Feb 23, 2013

Vietnam - Tough year for mobile telecom industry

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VietNamNet Bridge – Tough competition plus saturated demand in the local mobile telecom industry forced many firms to either pull out of Vietnam or to make offshore investments last year.

Regarding the local mobile telecom market in 2012, market research company BMI reports that the local market has lost its attractiveness. The number of subscribers is nearing the saturation level and the average revenue per user (ARPU) has been falling with the number of pre-paid users accounting for over 90%, the British firm reports.

Vietnam’s ARPU is at a mere US$4.11 per subscriber and the figure is expected to drop to US$3.51 in 2015, BMI says.

Similarly, Tong Viet Trung, deputy general director of military-run telecom firm Viettel, commented that 2012 was a difficult year for industry insiders in the context of the on-going economic slowdown. The local telecom market is in fierce competition with the number of users almost reaching the saturation mark, meaning there is little room left for the market’s development, he added.

The domestic market last year witnessed the disbandment of CDMA S-Fone and Viettel’s acquisition of EVN Telecom.

Russian telecom group VimpelCom in April 2012 had no other choice but to sell 49% equity on the cheap at a total value of US$45 million to Vietnam Gtel Mobile JSC to cut losses. At the same time, the Russian company withdrew its Beeline brand out of Vietnam.

Since Beeline’s withdrawal, Vietnam Gtel Mobile JSC has still struggled with attracting new users for the new service Gmobile, and this is ascribable to capital shortages, incomplete infrastructure and weak competitive capability.

In the meantime, mobile service provider S-Fone became inactive in 2012 without releasing any official announcements. Other mobile services suppliers having ties with S-Fone like Viettel, MobiFone or VinaPhone all affirmed that the firm has stopped connections with their networks as well as its own operation.

That’s why several licensed mobile virtual networks find it too risky to join the market at present.
Dong Duong Telecom has lost its license for deploying mobile virtual network while the Ministry of Information and Communications is considering taking back the license it granted to VTC if the firm fails to launch its virtual network this year.

Viettel was considered the most successful industry player in 2012 with an after-tax profit of VND27.5 trillion. But the company also experienced troublesome procedures when acquiring EVN Telecom and handling a loss of nearly VND2 trillion on behalf of its partner under the deal.

Given the saturated demand at home, members in the mobile telecom industry are racing to expand their network overseas. MobiFone in early December last year opened its representative office in Myanmar’s capital city of Yangon in order to explore and promote its investment activities in the new market.

Viettel recently invested in Laos, Cambodia, Dong Timor, Mozambique, Cameroon, Haiti and Peru, and reported profits. The total number of users in the new foreign markets of Viettel amounts to roughly 10 million people.

Source: SGT

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