VN telco newcomers eking out share

New entrants will face certain obstacles given the changes in Vietnam's telecoms market, though interest from foreign investors remains.

VN telco newcomers eking out share

Indochina Telecom, the Vietnamese mobile virtual network operator (MVNO), officially relaunched in April after ten years out of the country’s telecommunications market.

Having failed to negotiate a deal with Viettel - the leading local mobile network operator (MNO) - this time around Indochina Telecom is operating on the Vinaphone network, the mobile subsidiary of the Vietnam Posts and Telecommunications Group (VNPT).

The “newcomer” expects to contribute to improving the nature and quality of services in Vietnam’s information and telecommunications industry, sharing the burden of infrastructure investment and operations with other companies, said Mr. Luu Anh Son, Deputy CEO of Indochina Telecom (ITelecom).

Back in the game

Back in 2012, after ITelecom failed to roll out commercial services after a few years of effort, the Ministry of Information and Communications (MoIC) cancelled its license.

At that time, another MVNO license was approved for the State-owned VTC Telecom, but it also failed to launch mobile services.

The return of ITelecom sees it become the sixth telecoms provider in the market, despite the market being saturated in recent years, which makes local insiders wonder how it can earn a profit.

But the company believes it possesses advantages in its new business model, and will focus on niche markets and targeted customers to turn challenges into opportunities, Mr. Son told VET.

ITelecom will initially introduce services for workers at industrial parks in nine cities and provinces.

According to its research, spending on telecom services by these workers is about VND80,000 ($3.4) each per month and so are the target segment in the first stage. It then plans to reach 15 million workers at industrial parks around the country.

It will introduce a variety of packages tailored to different groups and user segments, and will cooperate with local MNOs that have unused mobile phone capacity to negotiate the best deals.

“We will create the most convenient services at reasonable cost, which will make the market compete fairly,” Mr. Son added. “There are still a lot of niche segments that MNOs find hard to exploit.”

In theory, a focus on niche markets is one of the model’s competitive advantages, which its competitors either find challenging to address or have addressed in a different manner.

Successful MVNOs around the world have effectively applied three key factors: an understanding of the target segment, better distribution channels, and lean operations.

Another MNVO, the Malaysia-based

VN telco newcomers eking out share

RedONE, told VET of its plan to cooperate with VNPT to launch a new business in Vietnam this year.

The two sides have signed a cooperation agreement and are now preparing for the upcoming launch. Established in 2012, RedONE has received MNVO Service Provider of the Year awards for three consecutive years.

It reached 1 million post-paid subscribers in just under three years, and its goal is to become the largest MNVO in ASEAN.

The penetration of the foreign company increases the total of mobile network operators in Vietnam to seven.

Room to grow

Vietnam’s telecoms market is dominated by the three largest MNOs - Viettel, Vinaphone, and MobiFone - which hold a combined market share of more than 90 per cent in mobile and broadband services.

Growth in total revenue in the industry comes mainly from these three giants, standing at $15 billion in 2018 for 6 per cent growth, according to MoIC.

Viettel, who has just made Vietnam one of the first countries in the world to pilot 5G technology, in early May, contributed 60 per cent of total revenue and 70 per cent of total profit in 2018.

MobiFone, meanwhile, saw 7.5 per cent growth in profit in 2018 against 2017. Growth in revenue and profit, however, is tending to slow as the market has witnessed mobile-price competition between players over recent years.

But Mr. Sesto E Vecchi, Managing Partner of Russin & Vecchi - a foreign consulting company in Vietnam - believes there is still room to grow.

The ratio of households with internet access is just 27 per 100. Similarly, only 9.3 per cent of households have fixed-line telephones, though this is a diminishing market.

 

In addition, the number of mobile subscribers exceeds the population, most of which primarily use 2G services (calls and SMS).

The number of mobile subscribers with 3G data connection is still lower than the global average. 4G subscriber numbers is lower again, and the 5G network is yet to be developed in the country, according to Mr. Vecchi.

He noted that data demand is one the rise in Vietnam and will keep increasing into the future.

MoIC and telecom analysts have forecast that the number of 4G subscribers will rise more than nine-fold from 2019 to 2024.

In addition, under Vietnam’s commitments in trade agreements, the government understands that it must divest from State-owned enterprises, including telecommunications enterprises, and MobiFone and VNPT plan to have their IPOs completed this year and next, respectively.

“This presents a huge opportunity for foreign investors to invest in the telecoms market if indeed divestment does occur and if bidding is open and appropriate,” Mr. Vecchi said.

Mr. Son believes that participation by foreign MNVOs and other newcomers will create fair competition between telecoms providers and help them gain more opportunities to develop and improve products and services to provide the best value possible for customers.

VNPT recorded the highest profit growth among the three giants in 2018. Recognizing that revenue from traditional mobile services is going down, the group plans to change to a mobile-data business model.

It also plans to outlay $1 billion on merger and acquisitions (M&As) of domestic and foreign tech enterprises over the next two years, as part of adopting a business model in line with digital transformation.

Other State-owned telecoms companies have also switched their business strategy to differentiate themselves and serve cross-border partnerships in areas of mobile payments, digital marketing, cyber security, and cloud-based services.

Opportunities exist for foreign exporters in providing equipment and infrastructure and value-added services, such as developing wireless and alternative broadband technologies and partnering with established network operators to provide 3G/4G/5G services, pay TV infrastructure, and media broadcasting services, according to Mr. Chu Bao Khanh, Associate at Russin & Vecchi.

“Since the satellite-based telecom market is not yet developed in Vietnam, we think there is an opportunity for foreign companies to provide satellite services into the country on a cross-border basis,” he added.

Encouragement policies

2019 will be another year of much change, like 2018, due to MoIC’s mobile number portability (MNP) policy and other polices that will re-draw the market share among telecom companies.

This makes them feel more pressure to retain subscribers, in which they need to provide services with high quality.

ITelecom and RedONE will also face challenges, as they depend on the VNPT network, needing solid partnerships with the corporation to gain competitive price policies as well as distribution networks.

In theory, MNOs limit MVNOs in exploiting distribution areas where the MNO has stable share market.

Mr. Son said ITelecom will propose telecoms management policies to MoIC that will help the price model in buying wholesale and selling retail.

The introduction of 4G services is expected to generate a spike in new opportunities for investors, especially as the industry has been moving towards digital and data products, and local telecoms providers have continued to improve their services.

MoIC is encouraging the development of broadband infrastructure to complete the 4G network and begin work on 5G as early as possible, to enhance the performance of the Internet of Things (IoT).

The ministry has also proposed policy incentives to attract new foreign investments in telecommunications and information technology.

The government hopes more tech companies will invest in Vietnam, as foreign investment has played a major role in the development of the industry.

Mr. Vecchi said that with Vietnam joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), it is clear that the country intends to open up its telecoms market, well beyond its current WTO commitments. VN Economic Times

Nghi Do

Does Huawei have a chance to grasp share in Vietnam’s 5G deployment?

Does Huawei have a chance to grasp share in Vietnam’s 5G deployment?

Three major mobile carriers in Vietnam have recently announced information of cooperation plans with foreign partners in the roadmap of 5G implementation but no one has mentioned Huawei.  

More mobile networks join Vietnam's telecom market

More mobile networks join Vietnam's telecom market

The telecom network is expecting to receive more mobile network operators, but analysts say the existing networks are ‘more than enough’ for Vietnam.

5G warmly welcomed in Vietnamese telecommunications market

5G warmly welcomed in Vietnamese telecommunications market

The pilot of 5G technology is planned to be carried out in 2019 in Vietnam so that in 2020, the country will become one of the first in the world to formally offer this service.

 
 

Other News

.
State Bank, Transport Ministry top 2020 cyber security readiness rankings
State Bank, Transport Ministry top 2020 cyber security readiness rankings
SCI-TECH & ENVIRONMENTicon  29/10/2021 

The State Bank and the Ministry of Transport led ministries and ministry-level agencies in the cyber security readiness rankings in 2020,

Local communities lend a hand to forest protection
Local communities lend a hand to forest protection
SCI-TECH & ENVIRONMENTicon  29/10/2021 

Local communities are helping to protect vital areas of the country's national parks.

Hundreds of millions of US dollars invested in Vietnam startups
Hundreds of millions of US dollars invested in Vietnam startups
FEATUREicon  29/10/2021 

Amid the Covid-19 pandemic, many startups in online education, health care and goods delivery have received huge capital from foreign funds.

Vietnam states its case ahead of crucial climate convention
Vietnam states its case ahead of crucial climate convention
SCI-TECH & ENVIRONMENTicon  28/10/2021 

At CO26, the nation will meet to strengthen actions against global warming under the 2015 Paris Agreement, amid extreme weather events worldwide.

The young female CEO and Vietnam’s first app for the elderly
The young female CEO and Vietnam’s first app for the elderly
SCI-TECH & ENVIRONMENTicon  28/10/2021 

HASU, developed by young female IT expert Ngo Thuy Anh during a special time – the first wave of Covid 19 in Vietnam, has become the first application on comprehensive healthcare for people aged over 50 in Vietnam.

Vietnam has only 300 artificial intelligence experts
Vietnam has only 300 artificial intelligence experts
SCI-TECH & ENVIRONMENTicon  28/10/2021 

This shortage of talent is a huge challenge for the country to realize its goal of becoming a center of artificial intelligence (AI) development in the region and the world.

Five scientific journals of Vietnam included in ACI in 2021
Five scientific journals of Vietnam included in ACI in 2021
SCI-TECH & ENVIRONMENTicon  27/10/2021 

Five Vietnamese scientific journals were accepted to the ASEAN Citation Index (ACI) database system in 2021, announced the Ministry of Science and Technology (MoST) on October 26.

AAG submarine cable has problems, Internet affected again
AAG submarine cable has problems, Internet affected again
SCI-TECH & ENVIRONMENTicon  27/10/2021 

The AAG submarine cable route has encountered problems on the S1I branch from Vietnam to Hong Kong, affecting the quality of Internet services in Vietnam. Meanwhile, the errors on the AAE-1 submarine cable have not been fixed yet.

Da Nang to have second software park
Da Nang to have second software park
SCI-TECH & ENVIRONMENTicon  27/10/2021 

The second software park in the central city of Da Nang is under construction at a cost of VND800 billion (over US$34 million), according to the local Department of Information and Communications.

IT graduates earn monthly pay of VND30-40 million: report
IT graduates earn monthly pay of VND30-40 million: report
SCI-TECH & ENVIRONMENTicon  27/10/2021 

Vietnam is seriously lacking IT engineers, which explains why many new graduates with good skills and experience find jobs with attractive pay of up to VND30 million ($1,300) a month.

Vietnamese-origin professor awarded Constantin Caratheodory Prize
Vietnamese-origin professor awarded Constantin Caratheodory Prize
SCI-TECH & ENVIRONMENTicon  26/10/2021 

Vietnamese-origin Professor Le Thi Hoai An has received the Constantin Caratheodory Prize and has been appointed a senior member of the Institut Universitaire de France (IUF).

Leading Vietnamese and Australian AI experts to meet at forum
Leading Vietnamese and Australian AI experts to meet at forum
SCI-TECH & ENVIRONMENTicon  26/10/2021 

This event will be held on October 27 to provide information about AI cooperation programs between the two countries and exchange experiences in building and developing AI community.

Many Vietnamese among most influential scientists in the world
Many Vietnamese among most influential scientists in the world
SCI-TECH & ENVIRONMENTicon  26/10/2021 

According to a list of 100,000 most influential scientists in the world in 2021, 146 scientists work in Vietnam, including 29 who are Vietnamese.

Hue residents’ ‘special’ passport during pandemic
Hue residents’ ‘special’ passport during pandemic
FEATUREicon  26/10/2021 

At 6.40 am on August 15, through the Hue-S system, Hue City Smart City Monitoring Center received images from local residents that showed a man jumping from a train and running to Alley No 128 off Phan Chu Trinh Street in Hue City.

Trading scraps for groceries
Trading scraps for groceries
SCI-TECH & ENVIRONMENTicon  25/10/2021 

As a means to promote environmental protection while supporting the community through the pandemic, grocery stalls in Van Mieu Ward, Dong Da District, Hanoi are letting people trade scraps for food.

Vietnam faces shortage of artificial intelligence experts
Vietnam faces shortage of artificial intelligence experts
SCI-TECH & ENVIRONMENTicon  25/10/2021 

Artificial intelligence (AI) is now at the center of the technology world. Many countries around the world have largely invested in AI and Vietnam is no exception.

Vietnam’s tech shops stay up all night selling iPhone 13
Vietnam’s tech shops stay up all night selling iPhone 13
SCI-TECH & ENVIRONMENTicon  23/10/2021 

On October 22, sales of officially distributed iPhone 13 models began in Vietnam. Many shops opened overnight to serve customers.

Apple takes steps to reduce “hand-carried” iPhone market in Vietnam
Apple takes steps to reduce “hand-carried” iPhone market in Vietnam
SCI-TECH & ENVIRONMENTicon  22/10/2021 

The market for “hand-carried” iPhones in Vietnam has been shrinking in the past two years, especially after the launch of Apple-authorized stores.

Rice husks: From waste to new green energy
Rice husks: From waste to new green energy
SCI-TECH & ENVIRONMENTicon  22/10/2021 

Intensive efforts are underway with support from diverse stakeholders to promote the sustainable use of rice husks and other biomass resources for electricity and heat production throughout Vietnam.

Investigation launched to find killers of endangered langurs in Quang Ngai
Investigation launched to find killers of endangered langurs in Quang Ngai
SCI-TECH & ENVIRONMENTicon  22/10/2021 

Local ranger and police forces have been tracking illegal hunters who killed five grey-shanked douc langurs (pygathrix cinerea). 

 
 
 
Leave your comment on an article

OR QUICK LOGIN