Analyzing Vietnam's Telecom Trend - Past - Present - Future 2008

8/14/2019 Analyzing Vietnam's Telecom Trend - Past - Present - Future 2008

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Analyzing VietnamAnalyzing Vietnam ss

telecoms trendtelecoms trend -- Past,Past,Present And FuturePresent And Future

Presented by PhD., M.A., & B.A inPresented by PhD., M.A., & B.A in

Mass media and communicationsMass media and communications

ResearchResearch


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Will The Economic Crunch Play Havoc OnWill The Economic Crunch Play Havoc On

Vietnam's Markets?Vietnam's Markets?

Telecoms subscriber figures produced by Vietnam's MICTelecoms subscriber figures produced by Vietnam's MICshowed another impressive year of growth during 2008.showed another impressive year of growth during 2008.

TotallingTotalling 82.25mn fixed82.25mn fixed--line and mobile subscribers,line and mobile subscribers, an increase of 105.6% during the year,an increase of 105.6% during the year,

mobile subscriptions dominated,mobile subscriptions dominated, accounting for 85.5% or 70.324mn, with fixedaccounting for 85.5% or 70.324mn, with fixed--lineline

occupying the remainder at 11.926mn.occupying the remainder at 11.926mn.

As for internet, there were 20.67mn users, representingAs for internet, there were 20.67mn users, representingpenetration rates of 24.2%, following an increase ofpenetration rates of 24.2%, following an increase of11% during the year.11% during the year.


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Vietnam FixedVietnam Fixed --Line, Internet and MobileLine, Internet and Mobile -- Historical Data andHistorical Data and

Estimates/ForecastsEstimates/Forecasts

Source: Vietnam Ministry of Information and Communications, VOVSource: Vietnam Ministry of Information and Communications, VOV News, BMINews, BMI


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2008, A Year Of Highs And Lows2008, A Year Of Highs And Lows The subscriber results of Vietnam's telecoms sectorThe subscriber results of Vietnam's telecoms sector

showed resilience despite a less than supportiveshowed resilience despite a less than supportiveoperating environment during the previous year, whichoperating environment during the previous year, whichsaw the suspension of registration for prepaidsaw the suspension of registration for prepaidsubscribers via text messaging and websites,subscribers via text messaging and websites,

the increase in mobile handset prices during June andthe increase in mobile handset prices during June andJuly, as the US dollar rose in value, making Vietnam'sJuly, as the US dollar rose in value, making Vietnam'spredominantly imported handsets increasingly dearer,predominantly imported handsets increasingly dearer,

and HT Mobile announcing the dissolution of its CDMAand HT Mobile announcing the dissolution of its CDMAnetwork innetwork in favourfavour of GSM.of GSM.


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HighsHighs Some highs in the market.Some highs in the market. A seventh mobile operatingA seventh mobile operating licencelicence was awardedwas awarded

toto GtelGtel Mobile, a joint venture between theMobile, a joint venture between theMinistry of Public Security andMinistry of Public Security andVimpelcomVimpelcom GroupGroup

of Russia,of Russia, national GPRS coverage by the three largestnational GPRS coverage by the three largest

mobile operatorsmobile operatorsViettelViettel,, MobiFoneMobiFone andand

VinaPhoneVinaPhone and the growth of local retailers.and the growth of local retailers. Furthermore, free GSM cell phones wereFurthermore, free GSM cell phones wereprovided byprovided by MobiFoneMobiFone andandViettelViettel, although their, although theiruse was restricted to one network.use was restricted to one network.


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ViettelViettel mobile market leadermobile market leaderViettelViettel announcing it had doubledannouncing it had doubled

its gross profit over the year to reach VND8trnits gross profit over the year to reach VND8trn(US$471mn) in 2008, its revenues rising by 26% in the(US$471mn) in 2008, its revenues rising by 26% in thesame period to VND33trn, accounting for 35.9% of thesame period to VND33trn, accounting for 35.9% of thereported telecoms market revenue total of VND92trn, asreported telecoms market revenue total of VND92trn, as

cited by Reuters.cited by Reuters. ViettelViettel ranked second in terms of revenues in theranked second in terms of revenues in thecountry after Vietnam Posts and Telecommunicationscountry after Vietnam Posts and TelecommunicationsCorporation (VNPT), the parent company of rivalsCorporation (VNPT), the parent company of rivals

MobiFoneMobiFone andandVinaPhoneVinaPhone.. Minor operators such as EVN Telecom did not fare badlyMinor operators such as EVN Telecom did not fare badly

either in 2008, with 3.2mn connections, including fixedeither in 2008, with 3.2mn connections, including fixedwireless and mobile, and it announced a 17% yearwireless and mobile, and it announced a 17% year--onon--

year increase in revenues VND3trn, according to theyear increase in revenues VND3trn, according to theMIC, and reported byMIC, and reported byVietNamNetVietNamNet Bridge.Bridge.


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So, will 2009 promise another profitable and engaging yearSo, will 2009 promise another profitable and engaging year

forforVietnam's telecommunicationsVietnam's telecommunications operators?operators?

Vietnam's MIC Minister Le Doan Hop has statedVietnam's MIC Minister Le Doan Hop has statedthat the beginning of this year has seen littlethat the beginning of this year has seen littleimpact to telecoms growth from high inflationimpact to telecoms growth from high inflationand global economic turbulence.and global economic turbulence.

However, a report byHowever, a report by HSBCHSBC issued in Januaryissued in January2009 predicted that Vietnam's economy would2009 predicted that Vietnam's economy wouldsuffer through a difficult year in 2009.suffer through a difficult year in 2009.

Among its key reasons was the fact thatAmong its key reasons was the fact thatVietnam's stock market had shrunk over 2008,Vietnam's stock market had shrunk over 2008,detracting attention from key foreign directdetracting attention from key foreign directinvestment, one of the main propellants forinvestment, one of the main propellants for

economic growth in the country, together witheconomic growth in the country, together withexports.exports.


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IPOsIPOs, The Answer To Weakened, The Answer To Weakened

FDI AttentionFDI Attention In order to counter the problems it faces, the initialIn order to counter the problems it faces, the initial

public offering (IPO) of large corporations in keypublic offering (IPO) of large corporations in keybusiness fields that include telecommunications isbusiness fields that include telecommunications isessential and will help gain the attention of foreignessential and will help gain the attention of foreigninvestors.investors.

The announcement thatThe announcement that MobiFoneMobiFone would undergo partwould undergo partprivatisationprivatisation by selling off a 30% stake saw theby selling off a 30% stake saw theestablishment of a number of Vietnamese subsidiaries byestablishment of a number of Vietnamese subsidiaries byforeign operators.foreign operators.

At the time, foreign investors that were early to establishAt the time, foreign investors that were early to establisha presence in the market saw the opportunity to forma presence in the market saw the opportunity to formrelations with government and associated telecomsrelations with government and associated telecomsbodies. Four years have passed sincebodies. Four years have passed since privatisationprivatisation waswas

promised, and investors such aspromised, and investors such as TelenorTelenor (Norway),(Norway),VodafoneVodafone (UK),(UK), NTTNTT DoCoMoDoCoMo (Japan) and(Japan) and FranceFranceTelecomTelecom have continued to wait.have continued to wait.


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Legal BarriersLegal Barriers While such delays have been explained away byWhile such delays have been explained away by

trademark issues, legal procedures and lack of atrademark issues, legal procedures and lack of adefinition for corporate value, foreign operators havedefinition for corporate value, foreign operators havekept their patience, largely as they appreciate the longkept their patience, largely as they appreciate the long--term investment potential of Vietnam, as investmentterm investment potential of Vietnam, as investmentopportunities elsewhere become less.opportunities elsewhere become less.

Indeed, a number of other local operators are also set toIndeed, a number of other local operators are also set tofollowfollow MobiFoneMobiFone intointo privatisationprivatisation including sister mobileincluding sister mobile

unitunitVinaPhoneVinaPhone, and EVN Telecom, which is planning to, and EVN Telecom, which is planning tosell a 30% stake, withsell a 30% stake, withViettelViettel and Saigon Postal possiblyand Saigon Postal possiblyfollowing, although the latter two operators have yet tofollowing, although the latter two operators have yet tomake any commitments.make any commitments.


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3G3G Furthermore, on the horizon is the prospect of 3GFurthermore, on the horizon is the prospect of 3G

licensing, which will also be open up to foreignlicensing, which will also be open up to foreignparticipation, in partnership with local operators. Thisparticipation, in partnership with local operators. Thiscould potentially seecould potentially see France TelecomFrance Telecom withwith MobiFoneMobiFone,,NTTNTT DoCoMoDoCoMo withwithVinaPhoneVinaPhone andand SingTelSingTel together withtogether withSaigonSaigon PostelPostel.. NTTNTT DoCoMoDoCoMo is already involved withis already involved withhelpinghelpingVinaPhoneVinaPhone to write its 3G proposal, although theto write its 3G proposal, although the

Vietnamese operator has said that its relationship isVietnamese operator has said that its relationship is

based purely on technological support.based purely on technological support. Although a timeframe for theseAlthough a timeframe for these IPOsIPOs has not beenhas not been

announced, foreign operators will expect to be rewardedannounced, foreign operators will expect to be rewardedfor their long wait, and hopefully soon. Meanwhile,for their long wait, and hopefully soon. Meanwhile,

Vietnam's government could be pushed into agreement,Vietnam's government could be pushed into agreement,if it hopes to ward off a poorly performing 2009.if it hopes to ward off a poorly performing 2009.


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Analyzing Vietnam's Telecom Trend - Past - Present - Future 2008

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