In the early 1990s, Vietnam entered the Doi Moi phase with a rapidly growing demand for communication, particularly in major economic hubs like Hanoi and HCMC.

Mai Liem Truc, former director general of the General Department of Posts and Telecommunications, said this was a period when the post and telecom sector was preparing to enter a “takeoff phase.”

At that time, most mobile systems worldwide still used analog technology. GSM, the new digital mobile technology, had only been deployed in Europe and was not yet widely commercialized. Handsets were both expensive and incomplete, with each phone costing thousands of USD.

Vietnam’s post sector faced a major choice: continue with analog to meet immediate demand, or choose GSM to aim for the long term.

In the end, leaders of the General Department of Posts and Telecommunications decided to skip analog and move straight to GSM digital technology. This was a risky choice because GSM had not yet proven its global commercial viability. However, the decision helped Vietnam avoid having to “start over” later.

In 1993, the first GSM mobile service launched in Hanoi with partner Alcatel, then expanded to HCMC with Ericsson. Initial infrastructure was tiny, just a few switches and a few BTS stations covering major cities.

In the early years, mobile phones were symbols of wealth. Dao Kim Dinh, former director of Hanoi Telecommunications Company, recalled that the first Alcatel phone was large and heavy but cost as much as $2,200.

Mobile subscribers had to pay a $200 connection fee, a $20 monthly subscription fee and call charges of up to VND8,000 per minute.

The General Department of Post then decided there needed to be unified management of the nationwide GSM network and established MobiFone.

Why did Vietnam need a second mobile network?

After the first GSM network was formed and MobiFone was launched in 1995, many people argued that Vietnam’s market was not large enough to support another mobile network. However, postal sector leaders saw a different future.

At that time, MobiFone had begun cooperating with Comvik and was still developing well, but the General Department of Post and VNPT decided to build a second mobile network, VinaPhone, which would be fully managed and developed by Vietnam.

The decision was made because postal and telecommunications leaders believed demand for mobile communications services in Vietnam would inevitably surge, while Comvik had committed to investing only $130 million in MobiFone over 10 years. That investment level was considered too limited to meet Vietnam’s future mobile development needs.

“The leadership’s view at the time was that Vietnam needed a second mobile network to maintain strategic initiative and avoid monopoly in a market expected to boom.

“With that determination, in June 1996, we launched VinaPhone, secured greater independence and created competition to develop Vietnam’s mobile communications market,” Mai Liem Truc said.

In 1996, VNPT officially launched VinaPhone. According to Truc, later developments proved the decision was correct because VinaPhone’s emergence created competition, pushed MobiFone’s investment capital up to $230 million and accelerated the growth of the mobile market.

In Hanoi alone, around 3,000 subscribers signed up in the first year, a very large figure at a time when mobile services were still considered luxury products.

However, infrastructure at the time remained extremely limited. Hanoi had only 13 BTS stations, while many provinces had just one or two transmission stations. Some customers registered for services but could not make calls because there was no signal coverage. Hanoi Post even had to take back phones and refund customers.

Making mobile services affordable

The late 1990s marked the period when VinaPhone entered an unprecedented race to expand infrastructure.

While VinaPhone initially covered only 18 provinces and cities at launch, by 1999 it had become the first mobile network to cover all 61 provinces and cities nationwide.

Within just five years, the number of BTS towers increased tenfold to 10,000; the number of subscribers grew sevenfold to approximately 12 million.

Do Trung Ta, former Minister of Post and Telecommunications, once evaluated that the 1995–2012 period was an era in which Vietnamese telecommunications created a “miracle,” narrowing the development gap with the world by decades.

Looking back at the history of VinaPhone's development, it is clear that many policies from the 1990s still profoundly shape the structure of the modern telecommunications market today.

Thai Khang