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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© 2012 Business Monitor International
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All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as
to the accuracy or completeness of any information hereto contained.
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
Business Monitor International
Senator House
85 Queen Victoria Street
London
EC4V 4AB
United Kingdom
Tel: +44 (0) 20 7248 0468
Fax: +44 (0) 20 7248 0467
Email: subs@businessmonitor.com
Web: http://www.businessmonitor.com
© 2012 Business Monitor International
All rights reserved.
All information contained in this publication is
copyrighted in the name of Business Monitor
International, and as such no part of this
publication may be reproduced, repackaged,
redistributed, resold in whole or in any part, or used
in any form or by any means graphic, electronic or
mechanical, including photocopying, recording,
taping, or by information storage or retrieval, or by
any other means, without the express written consent
of the publisher.
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as
to the accuracy or completeness of any information hereto contained.
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
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Vietnam Telecommunications Report Q1 2013
Fixed Line ..............................................................................................................................................
Fixed-Line ............................................................................................................................................
Long-Distance Services ...........................................................................................................................
Fixed-Wireless ......................................................................................................................................
Broadband .............................................................................................................................................
Internet ................................................................................................................................................
Broadband ............................................................................................................................................
Pay-TV ................................................................................................................................................
49
49
50
51
51
52
54
55
Industry Trends & Developments .................................................................................... 58
Industry Trends And Developments .............................................................................................................
Networks ..............................................................................................................................................
Mobile Broadband .................................................................................................................................
WiMAX ................................................................................................................................................
58
58
62
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 .......................................................................................................
Regulation ............................................................................................................................................
Licensing And Spectrum ..........................................................................................................................
Regulatory Developments ........................................................................................................................
68
69
69
70
Competitive Landscape .................................................................................................... 72
Competitive Landscape ............................................................................................................................. 72
Table: Key Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Company Profiles .............................................................................................................. 73
Vietnam Posts & Telecommunications (VNPT) ..............................................................................................
Viettel ...................................................................................................................................................
MobiFone ..............................................................................................................................................
VinaPhone .............................................................................................................................................
S-Fone ...................................................................................................................................................
EVN Telecom ..........................................................................................................................................
73
77
80
84
87
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
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Vietnam Telecommunications Report Q1 2013
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
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Vietnam Telecommunications Report Q1 2013
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, lowvalue 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
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Vietnam Telecommunications Report Q1 2013
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.
© Business Monitor International
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
Industry Forecast
Mobile
Table: Telecoms Sector - Mobile - Historical Data And Forecasts
2010
No. of mobile phone subscribers ('000)
2011
2012e
2013f
2014f
2015f
2016f
2017f
111,57 117,60 122,89 126,57 129,11 131,69 134,32 137,01
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
subscribers
776.2
758.7
825.9
886.1
931.8
979.8 1,019.8
1,061.
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
April 2011. We believe the GSO figures, which are
e/f = BMI estimate/forecast. Source: BMI, GSO, MIC,
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.
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
ARPU
Table: Telecoms Sector - Mobile ARPU - Historical Data And Forecasts (US$)
Market average
2010
2011
2012e
2013f
2014f
2015f
2016f
2017f
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
ARPU rates, particularly after the withdrawal of
VimpelCom - which published three quarters of
Industry Trends - Mobile ARPU (US
$)
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
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Vietnam Telecommunications Report Q1 2013
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
No. of main telephone lines in service ('000)
No. of main telephone lines/100 inhabitants
2011
2012e
2013f
2014f
2015f
2016f
2017f
14,374 15,500 14,880 14,285 13,856 13,441 13,172 12,908
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
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Vietnam Telecommunications Report Q1 2013
Fixed-line data provided by the General Statistics
Office (GSO) and the Ministry of Information and
Communications (MIC) differ. The MIC reported
Industry Trends - Fixed-Line
Sector
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 fixedline 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
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Vietnam Telecommunications Report Q1 2013
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
No. of internet users ('000)
No. of internet users/100 inhabitants
No. of fixed broadband internet subscribers ('000)
2011 2012e
2013f
2014f
2015f
2016f
2017f
26,905 31,159 31,782 32,418 33,066 33,727 34,402 35,090
30.6
35.1
35.4
35.8
36.1
36.5
36.9
37.3
3,644
4,085
4,452
4,719
4,955
5,154
5,308
5,467
4.1
4.6
5.0
5.2
5.4
5.6
5.7
5.8
No. of fixed broadband internet subscribers/100
inhabitants
e/f = BMI estimate/forecast. Source: BMI, VNNIC
According to data provided by the Vietnam Internet
Network Information Centre (VNNIC), there were
31.2mn internet users in Vietnam at the end of
Industry Trends - Internet Sector
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
© Business Monitor International
e/f = BMI estimate/forecast. Source: BMI, VNNIC
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Vietnam Telecommunications Report Q1 2013
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% mo-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.
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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.
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Vietnam Telecommunications Report Q1 2013
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 addon 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.
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
China is the highest-ranking emerging market in the
Asia's Big Three
Asia Pacific region due to its sheer growth potential,
which is reflected in the country's industry rewards
Asia Pacific Telecoms Risk/Reward Ratings
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.
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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.
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Vietnam Telecommunications Report Q1 2013
The Laggards
After tweaking our methodology, Sri Lanka has
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
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Vietnam Telecommunications Report Q1 2013
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
Country
Industry
Rewards
Risks
Country
Rewards
Industry
Risks
Country
Risks
Telecoms
Rating
Previous
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
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Vietnam Telecommunications Report Q1 2013
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-om 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.
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Vietnam Telecommunications Report Q1 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 stateowned 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.
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Vietnam Telecommunications Report Q1 2013
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
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Vietnam Telecommunications Report Q1 2013
Table: Vietnam Mobile Market Regional Comparison, 2011
Vietnam
Postpaid As % Of Market
Asia Pacific
na
32.2
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
Mobile Penetration (%)
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.
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Vietnam Telecommunications Report Q1 2013
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
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Vietnam Telecommunications Report Q1 2013
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
with 30.1% market share, according to the MIC.
EVN Telecom has since being acquired by Viettel. Beeline
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.
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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 SFone 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.
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Vietnam Telecommunications Report Q1 2013
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
3,000
2.5
10
0.0
120,700
100
GTEL Mobile (Beeline VN)
S-Fone
Total
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
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Vietnam Telecommunications Report Q1 2013
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.
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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
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Vietnam Telecommunications Report Q1 2013
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.
Sep12
Viettel launched an e-book store with about 2,000 books. Prices range from VND2,000 to VND15,000, and can be
deducted directly from the subscriber's mobile account.
Jul-1
2
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
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.
Jun-1
2
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
packages will allow subscribers to access images, videos, updates and advice from football experts through
SMS. The promotion also features a quiz with weekly prizes and a grand prize of VND200mn in cash.
May12
Viettel announced an international roaming service for its prepaid subscribers. Subscribers travelling to
Cambodia, Laos, Haiti and Mozambique also enjoy a preferential package due to the operator's global presence.
Feb-1
2
MobiFone, in association with media firm Zing, introduced Zing.vn service packages in the country, reports 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
Jan-1
2
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
connecting to 3G or Wi-Fi. The strategic cooperation would allow both parties to take full advantage of the
number of customers and network of both sides, said director of Viettel, Hoang Son.
Dec11
Beeline VN re-launched its Ty Phu package, which offers free on-net calls from the second to the 12th minute. A
SIM card costs VND20,000 and the tariff plan charges VND1,350 a minute for the first minute and from the 20th
minute onwards.
Dec11
Vietnamobile become Vietnam's fifth 3G provider and offers data connection speeds of up to 21.6Mbps. Prices
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.
Nov11
MobiFone announced that its postpaid subscribers can save 10% on their bills if they make mobile bill payments
via VietinBank's payment system. The payment service was made possible through a venture between MobiFone,
Vietnam Payment Solution Joint Stock Company and VietinBank.
Oct-1
1
© Business Monitor International
Beeline VN launched its free WebSMS service.
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Vietnam Telecommunications Report Q1 2013
Value-Added Services - Continued
Date
Details
Oct-1
1
Beeline VN launched a daily and monthly unlimited GPRS plan. Both options require a VND1,000 registration fee,
with the former priced at VND1,500 a day. The monthly plan cost VND30,000 a month.
May11
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 be required to pay VND300 for each SMS sent for this service.
Apr-1
1
EVN Telecom signed an agreement with Russian CDMA-450 mobile operator Sky Link to offer roaming services to
subscribers. The move will enable the CDMA 450MHz roaming subscribers of both the operators to connect with
each other while on a trip to Russia and Vietnam.
Mar11
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
packages including a weekly fee package of VND10,000 (US$0.48) and a monthly fee of VND20,000 and an extra
VND 2,000 to download messages.
Feb-1
1
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
and then swap their old number for a new number through text message as well. Numbers are available with the
'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- Sep09
10
10
10
10
11
11
11
11
12
12
12
General Statistics Office data
110,8 117,9 133,5 142,1 153,7 157,6 112,6 115,2 117,6 118,7 120,7 120,7
00
00
00
00
00
00
00
00
00
00
00
00
Ministry of Information and
Communication data
98,22
4
na
na
na
111,5
70
na
na
na
127,3
18
na
na
na
Source: BMI, GSO, MIC operators
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Vietnam Telecommunications Report Q1 2013
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)
Market share (%)
Number of net additions ('000)
39,031 40,969 42,626 44,100 46,000 47,600 49,000 50,000 50,500
36.1
36.7
38.0
39.2
39.9
40.5
41.3
41.4
41.8
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)
Market share (%)
Number of net additions ('000)
30,701 32,032 32,874 33,200 34,200 35,400 36,500 37,000 36,050
28.4
28.7
29.3
29.5
29.7
30.1
30.7
30.7
29.9
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)
Market share (%)
Number of net additions ('000)
31,026 32,478 29,621 26,600 24,200 21,050 20,000 20,050 20,140
28.7
1,453
29.1
26.4
23.6
21.0
17.9
16.8
16.6
16.7
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
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Vietnam Telecommunications Report Q1 2013
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
-483
-483
190
259
1,061
1,257
57
106
-120
na
na
na
na
0.7
0.9
0.9
na
na
Number of net additions ('000)
Blended ARPU (US$)
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)
Market share (%)
Number of net additions ('000)
3,670
3,548
5,086
6,624
8,162
9,700 10,100 10,500 11,000
3.4
3.2
4.5
5.9
7.1
8.2
8.5
8.7
9.1
-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)
Market share (%)
Number of net additions ('000)
1,590
591
473
355
236
118
80
30
10
1.5
0.5
0.4
0.3
0.2
0.1
0.1
0.0
0.0
-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
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Vietnam Telecommunications Report Q1 2013
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
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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
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system. However, we believe that at present, companies are keen to quickly bring the technology to massmarket status before concocting novel and profitable methods to capitalise on the capabilities.
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Table: Selected NFC Developments, 2011
Date
Country
Details
Jan-11
South Korea
LG Electronics announced plans to launch NFC-based B2B products in 2012. Products,
which include interactive TVs and payment terminals, will be initially launched in Europe.
Jan-11
Japan
Softbank plans to offer polyurethane stickers to allow iPhone 4 users to use mobile
payment services Edy, Waon and Nanaco.
Jan-11
China
China Telecom a launched commercial NFC service in Beijing, which allows users to
make payments on public transport systems and at more than 2,000 businesses.
Feb-11
Japan, South
Korea
KDDI partnered with Softbank and SK Telecom, while NTT DoCoMo teamed up with KT
to explore cross-border NFC opportunities.
Feb-11
China
ZTE announced that it will include NFC functionality in all of its next generation
handsets from Q211 after signing a deal with semiconductor manufacturer NXP.
South Korea
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
consumer electronics products and luxury items are available in the first store in Seoul.
South Korea
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
launched in February 2011.
Jun-11
South Korea
The Grand NFC Korea Alliance was formed by the Korea Communications Commission,
which brought stakeholders such as handset manufacturers, financial institutions,
payment service providers and mobile operators together.
Jun-11
Taiwan
FarEasTone announced that it plans to introduce NFC technology after it has launched
its mobile payment service in 2011.
Jul-11
New Zealand
Vodafone New Zealand announced that it was trialling NFC, and plans to roll out
services in 2012.
Australia
The Commonwealth Bank of Australia said it plans to launch a mass-market microSDbased 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 NFCenabled mobile handset.
Australia
Australian supermarket Coles ran a two-week advertising campaign that allowed
consumers to download exclusive digital Coles content such as recipes and cookbook
videos via an NFC-enabled handset.
South Korea
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
communications.
Taiwan
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,
VIBO Telecom and Asia Pacific Telecom to join the collaboration.
Mar-11
Apr-11
Jul-11
Sep-11
Sep-11
Sep-11
Source: NFC World, BMI
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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.
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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.
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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, GXChange, 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 SMSbased 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
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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.
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Fixed Line
Fixed-Line
The latest official market share figures from the
Vietnam GSO Fixed-Line
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 fixedline market share of 68.0% at the end of 2011, which was down from 72.9% in 2010.
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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 fixedline 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.
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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
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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
internet sector expanded by 14.1%, which was
Source: BMI, VNNIC
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 nonexistent.
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.
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The MIC reported that at the end of 2010, there were
an estimated 5.319mn personal computers (desktops
Vietnam Internet Market Share (%)
September 2012
and laptops) in the country, a penetration rate of
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.
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Broadband
Compared to Vietnam's internet sector, the fixed
broadband segment has been growing at a faster rate,
Vietnam Broadband Subscriber
Growth
2009-2012
on average, which is partially attributed to a lowbase 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,
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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.
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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
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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.
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Industry Trends & Developments
Industry Trends And Developments
Networks
3G
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
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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.
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3G Subscriber Growth
Vietnam 3G Subscriber Growth
('000)
2009-2012
According to local press reports, the demand for 3G
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.
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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.
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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
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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.
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Table: Vietnam 4G Triallists
Operator
4G licence date
Pilot launch
Vietnam Posts and Telecommunications
Group (VNPT)
Mar-06
Trials carried out in Hanoi, Ho Chi Minh City
and Lao Cai
Vietnam Multimedia Corporation (VTC)
Mar-06
Trials carried out in Hanoi and Ho Chi Minh
City
FPT Telecom
Mar-06
To carry out trials of wireless and wireline
WiMAX
Viettel
Mar-06
To carry out trials of wireless WiMAX
EVN Telecom
Jan-07
To carry out trials of wireless and wireline
WiMAX
Saigon Postel Corporation
Mar-08
Trials to be carried out in Ho Chi Minh City
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
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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
Date
Nov-1
2
Contract Value (US
$)
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
promotions offered by wireless operators. The one-time subscription cost for postpaid
na
services will remain at VND30,000.
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Telecoms Market Developments - Continued
Date
Contract Value (US
$)
Details
Oct-1
2
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
2014, will connect a number of countries in the region, including China, Hong Kong, Japan,
na
South Korea, Malaysia, Taiwan, Thailand, the Philippines, Vietnam and Singapore.
Sep-1
2
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
VietNamNews, five mobile networks have been running LTE trials for over a year. However,
na
the uptake of 3G services has been slower than expected.
Sep-1
2
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
and slogan, while retaining the characteristic colours of the Beeline brand - yellow and
na
black. The new name took effect from October 2012
Sep-1
2
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
competition in the industry while restricting the presence of state-owned firms from other
na
sectors.
Aug-1
2
na
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
registration of new phone numbers. The policy is to be introduced in an effort to limit the
sale of unregistered SIMs, which had led to a shortage of available numbers.
Aug-1
2
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
Saigon Post and Telecommunication. S-Fone is expected to offer 3G services in 2013. The
na
operator also plans to deploy more broadcast stations and expand its broadcast area.
Jun-1
2
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,
despite investing heavily in infrastructure. The firm intends to ask the government for help
na
regarding its predicament.
Jun-1
2
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
the services from July 15. The move will help the operator to focus on its fibre-to-the-home
na
'FiberVNN' and ADSL 'MegaVNN' broadband internet services.
May-1
2
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
Single RAN platform in southern and central Vietnam. The move will help the operator to
na
better handle the rise in demand for data services from mobile broadband subscribers.
May-1
2
na
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
Minister of Ministry of Information and Communications Le Nam Thang during a meeting
with the Telecommunication Department.
Apr-1
2
VimpelCom is to sell its 49% stake in Vietnamese operator GTel Mobile and will cease
operational control of the firm. The stake will be sold for US$45mnto GTEL Transmit and
na Infrastructure Service One Member Company, a related party of VimpelCom's local partner
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Telecoms Market Developments - Continued
Date
Contract Value (US
$)
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'.
Apr-1
2
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
is expandable to Asia, Europe and North America through submarine cable systems and
na
land cable connections.
Apr-1
2
MobiFone announced that it has installed 3,500 3G and 4,000 2G base stations throughout
the country. The operator has also upgraded the 3G base stations to HSPA+ technology to
na
provide downlink and uplink speeds of 21Mbps and 5.76Mbps respectively.
Feb-1
2
Mobile data network services and solutions provider Aicent announced that Viettel selected
its GPRS Roaming Exchange (GRX) and message interworking services to provide the
global delivery of mobile data applications and supply SMS and MMS voice, video, and text
na
interworking services to its subscribers.
Jul-11
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
na
frequencies to offer services for VMS2 subscribers.
Source: BMI, operators
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Regulatory Development
Regulatory Development
Table: Vietnam: Regulatory Bodies And Their Responsibilities
Regulatory Body
Responsibilities
Ministry of Information and
Communications (MIC)
The Ministry of Posts and Telematics of the Socialist Republic of Vietnam is the state
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
infrastructure, management of public services, as well as control over, on behalf of
government and as stipulated by laws and regulations, the state capital in posts,
telecommunications and information technology enterprises. Its main functions include:
18 Nguyen Du
Street,Hanoi,Vietnam
Tel: +84 4 943 5602
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.
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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
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(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-facilitiesbased 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 foreignowned 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
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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.
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Competitive Landscape
Competitive Landscape
Table: Key Players
Ownership
Market
Government (100%)
Local, long distance and international
telephony, data and internet
VinaPhone
Vietnam Posts and Telecommunications (100%)
Mobile
MobiFone
Vietnam Posts and Telecommunications (100%)
Mobile
Ministry of Defence
Mobile, local telephony, data and
internet
Joint venture: Saigon Post and
Telecommunications Service and SK Telecom
Mobile
EVN Telecom
Viettel (100%)
Local, long distance and international
telephony, data, internet and mobile
Vietnamobile
Hanoi Telecom, Hutchison Telecommunications
International (HTIL)
Mobile
Global Telecommunications Corporation
Mobile
Vietnam Posts and
Telecommunications (VNPT)
Viettel
S-Fone
Gmobile (previously GTEL
Mobile)
Source: BMI, operators
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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.
Weaknesses
■
A clear investment strategy to invest heavily in mobile and broadband services.
■
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.
Opportunities
■
New mobile price structure under pressure from competitors.
■
3G, and eventually 4G, mobile services will provide substantial source of value-added
mobile revenue.
Threats
■
Deployment of broadband and fixed-wireless networks in short and medium term.
■
Expansion of GPhone fixed-wireless service will help presence in rural areas.
■
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.
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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.
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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
Performance
In January 2012, local media citing data from the Ministry of Information and
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
Developments
Networks
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 highspeed 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
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national socio-economic development, natural disaster mitigation and national defence
and security.
VNPT's Vietnam Telecom International (VTI) inaugurated a Cambodia-Vietnam highspeed 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
■
■
■
Operational Data
■
■
■
■
■
■
■
Company Details
■
■
Annual Revenue (2009): VND83.253trn
Annual Revenue (2010): VND101.569trn
Annual Revenue (2011): VND120.8trn
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
Vietnam Posts and Telecommunications Corporation (VNPT)
18 Nguyen Du Street
Hanoi
Vietnam
Tel: +84 (49) 434 936
■
Fax: +84 (48) 255 851
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Viettel
SWOT Analysis
Strengths
Weaknesses
■
Licence to offer fixed-wireless, mobile and value-added services.
■
Low tariff structure.
■
Nationwide coverage.
■
Mobile market leader.
■
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
Threats
■
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
■
Connection difficulties could prompt potential subscribers to opt for alternative
networks.
Company Overview
■
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.
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.
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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
Perfomance
Viettel generated VND117trn in revenue in 2011, representing an increase of 28% y-o-y.
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
Developments
Mobile
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 Dcom 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.
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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
■
■
■
Operational Data
■
■
■
■
■
■
■
■
■
■
Company Details
■
■
Annual Revenue (2009): VND60.600trn
Annual Revenue (2010): VND91.134trn
Annual Revenue (2011): VND117trn
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
Viettel
1A Giang Văn Minh Street
Ba Đình
Hanoi
Vietnam
Tel: +84 (4) 255 6789
■
Fax: +84 (4) 846 0486
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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
Opportunities
■
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.
■
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-
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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
Performance
Operational
Developments
For the year ended December 2010, MobiFone registered a 31.5% y-o-y increase in
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 pretax profit for 2010.
Networks
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,
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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).
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Operational Data
■
■
■
■
■
■
■
■
■
■
Company Details
■
■
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
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
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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).
Weaknesses
■
Early introduction of 3G services has led to second-ranked position.
■
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.
Opportunities
■
Reduced ARPU rates as a result of an unfavourable customer mix.
■
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 thirdranked position.
■
Company Overview
The government could force VinaPhone to undergo privatisation.
A wholly owned subsidiary of VNPT, GPC-VinaPhone operates a nationwide GSMbased digital cellular telephone network under the VinaPhone brand name. The network
was launched in June 1996.
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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
Performance
VinaPhone reported revenue of VND28.1trn in 2010, representing an increase of 37.2%
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
Developments
Networks
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
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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
■
■
■
■
■
Company Details
■
■
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
Vietnam Telecom Services Company (GPC-VinaPhone)
57A Hyunh Thuc Khang
Dong Da
Hanoi
Vietnam
Tel: +84 (4) 835 8815
■
Fax: +84 (4) 835 7502
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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.
Threats
■
Expanding arsenal of mobile handset models, not to mention non-voice applications.
■
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,
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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
Developments
Networks
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
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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
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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 stateowned 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
Developments
Networks
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.
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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.
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Financial Data
Operational Data
■
■
■
■
■
Company Details
■
■
Annual Revenue (2010): VND2.885trn
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
EVN Telecom
30A Pham Hong Thai St.
Ba Dinh District
Hanoi
Vietnam
Tel: +84 (4) 2100507
■
Fax: +84 (4) 7151109
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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
Performance
According to FPT, its telecoms business segment reported revenue of VND2.357trn in
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
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telecoms services to eight provinces and VND200bn on deploying network
infrastructure in four of Cambodia's provinces.
Operational
Developments
Networks
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
■
■
■
■
■
■
Company Details
■
■
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
FPT Telecom
48 Van Bao, Kim Ma Street
Ba Dinh Dist
Hanoi
Vietnam
Tel: +84 (4) 760 1060
■
Fax: +84 (4) 822 3111
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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 AlcatelLucent 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
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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
735
1,077
47
283
300
583
1,481
1,791
21
378
381
759
12,661
14,041
11
2,947
3,343
6,290
North America
Latin America
Total
Source: Nokia
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Asia Pacific Is The Place To Be
Asia Pacific To Continue
Outperforming
The shift towards Asia Pacific is a testament of the
region's growing importance for network
infrastructure vendors in light of the favourable
Cisco VNI Global Mobile Data Traffic Forecast
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
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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
Jul-12
Jun-12
Country
Details
Australia
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
provider for Optus.
na
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
using TD-LTE technology.
May-12
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
Japan
service, irrespective of the network they are using.
May-12
Indian Railways selected Nokia Siemens Networks as its partner for equipping the Kolkata
India metro line with Global System for Mobile Communications - Railway (GSM-R) infrastructure.
Apr-12
Japan
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
provide optimised backhaul transport with its FlexiPacket Microwave platform.
Apr-12
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
Thailand
LTE.
Apr-12
Singapore
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
network equipment by up to 50%.
India
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
Bengaluru R&D facility in October 2010.
Feb-12
Feb-12
Jan-12
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
Indonesia
generate new revenue streams.
Japan
KT selected Nokia Siemens Networks as one of its LTE mobile broadband infrastructure and
services vendors. Nokia Siemens Networks will provide its 1,800MHz LTE radio equipment
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NSN Selected Asia Activities - Continued
Date
Jan-12
Dec-11
Dec-11
Oct-11
Sep-11
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.
India
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
enterprise broadband service.
Indonesia
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
Dangas, while reusing existing assets.
Japan
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
services while maximising the efficiency of its newly deployed LTE network.
Indonesia
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
Indosat's network readiness to refarm the existing 1,800MHz frequency band.
China
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
downlink and 51Mbps uplink to support data-intensive services on TD-LTE networks.
Sep-11
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
Taiwan
a high-speed rail service.
Jul-11
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,
China
Jiangsu, Fujian, Guangdong and Zhejiang.
Jul-11
China
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
and online HD video conferencing.
Malaysia
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
smartphone growth in Malaysia.
Jun-11
Jun-11
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
South Korea
division multiplexing platform to SK Telecom.
May-11
South Korea
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
and network optimisation.
China
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
China Unicom's Shanghai branch.
Australia
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
along with improving time to market.
May-11
Apr-11
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Vietnam Telecommunications Report Q1 2013
NSN Selected Asia Activities - Continued
Date
Mar-11
Country
Details
China
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 largescale TD-LTE trial with China Mobile.
Mar-11
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
Indonesia
the possibility of yearly extensions.
Jan-11
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
India
more than 87,000 base station sites, 14 times the number when it opened four years ago.
Source: Nokia Siemens Networks
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Vietnam Telecommunications Report Q1 2013
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.
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Vietnam Telecommunications Report Q1 2013
Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2012f
2015f
2020f
67,102
74,008
78,758
83,161
87,848
89,730
92,443
96,355
0-4 years
9,340
9,212
7,002
6,776
7,186
7,186
7,026
6,529
5-9 years
8,685
9,193
9,124
6,921
6,703
6,885
7,143
6,982
10-14 years
7,504
8,604
9,142
9,038
6,844
6,539
6,668
7,104
15-19 years
7,127
7,408
8,535
9,064
8,963
8,161
6,806
6,628
20-24 years
6,492
7,003
7,305
8,420
8,954
9,115
8,892
6,745
25-29 years
5,893
6,361
6,879
7,167
8,284
8,602
8,862
8,803
Total
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Vietnam Telecommunications Report Q1 2013
Vietnam's Population By Age Group, 1990-2020 ('000) - Continued
1990
1995
2000
2005
2010
2012f
2015f
2020f
30-34 years
4,884
5,779
6,250
6,765
7,058
7,475
8,202
8,779
35-39 years
3,965
4,794
5,688
6,163
6,677
6,770
6,991
8,131
40-44 years
2,420
3,884
4,710
5,614
6,086
6,304
6,609
6,925
45-49 years
2,039
2,358
3,802
4,653
5,548
5,761
6,012
6,536
50-54 years
1,933
1,968
2,287
3,739
4,580
4,936
5,449
5,914
55-59 years
1,946
1,843
1,887
2,201
3,617
4,001
4,446
5,305
60-64 years
1,544
1,822
1,737
1,767
2,076
2,573
3,455
4,268
65-69 years
1,283
1,391
1,659
1,582
1,621
1,649
1,927
3,233
70-74 years
919
1,084
1,194
1,439
1,389
1,384
1,438
1,729
1,127
1,305
1,559
1,852
2,264
2,388
2,516
2,743
75+ years
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2012f
2015f
2020f
0-4 years
13.92
12.45
8.89
8.15
8.18
8.01
7.60
6.78
5-9 years
12.94
12.42
11.58
8.32
7.63
7.67
7.73
7.25
10-14 years
11.18
11.63
11.61
10.87
7.79
7.29
7.21
7.37
15-19 years
10.62
10.01
10.84
10.90
10.20
9.10
7.36
6.88
20-24 years
9.68
9.46
9.27
10.13
10.19
10.16
9.62
7.00
25-29 years
8.78
8.60
8.73
8.62
9.43
9.59
9.59
9.14
30-34 years
7.28
7.81
7.94
8.14
8.03
8.33
8.87
9.11
35-39 years
5.91
6.48
7.22
7.41
7.60
7.55
7.56
8.44
40-44 years
3.61
5.25
5.98
6.75
6.93
7.03
7.15
7.19
45-49 years
3.04
3.19
4.83
5.59
6.32
6.42
6.50
6.78
50-54 years
2.88
2.66
2.90
4.50
5.21
5.50
5.89
6.14
55-59 years
2.90
2.49
2.40
2.65
4.12
4.46
4.81
5.51
60-64 years
2.30
2.46
2.21
2.12
2.36
2.87
3.74
4.43
65-69 years
1.91
1.88
2.11
1.90
1.85
1.84
2.08
3.36
70-74 years
1.37
1.46
1.52
1.73
1.58
1.54
1.56
1.79
75+ years
1.68
1.76
1.98
2.23
2.58
2.66
2.72
2.85
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Vietnam Telecommunications Report Q1 2013
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age 1
Dependent population, total, '000 2
Active population, % of total 3
Active population, total, '000
4
Youth population, % of total working age
5
Youth population, total, '000 6
1990
1995
2000
2005
2010
2012f
2015f
2020f
75.5
71.2
60.5
49.7
42.1
40.9
40.6
41.6
28,859
30,790
29,679
27,609
26,006
26,031
26,717
28,321
57.0
58.4
62.3
66.8
70.4
71.0
71.1
70.6
38,243
43,218
49,079
55,552
61,842
63,699
65,725
68,034
66.8
62.5
51.5
40.9
33.5
32.4
31.7
30.3
25,529
27,009
25,268
22,735
20,732
20,610
20,837
20,615
8.7
8.7
9.0
8.8
8.5
8.5
8.9
11.3
3,330
3,780
4,411
4,874
5,274
5,421
5,881
7,706
Pensionable population, % of total working
age 7
Pensionable population, '000
8
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of total
population; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population; 8 65+.
Source: World Bank, UN, BMI
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2012f
2015f
2020f
Urban population, % of
total
20.3
22.2
24.3
26.4
28.7
29.7
31.2
33.9
Rural population, % of total
79.7
77.8
75.7
73.6
71.3
70.3
68.8
66.1
Urban population, '000
13,438.6
16,201.6
18,865.4
21,940.1
25,212.5
26,649.9
28,842.1
32,664.4
Rural population, '000
52,761.4
56,778.4
58,770.0
61,166.2
62,635.9
63,080.4
63,600.5
63,690.7
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Glossary
Glossary
Table: Glossary Of Terms
2G
second generation
GDP Gross Domestic Product NGN Next Generation Network
3G
third generation
GPR Global Packet Radio
S
Service
Mbps megabits per second
ADS
L
Asymmetric Digital Subscriber Line
Global System for Mobile
GSM Communications
MHz
ARP
U
Average Revenue per User
HDS High-bit-rate Digital
L
Subscriber Line
MNP Mobile Number Portability
ASP Average Selling Price
HSD High-Speed Downlink
PA
Packet Access
MoU Memorandum of Understanding
BMI
Business Monitor International
HPS High-Speed Packet
A
Access
MOU Minutes of Use
bn
billion
HSU High-Speed Uplink Packet MPL
PA
Access
S
BTS
Base Transceiver Stations
HTM HyperText Markup
L
Language
MSC Mobile Switching Centre
Hz
Hertz
MVN
O
Mobile Virtual Network Operator
CRM Customer Relationship Management ICT
Information And
Communication
Technology
na
DAMP Digital-Advanced Mobile Phone
S
Service
IDD
OIBD Operating Income before
International Direct Dialling A
Depreciation and Amortization
DLD Domestic Long-Distance
ILD
International LongDistance
POP
Point of Presence
DMB Digital Multimedia Broadcasting
IPO
Initial Public Offering
R&D
research and development
DSL
Digital Subscriber Line
IP
Internet Protocol
SaaS Software-as-a-Service
DSL
AM
Digital Subscriber Line Access
Multiplexer
IPTV Internet Protocol TV
CDM
A
Code Division Multiple Access
megahertz
Multiprotocol Label Switching
not available
SDSL Symmetric Digital Subscriber Line
DSU Digital Subscriber Unit
Integrated Services Digital
ISDN Networks
SIM
DTH Direct-To-Home
ISP
Subscriber Identity Module
Internet Service Provider
SMS Short Messaging Service
DVBH
Digital Video Broadcasting-Handheld IT
Information Technology
TDM
A
Time Division Multiple Access
DVB- Digital Video Broadcasting-Satellite
SH
Handheld
ITU
TDInternational
SCD
Telecommunication Union MA
Time Division-Synchronous Code
Division Multiple Access
e/f
JV
joint venture
trillion
estimate/forecast
EBIT Earnings Before Interest, Taxes,
DA
Depreciation and Amortization
© Business Monitor International
Kbps kilobits per second
trn
UMT Universal Mobile
S
Telecommunications System
Page 105
Vietnam Telecommunications Report Q1 2013
Glossary Of Terms - Continued
2G
second generation
GDP Gross Domestic Product NGN Next Generation Network
EC
European Commission
KHz
kilohertz
VOD
EME
A
Europe, Middle East & Africa
km
kilometres
VoIP Voice over Internet Protocol
EVDO
Evolution-Data Optimised
LANs Local Area Networks
VLAN Virtual Local Area Network
FDI
Foreign Direct Investment
LEC
Local Exchange Carrier
WAP Wireless Application Protocol
Long-Term Evolution
WCDM
A
Wideband CDMA
Video On Demand
FTTB Fibre-To-The-Building
LTE
FTTH Fibre-To-The-Home
M2M machine-to-machine
WiBr
o
Wireless Broadband
FTP
mn
WiM
AX
Worldwide Interoperability for
Microwave Access
WLL
Wireless Local Loop
File Transfer Protocol
million
Gbps gigabits per second
MEA Middle East & Africa
GPO
N
Gigabit Passive Optical Network
MEN
A
Middle East & North Africa WTO World Trade Organization
Source: BMI
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Methodology
Methodology
Table: Key Indicators For Telecommunications Industry Forecasts
Emerging markets
Average market growth
Weighting
80%
Subjective indicators
- Real GDP growth
25%
- Inflation
-5%
Developed markets
Average market growth
90%
Subjective indicators
- Real GDP growth
15%
- Inflation
-5%
Telecommunications business environment ratings
- Telecommunications ratings
na
- Country risk short-term ratings
na
- Country risk long-term ratings
na
na = not applicable. Source: BMI
Average Market Growth: Indicator takes into consideration the historical growth patterns of the fixedline, internet, broadband and mobile markets, providing a basis from which to forecast. Using historical data
is often the most desirable method of analysis. In most cases, subscriber data is derived from individual
operators and/or national regulators.
Subjective Indicators: Indicators look at a number of factors, such as:
■
Neighbouring/similar states. These types of markets often share similar telecoms markets. For example,
Japan and South Korea are both highly developed technophile markets where growth prospects are high
in 3G. Meanwhile, China and India both offer high growth in successfully emerging markets.
■
Tracking growth. High growth may be more likely to be repeated in the near future, and is unlikely to
turn into a significant decline in the short term, although there may be exceptions to this rule.
■
Market maturity. Where markets have reached saturation they are not likely to expand as fast as those
that are less developed.
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Vietnam Telecommunications Report Q1 2013
■
Competition from alternative technologies, such as VoIP versus fixed-line, ADSL versus WiMAX
■
Operator behaviour. Operators' corporate strategies and investment behaviour may dictate changes in the
telecommunications market. This is similarly the case for regulatory developments, which have been
accounted for in our integration of the Telecommunications Business Environment Ratings.
The remaining weighting of real GDP represents the health of the economy, and the inflationary weighting
represents investment confidence. For example, high inflation distorts investment confidence in the
telecoms market.
The indicators are adjusted by BMI's independent benchmark ratings, which look at a significantly higher
number of indicators, and involve our:
■
Telecommunications Business Environment Ratings. A more comprehensive assessment of the Risk/
Return trade-off for the industry (see Telecoms Business Environment Ratings below for greater
explanation); as well as,
■
Country Risk Ratings. For short-term (one-to-two year period) and long-term (three years and more)
economic and political ratings.
Telecoms Business Environment Ratings
Risk/Reward Ratings Methodology: BMI's approach in assessing the risk/reward balance for Telecoms
Industry investors globally is fourfold. First, we identify factors (in terms of current industry/country trends
and forecast industry/country growth) that represent opportunities to would-be investors. Second, we
identify country and industry-specific traits that pose or could pose operational risks to would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity. Finally, we use BMI's proprietary Country Risk Ratings (CRR) in a nuanced
manner to ensure that only the aspects most relevant to the Telecoms Industry are incorporated. Overall, the
system offers an industry-leading, comparative insight into the opportunities/risks for companies across the
globe.
Ratings System: Conceptually, the ratings system divides into two distinct areas:
Rewards: evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development, such as the broader economic/socio-demographic
environment.
Risks: evaluation of industry-specific dangers (regulatory and competitive issues) and those emanating from
the state's political/economic profile that call into question the likelihood of anticipated returns being
realised over the assessed time period.
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Vietnam Telecommunications Report Q1 2013
Indicators: The following indicators have been used. Overall, the rating uses three subjectively measured
indicators, and around 20 separate indicators/datasets.
Table: Ratings Indicators
Indicator
Rationale
Rewards
Industry rewards1
- ARPU
Denotes depth of telecoms market. High-value markets score better than low-value ones.
- No. of subscribers
Denotes breadth of telecoms market. Large markets score higher than smaller ones.
- Subscriber growth,
% y-o-y
Denotes sector dynamism. Scores based on annual average growth over our five-year forecast
period and also take into account the penetration rate.
- No. of operators
Subjective evaluation against BMI-defined criteria. Evaluates market openness and
competitiveness.
Country rewards2
- Urban/rural split
A highly urbanised state facilitates network roll-out and implies higher wealth. Pre-dominantly
rural states score lower, with overall score also affected by country size.
- Age range
Proportion of population under 24 years old. States with young populations tend to be more
attractive markets.
- GDP per capita, US$ A proxy for wealth. High income states receive better scores than low income states.
Risks
Industry risks
- Regulatory
independence
Subjective evaluation against BMI-defined criteria. Evaluates predictability of operating
environment.
Country risks
- Short-term external
risk
Rating from BMI's Country Risk Ratings (CRR). Denotes state's vulnerability to externally
induced economic shock, which tend to be the principal triggers of economic crises.
- Policy continuity
From CRR. Evaluates the risk of a sharp change in the broad direction of government policy.
- Legal framework
From CRR. Denotes strength of legal institutions in each state - security of investment can be a
key risk in some emerging markets.
- Corruption
From CRR. Denotes risk of additional illegal costs/possibility of opacity in tendering/business
operations affecting companies' ability to compete.
1. Overall market structure score also affected by telecoms sector tax rate and, where relevant, broader security issues.
2. The overall score for country structure is also affected by the power transmission network's national coverage. Source:
BMI
Weighting: Given the number of indicators/datasets used, it would be inappropriate to give all subcomponents equal weight. Consequently, the following weighting has been adopted.
© Business Monitor International
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Vietnam Telecommunications Report Q1 2013
Table: Weighting Of Indicators
Component
Weighting, %
Rewards
70, of which
- Industry rewards
65
- Country rewards
35
Risks
30, of which
- Industry risks
40
- Country risks
60
Source: BMI
Sources: Sources used in telecoms reports include national ministries and media/telecoms regulatory
bodies, officially released company results and figures, national and international industry organisations,
such as the CTIA, the GSM Association and the International Telecommunication Union (ITU) and
international and national news agencies.
© Business Monitor International
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