VietNamNet Bridge – The number of mobile phone subscribers is two times higher than the population. Meanwhile, more investors attempt to join the telecom market and compete fiercely with each other by reducing charges.

 

Vietnam’s telecom development unsustainable

 
The British market survey firm BMI has released a report which says that in the second quarter of 2011, the Telecommunications Business Environment Rating of Vietnam does not show any considerable improvements in the ranking of Vietnam in Asia Pacific.

 

Vietnam remains on the 17th position, higher than Sri Lanka, but lower than Thailand and Cambodia.

 

According to BMI, the average revenue per user ARPU in Vietnam has been decreasing rapidly in the last time, since service providers have been rushing to run sales promotion campaigns and slashing charges. The mobile telecom market now heavily relies on pre-paid subscribers, while the telecom charges dropped sharply by 15 percent in July 2010. Especially, the mobile telecom market has nearly reached the saturation threshold.

 

According to Thoi bao Kinh te Saigon, in 2009, the ARPU in Vietnam was only five dollars, decreasing from 5.52 dollars in 2009. Meanwhile, the ARPU indexes in 2008 and 2007 were six dollars and 6.5 dollars. The figures show that ARPU has been decreasing rapidly, while BMI thinks the ARPU in Vietnam would drop further to 3.51 dollars by 2015.

 

In 2010, the Ministry of Information and Communication released a decision on not allowing telcoms to offer the bonuses valued at higher than 50 percent of the phone cards’ values. However, Lao dong has reported that telcoms, after a period of implementing the decision, have ignored the regulations, continuously running big sales promotion programs. This has led to the boom of “virtual mobile subscribers”.

 

The figure about 3G subscribers also does not show an optimistic situation, even though the figure released by telecom companies was relatively satisfactory. BMI believes that by the end of 2010, Vietnam had had 8 million 3G subscribers, which was much lower than the figure released by telcoms.

 

Too many mobile networks licensed?

 

According to Lao dong, the biggest problem now is the programming the development of telcoms. Vietnam has granted licenses to too many mobile networks, but only 3-4 enterprises have been operating effectively, while other small networks have been narrowed. Dong Duong Telecom many times announced the plans to join the telecom market, but it is still unclear when it will be able to begin providing services.

 

The licensing to too many telcoms has put small newly established enterprises into a dilemma. If the enterprises continue to pour money into investments, they will have to face high risks, when the telecom market has become nearly saturated. However, if they withdraw from the markets, they will see their invested money “gone away”.

 

The great difficulties in the telecom market have forced many telcoms to look for other ways to develop. Buu dien has quoted its sources as saying that S-Fone is considering replacing CDMA technology with GSM technology after it failed to provide CDMA based services on the market. Analysts believe that CDMA technology is the main reason which makes S-Fone unsalable after the withdrawal of SK Telecom, though CDMA is an advanced technology.

 

Sources said that FPT once intended to buy S-Fone, but then decided to buy EVN Telecom, because S-Fone developed CDMA based network. Though EVN Telecom also uses CDMA, it still has 3G license, which was attractive to FPT. However, finally, FPT also gave up the deal with EVN Telecom.

 

Prior to that, Hanoi Telecom and its partners also had to accept to replace CDMA technology with GSM, and turned into Vietnamobile.

 

Thoi bao Kinh te Saigon quoted Hoang Ngoc Diep, former General Director of Qualcomm Indochina as saying that if telecom service providers still focus on expanding networks and competing with low prices, but not concentrating on quality and services, they will face losses in the future.

 

C. V