Article Excerpt Mobile

Obtaining reliable data on the number of mobile subscribers served by 's six mobile network operators can be challenging, given the often conflicting reports which circulate in the press and among official statistics briefs. BMI has recently taken a more detailed look at the available figures and the way they have evolved in recent months. This had led us to revise some of our earlier estimates of the size and market shares of Vietnam's mobile operators. At the end of 2007, , which is owned by the Vietnamese military, continued to be the country's mobile market leader, with a 33% market share. However, if we combine the GSM mobile subscribers which are served by MobiFone and , both of which are owned by Vietnamese fixed-line incumbent Vietnam Posts and Telecommunications (VNPT), then VNPT can be said to be Vietnam's mobile market leader with a total market share of 53%. Together, Vietnam's three GSM operators controlled over 86% of the mobile market at the end of 2007. In contrast, the three CDMA operators served less than 14% of the country's subscribers. By the end of 2007, Vietnam's mobile subscriber base had risen to 35.805mn, giving the country a penetration rate of just over 41%.

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At the end of 2007, VinaPhone and MobiFone had a combined subscriber base of almost 19mn. BMI believes that the two operators have seen some success in regaining market share which had previously been lost to Viettel. In 2007, MobiFone and VinaPhone are understood to have deployed 6,000 new base stations in order to accommodate a growing subscriber base. VinaPhone is aiming to add a further 3,000 base transceiver stations (BTSs), in order to achieve its target of 9,000 BTSs by 2008. In December 2007, it was announced that VNPT had entered a partnership with Motorola to expand and enhance VinaPhone's GSM network in major cities, including Hanoi and . Under the contract, Motorola will commission over 650 cell sites and provide optimisation and maintenance services. Some of the equipment will be delivered by the end of the year with the rest following in 2008. Motorola is also understood to be cooperating with VinaPhone in order to expand GPRS coverage and provide EDGE service in major metropolitan areas.

Meanwhile, MobiFone has said that, in 2008, it expects to earn total revenues of VND16trn (US$1bn) and turn a profit of VND6.65trn. In order to achieve these goals, the company will continue to expand its coverage area and increase its service quality in all localities and cities throughout the country. In 2008, MobiFone is planning to install 6,000 additional base transceiver station (BTS), raising its total to nearly 10,000 by the end of the year. Furthermore, in December 2007, both MobiFone and VinaPhone began reducing their call charges by as much as 25%-28% in order to safeguard and expand their market shares. Accordingly, activation fees for post-paid mobile subscribers have fallen from VND136,364 to VND109,000, while monthly subscription charges will stay the same at VND54,545. Call charges are being reduced by 20% on average for post- paid subscribers, while, for pre-paid subscribers, the charges are being cut by nearly 30%. In November 2007, the Norwegian telco Telenor said that it might bid for a stake in MobiFone, which is planning an initial public offering (IPO) in 2008 and is looking to sell a one-third stake as part of a privatisation plan. The news of Telenor's possible interest followed a declaration by Japan's NTT DoCoMo that it was ready to bid at least US$1bn for a 30% stake in MobiFone. Other companies known to be keen to invest include France Telecom, Singapore Telecommunications and .

Although Viettel, MobiFone and VinaPhone continue to dominate the mobile sector, Vietnam's three CDMA operators have recently enacted policies that are designed to expand their current minority market shares. S-Fone, which has South Korea's SK Telecom as a shareholder, is also said to be considering a cut in tariffs in line with market trends, while HT Mobile (which is owned by Hanoi Telecom) was reportedly waiting to see how the mobile market reacted to Viettel's recent tariff discounting policy before making a similar commitment. In January 2008, rumours emerged that HT Mobile might sell its CDMA network to CDMA operator rivals S- Fone or EVN Telecom. The Deputy Minister of Information and Communications Le Nam Thang recently confirmed that HT Mobile had asked his Ministry's permission to switch its network to GSM technology, but stopped short of submitting any detailed plans.

Meanwhile, S-Fone's managing director, Ho Hong Son, has reportedly said that his company and HT Mobile have been negotiating an infrastructure- sharing agreement because the two networks use the same technology and frequency. S-Fone claimed to have 3.5mn mobile subscribers by the end of 2007. However, this figure includes fixed wireless customers and we estimate that its mobile subscriber base was closer to 1.3mn.

Finally, E Mobile, which is owned by EVN Telecom, announced in mid- October 2007 that it had 2mn subscribers, reportedly making it the world's largest CDMA operator to use the 450MHz band. Reports indicated that E Mobile's customer base had risen to 2.5mn by the end of 2007. EVN Telecom launched its mobile service in February 2006, and has network coverage across all 64 Vietnamese provinces.

In January 2008, it was reported that the Ministry of Information and Communications (MIC) was ready to grant a licence to Global Telecom Corporation (GTel) to offer mobile services. GTel is backed by Russian giant VimpelCom, which is said to be prepared to invest up to US$1bn into the GTel mobile network over the next few years. An MIC official confirmed that GTel had asked permission to supply GSM-based mobile services and that the Ministry was working on the necessary formalities, adding that GTel will be licensed to use the 1800 MHz frequency. As a result of foreign ownership restrictions, VimpelCom will hold only a minority voting stake in the joint venture company, although it will control a majority of the economic interest in the company, thereby exercising great influence over company operations. What makes the declaration so significant is that this represents the first time that VimpelCom will operate outside Russia or the CIS region.

Table: Vietnam Mobile Market, Q407 Operator No. of Subscribers (mn) Market Share (%)

Viettel 11.870 33.2 MobiFone 9.800 27.4 VinaPhone 9.180 25.6 E Mobile 2.500 7.0 S-Phone 2.260 6.3 HT Mobile 0.195 0.5 Total (e) 35.805 100.0

Source: Operators; BMI Research

3G

The Vietnamese government has granted permission for the Ministry of Information and Communications (MIC) to grant 3G licences to four mobile operators. In addition, five mobile operators will also be given permission to undertake mobile WiMAX trials. The decision, which was taken in late October 2007, follows more than a year during which the MIC was understood to be preparing the 3G licensing criteria. A beauty contest for domestic operators has been scheduled for early 2008, followed by licensing, but by the time of writing had not occurred.

There have also been a number of large foreign operators that have expressed an interest in investing in the development and deployment of 3G networks in the country. NTT DoCoMo, which opened an office in Hanoi (its fourth overseas office) in September 2007, sees the annual 30% growth rate of the Vietnamese telecoms market as a big draw. These sentiments are similar to those expressed by French incumbent France Telecom.

According to reports, both MobiFone and VinaPhone are expected to upgrade their infrastructure to 3G. MobiFone has completed a two-year 3G trial and is in the final stage of submitting a deployment proposal with Ho Chih Minh City and Hanoi the first cities expected to deploy services in 2008. Meanwhile, VinaPhone concluded a similar trial with Nokia in Danang, in August 2007. As for Viettel, S-Fone and Hanoi Telecom (HT Mobile), all three are understood to have requested UMTS licences from the Ministry.

It is unlikely that all six operators will win licences, with the government looking to award four 3G licences at the most. It has been proposed by the Radio Frequency Department, that each of the four 3G licences be granted 2x15MHz frequency division duplexing slots in the 1920MHz--1980MHz and 2110MHz--2170MHz bands, and a 5MHz time division duplexing slot in the 1900--1920MHz range. The 2010MHz -2025MHz band is to be reserved for further UMTS applications, and the RFD envisages that each network will be granted a minimum 5MHz block.

A lack of content and the cost and availability of 3G handsets will all present problems to growth in Vietnam's 3G market, with BMI estimating no more than 700,000 subscribers in the first year of 3G deployment. However, in spite of 3G, there is a real threat to growth in the Asia Pacific region as a whole, and it comes from WiMAX, which can cover huge distances and which is able to provide wireless internet access in the most remote towns and villages. Five operators are currently trialling WiMAX services--these include VNPT-owned Vietnam Data Communications (VDC), in Lao Cai Province, Vietnam Multimedia Corporation (VTC), in Hanoi and Ho Chi Minh, FPT Telecom, EVN Telecom and Viettel. The latter three are testing both wireline and mobile WiMAX services.

Fixed-Line

The Vietnam Posts and Telecommunications Group (VNPT) reported a total telecoms subscriber base of 27.8mn at the end of 2007. Of this total, the operator's fixed-line subscriber base amounted to 8.8mn. BMI estimates that traditional fixed-line services provided by VNPT amounted to 77% of the country's total fixed-line subscriber base, with a further 2.64mn customers using fixed wireless services provided by operators such as Viettel and S-Fone. By the end of 2007, we estimate that the fixed-line customer base amounted to 11.440mn, which is equivalent to a penetration rate of 13.2%.

Unusually for telecoms markets in Asia, the Vietnamese fixed-line sector still offers growth opportunities. Vietnam's government is determined to increase the speed with which VNPT's virtual monopoly in the fixed-line sector is broken. In December 2006, the Ministry of Posts & Telematics awarded a national wireline licence to FPT Telecom. FPT's fixed-line service will be based on a next-generation network, which will support the provision of IP-based voice telephony, as well as high-speed broadband and IPTV. In mid-2007, FPT reportedly had 200,000 ADSL customers. The operator aimed to have attracted an additional 50,000 subscribers by the end of 2007, with broadband services offered in 10 provinces.

In addition to controlling the greater part of the local voice telephony market, VNPT was, until 2002, the only body authorised to offer long- distance and international services. However, both Saigon Postel (a privatised former subsidiary of VNPT) and mobile operator Viettel (which is owned by the country's armed forces) have since begun offering domestic and international voice over IP (VoIP) services. VDC also introduced its own prepaid and post-paid VoIP... Vietnam Telecommunications Update Saturday, 14 August 2010

Market overview Innovation and growth in Vietnam’s telecommunications market have been staggering. In September 2009 FineIntel’s last telecommunications update reported a number of 96.5 million mobile subscribers. Day-by-day the number is increasing, to over 110 million subscribers as at the end of last year and 133 million according the GSO’s report in June, an increase of 22.8 million subscribers in half a year.

The market is the country’s most dynamic telecommunications sector. Until recently, the country’s incumbent operator - Vietnam Posts and Telecommunications (VNPT) - enjoyed a monopoly in the mobile arena. This situation is, however, rapidly evolving, with nine licensed mobile operators - MobiFone, Vinaphone, Viettel, S-Fone, EVN Mobile, Vietnam- obile, Gtel Mobile, Indochina Telecom and VTC Telecom - and four licensed 3G network providers - Vinaphone, MobiFone, Viettel and a consortium between EVN Telecom and Hanoi Telecom, which will build and develop a 3G network together.

On June 24 Deputy Prime Minister Nguyen Sinh Hung signed Decision No. 995/QD-TTg, reforming the parent company - VNPT - into a one-member limited liability company owned by the State. Seven years have now passed since the mobile operators’ equitization was promised and the deadline of July 1, 2010 for equitizing State-owned enterprises has come and gone, while investors such as Telenor (Norway), Vodafone (UK), NTT DoCoMo (Japan) and France Telecom continue to wait.

Market size and share Vietnam’s telecommunications market continues to thrive, with remarkable growth numbers. According to the most recent report from the GSO, in the fist half of 2010 the number of mobile subscriptions increased rapidly, by around 50 percent year-on-year (y-o-y). Many experts estimate that Vietnam’s mobile market could have 20 million more subscriptions next year. Figure1: Number of mobile phone subscriptions (GSO and MIC, June 2010)

However, according to the new definition of active user, the Ministry of Information and Communications (MIC) announced that only half of mobile subscriptions in Vietnam are active users, while the remaining numbers are unused. Then it shows the actual penetration rates which are certainly much lower.

Figure 2: Vietnam mobile data – Facts and forecasts (* Estimate, MIC and BMI, June 2010)

Focusing on the number of subscriptions, it seems operators have forgotten the sharp fall in ARPU over the years. In 2009, MIC reported a reduction 20 percent in Vietnam’s mobile ARPU. One reason for the decline relates to the impact of the economic slowdown on customer spending patterns. Another more important one is the competition in charge cuts, which were introduced by the leading mobile operators in the early part of 2009. Around 90 percent of subscriptions in Vietnam mobile market are pre-paid. The fall in mobile ARPU over the next two years will not be so high if operators were not so dependent on pre-paid customers, and if there were more apparent signs of strong growth in the demand for mobile data services. As at the end of May,