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Launched a year ago, 3G now accounts for 15 percent of total connections in Vietnam, according to the latest Wireless Intelligence data. The three operators under state control – Mobifone, Vinaphone and Viettel – have recently met their 3G investment targets and the government is now turning its attention to LTE, within the last month giving the go-ahead for five state-owned telecom companies to test LTE.
Our data shows that 3G connections in Vietnam reached 8.5 million in Q3. However, this is below the levels reported by individual operators earlier in the year, which exaggerated 3G uptake. Vietnam’s Ministry of Information and Communications (MIC) attempted to put the record straight during the summer, setting the country’s 3G total at 7 million by end-Q2.
Third-placed Mobifone has emerged as the 3G front-runner, according to our data, reaching 4.5 million 3G connections in Q3, giving it over a 50 percent share of the country’s nascent 3G market. This figure also means that Mobifone has migrated almost one-fifth (19 percent) of its customer base to 3G within the space of a year, a significantly higher proportion than either of its two main state-owned rivals.
Vietnam awarded four 3G licenses in April 2009, one each to Mobifone, Vinaphone and Viettel, and a fourth to a consortium comprising CDMA player EVN Telecom (E-Mobile) and Vietnamobile, a new GSM-based player. Vinaphone, a subsidiary of state-owned incumbent VNPT, was the first off the blocks launching a commercial 3G service in October 2009, initially in key metro areas such as Hanoi. Mobifone launched 3G services two months later (December 2009), followed by Viettel in March 2010 and Vietnamobile/EVN Telecom in June 2010. Those that met rollout deadlines were eligible to receive back 50 percent of their initial licence fees. Operators that missed out on licences were Beeline – another relatively new GSM entrant backed by Russian giant VimpelCom – and CDMA operator S-Fone.
Vinaphone noted last month that it will have 50 ‘value-added’ 3G services available by year-end, but services to date (from all 3G operators) have yet to achieve large-scale traction or generate significant additional revenue. Indeed, it is likely that the new 3G operators will face a long wait for return-on-investment in their new networks while they wait for affordable smartphones to come to market and data services to go mainstream.
Operators are also hampered by a predominately prepaid customer base. Prepaid connections still account for about 90 percent of the market and typically comprise lower-value customers who are more susceptible to churn. The situation is complicated further by very high levels of multiple SIM ownership, which has led to an artificially high mobile penetration rate of almost 140 percent. The regulator has made moves to address the issue by forcing operators to register their prepaid users and setting a cap of three SIMs per user. However, inactive prepaid SIMs are still thought to account for a significant proportion of the country’s installed base.
Investment in 3G also comes at a time of increasing competition among networks, due to various measures undertaken by the government in recent years to liberalise the mainly state-controlled market. EVN Telecom, a subsidiary of state-owned utility Electricity of Vietnam, is the latest operator planning an IPO and seeking a strategic foreign investor. There are currently only three foreign operator groups involved in the market – Hong Kong’s Hutchison (Vietnamobile), South Korea’s SK Telecom (S-Fone) and VimpelCom (Beeline) – but none of these currently represent a major threat to the large state-owned firms. Indeed, SK Telecom announced at the end of last year it was ceasing to invest in S-Fone, citing the CDMA operator’s inability to keep pace with its GSM rivals.
The state shows no sign of relinquishing its control of the market with regards to LTE. According to reports, the five operators given permission by the MIC to begin LTE testing are all either state or military controlled: VNPT (owner of Vinaphone and Mobifone), Viettel, FPT Telecom, CMC Telecom and Vietnam Multimedia Corporation (VTC). The five firms have been given one-year licences to test LTE ahead of next-generation spectrum auctions pencilled in for next year, when they can either buy spectrum or transfer the licence.
Joss Gillet, Senior Analyst, Wireless Intelligence:
The phenomenon of multiple SIMs per user is distorting real market growth in Vietnam and the recent regulatory measures have yet to counter this trend. MIC was expected to revoke up to 60 million mobile numbers by January 2010, the deadline for prepaid SIM card registration. However, the top three mobile operators have been adding an average of 1 million prepaid connections on a quarterly basis since then, and market penetration still stands at a high 140 percent. In Greece, the introduction of SIM card registration triggered a sharp contraction of mobile connections with WIND Hellas reporting a 7 percent quarterly decline in 3Q10, and overall market penetration dropping by 20 percentage points year-on-year. Similarly, in markets such as Kenya, Ghana, Tanzania and Nigeria, we expect that similar regulatory measures will impact mobile growth when they come into effect. Hence, Vietnam’s special rule of allowing users to hold a maximum of three SIM cards from each operator will still not give a clear picture of genuine market potential. Nevertheless, the market is going through some important changes fuelled by the introduction of high-speed 3G networks and the privatisation of some state-owned operators. EVN Telecom, for example, is set to sell a 50 percent stake of its capital to FPT Telecom and is expected to sell a further 20 percent to a foreign investor experienced in rolling out 3G networks. Next year’s spectrum auctions will determine the number of LTE players coming to market and we expect Greenfield operators to reshape current market dynamics.
|Parent(s)||Networks||Connections (millions)||Market Share
|% 2G||% 3G|
|E-Mobile||EVN Telecom||CDMA /
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