Article Excerpt Mobile Obtaining reliable data on the number of mobile subscribers served by Vietnam'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, Viettel, 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 VinaPhone, 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%. [GRAPHIC OMITTED] 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 Ho Chi Minh City. 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 Vodafone. 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.