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Published by BUSINESS MONITOR INTERNATIONAL LTD
Including 5-year industry forecasts
© 2008 Business Monitor International. All rights reserved.All information, analysis, forecasts and data provided by Business Monitor International Ltd is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis). All such content is copyrighted in the name of Business Monitor International, and as such no part of this content may be reproduced, repackaged, copied or redistributed without the express consent of Business Monitor International Ltd.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
Business Monitor InternationalMermaid House, 2 Puddle DockLondon EC4V 3DS UKTel: +44 (0)20 7248 0468Fax: +44 (0)20 7248 0467email: [email protected]: http://www.businessmonitor.com
Vietnam TelecommunicationsReport Q3 2008 ISSN: 1748-4944
Business Monitor International Mermaid House, 2 Puddle Dock, London, EC4V 3DS, UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 email: [email protected] web: http://www.businessmonitor.com
© 2008 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 Q3 2008 Including 5-year industry forecasts by BMI
Part of BMI's Industry Survey & Forecasts Series
Published by: Business Monitor International
Publication Date: July 2008
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 2
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 3
CONTENTS
Executive Summary .........................................................................................................................................5
Vietnam Business Environment Industry SWOT .................................................................................................................................................... 6
Business Environment ....................................................................................................................................7
Vietnam.................................................................................................................................................................................................................. 9 Table: Business Environment Rankings ............................................................................................................................................................... 10
Industry Forecast Scenario ...........................................................................................................................11
Mobile....................................................................................................................................................................................................................... 11 Table: Telecoms Sector – Mobile – Historical Data & Forecasts........................................................................................................................ 11
Fixed Line................................................................................................................................................................................................................. 13 Table: Telecoms Sector – Fixed-Line – Historical Data & Forecasts ................................................................................................................. 13
Internet ..................................................................................................................................................................................................................... 14 Table: Telecoms Sector – Internet – Historical Data & Forecasts ...................................................................................................................... 14
Market Data Analysis .....................................................................................................................................16
Mobile.................................................................................................................................................................................................................. 16 Table: Vietnam Mobile Market, 2007 .................................................................................................................................................................. 17 3G........................................................................................................................................................................................................................ 19 Fixed Line............................................................................................................................................................................................................ 20 Fixed Wireless ..................................................................................................................................................................................................... 21 Broadband ........................................................................................................................................................................................................... 21 Table: Vietnam – WIMAX Triallists..................................................................................................................................................................... 23
Macroeconomic Outlook ...............................................................................................................................25
Table: Vietnam – Economic Activity .................................................................................................................................................................... 27 Regulatory Environment..................................................................................................................................................................................... 28 Vietnam: Regulatory Bodies And Their Responsibilities...................................................................................................................................... 28
Regulatory Developments ......................................................................................................................................................................................... 31
Company Monitor...........................................................................................................................................32
Table: Global Mobile Handset Market v. Nokia Mobile Handset Market By Geography (mn units)................................................................... 32 Table: Top Ten Nokia Net Sales Markets............................................................................................................................................................. 33 Table: Nokia And NSN: Major Contracts And Milestones ................................................................................................................................... 35
Selected Profiles – Operators ................................................................................................................................................................................... 36 Vietnam Posts &Telecommunications (VNPT)..................................................................................................................................................... 36 S-Fone (S-Telecom) ............................................................................................................................................................................................. 41 VinaPhone ........................................................................................................................................................................................................... 43 MobiFone ............................................................................................................................................................................................................ 44 Viettel................................................................................................................................................................................................................... 45 EVN Telecom ....................................................................................................................................................................................................... 47 Hanoi Telecom..................................................................................................................................................................................................... 49 FPT Telecom........................................................................................................................................................................................................ 50
Competitive Landscape .................................................................................................................................52
Competitor Analysis.................................................................................................................................................................................................. 52 Table: Key Players – Vietnam Telecoms Sector................................................................................................................................................... 52
Key Players............................................................................................................................................................................................................... 52 Fixed Line............................................................................................................................................................................................................ 52
Vietnam Telecommunications Report Q3 2008
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Table: Regional Fixed-Line Penetration Overview.............................................................................................................................................. 53 Mobile.................................................................................................................................................................................................................. 53 Table: Regional Mobile Penetration Overview.................................................................................................................................................... 54 Broadband ........................................................................................................................................................................................................... 55 Broadband ........................................................................................................................................................................................................... 55 Table: Regional Broadband Penetration Overview ............................................................................................................................................. 55 Table: Glossary Of Terms.................................................................................................................................................................................... 56
BMI Forecast Modelling.................................................................................................................................58
How We Generate Our Industry Forecasts .......................................................................................................................................................... 58 Telecommunications Industry .............................................................................................................................................................................. 59 Sources ................................................................................................................................................................................................................ 59
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 5
Executive Summary
Vietnam’s telecoms market remains attractive in terms of its potential growth prospects. Even with
minimal foreign direct investment in the industry, the country’s mobile market has prospered with
penetration reaching in excess of 40%. This is largely due to the prevalence of multiple SIM cards per
subscribers, which in turn is down to the ongoing and competitive promotional battle between Vietnam’s
several mobile operators.
We expect a major step change across the telecoms sector with an increase in overseas strategic
investment. The government’s obligations to the WTO should ensure this and are likely to lead to
liberalisation in the market. This, we should see first with the state looking to sell two-thirds of the mobile
operator MobiFone to domestic investors and foreign investors. Lining up and ready for action are
Singapore Technologies Telemedia (STT), NTT DoCoMo, Telenor and France Telecom. We expect
the process to start in 2009 and that it will be followed up by a similar divestment in VinaPhone.
At the time of writing this report, Vietnam has approximately 50mn mobile subscribers, and BMI projects
6mn more net additions over the next six months. The country’s subscriber base is likely to reach 100% in
early 2012, and we forecast that there will be 99mn subscribers in early 2011.
Viettel remains market leader with a 29% market share, ahead of MobiFone and VinaPhone on 28% and
25%, respectively. All three operators should be concerned at the low ARPU rates of around US$6 per
month; this suggests that the market is not mature with regards to value-added services and that intense
competition is leading to low tariff setting. We note also that approximately 90% of all subscribers are
prepaid customers.
In an attempt to increase ARPU rates, Vietnam’s leading operators are keen to encourage the take-up of
3G mobile services. There is little to suggest that this is imminent, but market leader Viettel has suggested
that, with the cost of 3G equipment falling and the consumer demand in value-added services rising
(video, mobile TV and internet connection), there will soon be a growing 3G market in Vietnam.
However, it is instructive to note that broadband growth remains limited with ADSL technologies
remaining expensive and service quality poor. This leads to slow speeds and unstable connections and
could result in a growing popularity of WiMAX – Vietnam has six WiMAX triallists.
Vietnam’s telecoms sector should witness a significant change over the next five years, with foreign
investment from carriers and vendors alike more common. Such a trend should result in a maturing
market, both in terms of consumer demand and technology take-up.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 6
Vietnam Business Environment Industry SWOT
Strengths ! An increasingly competitive mobile sector ! Impressive growth in mobile and fixed-line sectors during 2007, with
subscribers up by 88.6% and 23%, respectively, in each sector ! WTO membership in 2007 makes Vietnam a more appealing investment
centre – stronger growth in broadband market could be the result of this
Weaknesses ! Fixed-line sector remains largely monopolised, under the control of Vietnam Posts & Telecommunications
! 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 any telecommunications services
Opportunities ! Increase in competition in the mobile sector will lead to a sharp rise in growth
! Government approach to liberalisation of the telecoms industry could see entrance of strategic investors such as NTT DoCoMo, SingTel and Telenor
! VNPT is the latest to launch fixed wireless service, tapping into rural market and therefore joining Viettel and S-Fone
Threats ! Pace of deregulation is irregular ! Nearly one-third of Vietnam's villages lie in mountainous areas and are
without access to telecommunications services; a delay in network expansion could slow potential growth in fixed-line, mobile and internet sectors
! Number of inactive mobile subscribers is unknown in what is still a market that lacks transparency and reliable data
! Poor quality of ADSL services and high prices are combining to hold up broadband growth
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 7
Business Environment
Changes in this quarter's Asia Pacific Business Environment Ratings have largely been due to revisions in
our forecasts with the release of full-year figures, but also as a result of the significant alterations in the
scores for country risk. This takes into account short-term external risk, policy continuity, legal
framework and corruption. Just under half of the countries in our table reported a fall in their risk ratings,
with the remainder witnessing small improvements or unchanged over the quarter. This quarter, we have
focused on the economic and political risks to the business environment in Asia Pacific and their
implications for the telecoms industry.
A major factor behind the worsening risk ratings has been in response to the slowdown in the global
economy. Many Asian states are heavily export dependant and retain strong trading ties with the US,
which is experiencing difficulties on account of the subprime crisis and ongoing credit crunch. Here,
international lenders could scale back the funds available to regional companies to cover their losses
elsewhere. This would prevent Asian firms from financing their operations. On account of limited
domestic credit availability, due to immature local bond markets, many companies could find themselves
stretched.
Accompanying this, and perhaps the largest downside risk, is inflation, which is being driven mainly by a
surge in the price of commodities such as oil, metals and, most importantly, food. For the most part, rice
remains the major agricultural output and staple diet for the majority of these Asian economies, but prices
have surged, facilitated by major producers restricting exports. This, not only has an impact on economic
risk, with inflation reducing the value of investments, but has significant political implications as well.
There are existing reports of an illicit rice trade emerging in Asia, while concerns are growing that riots
could occur, as has been the case in countries such as Haiti, Egypt, Mexico, Burkina Faso and Senegal.
Further cause for unrest could be facilitated by a number of elections due to take place in the region. In
the case of Pakistan, where BMI sees the likelihood of political 'cohabitation' between President Pervez
Musharraf, the next prime minister, and the new army chief, General Ashfaq Pervez Kiyani, this could
lead to tensions at the top. This would unnerve investors, potentially causing a drop in FDI inflows, which
had generally been very strong prior to the start of the current political crisis. Indeed, FDI during the first
five months of FY07/08 (July-June) dropped by 19.3% y-o-y.
To return to the overall business ratings, however, the most significant change is that Singapore has
replaced Australia at the top of our table. This has not just been a case of changes in the country risk
category, with both countries suffering from rising risk over the quarter, but of Singapore gaining points
in the telecoms market category to a greater extent than Australia. The small size of the Singapore market
and high penetration rates realise fewer potential returns for the country, although the country is
deploying a SGD1bn (US$725mn) ultra-high speed national broadband network. As for the
announcement that Australia's government had cancelled the AUD958mn (US$871mn) regional
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 8
broadband contract it signed with SingTel-backed Opel and Futuris may represent a blow to the
development of the country's national high-speed internet network. However, the federal government is
set to award an AUD4.7bn national broadband contract, and therefore, the cancellation of the regional
agreement can be viewed as positive, as it would have meant the duplication of technology and potential
waste of resources
Further down the table, India leapt up from eighth to fifth place. Once again, this has been due to changes
in score for country risk, but also on account of growing maturity in its mobile market, which remains the
fastest growing in the world. India beat the US last quarter to become the second largest global mobile
market after China. Regulatory transparency and mounting foreign interest will ensure that India's
telecoms market continues to gain in strength. The award of spectrum for 3G licences will further fuel
this. China, on the other hand, maintained its ninth place position, and we are still waiting to hear
information on when 3G licences will be awarded. With the Beijing Olympic games expected in August
this year, only China Mobile appears ready to commercially launch TD-SCDMA services, while no
mention has been made of the two other standards, CDMA2000 and W-CDMA.
As we reach the bottom of the table made up of the Philippines, Vietnam, Bangladesh and Thailand, we
can see that these markets offer high growth returns, but lack the country structure to support greater
developments. The biggest change to this group during the quarter was the switch between the Philippines
and Thailand, with the former in 12th position as opposed to 15th. Although the Philippines has moved
up the table, with its economy in 2007 reporting a 31-year high in growth and fortifying consumer
purchasing power, it remains vulnerable to a slowdown in the US, which is its biggest purchaser of
exports and main source of remittances from overseas workers. Meanwhile, the strength of the peso itself
carries risks, by making Philippine exports less competitive.
At the foot of the table, Thailand continues to suffer from repeated delays to the launch of Thailand's
three UMTS (3G) licences and that of WiMAX. This has damaged the overall development of the sector,
while additional issues, including interconnection charges, access charges and number portability, have
yet to be fully resolved, with a number of lawsuits between operators pending. Furthermore, issues of
network sharing would help to raise overall service coverage where infrastructure is generally weak,
mostly concerning rural areas, where the majority have poorer access to telecommunications services.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 9
Vietnam
Vietnam is in 13th position in our Business Environment Rankings, ahead of Bangladesh and Thailand.
The telecoms sector in Vietnam suffers from a lack of foreign investment – indeed inward investment is
only allowed under certain conditions. Vietnam’s accession to the WTO should mean a liberalisation of
the market, and we expect to see this start to happen either later this year, or more likely in 2009, when a
33.3% stake in MobiFone is sold to a strategic investor. Under WTO regulations and in accordance with
the government’s commitments, foreign investors are allowed to participate in joint ventures with
domestic companies. A minimum capital requirement has been set out, with VND1.6trn required for a
network infrastructure deal, VND500bn for a project spanning at least two provinces and VND160bn for
a project covering a single province.
And so, Vietnam is becoming a more attractive market with greater investment potential. This is
illustrated by the fact that Intel, Japan’s Renesas, Campal and Foxcom of Taiwan and Samsung
Electronics have invested US$10bn between them in Vietnam. France Telecom, China’s ZTE,
Qualcomm, SK Telecom and Alcatel also have ongoing investments in the country.
While there are encouraging signs – and Samsung has pointed to Vietnam’s cheap labour opportunities as
a key factor behind its US$670mn mobile handset plant in northern Vietnam – many foreign investors
remain concerned at the country’s complex licensing regime and fiscal policy. And while labour may be
inexpensive, there are further concerns that there is a shortage of skilled workers and that language skills
are poor.
Looking at Vietnam’s economy, we suggest that 2008 could be a testing year with a drop in GDP growth
likely, partly due to domestic inflationary pressures and partly due to the slowdown of the US economy,
its largest export market. Consequently, BMI has lowered our GDP growth forecast from 8.2% to 7% for
this year, although we suggest that this will be a short-term blip only. We are concerned, however, as to
whether the stock market will be able to absorb the planned IPOs of state-owned enterprises, with
MobiFone and VinaPhone, two of the higher profiles of such privatisations.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 10
Table: Business Environment Rankings
Limits of Potential Return Risks To Realisation of Potential
Returns
Country Telecoms Market
Country Structure
Independence of Regulator Country Risk
Telecoms Rating
Rank
Singapore 70.0 96.7 80.0 66.1 77.5 1
Japan 62.0 66.7 90.0 87.2 71.1 2
Australia 50.0 100.0 70.0 77.3 69.3 3
Malaysia 57.8 63.3 90.0 74.2 66.4 4
India 75.0 35.7 80.0 61.6 64.1 5
Hong Kong 44.0 76.7 80.0 81.9 63.1 6
South Korea 50.0 99.7 70.0 72.1 60.4 7
Taiwan 40.0 66.7 90.0 77.2 59.6 8
China 74.3 31.7 40.0 70.6 58.1 9
Pakistan 62.5 39.3 80.0 27.6 54.2 10
Indonesia 52.5 42.7 60.0 49.5 50.8 11
Philippines 50.0 36.7 60.0 57.2 49.3 12
Vietnam 50.0 33.3 60.0 51.6 47.7 13
Bangladesh 52.5 30.0 60.0 35.8 45.6 14
Thailand 47.5 32.7 40.0 60.5 44.4 15
Source: BMI
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 11
0
20,000
40,000
60,000
80,000
100,000
120,000
2005
2006
2007
e
2008
f
2009
f
2010
f
2011
f
2012
f
0
20
40
60
80
100
120
140
Cellular Mobile Phone Subscribers ('000)No of 3G Phone Subscribers ('000)Mobile Phone Subscribers/100 Inhabitants, RHS
Source: BMI Research
Industry Trends - Mobile Forecast, 2005-2012
Industry Forecast Scenario
Mobile
Table: Telecoms Sector – Mobile – Historical Data & Forecasts
2005 2006 2007 2008e 2009f 2010f 2011f 2012f
No. of Mobile Phone Subscribers ('000) 9,300 18,980 35,805 56,630 69,455 85,280 99,105 110,930
No. of Mobile Phone Subscribers/100 Inhabitants 11.0 22.2 41.4 67.8 78.1 94.6 108.5 119.8
No. of Mobile Phone Subscribers/100 Fixed Line Subscribers 143.5 204.1 313.0 435.9 499.7 580.1 639.4 688.2
No. of 3G Phone Subscribers ('000) 0 0 100 700 1,360 2,100 3,050 4,021
3G Market As % Of Entire Mobile Market 0.0 0.0 0.3 1.2 2.0 2.5 3.1 3.6
e/f = BMI estimate/forecast. Source: International Telecommunications Union (ITU), BMI
Faster growth in the first half of 2008
means that we have made an amendment
to our short-term forecast, as we suggest
that there should be in excess of 56mn
mobile subscribers by the end of this year,
accounting for a 67.8% penetration rate.
This would equate to just over 20mn net
additions over the last 12 months and 58%
y-o-y growth. Although this still
represents rapid growth, we note that this
would be down on the 88% growth seen in
2007.
Looking ahead, we project that Vietnam
will surpass the 100% penetration threshold in 2011 and will end 2012 with close to 111mn subscribers. It
should be noted that these figures are based on the assumption that the sector contains a certain number of
inactive prepaid users. Meanwhile, we continue to predict that the first commercial deployments of ‘third
generation’ (3G) mobile services will occur in 2008. We do not expect consumer demand for such
services to be strong in the initial stages of deployment and estimate just 700,000 subscribers by the end
of the first full year of operations. The cost and availability of 3G-compatible handsets are expected to be
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 12
the main obstacles to 3G growth in these early stages of development. However, with the Vietnamese
government pushing the development of 3G, we believe that stronger consumer demand will be sparked
later in the decade. We predict over 4mn 3G customers at the end of 2012, which would equate to around
7.5% of Vietnam’s mobile user base.
Competition and growth in 2008 will be boosted by the wave of tariff cuts, which have characterised
recent operator strategies. Further cuts may follow in the near future and these have generally been
predicted to encourage a price war within the sector. Lower mobile service prices are expected to
stimulate the growth of dual SIM ownership, as mobile users increasingly take advantage of special
offers. Conversely, lower prices will also likely lead to increased customer churn and a higher number of
inactive prepaid users. Meanwhile, during 2008, Vietnam’s mobile operators will continue to invest in
expanding their network footprints, with these investments having a positive impact on service quality
and coverage.
We also look forward to the presence of new strategic investors in Vietnam’s mobile market, as
companies such as Japan’s NTT DoCoMo, Norway’s Telenor, SingTel and France Telecom all show an
interest in bidding for a stake in MobiFone, through that company’s anticipated initial public offering
(IPO). Furthermore, following its September 2007 agreement with the Vietnamese government for the
creation of a joint venture under the name of GTel Mobile, Russia’s VimpelCom is also expected to
expand its presence in Vietnam. The Russian operator has pledged to spend US$1bn over the next several
years in the development of a GSM mobile network and in the provision of technical and operational
expertise.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 13
Industry Trends - Fixed Line Sector 2005-2012
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
2005
2006
2007
e
2008
f
2009
f
2010
f
2011
f
2012
f
0.0
3.0
6.0
9.0
12.0
15.0
18.0
21.0
Main Telephone Lines in Service ('000) (LHS)
Main Telephone Lines/100 Inhabitants (RHS)
Source: BMI Research
Fixed Line
Table: Telecoms Sector – Fixed-Line – Historical Data & Forecasts
2005 2006 2007 2008e 2009f 2010f 2011f 2012f
No. of Main Telephone Lines in Service ('000) 6,480 9,300 11,440 12,990 13,900 14,700 15,500 16,120
No. of Main Telephone Lines/100 Inhabitants 7.7 10.9 13.2 14.8 15.6 16.3 17.0 17.4
e/f = BMI estimate/forecast. Source: International Telecommunications Union (ITU), BMI research.
We have held steady our forecast for the
growth of Vietnam’s fixed-line market over
the next five years. This decision has been
based on an examination of year-end fixed-
line data provided by Vietnam’s fixed-line
incumbent operator, Vietnam Posts and
Telecommunications (VNPT). VNPT
gained 1.08mn new fixed-line subscribers in
2007, taking its total customer base to 8.8mn
and reflecting y-o-y growth of 14%.
However, it is important to remember that
traditional fixed-line subscriptions, based on
the public switched telephony network (PSTN), account for only around 77% of the total fixed-line
market, with the remaining fixed lines being based on fixed-wireless services.
We estimate that there were over 11.4mn fixed lines in Vietnam at the end of 2007, which is equivalent to
a penetration rate of just over 13%. These figures are consistent with recent data provided by the
country’s Ministry of Posts and Telematics (MPT). We predict that continued growth in 2008 will result
in around 13mn fixed-line customers by the end of 2008 and a penetration rate of almost 15%. Growth
will be encouraged by the 15-20% tariff cuts, which were applied to fixed-line and public card phone
charges in June 2007. However, towards the end of the decade, we expect that a slowdown in fixed-line
growth will occur as a result of increased mobile substitution and the more widespread use of VoIP
services. The slowdown will partly reflect fixed-line saturation in urban areas of Vietnam, while rural
parts of the country will be more inclined to take up mobile telephony. By the end of 2012, we predict an
almost stagnant rate of fixed-line growth, although, by that time, fixed-line penetration will have
surpassed 17%.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 14
Industry Trends - Internet Sector 2005-2012
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2005
2006
2007
e
2008
f
2009
f
2010
f
2011
f
2012
f0
2,000
4,000
6,000
8,000
10,000
12,000
Internet Users ('000)
Broadband Internet Subscribers ('000), RHS
Source: BMI Research
Internet
Table: Telecoms Sector – Internet – Historical Data & Forecasts
2005 2006 2007e 2008f 2009f 2010f 2011f 2012f
No. of Internet Users ('000) 10,711 14,684 18,862 23,400 26,000 28,650 30,250 31,460
No. of Internet Users/100 Inhabitants 12.7 17.2 21.8 26.7 29.2 31.8 33.1 34.0
No. of Broadband Internet Subscribers ('000) 210 517 1,195 2,465 3,935 5,705 7,875 10,131
No. of Broadband Internet Subscribers/100 Inhabitants 0.2 0.6 1.4 2.8 4.4 6.3 8.6 10.9
e/f = BMI estimate/forecast. Source: International Telecommunications Union (ITU), BMI
We have made some alterations to our
figures for internet user and broadband
subscriber growth in Vietnam, in order to
take account of figures published by
Vietnam’s Internet Network Information
Centre (VNNIC) in January 2008. The
VNNIC has suggested that there were
18.9mn internet users in Vietnam at the
end of January 2008, which equated to
22% of the total population. These figures
point to the likelihood of a slightly larger
internet user market than we had estimated
at the end of 2007. Nevertheless, the
differences between our figures and those of the VNNIC are not large, and we continue to believe that
Vietnam’s internet user base is expanding in accordance with our predictions. We have therefore retained
our figures for internet user growth in 2008 and beyond. We predict that the number of internet users will
expand by 24% in 2008 and will rise to over 23mn by the end of the year. By the end of our five-year
forecast, we anticipate a market of almost 31.5mn internet users, equivalent to 34% of the population.
Meanwhile, according to the VNNIC, the number of broadband subscribers rose by an impressive 130%
in 2007 and reached 1.3mn by the end of January 2008; this is equivalent to a penetration rate of 1.5%.
We estimate that there were 1.195mn broadband subscribers in Vietnam at the end of 2007, which is
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 15
equal to 1.4% of the population. Looking ahead, we continue to believe that broadband growth will be
strong over the next five years, and we predict a little over 10mn subscribers by the end of 2012
(equivalent to almost 11% penetration). However, we believe that the rate of broadband growth will be
slower in the early part of our forecast and have therefore altered our year-end projected subscriber totals
for 2008 through 2010. Although the government is investing heavily in the development of Vietnam’s
broadband sector (for example, it is doubling capacity over the country’s national fibre-optic network),
we believe that increased competition is required in order to increase the affordability of broadband
services. The arrival of new broadband service providers, some of them international operators, will help
to stimulate competition. The anticipated launch of new WiMAX broadband services over the next few
months should also help to boost broadband take-up. Nevertheless, we believe that it will take time for
some of these new developments to filter through into new subscriber growth, which is one of the reasons
why we have lowered our expectations for broadband subscriber growth in the early part of our forecast.
Vietnam Telecommunications Report Q3 2008
© Business Monitor International Ltd Page 16
Market Data Analysis
Mobile
Obtaining reliable data on the number of mobile subscribers served by Vietnam’s six mobile network
operators remains a challenging exercise. Indeed, the Ministry of Information and Communications
(MIC) has pledged to conduct an audit of all operators’ counting methodologies over deciding whether a
SIM card is active or not. To illustrate the confusion, both Viettel and MobiFone claim to be the country’s
leading mobile operator.
The latest data that we feel comfortable publishing is from the end of 2007, but suggestions from the MIC
suggest that there were approximately 50mn mobile subscribers at the end of June 2008, of which some
90% are prepaid subscribers. This high proportion of prepaid subscribers means that ARPU is low at
about US$6 per month, one of the lowest rates in Asia.
According to MIC’s figures, Viettel leads the way with a 38% market share and approximately 19.5mn
subscribers, ahead of MobiFone on 13.4mn and VinaPhone with 12.1mn.
Our end of year figures from 2007 show Viettel, owned by the Vietnamese military, as market leader with
a 29% share of the market, ahead of MobiFone and VinaPhone on 28% and 25%, respectively. Both
MobiFone and VinaPhone are owned by incumbent operator VNPT. Together, Vietnam’s three GSM
operators controlled over 82% of the mobile market at the end of 2007. We note that the number of
CDMA subscribers reached 6mn at the end of 2007, up from just below 2mn at the end of 2006. This
figure is likely to exceed 10mn by the end of 2008, despite HT Mobile’s decision to move from CDMA
to GSM.
Vietnam’s mobile subscriber base exceeded 35mn at the end of 2007, accounting for a 41% penetration
rate. This penetration figure we feel to be artificially high, as many people in Vietnam are multiple SIM
cardholders, a consequence of a very competitive market and a plethora of promotional campaigns.
We note that, by the end of 2007, VNPT had a combined subscriber base of 19mn. BMI believes that the
two operators had some success at the expense of Viettel. This came as MobiFone and VinaPhone
deployed 6,000 new base stations. VinaPhone is aiming to add a further 5,000 base transceiver stations
(BTSs), in order to achieve its target of 9,000 BTS by 2008, and awarded a contract to UK Vendor
Aircom International in May 2008 to provide it with network planning and design services.
In December 2007, it was announced that VNPT had entered a partnership with Motorola to expand and
enhance VinaPhone’s GSM network in major cities, including Hanoi and Ho Chi Minh City. Under the
contract, Motorola will commission over 650 cell sites and provide optimisation and maintenance
Vietnam Telecommunications Report Q3 2008
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services. Motorola is also understood to be cooperating with VinaPhone in order to expand GPRS
coverage and provide EDGE service in major metropolitan areas.
MobiFone has said that, in 2008, it expects to earn total revenues of VND16trn (US$1bn) and return a
profit of VND6.65trn. In order to achieve these goals, the company will continue to expand its coverage
area and increase its service quality in all localities and cities throughout the country. It plans to raise its
number of BTS to 10,000 by the end of 2008.
Furthermore, in December 2007, both MobiFone and VinaPhone began reducing their call charges by as
much as 25-28% in order to safeguard and expand their market shares. Accordingly, activation fees for
postpaid mobile subscribers fell from VND136,364 to VND109,000, while monthly subscription charges
remained the same at VND54,545. Call charges are being reduced by 20% on average for postpaid
subscribers, while, for prepaid subscribers, the charges are being cut by nearly 30%.
Table: Vietnam Mobile Market, 2007
Operator No. of Subscribers (mn) Market Share (%)
Viettel 10.4 29.1%
MobiFone 9.9 27.6%
VinaPhone 9.1 25.4%
S-Fone 3.4 9.5%
VPT Telecom 2.8 7.8%
HT Mobile 0.205 0.6%
Total 35.805 100.0
Source: Operators; BMI
Meanwhile, Norwegian telecom company Telenor has continued to fuel speculation about its possible
entrance into Vietnam’s mobile market. It has had a representative office in Vietnam since 2005 and is
hopeful that the Vietnamese government might soon open up the market and allow it, perhaps, to acquire
a stake in MobiFone.
We know that MobiFone is preparing for an IPO of approximately one-third of the company, with the
government retaining a 33.3% stake with the final third going to a strategic investor. This is likely to be
the first of several planned privatisations in Vietnam’s telecoms sector. While Telenor may show its hand,
so, too, could STT, which controls 75% of Asia Mobile Holdings, and as such controls a 40% stake in
Vietnam Telecommunications Report Q3 2008
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Indonesia’s second-ranked mobile operator Indosat. STT expects the sale of MobiFone’s stake, originally
slated for 2008, to be delayed until 2009.
Although Viettel, MobiFone and VinaPhone continue to dominate the mobile sector, Vietnam’s three
CDMA operators have recently enacted policies that are designed to expand their current minority market
shares. S-Fone, which has South Korea’s SK Telecom as a shareholder, is also said to be considering a
cut in tariffs in line with market trends.
However, one of these CDMA operators, HT Mobile, in April 2008, started to migrate customers away
from its CDMA network towards GSM technology (if they elect to stay with CDMA, they will switch to
S-Fone’s network). Those customers staying with HT Mobile will receive a new GSM handset. The
operator made its move after it failed in its target of luring 1mn customers by the end of 2007.
In January 2008, it was reported that the Ministry of Information and Communications (MIC) was ready
to grant a licence to Global Telecom Corporation (GTel) to offer mobile services. GTel is backed by
Russian giant VimpelCom, which is said to be prepared to invest up to US$1bn into the GTel mobile
network over the next few years. An MIC official confirmed that GTel had asked permission to supply
GSM-based mobile services and that the Ministry was working on the necessary formalities, adding that
GTel will be licensed to use the 1800 MHz frequency.
Further demonstrating the current attractiveness of Vietnam’s mobile market is the move by Dutch semi-
conductor manufacturer NXP, which has opened a representative office in the country. It hopes to work
closely with local partners to manufacture mobile handsets costing less than US$30.
Meanwhile, competition among handset manufacturers is also fierce with Nokia, Samsung, Motorola,
Sony Ericsson and BenQ Siemens all fighting it out for market share. Competition is made even fierce
by the downward trend in handset prices, as mobile phones no longer become status symbols. Indeed,
Nokia leads the way by introducing a number of cheaper handsets to the market, especially in rural
Vietnam.
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3G
The Vietnamese government has granted permission for the MIC to grant 3G licences to four mobile
operators. In addition, five mobile operators will also be given permission to undertake mobile WiMAX
trials. The decision, which was taken in late October 2007, follows more than a year during which the
MIC was understood to be preparing the 3G licensing criteria. A beauty contest for domestic operators
has been scheduled for 2008, followed by licensing, but, by the time of writing, had not occurred.
There have also been a number of large foreign operators that have expressed an interest in investing in
the development and deployment of 3G networks in the country. NTT DoCoMo, which opened an office
in Hanoi (its fourth overseas office) in September 2007, sees the annual 30% growth rate of the
Vietnamese telecoms market as a big draw. These sentiments are similar to those expressed by French
incumbent France Telecom.
According to reports, both MobiFone and VinaPhone are expected to upgrade their infrastructure to 3G.
MobiFone has completed a two-year 3G trial and is in the final stage of submitting a deployment proposal
with Ho Chi Minh City and Hanoi, the first cities expected to deploy services in 2008, possibly in
partnership with France Telecom. Meanwhile, VinaPhone concluded a similar trial with Nokia in Danang
in August 2007. As for Viettel, S-Fone and Hanoi Telecom (HT Mobile), all three are understood to have
requested UMTS licences from the Ministry.
It is unlikely that all six operators will win licences, with the government looking to award four 3G
licences at the most. It has been proposed by the Radio Frequency Department that each of the four 3G
licences be granted 2x15MHz frequency division duplexing slots in the 1920-1980MHz and 2110-
2170MHz bands, and a 5MHz time division duplexing slot in the 1900-1920MHz range. The 2010-
2025MHz band is to be reserved for further UMTS applications, and the RFD envisages that each
network will be granted a minimum 5MHz block.
A lack of content and the cost and availability of 3G handsets will all present problems to growth in
Vietnam’s 3G market, with BMI estimating no more than 700,000 subscribers in the first year of 3G
deployment. However, in spite of 3G, there is a real threat to growth in the Asia Pacific region as a whole,
and it comes from WiMAX, which can cover huge distances and which is able to provide wireless
internet access in the most remote towns and villages. Five operators are currently trialling WiMAX
services – these include VNPT-owned Vietnam Data Communications (VDC), in Lao Cai Province;
Vietnam Multimedia Corporation (VTC), in Hanoi and Ho Chi Minh; FPT Telecom; EVN Telecom
and Viettel. The latter three are testing both wireline and mobile WiMAX services.
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Fixed Line
VNPT reported a total telecoms subscriber base of 27.8mn at the end of 2007. Of this total, the operator’s
fixed-line subscriber base amounted to 8.8mn. BMI estimates that traditional fixed-line services provided
by VNPT amounted to 77% of the country’s total fixed-line subscriber base with 2.64mn customers using
fixed wireless services provided by operators such as Viettel and S-Fone. By the end of 2007, we estimate
that the fixed-line customer base amounted to 11.44mn, which is equivalent to a penetration rate of
13.2%.
Unusually for telecoms markets in Asia, the Vietnamese fixed-line sector still offers growth opportunities.
Vietnam’s government is determined to increase the speed with which VNPT’s virtual monopoly in the
fixed-line sector is broken. In December 2006, the Ministry of Posts & Telematics awarded a national
wireline licence to FPT Telecom. FPT’s fixed-line service will be based on a next generation network,
which will support the provision of IP-based voice telephony, as well as high-speed broadband and IPTV.
In mid-2007, FPT reportedly had 200,000 ADSL customers. The operator aimed to have attracted an
additional 50,000 subscribers by the end of 2007, with broadband services offered in 10 provinces.
In addition to controlling the greater part of the local voice telephony market, VNPT was, until 2002, the
only body authorised to offer long-distance and international services. However, both Saigon Postel (a
privatised former subsidiary of VNPT) and mobile operator Viettel (which is owned by the country’s
armed forces) have since begun offering domestic and international voice over IP (VoIP) services. VDC
also introduced its own prepaid and postpaid VoIP under the brand name FoneVNN in 2003 and, in
November of that year, became Vietnam’s first provider of virtual private network (VPN) services.
In an effort to expand its fixed-line customer base, VNPT chose Swedish vendor Ericsson to supply
equipment to accommodate 200,000 additional fixed-line subscribers in Vietnam’s central region. The
deal is part of the second phase of a project to expand reach and capacity in the area. The first phase
began in August 2006, when Ericsson won a contract to install 600,000 lines.
Meanwhile, the Ministry of Posts & Telematics has pledged to develop the country’s fixed-line
infrastructure, especially in rural areas. Behind the government’s plan to invest in fixed-line telephony is
its desire to ensure a balanced and sustainable development of traditional voice telephony services
alongside mobile telephony. One reason why the government aims to support the funding of telephony in
rural areas is the difference in revenue terms between fixed-line connections in urban and rural areas;
whereas a wireline subscriber will typically generate an average monthly revenue of under VND50,000 in
urban areas, this figure falls to VND30,000 in remoter parts of the country.
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Fixed Wireless
Around 70% of Vietnam’s population live in rural areas, and with saturation occurring in the highly
competitive urban mobile markets, an increasing number of operators, including mobile operators, are
launching fixed wireless services to cater to low-income households, helping to boost their revenues.
Fixed wireless services can be launched on existing mobile networks and therefore incur few start-up
costs. For Viettel, with around 70% of its subscriber base in rural areas, this indicates the importance of a
fixed wireless unit. Called HomePhone, Viettel announced a postpaid service in August 2007, having
launched its prepaid service several days earlier. Offering special discounts, it is expecting to raise the
number of customers of this service. Although press reports have suggested that Viettel had over 13mn
customers at the end of 2007, this figure is thought to include both mobile and fixed wireless customers.
Discounting its 11.9mn mobile customers, this would leave Viettel with just over 1mn fixed wireless
customers at the end of the year.
Vietnam’s fixed-line incumbent 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 further service deployments to the rest of the country
during August 2007. VNPT had outlined a target of 100,000 GPhone subscribers by the end of 2007, but
raised this to 500,000 new customers by year-end.
Broadband
Vietnam’s Internet Network Information Centre (VNNIC) suggests that there were 18.9mn internet users
in Vietnam at the end of January 2008, which equated to 22% of the total population. According to the
VNNIC, the number of internet users grew by 33% during 2007, while the number of broadband
subscribers rose by an impressive 130% y-o-y. Despite the number of broadband subscribers topping just
1.3mn in January 2008 for a penetration rate of 1.5%, the rapid take-up of broadband services illustrates
the growing popularity of such services within the country. Of the total number of broadband subscribers
in Vietnam, it is notable that two-thirds of them are from Hanoi and Ho Chi Minh City. Holding back
faster growth is the fact that ADSL services remain expensive and service quality remains poor, with slow
speeds and unstable connections beyond the country’s largest cities.
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Seeing the potential, however, for
broadband growth, VNPT increased its
fixed-line network capacity in June 2007
with the help of Nortel Networks, so that
it could offer an enhanced broadband
service. As a result of its investment,
VNPT’s north-south fibre-optic network
capacity was doubled from 20Gbps to
40Gbps, as part of VNPT’s plans to cater
for 600,000 high-speed internet customers
by the end of 2007. VNPT has set itself
what appears to be a rather conservative
target of 1.5mn broadband subscribers by
the end of 2009. In February 2008, VNPT
revealed that it planned to invest US$1bn in broadband development in 2008. The investment will be used
to raise existing capacity to 200Gbps by mid-2008, rising to 300Gbps at a later date. Furthermore, the
investment will fund the expansion of VNPT’s broadband network over the next two years ending 2010,
in order to provide coverage in previously underserved regions, while connecting public high schools and
government offices. VNPT is also trialling WiMAX services in the cities of Hanoi and Ho Chi Minh.
This follows the operator's earlier success with WiMAX trials in Lao Cai. However, VNPT is not the first
to test WiMAX, with both Viettel and FPT Telecom having been carrying out similar trials.
In March 2008, Saigon Postel Corporation (SPT) became the sixth operator to be awarded a WiMAX
licence by Vietnam's Ministry of Information and Communication. SPT is affiliated with the country's
mobile operator S-Fone. Three of the other five operators to have been awarded similar licences also have
links with the country’s mobile sector: VNPT is responsible for mobile operators VinaPhone and
MobiFone, while Viettel and EVN Telecom also provide mobile services. Meanwhile, the fourth WiMAX
licensee, Vietnam Multimedia Corporation (VTC), offers mobile digital TV services among other
broadcast services. Finally, Financially Promoting Technology (FPT) is already licensed to offer fixed-
line voice and internet services; so far, however, it has been licensed to only carry out trials of wireline
and wireless WiMAX services. The connection between WiMAX licensees and the mobile sector also
indicates that WiMAX has become more closely entangled in mobile wireless technology rather than
under the guise of a fixed network wireless technology, in which it was originally conceived. SPT has
indicated that it will 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. The
majority of other WiMAX trials are also being conducted in Vietnam's two major cities of Hanoi and Ho
Chi Minh.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep
-07
Nov
-07
Jan-
08
No of Internet Subscribers ('000)No of Broadband Subscribers ('000)
Vietnam Internet Market
Source: VNNIC
Vietnam Telecommunications Report Q3 2008
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Table: Vietnam – WIMAX Triallists
Operator WiMAX Licence Date Pilot Launch
Vietnam Post and Telecoms (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
Financially Promoting Technology (FPT) Mar-06 To carry out trials of both wireless and wireline WiMAX
EVN Telecom Jan-07 To carry out trials of both wireless and wireline WiMAX
Viettel Mar-06 To carry out trials of wireless WiMAX
Saigon Postel Corporation Mar-08 Trials to be carried out in Ho Chi Minh City and one
neighbouring province
Source: BMI
In February 2008, the Ministry of Information and Communication awarded a licence to CMC Telecom
to provide internet services in Vietnam. The operator, an affiliate of CMC Corporation, will reportedly
be the 10th internet service provider in the country. CMC Corporation, which set up CMC Telecom in
2007, will offer its services through its partnership with EVN Telecom, a CDMA-based Vietnamese
mobile operator. The chairman of CMC Corporation confirmed that, if licensed, CMC would consider
launching WiMAX broadband wireless services and stated that US chip manufacturer Intel would support
deployment. However, any WiMAX provider must currently be at least 51% state owned in order to
launch services. Given that CMC is less than 51% state owned, it would require a change in regulations
for it to be able to offer WiMAX services. Along with its licence to provide internet access, CMC
Telecom also gained two further licences – one for online services provision and one for internet content
provision. However, the operator is not currently allowed to build its own telecoms infrastructure. As part
of its partnership with CMC, EVN Telecom is responsible for investing in transmission infrastructure,
while CMC is to invest in IT and communications services, which will provide services for the customers
of both groups. CMC has stated that its strategy is to focus on large corporate clients and governmental
organisations, a strong sector for internet use in Vietnam, as 89% of companies are estimated to have
internet connections.
Strong demand for internet and broadband services in Vietnam is expected to continue, given that levels
of PC ownership remain high. According to a survey conducted by Alcatel-Lucent, some 95% of
Vietnamese households have access to a desktop PC, of which 16% are planning to purchase a laptop.
Furthermore, growth in broadband demand is set to soar, as the Vietnamese government has been
investing heavily in developing the broadband sector, announcing its commitment to inject VND100trn
(US$6.3bn) in order to raise penetration rates significantly. Also, since Vietnam joined the World Trade
Organisation (WTO), the country has seen a number of high-profile global companies locate their
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operations there, and employing local staff has boosted incomes. The result has been that a significant
number spend between US$10 and US$20 on their home internet bills, accessing multimedia content
including games and downloads. Increased competition is also expected to encourage increased
broadband usage.
Meanwhile, in March 2008, ISP One-Connection Internet (OCI) launched an online advertising site,
something it claims will give companies a chance to take full advantage of video and online advertising.
As a concept, online advertising has not yet developed in Vietnam, but it is a potentially large market, and
one that OCI thinks will grow by 50% each year from 2008, potentially reaching VND600bn by the end
of 2012.
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Macroeconomic Outlook
Short Lapse In Economic Growth Expected
BMI View: We believe Vietnam will experience a brief slowdown in economic growth in 2008 and 2009,
but should remain one of the world's fastest growing economies over our five-year forecast period. We
have therefore lowered our GDP forecasts for 2008 and 2009 to 7.0% and 7.5%, respectively, while
keeping our 2010 forecast at 8.5%. The notable risk is that short-term concerns about macroeconomic
stability will delay economic reform needed to maintain high economic growth.
The present surge in inflation and ballooning trade deficit are, in our view, primarily the consequences of
years of heavy investment and loose monetary policy, which have left the Vietnamese economy awash
with liquidity. The government belatedly tightened monetary policy in H108, and we believe this will
contribute to lowering growth in 2008 and 2009, as consumers and firms feel the pinch of tighter lending
conditions. Yet with robust macroeconomic fundamentals still in place, we expect GDP growth to return
to around 8% once inflation has been brought back under control.
Q108 Data Indicates Lower Growth In 2008
The General Statistics Office (GSO) released a Q108 GDP growth estimate of 7.52% y-o-y growth in late
March. Vietnamese GDP statistics are less reliable than those of other more advanced countries in the
region and tend to overload economic activity in the second half of the year, especially in construction
and manufacturing activity. This makes the analysis of quarterly GDP data somewhat spurious, but we
still see some evidence of slowing growth in the Q108 GDP data.
Firstly, the headline growth figure was slightly lower than the 7.66% y-o-y recorded in Q107, which we
see as an indication that growth this year will fall short of last year's estimated 8.5% expansion. The
slowdown was particularly marked in the construction sector where growth slowed to 3.3% y-o-y from a
pace of 7.6% in Q107. The important manufacturing component, which accounts for roughly a quarter of
GDP, also recorded a slowdown from 11.7% y-o-y in Q107 to 10.3% in Q108, which we see as indicative
that slackening global demand is now starting to affect Vietnam's industrial expansion.
We believe the slowdown in the manufacturing sector is primarily due to weaker orders from overseas
markets, as little of Vietnam's industrial production is aimed for the home market. External demand has
so far held up fairly well, with export growth coming in at an average of 27.9% in the first four months of
the year. Shipments to the US rose 23% y-o-y to US$2.38bn in Q108, a somewhat lower expansion rate
than the 26% y-o-y recorded in Q107. March sales data suggest that export growth to the US may slow
more markedly in Q208 as US consumers start tightening their belts. Anecdotal evidence suggest that
manufacturers are attempting to shift their business to Europe, the Middle East and Asia, but we believe
Vietnam's high exposure to the US retail market will take its toll on GDP growth this year.
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Apparel exports to the US, comprising about 10% of total exports, increased by 30% y-o-y to US$1.16bn
in Q108, but this still constitutes a slowdown compared to previous expansion levels of 35-40% (y-o-y)
recorded over 2007. Vietnam can take some comfort from the continued strong overseas sales of coffee,
rice, rubber and seafood, which should give the country's exports some leverage on higher global food
and commodities prices. The government's temporary ban on rice exports is, however, likely to decrease
the impact on the trade account from the more than doubling of the global rice price on the trade account.
While export growth was robust in Q108, we believe a slowdown in overseas sales is still on the cards.
We are forecasting export growth to drop from 22.3% in 2007 to 18.0% in 2008 as US demand falters.
We have pencilled in import growth staying flat at 35% this year, but acknowledge upside risks to this
target after the 75% y-o-y jump in imports in the first four months of 2008. The growing trade deficit
entails that much of the increase in domestic spending will benefit foreign exporters rather than domestic
producers. The sharp increase in imports implies that Vietnam will have to strive to source more of the
steel, machinery and fertiliser it needs domestically.
Domestic Momentum Likely To Feel The Pinch
The Q108 GDP estimate showed few signs of weakening domestic demand, with the service sector
expanding at a rate of 8.3% y-o-y compared to 7.8% in Q107, buoyed by strong growth in the hospitality
and transport sectors. We find it likely that the Q208 GDP estimate, which should be released at the end
of June, will show the domestic economy being harder hit by high inflation and monetary tightening. The
rapid increase in the price of rice to levels of VND16,000-20,000/kg (US$1.00-1.20/kg) has reduced the
spending power of many Vietnamese and is thus likely to affect private consumption going forward.
Retail sales, the most readily available proxy for private consumption, increased by 29.5% y-o-y in
January to April, but this masks a deceleration in real terms.
We expect the slowdown in both domestic and external demand to be more pronounced in the coming
quarters, bringing annual GDP growth down towards the 7.0% target we set in January. In fact, we do not
preclude that GDP growth will actually undershoot 7.0%, which is now also the government target for
2008, if the export sector were to be impacted by a severe slowdown in US demand and monetary and
fiscal tightening takes a deeper bite into domestic demand.
Our core scenario is, however, a less pronounced slowdown as the government readjusts its monetary
policy to achieve a more balanced growth path. We thus believe that the current monetary tightening
measures will remain in place over both 2008 and 2009 until inflation has returned to single digits by the
end of 2009. With the government having shown that it has recovered its grip on price growth, and
infrastructure investment progressing at a steady pace, we believe that foreign direct investment will
continue to be forthcoming over our five-year forecast period.
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It should be kept in mind that Vietnam's cost advantage vis-à-vis China remains largely intact as inflation
and a new labour law have pushed up wages in the Chinese manufacturing industry. Vietnam should thus
continue to receive high investment inflows from Singapore, South Korea, Taiwan and other Asian
countries where firms are looking to cut costs by outsourcing assembly, testing and packaging functions
to plants in lower income countries like Vietnam.
We therefore believe that GDP growth will recover to 7.5% in 2009 before trending higher to 8.5% in
2010. Bearing in mind that Vietnam is an emerging economy and thus prone to be exhibit more volatility
in economic growth, we still see GDP growth continuing to expand at an annual rate of approximately 8%
over the next ten years. As such, it will contribute to shifting the weight of the world economy towards
the Pacific Rim, but Vietnam will still lag behind most of its neighbours in GDP per capita.
Table: Vietnam – Economic Activity
2005 2006 2007 2008f 2009f 2010f 2011f 2012f
Nominal GDP, VNDbn 2 839211.
0 973790.
0 1143442
.0 1337827
.1 1558568
.6 1815732
.4 2115328
.3 2458011
.5
Nominal GDP, US$bn 3 53.05 60.99 71.38 85.21 101.21 121.05 146.90 175.57
Real GDP growth, % change y-o-y 1,4 8.4 8.2 8.5 7.0 7.5 8.5 8.5 8.2
GDP per capita, US$ 3 638 714 825 971 1138 1342 1607 1894
Population, mn 5 84.24 85.40 86.58 87.77 88.97 90.19 91.42 92.70
Industrial production index, % y-o-y, ave 2 17.2 17.0 17.1 15.2 16.9 16.4 15.7 14.9
Unemployment, % of labour force, eop 2 5.3 4.8 4.5 5.0 4.8 4.4 4.3 4.3
Note: f = BMI forecast. 1 Constant 1994 prices; Source: 2 General Statistics Office. 3 BMI calculation; 4 General Statistics Office, BMI calculation; 5 Asian Development Bank. As of July 1.
Vietnam Telecommunications Report Q3 2008
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Regulatory Environment
Vietnam: Regulatory Bodies And Their Responsibilities
Regulatory Body Responsibilities
Ministry of Information and
Communications (MIC)
18 Nguyen Du Street,
Hanoi,
Vietnam
Tel: 00 844 943 5602
Fax: 00 844 826 3477
Web: www.mic.gov.vn
The Ministry of Posts and Telematics of the Socialist Republic of Viet Nam 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 of 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:
! Submit to Government drafts of laws, ordinances, regulations, strategies and
development plans on posts, telecommunications and information technology;
! Give guidance in implementation of laws, ordinances, regulations, as well as
development strategies and plans related to posts, telecommunications and
information technology;
! Regulate the access to and the interconnection between public switched
telephone networks, specialised and private networks;
! Regulate the electronics and information technology industry development plan;
! Regulate charges and tariffs in the fields of posts, telecommunications and
information technology;
! Plan, assign and allocate radio frequency spectrum; control and monitor radio
frequency spectrum and radio equipment; organise radio frequency, satellite orbit
registration and coordination;
! Grant licenses in posts, telecommunications, radio frequency and Internet;
! Regulate the quality of posts, telecommunications and information technology
networks, plants, products and services;
! Regulate numbering resources, codes, domain names and addresses used in
the fields of posts, telecommunications and information technology;
! Conduct international cooperation activities in posts, telecommunications and
information technology;
! Inspect all activities and settle all regulatory breaches in the fields of posts,
telecommunications and information technology.
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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 18 October 2001, which ratifies Vietnam Post and Telecommunications
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.
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 the primary aims as follows. First is
the consolidation of the legal structure into a single law, which means the repeal of the set of
contradicting laws and regulations. Second, the Ordinance shall modernize the legal structure and address
the important issues that arise in a competitive market structure.
The functions of Vietnam Posts and Telecommunications (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 policy maker and regulatory authority. The
key functions and responsibilities of the organization 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 both 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 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 &
Telematics, 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
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(ASN) in Vietnam, VNNIC also provides Internet-related guidance and statistics related to international
activities on internet.
Licensing And Spectrum
Vietnam’s Ministry of Posts and Telematics (MPT) is responsible for all licensing related to
telecommunications services. Prior to Vietnam’s entry to the World Trade Organisation (WTO), foreign
telecoms operators were prevented from making direct investments in Vietnamese telecoms operations.
Instead, Business Cooperation Contracts (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, Vietnam’s MPT has allowed
a number of local telecoms companies to enter into joint ventures 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-facilities-based services, the foreign capital
contribution to these joint ventures must not exceed 51% of legal capital. Despite these continued
restrictions which govern the licensing process, it will be permissible for wholly foreign-owned firms to
provide registered telecoms services to Vietnamese organisations and individuals once Vietnam has been
a WTO member for two years. Furthermore, 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 joint ventures 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 joint ventures and will be allowed to raise their capital in the joint
venture 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 joint venture.
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 VNPT, Viettel, EVN
Telecom), and also to virtual personal network and IXB service providers such as FPT, VNPT, Viettel
and EVN Telecom four years after the date of Vietnam’s WTO membership.
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Regulatory Developments
According to reports published in February 2008, Vietnam’s Ministry of Information and
Communications (MIC) is to hold an exam to select which networks are most capable of providing 3G
services. All seven 2G licensees are eligible to enter. These are MobiFone, VinaPhone, Viettel Mobile, S-
Fone, EVN Telecom, HT Mobile and non-operational newcomer GTel. The MIC has said it will grant just
four licences. Incumbent VNPT, which runs VinaPhone and MobiFone, and military-owned Viettel, are
both said to be worried about failing the test through a simple mistake. An MIC spokesman said that the
cellcos will be tested on around 200 standards, which it is currently defining. The MIC has said that it will
seek comments before compiling the official examination contents and will deliver the exam documents
in March 2008. Competitors will then have two months to complete the exam documents. The ministry
will consider the exam documents in May, and it will grant 3G licences in the second quarter of 2008.
According to the MIC, winners will be granted 15MHz of frequency division duplex (FDD) spectrum and
4MHz of time division duplex (TDD) spectrum. However, any winner that fails to launch 3G services
(presumably by a set date) will be fined and risk having their frequencies withdrawn.
In March 2008, VNPT announced that the country’s first commercial telecoms satellite launched on April
12 2008. Vinasat-1 will be capable of handling more than 10,000 telephone, internet and data
transmission channels. People living in remote areas will be among those to benefit most, as the satellite
is expected to provide them with access to modern telecoms services for the first time. Speaking at a
briefing ceremony in Hanoi on March 12, VNPT Deputy General Director Nguyen Ba Thuoc said the
successful launch of the satellite will be of great importance to Vietnam’s socio-economic development.
Worth more than US$200mn, Vinasat-1 will be positioned at 132 degrees East Longitude in a
geostationary orbit and has a design life of 15 years.
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Company Monitor
Nokia Reports On Strengthened Investments In Asia's Emerging Markets
There were 1.137mn mobile handsets in the global market at the end of 2007, an increase of 16% over the
year. Of this total, the largest rise in mobile handset units occurred in Asia Pacific and China, both up by
34% y-o-y to 254mn and 173mn units, respectively. Middle East & Africa reported an increase of 19%,
followed by Latin America (10%), North America (6%) and Europe (3%). The reason behind the level of
handset growth witnessed in the worldwide market during the year was on account of a vibrant
replacement market and greater number of new subscribers from the emerging markets, according to
Nokia Group. If we consider that Asia Pacific, not only houses both developed markets interested in
device features, such as cameras, e-mail, music players and 3G, but also the largest developing markets –
India and China – it becomes easy to understand why this region should experience high demand levels
for handsets.
Table: Global Mobile Handset Market v. Nokia Mobile Handset Market By Geography (mn units)
Global ow Nokia Global ow Nokia Global Nokia
Region YE07 YE07 YE06 YE06 Y-o-Y Chg
% Y-o-Y Chg
%
Europe 284 117.2 276 99.6 2.9 17.7
Middle East & Africa 126 75.6 106 53.2 18.9 42.1
China 173 70.7 129 51 34.1 38.6
Asia-Pacific 254 112.9 189 79.8 34.4 41.5
North America 170 19.4 160 25.3 6.3 -23.3
Latin America 130 41.3 118 38.6 10.2 7.0
Source: Nokia; ow = of which
Nokia Conquers China And India
Taking Asia Pacific and China into isolation, the largest mobile handset provider in these two markets
was Nokia. The Finland-based telecoms equipment vendor had a 44.4% share of the Asia Pacific market
and 40.9% share of the Chinese mobile handset market. Early entry into the emerging markets combined
with affordable entry-level handsets priced at under EUR50 has ensured Nokia's success. According to
the vendor's estimates, the entry-level handset market made up over 35% of the industry's total handset
volume, while Nokia's share in the entry-level market was in excess of 50%. Of Nokia's top 10 net sales
generating markets in 2007, China and India were No.1 and No2, respectively, with Indonesia in ninth
place. Although it was a step up for India in the rankings by one spot over the year, China remained in
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first position. Nokia's ability to gain market share in China was due to its 'extensive distribution system,
broad product portfolio, brand and strong market share in the entry level.'
Table: Top Ten Nokia Net Sales Markets
Country 2007 (2006) Ranking
China 1 (1)
India 2 (3)
Germany 3 (5)
UK 4 (4)
US 5 (2)
Russia 6 (6)
Spain 7 (8)
Italy 8 (7)
Indonesia 9 (9)
Brazil 10 (10)
Source: Nokia
Mobile handsets continue to be the largest revenue contributor of Nokia's total net sales. In 2007, mobile
handset sales stood at EYR25.083bn to account for 49.2% of the total at EUR51.058bn, up by 24% y-o-y.
However, the increase in mobile handset revenues has remained less than impressive at 1% over the year,
the reason for this being that volume growth was offset by a significant decline in the average selling
price (ASP) of handsets. Nokia's ASP in Q407 stood at EUR83, down from EUR89 in the fourth quarter
of the previous year. This decline was also partially attributed to a weaker US dollar on Nokia net sales.
On a q-o-q basis, ASP increased by 1.2%, reflecting a greater percentage of sales recently launched at the
mid- to high-end and offsetting robust sales of entry-level units.
Investments Satisfy Greater Demand For Capacity
Of Nokia's 10 mobile handset production facilities, the majority were based in Asia Pacific: China
(Beijing and Dongguan), India (Chennai) and Republic of Korea (Masan). The importance of these
facilities to Nokia was highlighted by the announcement made in December 2007, of the decision to
invest a further US$75mn into its Chennai plant. Collectively, these four handset plants had a production
capacity totalling 101,885m² (productive capacity equals the total area allotted to manufacturing and to
the storage of manufacturing-related materials). However, Asia Pacific's handset plants were not the only
facilities to receive additional funds during 2007. The region's network unit, Nokia Siemens Network
(NSN), also with 10 network equipment plants, again of which four were based in Asia Pacific, received
further investment. Three were based in China (Beijing, Shanghai and Suzhou) and a fourth in India
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Middle EastAnd Africa
11.3%
China10.1%
Latin America
9.0%
NorthAmerica
4.6%Asia-Pacific25.0%
Europe40.0%
NSN Net Sales By Geography (%)
Source: BMI
(Calcutta). The low cost of production and a highly skilled labour force have made these two countries an
ideal location for NSN facilities, while logistically they allow for efficient distribution to Asia's two
largest markets. NSN demonstrated its commitment to the emerging markets by announcing that it would
expand its R&D capacity in China and invest US$100mn to strengthen its operations in India.
Greater investment in these emerging markets, with rapid subscriber growth, resulting in capacity
increases and network build-outs, has led
Asia Pacific to become the second largest
revenue contributor to NSN at EUR3.35bn,
up by 90.6% y-o-y. Europe, with its
revenues of EUR5.359bn, accounted for
40% of the total, managing a 98% y-o-y
increase. The degree of growth in Asia
Pacific is hardly surprising, with low
penetration rates, increased competition and
greater liberalization leading to strong
subscriber take-up. India has on average
8mn new subscribers per month, while the
number of competing mobile operators in Indonesia has grown rapidly in the last year leading to
downward pressures on price, long held as the major obstacle to growth. As for China, NSN sales rose by
53% during the year to EUR1.35bn, not far off from Middle East & African revenues of EUR1.515bn.
A number of network expansion contracts awarded to NSN during 2007 have highlighted the growing
need for capacity. During the year, the company signed a US$500mn network expansion contract with
India's Idea Cellular and a US$900mn end-to-end network expansion contract with Bharti Airtel.
Furthermore, Telenor Pakistan contracted NSN to a network expansion and managed services frame
agreement with NSN in February 2007, while NSN was also awarded a EUR180mn contract with China's
Henan Mobile Communications Company for the expansion of its GSM network.
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Table: Nokia And NSN: Major Contracts And Milestones
March 7 2008 Nokia Strategic Cooperation with China Postel strengthened
December 5 2007 US$75mn investment in Chennai, India manufacturing plant
November 29 2007 Telenor Pakistan selects Nikia Intellisync Wireless E-mail
November 6 2007 AIS Thailand standardising on Nokia Mobility Platform
August 23 2007 India emerges as Nokia's second largest market
August 1 2007 Opens first design studio in India
June 18 2007 MiTV and Nokia announce live DVB-H mobile TV services for Malaysia
June 5 2007 Power mobile e-mail solution for PCCW Mobile
February 28 2007 Telenor Pakistan and Nokia sign network expansion and managed services framework
agreement
Source: Nokia
Pushing The Boundaries Of NGN Technology
At the other end of the spectrum, Japan's NTT DoCoMo, faced with growing competition from KDDI
and Softbank Mobile and with 3G subscribers already accounting for over 80% of the total market, has
led to development efforts on super 3G or LTE network deployments. Together with Panasonic, NSN
was selected by NTT DoCoMo to carry out an LTE base station project. Similarly, other data-rich
applications have been the subject of focus for Asian operators, including the launch of live DVB-H
mobile TV services in Malaysia together with MiTV and an e-mail solution for Hong Kong's PCCW
Mobile during 2007.
At the end of 2007, NSN net sales stood at EUR13.393bn to account for 26.2% of Nokia Group's total
sales and only second to mobile handset devices. A direct y-o-y comparison has not been possible, with
the inclusion of NSN results commencing in April 1 2007, and, therefore, 2006 network sales report those
of only Nokia. According to its original timeframe, NSN had been targeted to achieve annual cost
synergies of EUR2bn in order to maintain a competitive cost structure. This year should see continuing
subscriber growth resulting in greater minutes of use and maturity of the services market.
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Selected Profiles – Operators
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 53% of mobile subscribers
! A clear investment strategy to invest heavily in mobile and broadband services
Weaknesses
! Services in rural areas is poor or non-existent
! Lack of competition in fixed-line sector has contributed to limited array of services on offer
! New mobile price structure under pressure from competitors
Opportunities
! 3G services, once VinaPhone and MobiFone win licences, will provide substantial source of value-added mobile revenues
! Deployment of broadband and fixed-wireless networks in short and medium term
! Expansion of GPhone fixed wireless service will help presence in rural areas
Threats
! Viettel expected to extend lead over mobile market
! Low-cost mobile services from competitors could result in migration away from fixed services
! Timescale for restructuring plan currently uncertain and could be delayed
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, Vietnam Telecom Company (GPC-VinaPhone) and VMS
MobiFone, both operating GSM networks.
At the end of 2007, VNPT served approximately 8.8mn fixed-line telephone
subscribers and almost 19mn mobile telephone customers.
In April 2008, VNPT launched Vinasat 1, the country’s first telecoms satellite in
French Guyana. Vinasat-1 will be controlled from two land stations in Ha Tay
province (north Vietnam) and Binh Duong (South Vietnam). The cost of Vinasat-1 has
been US$200mn. VNPT worked closely with Lockheed Martin Commercial Systems
over the construction and launch of Vinasat 1.
Address
! Vietnam Posts and Telecommunications Corporation (VNPT) 18 Nguyen Du Street Hanoi Vietnam
! Tel: +84 (49) 434 936
! Fax: +84 (48) 255 851
! Web: www.vnpt.com.vn
Key Statistics
! Annual Revenues (2003): VND26.51trn
! Annual Revenues (2004): VND30.66trn
! Annual Revenues (2005): VND33.8trn
! Annual Revenues (2006):
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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 Datacommunications 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. Under the plan, the national network will be run directly by VNPT,
instead of through subsidiaries such as Vietnam Telecom International and Vietnam
Telecom National, which will be absorbed into the parent. This should create fair
competition among local telecom operators, according to VNPT.
Recent Financial Performance
In 2007, VNPT generated a turnover of VND45.3trn (or US$2.8bn), a growth of
14.08% over 2006. Its state budget contribution reached VND6.917trn, which was
some 12.78% higher than in 2006. VNPT added 9.88mn new connections to its
networks in 2007, of which 8.8mn were mobile phone users. This helped the total
subscriber base of VNPT to gross 27.8mn nationwide, including almost 19mn mobile
phone users. Also in 2007, VNPT recorded 514,000 new ‘Mega VNN’ broadband
subscribers, raising the total to 740,000.
Strategy
Investing in mobile and broadband services are VNPT’s priorities in 2008. The
operator is currently designing new wireless stations and upgrading existing networks
so as to prepare for the implementation of 3G services. Both VinaPhone and
MobiFone will also seek to expand the reach of their EDGE services nationwide.
VNPT has also pledged to invest US$1bn in its NGN and mobile broadband services
as it aims to have one million broadband subscribers at the beginning of 2009.
Fixed-Line Services
In an effort to build on growing broadband interest, VNPT began providing IPTV
services in 2007. It aimed to sign up 500,000 new ADSL subscribers during 2007,
which would represent an annual increase of over 300%.
In May 2007, VNPT awarded a contract to Nortel to double its national optic
backbone capacity and meet growing demands for high-speed video, mobile and
broadband services. VNPT has said that it will provide ADSL broadband access to
more customers, handle increased mobile traffic for wireless operators and create a
platform for its planned migration to a wholly IP-based infrastructure. Instead of
VND38.3trn
! Annual Revenues (2007): VND45.3trn
! No. of Fixed-Line Subscribers (December 2005): 6.3mn
! No. of Fixed-Line Subscribers (July 2006): 7.2mn
! No. of Fixed-Line Subscribers (December 2006): 8mn (estimate)
! No. of Fixed-Line Subscribers (December 2007): 8.82mn
! No. of Cellular Subscribers (December 2005): 6.7mn
! No. of Cellular Subscribers (December 2006): 10.18mn
! No. of Cellular Subscribers (May 2007): 18.7mn
! No. of Cellular Subscribers (December 2007): 18.98mn
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running at 20Gbps, this will double to 40Gbps.
VNPT introduced lower fixed-line charging in June 2007; tariffs for fixed-line and
public card phone charges were cut by 15-20%.
VNPT’s internet and data unit Vietnam Data Communication Company (VDC) has
signed an agreement with Motorola to trial mobile WiMAX services. Under the terms
of the agreement, Motorola’s wi4 WiMAX will be deployed, enabling the delivery of
services including VoIP to meet broadband demand. The trial will last a year and
cover Hanoi and its surrounding areas in the first phase, extending to HCM City in the
second. Meanwhile, VDC is cooperating with Intel in running the second phase of a
fixed WiMAX trial in the northern mountainous province of Lao Cai. The test of the
mobile internet service will take place with three BTSs and 30-50 access points. The
government expects to see WiMAX services commercially launched in 2008.
In November 2007, it was reported that French-US vendor Alcatel-Lucent had signed
two contracts with VNPT for the supply and installation of telecoms equipment. The
deals are worth a total of US$31.7mn. Alcatel-Lucent will provide two telephone
switchboards with respective capacities of 1mn and 272,000 subscriber lines to VNPT.
The new switchboards will help VNPT fulfil its plan to upgrade fixed line services,
mobile networks and internet services ready for potential privatisations of the
incumbent’s various business units, including cellco MobiFone, during 2008.
In January 2008, VNPT chose Ericsson to supply equipment that would accommodate
200,000 more fixed-line subscribers across central Vietnam, forming the second phase
of a project to expand reach and capacity for the operator.
Mobile Services
VNPT indirectly owns both VinaPhone and MobiFone, which had almost 10.2mn
subscribers between them at the end of 2006 and almost 19mn customers between
them at the end of 2007; the two operators account for 53% of Vietnam’s entire
mobile subscriber base.
In December 2007, VNPT began to reduce mobile tariffs by up to 25-28%, in a move
which is expected to trigger a price war with Vietnam’s other operators. Indeed, the
move by VNPT followed similar readjustments by Viettel, which reduced its own
tariffs by 15% on December 1 2007.
Launching its fixed wireless phone service ‘GPhone’ in June 2007, VNPT said the
new service will operate on VinaPhone’s GSM platform. As a result, the service will
be provided in all areas covered by VinaPhone’s network. VNPT said in local press
reports, ‘the service is particularly suitable for remote and mountainous areas where
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installation of a fixed-line telephone service is expensive and in some cases,
impossible’. Subscribers of the GPhone service will be charged the same as fixed-line
subscribers. The service was introduced in two stages – initially launched in eight
provinces and cities, the service was extended nationally in August 2007. Although
VNPT was initially aiming to sign up 100,000 GPhone subscribers by the end of 2007,
this target was later increased to 500,000.
VNPT has sought to partially privatise MobiFone, after which it will do the same to
VinaPhone. VNPT has short listed some six foreign companies, which will bid to
advise the operator on its partial privatisation including its IPO expected in 2008.
Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Rothschild and UBS
are expected to bid to become an adviser for the operator. VNPT has yet to provide a
timeframe for the bidding. The IPO has already attracted some high profile operator
names including NTT DoCoMo, which has announced its interest to acquire a 30%
stake at a cost of US$1bn. Other companies to have expressed an interest are Telenor,
France Telecom and Singapore Telecommunications.
VNPT awarded a contract to Alcatel-Lucent in October 2007, for the deployment of
GSM/GPRS/EDGE base stations across the country to help improve the coverage and
capacity of its network. The vendor will provide VNPT with optical nodes to connect
base stations and to act as a mobile backhaul system in the northern region. The
contract is reported to be worth US$28.5mn.
A further contract was awarded to Alcatel-Lucent in November 2007, by VNPT for
the supply and installation of telecoms equipment. The deals are worth a total of
US$31.7mn. Under the terms of the agreement, the vendor will provide two telephone
switchboards with respective capacities of 1mn and 272,000 subscriber lines. This is
expected to help VNPT upgrade its fixed-line service, mobile networks and internet
service, as it prepares for the privatisation of its various business units.
Joint Ventures
NTT Communications, the sister unit of NTT DoCoMo is to form a joint venture with
VNPT. Operating under the name of Global Data Service (GDS) in Hanoi from 2008,
the company will provide data services and plans to establish data centres in Hanoi by
mid-2008 and Ho Chi Minh City in early 2009. NTT Communications will take a 40%
stake in GDS, with VNPT occupying the remainder.
International
In June 2007, the Vietnam Economy reported that VNPT had opened an office in the
US, providing ‘new opportunities for Vietnamese telecom companies in this market’.
The operator’s decision is based on a need to update strategic information on
technology and business to serve the group’s operations and integration. VNPT co-
operated with six US partners: MCI, Verizon, AT&T and Sprint over IDD services
Vietnam Telecommunications Report Q3 2008
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and with VITC and Net Global for voice over IP (VoIP) services. The Vietnamese
operator is now said to be looking to boost its internet and communication
partnerships with Time Warner, Teleglobe, Fusion, Ipass and Voice2me. Meanwhile,
VNPT has shown interest in the US’ wholesale and retail markets.
VNPT is to pay 25% of the US$3mn required to repair the broken undersea optical
cable linking the country with Thailand and Hong Kong. The TVH system-based cable
repairs will mostly be funded by Thailand’s CAT (44.5%), while Hong Kong’s
REACH will pay 20.4% towards the repairs.
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S-Fone (S-Telecom)
SWOT Analysis
Strengths
! Backed by leading Korean players SK Telecom and LG Electronics
! Licence to offer fixed-wireless, mobile and value-added services
! Ended 2007 with 3.4mn mobile subscribers and 9.5% share of the market
Weaknesses
! SK/LG not permitted to own equity in entity
! Coverage currently limited to 13 provinces and cities
! Pricing structure already undercut by Viettel
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
! Falling further behind market leader Viettel and VNPT subsidiaries
! Influx of new mobile entrants likely to lead to pricing war
Overview
S-Fone is a joint venture between Saigon Postel and SLD, a Singapore-based
consortium comprising 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 via
CDMA2000 1X technology. The operator launched services in July 2003, and, by the
end of 2006, had 1.8mn mobile subscribers. BMI estimates that its mobile customer
base had risen to 3.4mn by the end of 2007. The operator delivers its service over the
whole of Vietnam through almost 600 BTSs.
SK Telecom has announced that it will invest US$543mn into its joint venture SLD
Telecom, which partly owns S-Fone. The investment will go towards helping S-Fone
garner a larger share of the mobile market.
Mobile Services
In October 2006, S-Fone launched several services based on an EVDO network in
Hanoi, Ho Chi Minh and Da Nang. The EVDO services consist of real time TV
services and are expected to increase ARPU and the operator’s subscriber base. At the
Address
! 97 Nguyen Thi Minh Khai, Ben Thanh District 1 Ho Chi Minh City Vietnam
! Tel: +84 (8) 404 0079
! Fax: +84 (8) 925 4287
! Web: www.stelecom.com.vn
Key Statistics
! No. of Cellular Subscribers (December 2006): 1.8mn
! No. of Cellular Subscribers (December 2007): 3.4mn
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end of 2007, S-Fone had approximately 400,000 subscribers to its EV-DO service.
In December 2006, Ericsson announced an agreement with S-Fone for the building of
a nationwide IMS-based multimedia network across Vietnam. The strategy behind this
deal is to remain ahead of its competition in providing high quality IP multimedia
services.
In a deal to attract next generation subscribers, S-Fone signed an agreement with
digital entertainment company WiderThan to operate and manage the company’s
VAS. It will allow S-Fone to offer a broad range of mobile entertainment, including
ringbones, music and video on demand, games and news services.
In April 2008, S-Fone announced an agreement with Qualcomm to launch BREW
services on the operator’s CDMA network, providing it with a hosted data service. It
should provide S-Fone with an opportunity to differentiate their offerings from rival
competitors.
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VinaPhone
Overview
A wholly-owned subsidiary of VNPT, GPC-VinaPhone operates a nationwide GSM-
based digital cellular telephone network under the VinaPhone brand name. The
network was launched in June 1996. By the end of 2007, VinaPhone was estimated to
have 9.1mn mobile customers, which is equivalent to nearly 26% of the market.
In 2005, the government confirmed that GPC-VinaPhone would be publicly listed,
probably by year-end 2008.
Network Development In March 2003, Alcatel of France was contracted to supply and install its Evolium
GSM 900 solution to optimise VinaPhone’s existing network infrastructure and
upgrade its coverage of 18 northern provinces, including Hanoi.
In 2005, VinaPhone announced that it had upgraded some 1,000 base stations and built
three new exchanges in Hanoi, Hai Duong Province and Ho Chi Minh City.
In May 2008, UK-based Aircom International won a deal with Vinaphone to provide
the operator with network planning, design support and surveying activities for the
expansion of its network. This contract forms an important part of the operator’s aim
to boost subscriber numbers and provide nationwide coverage – Vinaphone expects to
have a total of 9,000 base transmission stations by the end of 2008.
Mobile Services Value-added services offered by VinaPhone include SMS, WAP and data
transmission. In September 2005, VinaPhone selected Comverse’s Multimedia
Messaging Service Centre (MMSC) and Mobile Data Gateway (MDG) to provide
expanded multimedia and video messaging services to its customers.
From July 1 2007, VinaPhone prepaid subscribers will be required to register their
personal details, following the introduction of similar rules for postpaid subscribers.
Subscriber details with deactivated incoming and outgoing calls will not be retained
for six months as before, but only for three months. The operator believes this new
method will help check the growth of subscribers, but will in the long term help
VinaPhone save its phone number resources. This we believe is largely a side effect of
the aggressive promotional activities of all operators, which has led to phone numbers
being wasted.
Address
! Vietnam Telecom Services Company (GPC-VinaPhone) 57A Hyunh Thuc Khang Dong Da Hanoi Vietnam
! Tel: +84 (4) 835 8815
! Fax: +84 (4) 835 7502
! Web: www.gpc.vnn.vn
Key Statistics
! No. of Subscribers (2003): 1.3mn
! No. of Subscribers (2004): 2.5mn
! No. of Subscribers (2005): 3.5mn
! No. of Subscribers (2006): 5.5mn
! No. of Subscribers (2007): 9.1mn
Vietnam Telecommunications Report Q3 2008
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MobiFone
Overview
Vietnam Mobile Telecom Services (VMS), a subsidiary of incumbent fixed-line
operator VNPT, operates a GSM-based digital cellular telephone network under the
MobiFone brand name, serving approximately 10mn customers at the end of 2007;
this is equivalent to over 27% of the total mobile market.
MobiFone plans to prepare for an IPO of one-third of the company’s shares. The
government will still retain a 33.3% stake, while the remaining third of the operator
could be acquired by a strategic investor, possibly later in 2008, but more likely in
2009. A number of operators have expressed an interest in MobiFone, but the most
likely candidates are Singapore Technologies Telemedia (STT), Telenor, France
Telecom or Japan’s NTT DoCoMo.
The sale will be important to watch as it will be the first of many privatisations
planned by the Vietnamese government for the telecoms sector. Next up for
privatisation will be sister company Vinaphone.
Network Development
The operator is pushing for the development of an NGN network. Due to be
introduced in two phases, the first phase, carried out between 2008 and 2010, will
focus on developing NGN applications and a core 2G network, while gradually putting
3G into application in big cities. The second phase, from 2010-2012, will focus on the
core NGN IP technology and launching 3G nationwide. MobiFone has set a target of
6,000 3G customers by 2012.
With 9.9mn subscribers at the end of 2007, MobiFone hopes to take this total to over
20mn by the end of 2008. The operator also expects to achieve revenues of VND16trn
and post a VND6.6trn profit for 2008. (Such a result suggests that MobiFone is
expecting a slowdown in growth, given that revenues grew by 30% in 2007, and such
a rise in revenues would only show 17% growth). So as to succeed in this aim,
MobiFone will install 6,000 additional base transceiver stations raising the total
number to approximately 10,000 by the end of the year.
Address
! 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
! Web: www.mobifone.com.vn
Key Statistics
! No. of Subscribers (2003): 1.036mn
! No. of Subscribers (2004): 1.843mn
! No. of Subscribers (2005): 3.2mn
! No. of Subscribers (2006): 5mn
! No. of Subscribers (2007): 9.9mn
Vietnam Telecommunications Report Q3 2008
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Viettel
SWOT Analysis
Strengths
! Licence to offer fixed-wireless, mobile and value-added services
! Low tariff structure
! Nationwide coverage
! Market leader
Weaknesses
! Network currently has limited capacity
! No distribution service outside urban areas
! No international partner
Opportunities
! Mobile market expected to increase to above 56mn by the end of 2008
! Nationwide coverage should guarantee substantial market share in medium term
! Won licence to test WiMAX mobile broadband service
Threats
! Connection difficulties could prompt potential subscribers to opt for alternative networks
! Influx of new mobile entrants likely to lead to pricing war
Overview
Viettel established a radio trunking network in 1998, 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 began rolling out a GSM
mobile network.
By the end of 2007, Viettel had in excess of 10mn mobile subscribers and with 29% of
the market was Vietnam’s No. 1 mobile operator. In addition, Viettel also provides
fixed-line services to approximately 1.4mn subscribers. The operator claims revenues
of around the US$1bn mark for 2007 and has pledged US$500mn of investment to
build a 3G network if it wins a licence. Commenting on 3G take-up in Vietnam,
director of Viettel Telecom claimed that the falling prices of 3G equipment and
increased need for value-added services (video streaming, mobile TV, internet
connection) should result in a migration from 2G networks to 3G in Vietnam.
Mobile Services
In July 2006, Ericsson won a GSM expansion deal from Viettel. Under the terms of
the deal, Viettel extended its coverage to rural Vietnam, increasing its capacity in
Address
! Viettel 1A Giang Văn Minh Street, Ba Đình, Hanoi. Vietnam
! Tel: +84 (4) 255 6789
! Fax: +84 (4) 846 0486
! Web: www.viettel.vn
Key Statistics
! No. of Mobile Subscribers (2004): 0.16mn
! No. of Mobile Subscribers (2005): 1.7mn
! No. of Mobile Subscribers (2006): 5mn
! No of Mobile Subscribers (2007): 10.4mn
! No. of Fixed-line Subscribers (December 2007): 1.4mn
Vietnam Telecommunications Report Q3 2008
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Hanoi, Ho Chi Minh City and Danang.
In December 2006, Viettel started to test its WiMAX mobile broadband service in
Hanoi on the back of Viettel winning a WiMAX licence in March 2006. Others to win
a licence were VNPT, the Vietnam Television Technology Company and FPT
Telecom.
The operator is also extending its service provision to the corporate sector, announcing
a commercial tie-up with AT&T. Under the terms of the agreement, both companies
will provide services initially to multinational companies to include VPN and frame
relay. The US vendor has already established an office in Hanoi, with a second office
built in Ho Chi Minh City by YE07.
Data Services
Telecoms equipment vendor ECI Telecom was selected by Viettel in late August
2007 for the expansion of the operator’s optical and broadband access network. The
project is being overseen by ECI Telecom’s Vietnam-based business partner Ntegrator
and includes the construction of a 2,000km long-haul Dense Wavelength Division
Multiplexing network with a capacity of 10Gb/s over 40 channels based on the XDM
platform.
In May 2008, Taiwanese incumbent operator Chunghwa Telecom set up a US$30mn
internet data joint venture with Viettel, which will take a 70% share of the operation.
International
Viettel launched mobile services in Cambodia. With an existing 25% share of the
Cambodian international VoIP market and over 50% share of the international channel
leasing market in the country, Viettel has said it will focus on the roll-out of a
US$27mn mobile network infrastructure.
The operator has attained a mobile licence to operate in nearby Laos. Unlike its plans
for Cambodia, the operator has stated that it will enter the market as part of a joint
venture with a Laos-based company in order to provide telecoms services in the
country.
(estimate)
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EVN Telecom
Overview
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 – a move
making it the country’s sixth commercial operator. By January 2007, EVN Telecom
had 700,000 subscribers on its networks comprising of fixed wireless, E-mobile and E-
phone customers and, by mid-October 2007, claimed 2mn wireless customers, a large
majority deriving from the rural areas. Reports have suggested that E-Mobile was
serving 2.8mn mobile customers at the end of 2007. According to EVN, this places it
as the largest CDMA operator using the 450MHz band.
Aside from mobile, EVN Telecom is licensed to provide fixed-line services, lease line,
internet, international connectivity and domestic and international VoIP.
Network Development
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 1900MHz
frequency band for 3G deployment alongside the operator’s existing 450MHz
spectrum.
EVN Telecom plans to increase its BTSs to 5,000-6,000 from its existing 1,000 BTSs,
in a bid to secure capacity for up to 8mn mobile subscribers. In 2007 alone, some
1,500 BTSs were to be established at a cost of VND3.7trn, providing it with the
capacity to serve some 5mn customers.
Meanwhile, the operator had been ordered by the government to complete its mobile
WiMAX trial in the first quarter of 2007, as the state gets ready to offer the mobile
WiMAX licences following the expiry of the country’s existing four fixed WiMAX
licences. These services were expected to be launched in cities by Q407.
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.
EVN Telecom is also involved in the Intra Asia Optical cable system, using DWMA
technology to cover Vietnam, the Philippines, Hong Kong, Taiwan, China, Japan and
Guam. EVN Telecom will invest US$30mn into the project.
Address
! EVN Telecom
30A Pham Hong Thai St.
Ba Dinh Dist., Hanoi
Vietnam
! Tel: +84 (4) 2100507
! Fax: +84 (4) 7151109
! Web: www.enet.vn
Key Statistics
! Annual Revenues (2006): VND1trn
! Estimated Annual Revenues* (2007): VND3trn
! No. of Mobile Subscribers (April 2007): 1mn
! No. of Mobile Subscribers (October 2007): 2mn
! No. of Mobile Subscribers (December 2007): 2.5mn
! Year established: 2005
* provided by EVN Telecom
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Agreements
EVN Telecom has leased lines to FPT Telecom, in a deal worth US$20mn. The three-
year contract is the largest of its kind in Vietnam in terms of value and will double
FPT Telecom’s bandwidth to 5Gb/s. (See FPT Telecom profile)
Fixed Wireless Services
Using a CDMA2000 1x network, the operator offers its fixed wireless service E-Com,
capable of supporting EV-DO and providing 3G service users. The number of E-Com
subscribers was targeted to rise from 650,000 in April 2007, to 2mn subscribers by the
end of 2007 (no further information has been made available). Further, the operator
plans to provide EV-DO services across 64 cities and provinces in 2007.
Expenditure Plans
Between 2007 and 2010, EVN Telecom plans to invest nearly VND24bn (US$1.5bn)
to expand its operations. This will be spent on expanding its mobile network coverage
and broadband upgrades as well as building a fibre-optic cable system.
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Hanoi Telecom
Overview
Established in 2001, Hanoi Telecom was awarded licences to provide national and
international services including wireless local loop, fixed-line, internet and ISP,
broadband data and VoIP services.
The majority of shares of Hanoi Telecom are owned by the Vietnamese government
through two entities, Hanel (belonging to the Hanoi People’s Committee) and HTI
(Vietnam Science Institute). These two entities have been involved in a wide range of
businesses in Vietnam for over 20 and 50 years, respectively, including telecom
software, manufacturing and integration of electric and electronic appliances, PCs and
consumer products.
Network Development
Hanoi Telecom launched its CDMA network in November 2006 and started deploying
its services in January 2007. The operator has installed about 800 base stations
throughout the country and has invested US$656mn towards its platform, making it
one of the largest telecoms projects in Vietnam. By the end of 2007, Hanoi Telecom’s
mobile service, HT Mobile, was reported to have just less than 200,000 customers.
Disappointed with its progress, Hanoi Telecom started to migrate its subscribers to a
GSM network offering from April 2008.
Address
! Hanoi Telecom
811 Giai Phong Road
Hoang Mai Dist., Hanoi
Vietnam
! Tel: +84 (4) 664 3724
! Fax: +84 (4) 664 3720
! Web: www.hanoitelecoms.com.vn
! No. of Mobile Subscribers (December 2007): 195,000
! Year Established: 2001
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FPT Telecom
Overview
FPT was granted licences for the provision of internet services by the government.
Since 1999, it has commercially been offering services, and by H105, the operator had
the largest share of the internet market at 38%, with some 60,000 ADSL subscribers.
By December 2006, the operator had received a licence to provide fixed line services,
and in February of that year, FPT Telecom added to its service portfolio mobile and
other wireless services.
Private equity company Texas Pacific Group (TPG) sold part of its stake in FPT in
mid-August 2007, although the company continues to retain a stake in the operator.
TPG and Intel Capital paid US$36.5mn for a combined 10% stake in 2006 in FPT;
however, the dilution of TPG’s stake is more to do with a fall in FPT’s shares. Reuters
commented that FPT had lost more than 40% of the value of its shares since it debuted
on the Ho Chi Minh stock Exchange on December 2006. According to FPT’s CEO
Truong Gia Binh, the reason for the fall in share price was due to rumours surrounding
the company not being timed correctly, the announcement by TPG that it was
registering to sell a large volume of shares and finally two members of the FPT’s
management board also registered to sell a number of shares.
Recent Financial Developments
For the financial year ending December 31 2007, FPT Telecom reported revenues of
VND27.3trn and a net profit of VND877bn. Fourth quarter revenues amounted to
VND9.4trn, while net profit in the fourth quarter totalled VND312.7bn.
Network Development The operator was responsible for completing the country’s first-ever metro Ethernet
and Optical network, with the help of Cisco Systems. The 10Gb/s 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 (VAS) services, including triple-play (data, voice and video), as
well as IPTV services.
Fixed-Line Services
The operator was targeting 100,000 fixed-line subscribers by June 2007 and 250,000
subscribers by YE07. The first locations to receive access to its fixed line network are
in 10 cities and provinces, including Hanoi, HCM City, Dong Nai, Binh Duong, Can
Tho, Hai Phong, Quang Ninh and Hai Duong. The operator’s existing ADSL
subscribers will be the first to be offered the fixed-line services, its CEO stating that
FPT Telecom would differ as ‘each (fixed-line) subscriber will be provided with two
Address
! FPT Telecom
48 Van Bao, Kim Ma Street
Ba Dinh Dist., Hanoi
Vietnam
! Tel: +84 (4) 760 1060
! Fax: +84 (4) 822 3111
! Web: www.fpt.vn
Key Statistics
! Revenues (H107): VND5.9trn
! Revenues (M907): VND17.97trn
! Revenues (2007): VND27.3trn
! Net Profit (H107): VND436bn
! Net Profit (M907): VND564.46bn
! Net Profit (2007): VND877bn
Vietnam Telecommunications Report Q3 2008
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phone numbers on the same line. FPT wants to provide each member in a family with
one different phone number, not one number for the whole family,’ By December
2006, the operator had installed cables for 180,000 ADSL subscribers.
The operator acquired a licence in October 2007 to provide domestic and international
land line networks and, over the coming 12-18 months, will build a network linking
Hanoi to HCM City, with another from HCM and the southern city of Vung Tau to
connect to a regional submarine cable project. A third network would also link Hanoi
with the northern provinces of Lang Son and Quang Ninh, bordering China with
international calls routed through gateways in Hong Kong and Shanghai. Until now,
the operator has been reliant on the networks of others.
Just a month before, FPT Telecom had inked a deal with EVN Telecom to lease a
2.5Gb/s international ADSL line. The three-year contract is the largest of its kind,
valued at VND20mn, and will enable FPT Telecom to double its bandwidth to 5Gb/s.
EVN Telecom plans to work with FPT Telecom as part of an agreement between their
parent companies on opportunities in IT products and services. Further, FPT Telecom,
having bought a new switchboard from Cisco Systems, will be able it to provide triple-
play services of internet, telephone and TV over a single cable.
Internet Services
In March 2006, FPT Telecom launched its IPTV service. Further long-term goals now
include expanding its internet-based VAS services, including establishing an e-
solution and website for corporations in Vietnam.
By June 2007, FPT Telecom announced that it had established free internet access via
its Wi-Fi systems to 5,000 locations throughout Hanoi and HCM City. The US$1.5bn
Wi-Fi project will benefit universities, colleges, cafes, restaurants, banks and securities
companies in the two main cities. By the end of 2007, it was expected that there would
be 8,000 Wi-Fi locations across Hanoi and Ho Chi Minh (no recent data has been
made available).
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Competitive Landscape
Competitor Analysis
Table: Key Players – Vietnam Telecoms Sector
Company Name Ownership Market
Vietnam Posts and Telecommunications (VNPT) Government (100%)
Local, long-distance and international telephony, data, internet
VinaPhone Vietnam Telecom Services (100%) Mobile
MobiFone Vietnam Telecom Services (100%) Mobile
Viettel Ministry of Defence Mobile, local telephony
S-Fone
Joint Venture: Saigon Postel and SLD (consortium comprising SK Telecom, LG
Electronics and Dong Ah Elecomm) Mobile
Electricity of Vietnam (EVN Telecom) Electricity of Vietnam (100%)
Local, long-distance and international telephony, data, internet and mobile
Hanoi Telecom Joint Venture: Hanoi Telecom, Hutchison Telecommunications International (HTIL) Mobile
Source: BMI
Key Players
Fixed Line
The provision of traditional PSTN-based telecoms services is still effectively under the monopoly of
Vietnam’s state-owned operator VNPT, which became responsible for the country’s telecommunications
services in 1995. Its fixed-line services are run through a network of 61 local push-to-talks (PTTs), while
the country’s two mobile operators are both subsidiaries of VNPT’s telecommunications business,
Vietnam Telecoms Services (GPC). Vietnam does not have an independent regulatory body – regulation
and policy development now fall under the aegis of the MPT.
BMI estimates that the Vietnam fixed-line user base grew by around 23% in 2007, compared with growth
of 43.5% in 2006. There were thought to be over 11.4mn fixed-lines at the end of 2007, which is equal to
a penetration rate of 13.2%. The country continues to have one of the lowest rates in the region, although
ahead of Indonesia, Pakistan, the Philippines and India.
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Table: Regional Fixed-Line Penetration Overview
Country Fixed-line Penetration 2007 (%) Regional Rank 2007 (2006 Rank)
Taiwan 58.6 1 (1)
Hong Kong 54.0 2 (2)
Australia 46.5 3 (3)
South Korea 46.2 4 (4)
Japan 41.6 5 (5)
Singapore 41.5 6 (6)
China 28.2 7 (7)
Malaysia 16.3 8 (8)
Sri Lanka 13.5 9 (-)
Vietnam 13.2 10 (10)
Thailand 10.9 11 (9)
Indonesia 7.0 12 (11)
Philippines 4.4 13 (13)
Pakistan 4.1 14 (12)
India 3.4 15 (12)
Bangladesh 0.8 16 (-)
Source: BMI
Mobile
Until mid-2003, the mobile market was nominally a duopoly. Both incumbent operators – MobiFone and
VinaPhone – are indirect wholly-owned subsidiaries of VNPT. MobiFone introduced services at 900MHz
in 1993, following a Business Co-operation Contracts (BCC) agreement with Comvik of Sweden, while
VinaPhone launched its own GSM 900 network in 1996.
During the second half of 2003, Saigon Postel subsidiary S-Fone launched CDMA-based services,
although it is only since the end of H104 that S-Fone has begun to acquire significant numbers of
subscribers. Meanwhile, Ministry of Defence-run Viettel launched a very successful GSM network in
2004 and has already overtaken S-Fone to become the country’s second largest mobile operator (after the
two VNPT-owned operators). Since then, Vietnam has also welcomed the entrance of newcomers EVN
Telecom (which operates under the E Mobile brand) and latterly Hanoi Telecom (which operates under
the HT Mobile brand). E-Mobile and HT Mobile, which began commercial operations in February 2006
and January 2007, respectively, both offer CDMA-based services (although from April 2008 HT Mobile
Vietnam Telecommunications Report Q3 2008
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started to shift its customers to a GSM network offering). With a penetration rate of just over 40%,
Vietnam continues to move up the below table, now ahead of China and Indonesia.
Table: Regional Mobile Penetration Overview
Country Mobile Penetration 2007 (%) Regional Rank 2007 (2006 Rank)
Hong Kong 140.9 1 (1)
Singapore 121.9 2 (2)
Taiwan 104.6 3 (4)
Australia 99.6 4 (3)
South Korea 90.4 5 (6)
Malaysia 87.8 6 (5)
Thailand 84.9 7 (9)
Japan 81.9 8 (7)
Philippines 64.0 9 (8)
Pakistan 49.2 10 (12)
Vietnam 41.4 11 (13)
Indonesia 41.2 12 (11)
China 39.4 13 (10)
Sri Lanka 39.3 14 (-)
Bangladesh 24.5 15 (-)
India 20.2 16 (14)
Source: BMI
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Broadband
Vietnam’s internet user base more than doubled during 2003 and 2004 and, at the end of 2004, was
estimated at nearly 5.87mn, representing penetration in excess of 7%. Indeed, during the course of the
year Vietnam leapfrogged both the Philippines and China in terms of internet take-up. There are now nine
licensed internet service providers (ISPs) in Vietnam and six internet exchange providers. By the end of
2007, internet user penetration had increased to 21.8%. In July 2003, VNPT subsidiary Vietnam
Datacommunications Company (VDC) launched the country’s first ADSL service in Hanoi, Ho Chi Minh
City and Haiphong. Broadband figures, according to the Vietnam Internet Network Information Centre
(VNNIC), are thought to have reached almost 1.2mn subscribers by the end of 2007, which is equivalent
to a penetration rate of 1.4%.
Table: Regional Broadband Penetration Overview
Country Broadband Penetration 2007 (%) Regional Rank 2007
South Korea 31.1 1
Australia 29.4 2
Hong Kong 26.4 3
Taiwan 23.6 4
Japan 22.3 5
Singapore 21.5 6
Malaysia 6.3 7
China 5.3 8
Thailand 4.0 9
Vietnam 1.4 10
Philippines 1.1 11
Bangladesh 0.5 12
Indonesia 0.4 13
India 0.3 14=
Sri Lanka 0.3 14=
Pakistan 0.2 16
Source: BMI
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Table: Glossary Of Terms
2G second generation ISP Internet Service Provider
3G third generation IT Information Technology
ADSL Asymmetric Digital Subscriber Line ITU International Telecommunications Union
AMOU Average Minutes of Use JV joint venture
ARPU Average Revenue per User Kbps kilobits per second
ASP Average Selling Price KHz kilohertz
bn billion km kilometres
BTS Base Transceiver Stations LANs Local Area Networks
CDMA Code Division Multiple Access LEC Local Exchange Carrier
CEO Chief Executive Officer LTE Long-Term Evolution
CRM Customer Relationship Management m metres
D-AMPS Digital-Advanced Mobile Phone Service mn million
DLD Domestic Long-Distance MEA Middle East & Africa
DMB Digital Multimedia Broadcasting NGN Next Generation Network
DSL Digital Subscriber Line Mbps megabits per second
DSLAM Digital Subscriber Line Access Multiplexer MHz megahertz
DSU Digital Subscriber Unit MNP Mobile Number Portability
DTH Direct-To-Home m-o-m month-on-month
DVB-H Digital Video Broadcasting-Handheld MoU Memorandum of Understanding
DVB-SH Digital Video Broadcasting-Satellite
Handheld MPLS Multiprotocol Label Switching
e/f estimate/forecast MSC Mobile Switching Centre
EBITDA Earnings before Interest, Taxes,
Depreciation and Amortization MVNO Mobile Virtual Network Operator
EC European Commission na not available
EMEA Europe, Middle East & Africa OIBDA Operating Income before Depreciation
and Amortization
EV-DO Evolution-Data Optimised POP Point of Presence
FDI Foreign Direct Investment q-o-q quarter-on-quarter
FTTB Fibre-To-The-Building R&D research and development
FTTH Fibre-To-The-Home SDSL Symmetric Digital Subscriber Line
FTP File Transfer Protocol SIM Subscriber Identity Module
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Table: Glossary Of Terms
Gbps gigabits per second SMS Short Messaging Service
GDP Gross Domestic Product TDMA Time Division Multiple Access
GPRS Global Packet Radio Service TD-
SCDMA Time Division-Synchronous Code Division
Multiple Access
GSM Global System for Mobile Communications trn trillion
HDSL High-bit-rate Digital Subscriber Line UMTS Universal Mobile Telecommunications
System
HSDPA High-Speed Downlink Packet Access VOD Video On Demand
HPSA High-Speed Packet Access VoIP Voice over Internet Protocol
HSUPA High-Speed Uplink Packet Access VLAN Virtual Local Area Network
HTML HyperText Markup Language WAP Wireless Application Protocol
Hz Hertz W-CDMA Wideband CDMA
IDD International Direct Dialling WiBro Wireless Broadband
ILD International Long-Distance WiMAX Worldwide Interoperability for Microwave
Access
IPO Initial Public Offering WLL Wireless Local Loop
IP Internet Protocol WTO World Trade Organisation
IPTV Internet Protocol TV y-o-y year-on-year
ISDN Integrated Services Digital Networks
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BMI Forecast Modelling
How We Generate Our Industry Forecasts
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling. The
precise form of time-series model we use varies from industry to industry, in each case being determined,
as per standard practice, by the prevailing features of the industry data being examined. For example, data
for some industries may be particularly prone to seasonality, meaning seasonal trends. In other industries,
there may be pronounced non-linearity, whereby large recessions, for example, may occur more
frequently than cyclical booms.
Our approach varies from industry to industry. Common to our analysis of every industry, however, is the
use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the
variable's own history as explanatory information. For example, when forecasting oil prices, we can
include information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data
quality is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a
basis for analysis and forecasting.
It must be remembered that human intervention plays a necessary and desirable part of all our industry
forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks,
anomalous data, turning points and seasonal features where a purely mechanical forecasting process
would not.
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Telecommunications Industry
There are a number of principal criteria which drive our forecasts for each telecoms variable:
Subscriber Numbers
Subscriber data are derived in the majority of instances from individual operators and/or national
regulators. Subscriber forecasts are then based on a range of variables including:
! stated network roll-out and capex plans;
! level of maturity of a given market;
! competition from alternative technologies (i.e. ADSL/wireless vs PSTN);
! potential regulatory developments (increased liberalisation, etc.);
! cost of technology in relation to GDP/capita; and
! political/economic factors.
Expenditure per capita/% of GDP/% of fiscal budget is calculated using BMI’s own macroeconomic and
demographic forecasts.
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 ITU) and international and national news agencies.