Zalo reaches new peak, telcos lose traditional revenue

With a sustainable development focus over nearly two decades, Zalo continues to grow, becoming Vietnam’s leading messaging app.

By the end of 2024, Zalo had had 77.8 million monthly active users (MAUs) with nearly 2 billion messages sent daily.

After the first six months 2025, the platform officially hit a new milestone of 78.3 million monthly active users. With its mission to “develop the internet to change Vietnamese lives,” Zalo has spent 18 years delivering internationally competitive products tailored to Vietnamese users.

Amid the rapid rise of AI technology, in recent years, Zalo has actively advanced research and introduced new AI-driven features. Currently, 20 million users engage with Zalo’s smart AI features.

Zalo’s AI features are also widely used, with about 20 million monthly users.

Voice-to-text messaging is a key AI feature developed by Zalo to upgrade the messaging experience for users. Integrated directly into chat windows, this feature allows users to speak into their devices to quickly convert speech into text. This reduces the time spent typing on phone keyboards, improving the efficiency of daily message composition.

Reports showed that nearly 1 million users utilize Zalo’s voice-to-text messaging feature daily, with the figure reaching 5 million users monthly.

The 78.3 million monthly active user milestone underscores Zalo’s success while serving as a wake-up call for Vietnam’s mobile operators.

With this figure, Zalo surpasses Viettel, the operator holding over 50 percent of Vietnam’s mobile market share.

However, instead of viewing OTT platforms as competitors, operators can see them as a catalyst to shift their business models toward data and digital services.

Over a decade ago, SMS was a “golden goose that laid golden eggs” for operators, but now most users, especially younger customers who dominate the mobile market, have shifted to Zalo and other OTT platforms.

Pham Ngoc Nghia, 23, a real estate broker, noted that ringtone and ringback tone services from operators are no longer as popular as 15 years ago. 

“I now subscribe to Zalo’s ringtone and ringback tone service. I still use a VND10,000 SMS package to message clients monthly, costing VND30,000 across three networks. I rarely use SMS for clients. Operator voice call packages are limited, cutting off after 10-20 minutes of in-network calls, which is challenging for someone in real estate like me when communicating with clients. So, I prefer using Zalo or Facebook Messenger for calls,” he said.

With over 2 billion daily messages sent via Zalo, the demand for SMS has nearly vanished among young users.

Revenue from voice and SMS services for Vietnamese operators has been declining sharply. Zalo’s surge accelerates this trend.

Users no longer need SMS when they can send free messages, share photos, videos, and make voice or video calls on a single app.

Traditional SMS packages, once highly profitable, now generate minimal revenue for mobile network operators.

Strategy to escape ‘pipeline trap’

Despite the decline in SMS and voice services, Zalo’s rapid growth has opened new opportunities for operators: mobile data revenue.

With 78.3 million users, nearly all mobile customers in Vietnam need data to use Zalo. This has prompted operators to promote 4G/5G packages while preparing for 6G in the next decade.

Beyond providing connectivity, Zalo is also creating a new market for AI services, cloud computing, and edge computing.

With 20 million AI users each month, the demand for data processing, bandwidth optimization, and latency reduction all require robust telecom infrastructure, the thing that network operators can provide.

What worries telecom providers most is the risk of becoming mere "pipe providers", i.e only offering connection infrastructure, while added value and user data remain in the hands of OTT platforms like Zalo.

Though operators have announced shifts from traditional services to digital service providers, investing in e-wallets, e-commerce, digital entertainment, and AI services instead of relying solely on voice and data, traditional services remain their primary revenue source.

Thus, only by escaping the “pipeline” role and climbing higher in the digital value chain, can operators survive and thrive sustainably in the era of AI and mobile internet.

Thai Khang