January 2010, it had requested that the Ministry of Information and Communications grant it permission to share its 3G network infrastructure with other mobile operators in Vietnam, according to VietNamNet Bridge. The operator expected that sharing infrastructure would help it reduce its investments by up to one-third.

In June 2010, EVN Telecom commercially rolled out its 3G network. The operator targeted Hanoi, Ho Chi Minh City, Hai Phong, Da Nang and Can Tho in the first phase of the roll-out. The operator, fourth in Vietnam to offer 3G services, was expecting to register 1mn 3G subscribers within one year of the launch of its services.

Partnerships

EVN Telecom and Hutchison Global Communications (HGC) signed a MoU, in January 2009, to interconnect EVN Telecom's newly purchased capacity on the TGN Intra-Asia Submarine cable system with HGC's advanced network. Under the terms of the MoU, HGC is to cooperate with EVN Telecom to provide connectivity solutions to wholesale carriers and corporate customers in Vietnam.

In June 2009, EVN Telecom and Hanoi Telecom Company signed a VND6mn 3G network and services agreement. The two companies planned to construct 5,000 BTSs over the next three years to provide 50% of residential areas with third generation services. At present, EVN Telecom operates close to 3,000 BTSs and Hanoi Telecom around 1,200.

EVN Telecom signed a strategic cooperation agreement with the Vietnam Multimedia Corporation (VTC) in March 2010. The partnership would provide VTC's content services and valued-added services by EVN's 3G and GSM networks. Both parties aimed to reduce cost by utilising each other's infrastructure, capability and specialisations.

EVN Telecom and CMC Telecom Infrastructure signed an FTTx network contract in July 2010 to provide international channels in Hanoi and Ho Chi Minh City. CMC would use an international internet TV channel with a capacity of up to 2.5Gbps through an EVN Telecom's optical cable for five years. The internet TV would be used to meet all the demand for telecoms services on a single link in the two cities.

Financial Data ■ Annual Revenue (2010): VND2.885trn

Operational Data ■ No. of Fixed-Line Subscribers (2010): 1.068mn ■ No. of Fixed-Line Subscribers (2011): 1.223mn ■ No. of Mobile Subscribers (2010): 1.774mn ■ No. of Mobile Subscribers (2011): 259,000

Company Details ■ EVN Telecom

■ 30A Pham Hong Thai St. Ba Dinh District

Hanoi

Vietnam

Tel: +84 (4) 2100507

■ Fax: +84 (4) 7151109

FPT Telecom

Company Overview FPT Telecom is one of the subsidiaries of The Corporation for Financing and Promoting Technology. The operator offers an array of services including ADSL, ADSL 2+, FTTH, Leased line and WiMAX broadband services and dial-up services. In July 2007, the operator launched Wi-Fi services, free of charge for its customers. FPT launched ADSL services in 2003. The operator is the third largest provider of internet services after VNPT and Viettel.

Strategy FPT Telecom remains keen to enter into the mobile market and continues to look for stakes to purchase within existing mobile operators. However, the operator indicated that, in the event that it was not able to purchase a stake, it would deploy its own LTE network having received a licence from the Ministry of Information and Communications.

Financial According to FPT, its telecoms business segment reported revenue of VND2.357trn in Performance 2011, up by 20% y-o-y. We believe that the telecoms financial results reported in 2011 are not directly comparable with past year data. In 2011, FPT divided its revenue by seven segments: telecoms, digital content, software development, system integration, IT services, education and production and distribution of mobile and IT productions. In 2010, FPT reported its financial results based on its six subsidiaries: FPT Telecom, FPT Information System, FPT Software, FPT Trading, FPT Education and FPT IT Services.

Meanwhile, FPT reported that its telecoms profit before tax reached VND550bn, up by 23% y-o-y. This revenue includes sales to outside customers and sales to other FPT units for business purposes (for example, FPT Telecom provides internet services for other units of FPT).

In 2010, FPT Telecom reported revenue of VND2.457trn, representing an increase of 32.8% y-o-y. Profit before tax reached VND601bn, up by 11.4% y-o-y. The lower profit growth was attributed to the government's decision to ground telecoms cables, exchange rate fluctuations, and start-up expenditures for business expansion. FPT Telecom had the third highest revenue among FPT's operations, but reported the highest profit before tax.

Broadband was FPT Telecom's largest revenue source, accounting for VND1.520trn or 61.9% of its total. Online service revenue came in second at VND492bn, representing an increase of 52% from 2009. Lease-line revenue grew by 28% y-o-y to reach VND437bn in 2010.

FPT received its deposit of VND708.8bn from EVN Telecom, which was part of an agreement that would have seen FPT acquire a 60% stake in the troubled firm. FPT intends to invest VND220bn in the Asia Pacific Gateway cable and VND350bn in deployment of backbone infrastructure. Another VND100bn will be spent on expanding

telecoms services to eight provinces and VND200bn on deploying network infrastructure in four of Cambodia's provinces.

Operational Networks Developments In February 2009, FPT Telecom completed its tests for mobile WiMAX in the capital, Hanoi. The trials enabled the operator to try out high-speed internet access, video downloads and the transfer of data and phone calls through wireless data speeds of up to 15Mbps, within 3km of a pilot WiMAX station.

The operator was responsible for completing the country's first-ever metro Ethernet and Optical network, with the help of Cisco Systems. The 10Gbps NGN is equipped with a total metro Ethernet, broadband and IP/MPLS solution. The network provides FPT with a platform to deliver a wide variety of data, voice and video services over high-speed broadband connections. Cisco's solution will enable FPT to provide new value-added services, including triple play (data, voice and video) and IPTV.

According to VietNamNet, the Ministry of Information and Communications granted FPT Telecom in August 2010 permission to trial LTE technology.

In 2010, FPT Telecom opened branches in provinces and cities such as Da Nang, Hue, Khanh Hoa, Dak Lak, Tay Ninh, Phu Yen, Quang Nam, Can Tho, Sa Dec. By the end of the year, FPT Telecom had infrastructure in thirty six provinces.

In October 2012, FPT Telecom, along with Viettel and CMC Telecom, received approval to participate in the Asia Pacific Gateway (APG) regional cable project. The APG cable, which is slated for completion in 2014, will connect a number of countries in the region, including China, Hong Kong, Japan, South Korea, Malaysia, Taiwan, Thailand, the Philippines, Vietnam and Singapore.

Financial Data ■ Group Revenue (2010): VND20.517trn ■ Group Revenue (2011): VND25.895trn ■ FPT Telecom Revenue (2010): VND2.457trn ■ Telecoms Revenue (2011): VND2.357trn ■ FPT Telecom Profit Before Tax (2010): VND601bn ■ Telecoms Profit Before Tax (2011): VND550bn

Company Details ■ FPT Telecom

■ 48 Van Bao, Kim Ma Street Ba Dinh Dist

Hanoi

Vietnam

Tel: +84 (4) 760 1060

■ Fax: +84 (4) 822 3111

Regional Overview Vendor Profile

Nokia Siemens Networks (NSN), jointly owned by Nokia (50.1%) and Siemens (49.9%), is one of the major vendors for telecommunications infrastructure hardware, software and professional services globally. The joint venture was first announced in mid-2006 after both parent companies decided to merge their mobile and fixed-phone network equipment businesses, with NSN commencing operations on April 1 2007.

Financial Performance

At inception, NSN held a top three position in the industry, based on 2006 pro forma revenues of EUR17.1bn. By 2011, NSN fell to fourth position behind Ericsson, Huawei Technologies and Alcatel- Lucent with net sales of EUR14.0bn (after converting the various reported revenues to US dollars).

Table: Vendor Revenues (US$mn)

2010 2011 Ericsson 30,971 34,561 Huawei Technologies 28,944 32,334 Alcatel-Lucent 15,327 19,884 Nokia Siemens Networks 16,338 18,118 ZTE 11,084 13,676

Converted based on EUR/US$ = 1.29039, SEK/US$ = 0.15231, CNY/US$ = 0.15855. Retrieved from www.xe.com on September 26 2012. Source: BMI, vendors

While NSN's 2011 net sales increased by 11% y-o-y from EUR12.661bn, the firm incurred an operating loss of EUR300mn after accounting for cost of sales and expenses such as research and development. In Q212, NSN's net sales declined by 8% y-o-y to EUR3.343bn due to the firm's strategy of focusing on mobile broadband, customer experience management and services, as well as lower infrastructure equipment sales and slower operator investment environment in some markets. Non-IFRS operating margin declined from 1.1% in Q112 to 0.8% in Q212 in light of lower net sales, which was partially offset by lower operating expenses.

Restructuring Efforts

Although NSN saw its operating loss narrowed from EUR686mn in 2010, the vendor initiated a new strategy and restructuring programme on November 23 2011. NSN continues to target a reduction of its non-IFRS annualised operating expenses and production overseas by EUR1bn end-2013 compared with end-2011. Cost savings will largely come from organisational streamlining, although the company will also target areas such as real estate, overall general and administrative expenses and a reduction of suppliers.

NSN expects cumulative restructuring charges of about EUR1.2bn before end-2012. By the end of Q212, the vendor had cumulative restructuring related cash outflow of approximately EUR250mn, and it forecast the amount to be EUR350mn in 2012, EUR400mn in 2013 and EUR200mn in 2014. NSN aims to end-2012 with higher net cash than end-2011.

Geographical Breakdown

NSN has been traditionally reliant on the European region as seen from its revenue breakdown in 2010. The vendor generated EUR4.628bn in Europe, representing 36.6% of its total. However, the widespread economic slowdown and concerns about the sovereign debt crisis resulted in its clients scaling back on investment. Consequently, European revenue declined by 3% y-o-y to EUR4.469bn in 2011, an equivalent of 31.8% of the total. Meanwhile, Asia Pacific (including China) overtook Europe as the main revenue contributor in 2011 after accounting for 37.8% of NSN's total or EUR5.313bn, up from EUR4.366bn the previous year.

Table: Net Sales By Geography (EURmn)

2010 2011 % chg y-o-y Q112 Q212 H112 Europe 4,628 4,469 -3 930 990 1,920 Middle East & Africa 1,451 1,391 -4 270 304 574 Greater China 1,451 1,465 1 209 340 549 Asia Pacific 2,915 3,848 32 877 1,028 1,905 North America 735 1,077 47 283 300 583 Latin America 1,481 1,791 21 378 381 759 Total 12,661 14,041 11 2,947 3,343 6,290

Source: Nokia

Asia Pacific Is The Place To Be Asia Pacific To Continue The shift towards Asia Pacific is a testament of the Outperforming region's growing importance for network Cisco VNI Global Mobile Data Traffic Forecast infrastructure vendors in light of the favourable By Region (TB per month) demographics and growing affluence. The two factors combine to generate a resilient domestic demand, which is less vulnerable to external headwinds from Europe and the US. While China's market potential justifies it being reported separately, alternative countries such as India, Pakistan, Thailand, Indonesia, Vietnam and the Philippines are not to be ignored. Asia Pacific (excluding China)'s contribution was almost at parity with Europe in H112, and the former could eventually overtake Europe by end-2012.

There is overwhelming evidence highlighting the Source: Cisco growth opportunities in Asia Pacific. In developed countries, LTE has started to gain traction with strong growth in markets such as South Korea and Japan (for example, there were 8.663mn LTE subscribers in South Korea at the end of July 2012, up from 1.191mn in December 2011). Meanwhile, countries such as Singapore and Australia are ramping up their network coverage, and we expect the adoption of next generation 4G technologies to accelerate in light of the growing number of compatible smartphones, especially considering that launch of Apple's new iPhone 5, which is compatible with a broad range of LTE frequencies.

In developing markets, 2G and 3G mobile data connections will still be the norm in the near-to-medium term due to the affordability of products and services. We expect mobile operators to continue investing in these technologies as the growing data demand weighs on their networks. In August 2012, NSN reported that it estimates a 54% increase in India's mobile data traffic (2G and 3G) in H112. The estimate, which is based on NSN's MBit Index, is in line with BMI's growth outlook for India's mobile data market following the introduction of 3G services in late 2010. According to the report, a first-time 3G user consumes almost 400MB of data every month compared to about 100MB consumption over 2G.

Although NSN demonstrated the world's first LTE radio access solution in 2006, the company faces strong competition in the rapidly growing market. Ericsson is one of the front runners as it has signed LTE

contracts with seven of the top eight ranked operators by 2010 global revenue. The vendor also claims its 85 LTE networks in 36 countries cover 305mn people. Meanwhile, Chinese vendors Huawei Technologies and ZTE are strong contenders in the TD-LTE space due to their early involvement in the Chinese technology as well as cost competitiveness. The LTE variant has been adopted by India and China (partially) where operators and consumers are highly price sensitive. With the competition also focusing on Asia Pacific, NSN has the additional challenge of balancing its restructuring programme and investing heavily to keep pace with its rivals.

Table: NSN Selected Asia Activities

Date Country Details Optus selected Nokia Siemens Networks as a partner for its key network initiatives. The agreement includes modernisation of the mobile network, refarming the 900MHz GSM frequency band, and providing infrastructure and services for LTE roll-out in Sydney and Perth. In addition, as part of this agreement, Nokia Siemens Networks is the sole LTE core Jul-12 Australia provider for Optus. Nokia Siemens Networks became a member of the Global TD-LTE Initiative (GTI) Partner Forum. The GTI is an industry body that advocates and promotes 4G mobile broadband Jun-12 na using TD-LTE technology. Nokia Siemens Networks deployed a new telecoms operating system for KDDI, which has created the world's first intelligent, self-organising network. The approach automatically manages KDDI's 3G and 4G networks to ensure people receive a consistent voice and data May-12 Japan service, irrespective of the network they are using. Indian Railways selected Nokia Siemens Networks as its partner for equipping the Kolkata May-12 India metro line with Global System for Mobile Communications - Railway (GSM-R) infrastructure. Softbank Mobile selected Nokia Siemens Networks to supply, deploy and integrate its 4G, FDD-LTE network. Nokia Siemens Networks will deploy its Flexi Multiradio Base Station for both Softbank Mobile's FDD-LTE network and HSPA+ network expansion. It will also Apr-12 Japan provide optimised backhaul transport with its FlexiPacket Microwave platform. TOT selected Nokia Siemens Networks to upgrade its 3G network to HSPA+. Nokia Siemens Networks' all-IP ready HSPA+ solution is based on the Dual Carrier HSDPA technology, Flexi Multiradio Base Station and the 3G Radio Network Multicontroller. The company will also deploy its Liquid Core's COTS ATCA-based Open Mobile Switching Server, which together with the Flexi Multiradio Base Station enables a smooth transition to Apr-12 Thailand LTE. StarHub selected Nokia Siemens Networks as its LTE mobile broadband infrastructure and services vendor. As part of the contract, Nokia Siemens Networks will also modernise StarHub's GSM network, helping the operator reduce power consumption generated by Apr-12 Singapore network equipment by up to 50%. Bharti Airtel selected Nokia Siemens Networks to build and operate its TD-LTE network in Maharashtra. Nokia Siemens Networks was one of the first companies to successfully demonstrate TD-LTE on 2.3GHz BWA spectrum in India using commercial hardware at its Feb-12 India Bengaluru R&D facility in October 2010. Telkomsel expects to provide improved service quality using Nokia Siemens Networks' Customer Experience Management on Demand. The new portal will provide one single entry point to view real-time experience metrics for every customer on Telkomsel's network. This will allow Telkomsel to have a unified view of customer data, along with continuous reporting of customer insights that help it to improve its customers' experience and Feb-12 Indonesia generate new revenue streams. KT selected Nokia Siemens Networks as one of its LTE mobile broadband infrastructure and Jan-12 Japan services vendors. Nokia Siemens Networks will provide its 1,800MHz LTE radio equipment

NSN Selected Asia Activities - Continued

Date Country Details including its Flexi Multiradio Base Stations. The company will also provide services including network integration and commissioning. Nokia Siemens Networks' NetAct operations support system will enable monitoring, management and optimisation of KT's LTE network. Bharti Airtel selected Nokia Siemens Networks as its managed services partner in eight circles of the country - Bihar and Jharkhand; Kolkata; Gujarat; Maharashtra and Goa; Madhya Pradesh and Chhattisgarh; Mumbai; Orissa; and West Bengal. Under this five-year managed services contract, Nokia Siemens Networks will manage and maintain Bharti Airtel's 3G and GSM networks as well as internet Wireless Access Network, the operator's Jan-12 India enterprise broadband service. A 354km undersea link in Indonesia, critical to the country's international connectivity, has been upgraded by Nokia Siemens Networks. Telekomunikasi Indonesia now benefits from bandwidth of 40Gbps per channel on its JaSuKa undersea cable between Dumai and Dec-11 Indonesia Dangas, while reusing existing assets. Nokia Siemens Networks was implementing its Circuit Switched Fallback technology to enable CDMA and LTE technologies to work together in KDDI's network. The deployment will allow KDDI to use its existing CDMA network to continue delivering high-quality voice Dec-11 Japan services while maximising the efficiency of its newly deployed LTE network. Indosat and Nokia Siemens Networks successfully conducted the country's first LTE field trial in the 1,800MHz band. The trial is based on FDD-LTE technology and showcases Oct-11 Indonesia Indosat's network readiness to refarm the existing 1,800MHz frequency band. Nokia Siemens Networks launched three new 4G devices at PT Expo Comm in Beijing, China. The devices allow consumers to enjoy broadband access at up to 102Mbps Sep-11 China downlink and 51Mbps uplink to support data-intensive services on TD-LTE networks. VeeTIME worked with the Taiwanese Government to offer onboard connectivity enabled by its existing WiMAX system provided by Nokia Siemens Networks. Passengers will be able to connect via Wi-Fi or directly to the network if they have a compatible WiMAX device. It will be the first time that WiMAX has been used to support broadband access for passengers on Sep-11 Taiwan a high-speed rail service. Nokia Siemens Networks announced that it was deploying a 5,000km, 40Gbps per channel, dense wavelength division multiplexing optical network for China Unicom. The technology paves the way for upgrades to 100Gbps across seven provinces: Chongqing, Hubei, Anhui, Jul-11 China Jiangsu, Fujian, Guangdong and Zhejiang. Nokia Siemens Networks successfully ran live TD-LTE trial networks in Hangzhou and Xiamen for China Mobile. Trial users were able to enjoy peak download and upload speeds of up to 100Mbps along with uninterrupted access to applications such as video streaming Jul-11 China and online HD video conferencing. Celcom Axiata awarded a contract to Nokia Siemens Networks to boost its network as part of its ongoing network expansion and upgrade in Klang Valley. Under the contract, Nokia Siemens Networks will provide HSPA+ at up to 42Mbps to cater to the explosive Jun-11 Malaysia smartphone growth in Malaysia. SK Telecom selected Nokia Siemens Networks' 100G-ready optical network equipment. As part of the contract, Nokia Siemens Networks will deliver its hiT 7300 dense wavelength Jun-11 South Korea division multiplexing platform to SK Telecom. LG Uplus selected Nokia Siemens Networks to roll out its LTE network. Nokia Siemens Networks would deploy its single radio access network including its Flexi Multiradio Base Station and NetAct management system to provide consolidated configuration, monitoring May-11 South Korea and network optimisation. Shanghai Unicom awarded a five-year contract for network maintenance services to Nokia Siemens Networks. Under the contract, Nokia Siemens Networks will offer field maintenance services, covering the base stations, transmission and fixed-line networks of May-11 China China Unicom's Shanghai branch. Optus selected Nokia Siemens Networks as its sole packet core vendor in a multimillion dollar agreement to address growing bandwidth requirements and offer new data services Apr-11 Australia along with improving time to market.

NSN Selected Asia Activities - Continued

Date Country Details With the approval of the Ministry of Industry and Information Technology, Nokia Siemens Networks became one of the first telecoms equipment vendors to participate in the large- Mar-11 China scale TD-LTE trial with China Mobile. Protelindo renewed its managed services contract with Nokia Siemens Networks for maintaining and operating more than 5,000 base station towers for a multi-year period, with Mar-11 Indonesia the possibility of yearly extensions. Nokia Siemens Networks announced the relocation and expansion of its Global Network Solutions Centre (GNSC) to a new site in Chennai, India. The centre now remotely manages Jan-11 India more than 87,000 base station sites, 14 times the number when it opened four years ago.

Source: Nokia Siemens Networks

Demographic Forecast Vietnam Demographic Forecast

Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is the total population of a country a key variable in consumer demand, but an understanding of the demographic profile is key to understanding issues ranging from future population trends to productivity growth and government spending requirements.

The accompanying charts detail Vietnam's population pyramid for 2011, the change in the structure of the population between 2011 and 2050 and the total population between 1990 and 2050, as well as life expectancy. The tables show key datapoints from all of these charts, in addition to important metrics including the dependency ratio and the urban/rural split.

Source: World Bank, UN, BMI

Table: Vietnam's Population By Age Group, 1990-2020 ('000)