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Vietnam Telecommunications Report Q2 2011
Business Monitor International, April 2011, Pages: 108
Business Monitor International's Vietnam Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's telecommunications industry.
In January 2011, it was announced that the purchase of a 49% stake in EVN Telecom by the Corporation for Financing and Promoting Technology (FPT) had been approved by Vietnam’s prime minister, as part of a plan to privatise the state-owned operator. The state will retain a 50.6% stake in EVN Telecom, while a 0.4% stake will be sold to EVN Telecom’s employees. In addition to providing capital to expand EVN Telecom's mobile and 3G networks, the deal will enable FPT – which currently offers internet services – to enter the mobile and fixed-line industries without building additional telecoms infrastructure.
Despite the additional investment which is likely to come as a result of its acquisition by FPT, EVN Telecom is expected to remain one of Vietnam’s smallest mobile network operators. The latest data suggest that the mobile sector continues to be dominated by VNPT subsidiaries VinaPhone and MobiFone, and by Viettel, which is backed by the Vietnamese military. In order for smaller operators to effectively challenge the dominance of these three companies BMI believes that further consolidation within the highly competitive mobile sector will ultimately be needed.
This Q211 update on Vietnam’s telecommunications market incorporates the latest data from Vietnam’s General Statistics Office and the Ministry of Information and Communications (MIC). Since the update, new data have been reported which relate to the end of 2010 and the first two months of 2011. Based on this data, BMI has made several revisions to the report’s five-year growth forecasts for Vietnam’s mobile and fixed-line telephony, internet user and broadband subscriber sectors.
According to official figures, there were 155.5mn Vietnamese mobile subscribers at the end of 2010, equivalent to a penetration rate of 176%. The report’s newly revised growth forecast envisages more than 184mn mobile users at the end of 2011; this would give the country a penetration rate in excess of 206%. Although this is clearly a high penetration rate, it should be remembered that the market contains a large number of inactive mobile users.
The report’s new fixed-line forecast for Vietnam shows that the country had 16.1mn fixed telephony lines at the end of 2010, equivalent to a penetration rate of 18.3%. Faced with phenomena such as fixed-mobile substitution, it appears that the fixed-line sector shrank by almost 11% in 2010. Nevertheless, the latest official figures suggest that moderate fixed-line growth was experienced in the first two months of 2011. Going forward, this report expects Vietnam’s largest fixed-line players – VNPT, Viettel and EVN Telecom – to continue with the deployment of fixed wireless infrastructures in rural areas. Although these deployments will help to mitigate the rate of decline, the report’s long-term forecast anticipates shrinking demand for traditional voice services; such services are being challenged by the growth of cheaper alternatives such as mobile telephony and VoIP.
According to the latest data, the number of Vietnamese internet users grew by an impressive 19.1% in 2010. A combination of an improved economic climate, together with strong growth in the number of mobile broadband connections, is thought to have contributed to stronger growth in the number of internet users compared with 2009. Meanwhile, this quarter sees the introduction of a revised estimate for the number of Vietnamese broadband subscribers at the end of 2010. The new estimate takes account of mobile broadband connections which are offered by the country’s 3G network operators and which appear to be having a negative impact on demand for fixed broadband subscriptions based on DSL. The new estimate of 3.76mn broadband subscribers at the end of 2010. This report estimates that Vietnam’s broadband subscriber market grew by 26.7% in 2010. In 2011, BMI predicts that the broadband sector will grow by 28.4%.
This quarter sees no further changes to Vietnam’s position in the report’s Business Environment Ratings table for the Asia-Pacific region. The country remains in 17th position in o table, above Sri Lanka but below regional neighbours such as Thailand and Cambodia. Contributing to Vietnam’s low overall score are its weak and declining mobile ARPU rates, a relatively small fixed broadband sector which is dependent on DSL, a high urban/rural split, a low GDP per capita and a strong government presence within the sector.
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