Definitive data and analysis for the mobile industry Mobile Economic Impact Vietnam June 2019 © 2019 GSM Association The GSMA represents the interests of mobile operators worldwide, uniting GSMA Intelligence is the definitive source of global mobile operator data, more than 750 operators with nearly 400 companies in the broader mobile analysis and forecasts, and publisher of authoritative industry reports and ecosystem, including handset and device makers, software companies, research. Our data covers every operator group, network and MVNO in equipment providers and internet companies, as well as organisations in every country worldwide – from Afghanistan to Zimbabwe. It is the most adjacent industry sectors. 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Author www.gsmaintelligence.com Mayuran Sivakumaran [email protected] Senior Economist 2 Summary Part 1 State of industry Vietnam is a transitioning mobile According to the GSMA Mobile Vietnamese consumers are active economy, with seven mobile Connectivity Index, improving users of mobile services: 88% of broadband connections for every mobile infrastructure should be a mobile users visit social networks ten citizens priority to improve Vietnam’s websites on their phones current score of 63 Part 2 Economic impact in 2018 Public Total impact Employment funding In 2018 the mobile ecosystem Firms in the mobile ecosystem The mobile ecosystem’s contribution generated 8.8% of GDP or $21 created 800,000 direct jobs in to public funding equalled $2.2 billion in value added. 2018 billion, close to 4% of government tax revenue. This is forecasted to increase up to Their activity also supported the $29 billion in 2023, due to indirect employment of 510,000 Over 15% of the value added by the productivity benefits from increasing people . mobile ecosystem is retained by the mobile internet penetration. government in the form of taxation. 3 Vietnam Vietnam Total mobile spectrum 63 340 MHz Asia Pacific Mobile Sub-1GHz spectrum 59 Connectivity 90 MHz Index 2017 Penetration, 2018 Economic Impact Jobs Impact 148% Mobile penetration 2018 2018 $21 billion 800,000 direct and indirect jobs 8.8% GDP Fiscal Impact 67% Mobile broadband penetration 2023 $29 billion 2018 (+$8 billion growth in 5 $2.2 billion fiscal years) contribution 4 Source GSMA Intelligence 1. State of the industry Mobile Economic Impact: Vietnam State of the industry Penetration Mobile broadband connections penetration Mobile broadband connections penetration Connections as % of population Connections as % of population, Q4 2018 96% 100% 143% 127% 80% 109% 108% 100% 97% 95% 79% 79% 60% 67% 63% 46% 40% 31% 20% 74% 74% 0% 72% 72% 2011 2012 2013 2014 2015 2016 2017 2018 South-East Asia Vietnam Mobile broadband-capable connections grew significantly in Vietnam currently ranks well below its neighbours such as South-East Asia from around 2013 onwards. Vietnam’s significant Myanmar in particular, where recent liberalisation and investment growth has only started recently (mid-2017), leaving it some way has seen mobile broadband connections significantly increase. off the average South-East Asian market. This will however be some way off penetration rates seen in Malaysia and Thailand. 6 Source GSMA Intelligence State of the industry Market structure Viettel is the market leader in Vietnam with over 40% all Herfindahl-Hirschman Index: measure of market concentration mobile connections. However, competitors Mobifone and Vinaphone are major players as well. Vietnamobile and Gmobile provide challenger competition to the big three. 4,822 South-East Asia 3,769 Vietnamobile Gmobile 2% 2% 3,269 2,793 Vietnam Vinaphone 22% 41% Viettel MTN Airtel 2010 2011 2012 2013 2014 2015 2016 2017 2018 Market concentration is lower in Vietnam than across South-East 34% Mobifone Asia on average. The gap has narrowed over the years because of consolidation of market share in Vietnam but also because of the liberalisation of markets in Myanmar and Timor-Leste bringing down the South-East Asian average. 7 Source GSMA Intelligence State of the industry Consumer profile Consumer use of services on a mobile phone Percentage of all mobile users • According to the GSMA Intelligence Consumer Survey (2017), Vietnamese consumers are more 88% engaged than the average consumer in the Asia Vietnam region 70% • 54% of Vietnamese mobile consumers use instant Asia messaging applications on their phone, and 20% use 54% phones to send or receive emails 44% 41% • Most significantly, 88% of Vietnamese mobile users visit social networking sites on their mobile, indicating 30% a high penetration of these services in Vietnam 20% 15% • Promisingly, 44% of consumers are using financial services on their mobile phone, which will have a large impact on efficient access to banking Use Instant messaging Send or receive emails on a Visit social networking Financial services on a apps on a mobile phone mobile phone websites on a mobile phone mobile phone 8 Source GSMA Intelligence Consumer Engagement Survey State of the industry Connectivity enablers • Vietnam scores above the APAC average on three out of Mobile Connectivity Index the four enablers that make up the GSMA mobile Score of enablers, ratings based on data for 2017 connectivity index. The one area where it scores less than the APAC average is on infrastructure Index Score Content and 51 2017 Services 60 • By breaking down the results for infrastructure (below) we see that network performance (such as speeds) is lower in Asia Pacific Vietnam – which is probably due to a much lower spectrum 69 Consumer 59 74 score Vietnam Mobile Connectivity Index: Infrastructure enabler 69 Affordability 72 63 Score of dimensions, ratings based on data for 2017 87 51 75 Vietnam APAC Infrastructure 63 49 59 Asia Pacific Vietnam 35 33 23 17 The score of each enabler can range from 0 to 100 Network Coverage Other enabling Network Spectrum infrastructure performance 9 Source GSMA Mobile ConnectivityData Indexsource: (GSMA GSMA Intelligence) Intelligence 2. Economic impact of the mobile ecosystem Mobile Economic Impact: Vietnam Economic impact of the mobile ecosystem in 2018 The mobile industry makes an important contribution to Vietnam’s economy The economic value generated by the mobile ecosystem is through its direct, indirect and productivity impacts Ecosystem firms Direct Ecosystem firms´ wages, business impact operating surplus and taxes Mobile Operators Rest of mobile ecosystem Intermediate inputs Indirect Ecosystem firms purchase goods ecosystem* impact Device Retail and and services from other industries Manufacturing Distribution Mobile technology use Mobile Content, Apps Productivity Infrastructure Use of mobile technology & Services impact improves access to information and reduces transaction costs GDP impact 11 * Selected firms Economic impact of the mobile ecosystem in 2018 Mobile economic contribution to GDP $ billions (Percentage of GDP), 2018 Direct impact 5 21 Content, apps and services Distributors Infrastructure providers 3 2.0% and retailers 14 1.1% 5% 5% 12% 8.8% 5.7% Direct Indirect Productivity Total impact impact impact impact 78% Mobile Ecosystem firms Knock-on effect in Improved efficiency operators value added: sectors providing inputs throughout the wages, taxes and in the supply chain of economy via the business surplus mobile goods and use of mobile services technology 12 Source GSMA Intelligence Economic impact of the mobile ecosystem in 2018 Mobile economic contribution to employment Jobs (thousands), 2018 • In 2018, the mobile sector and related industries directly supported 290,000 jobs in Vietnam, of 510 800 Informal which 80,000 are estimated to be in the important informal economy. • The mobile ecosystem buys goods and services from an extensive supply chain which in turn employs more staff. As these industries further interact with supply chains throughout the 80 290 economy, this effect multiplies across Vietnam and 210 supports a further 510,000 jobs. • As a result – in total – the mobile ecosystem supports 800,000 jobs directly and indirectly. Formal Informal Direct Indirect Total 13 Source GSMA Intelligence Economic impact of the mobile ecosystem in 2018 Mobile ecosystem fiscal contribution to government revenue $ billions, 2018 • The mobile ecosystem decisively contribute to the 0.2 2.2 fiscal income of Vietnam, with a total of $ 2.2 billion 1.3 in direct and indirect taxes in the year 2018. • Most of the revenues are obtained through corporate Handsets sales taxes on profits, as well as handset VAT, sales taxes, excise and custom duties. 0.5 • Overall, consumer-side taxes on services and handsets accounted for $0.7 billion in 2018. 0.2 Services VAT, Handset VAT, Corporate taxes Employment Total sales taxes and sales taxes, on profits taxes and social excise duties excise and security custom duties *Excludes spectrum payments, regulatory taxes and fees that are not based on mobile operator’s revenue 14 Source GSMA Intelligence Economic impact of the mobile ecosystem Mobile economic contribution, forecast to 2023 $ billions 35 30 • The mobile ecosystem will continue to provide 5 25 5 significant contributions to the Vietnamese 5 economy in the coming years 5 4 20 5 4 5 3 • This is mainly driven by the direct impact of the 3 effect Productivity Productivity 3 mobile ecosystem, which will grow due to Vietnam’s 15 3 continued important role in manufacturing mobile devices for the global economy.