Making-Waves-VN.pdf

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Making waves:Southeast Asia series

Spotlight: Vietnam

www.pwc.com

State of the telco industry

in Southeast Asia

Focus: Vietnam

2011


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ACKNOWLEDGEMENT

We would like to acknowledge Business Monitor International (BMI), EIU ViewsWireand other organisations for the use of information extracted from their publicationsand websites.

PREAMBLE

Making waves is a new telco publication series on the Southeast Asia region. Thisis a PwC SEAPEN Region1led initiative. It aims to provide overviews of the emergingtelco markets in this region as well as insights on the challenges and opportunitiesfaced. We hope readers will nd this a valuable read.

DISCLAIMER

This publication has been prepared for general guidance on matters of interest only,and does not constitute professional advice. You should not act upon the informationcontained in this publication without obtaining specic professional advice. No

representation or warranty (express or implied) is given as to the accuracy orcompleteness of the information contained in this publication, and, to the extentpermitted by law, PricewaterhouseCoopers, its members, employees and agents donot accept or assume any liability, responsibility or duty of care for any consequencesof you or anyone else acting, or refraining to act, in reliance on the informationcontained in this publication or for any decision based on it.

All information contained in this publication has been researched and compiled fromsources believed to be accurate and reliable at the time of publishing.

1PwC SEAPEN Region comprises Malaysia, Thailand, Vietnam, Cambodia and Laos. Over 3000 peopleacross these five countries share knowledge, resources and experience to best serve our clients needsacross the region.


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Foreword

As the global economic axis shifts toAsia and emerging economies, telcooperators are now looking beyondtraditional geographies for new sources

of growth.

In this publication, we take a look atthe state of the telco industry in theemerging markets of Vietnam, Cambodiaand Laos, and the more developedmarkets in Malaysia and Thailand. Withthese countries strategically locatedbetween the Asian dynamos, Chinaand India, strong and varied growthopportunities are plenty.

Irvin MenezesPartnerPwC Malaysia

Stephen GaskillPartner, Advisory ServicesPwC Vietnam

Vietnam, one of Asias fastest growingeconomies, offers attractive long-term prospects for investors. Its highinvestment rate, low economic base,

large and young population provide anexpanding base of consumers for telcoservices.

Our spotlight on Vietnam, looks intothe prospects and challenges facing thecountrys developing telco sector andhow operators can transform themselvesthrough customer focus, simplersolutions and strategic collaborations tostay ahead of the competition.

We hope this publication offersfresh insights into the regions telcoopportunities and challenges.


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Contents

Foreword .......................................3

Global, Asia and Southeast Asiatelco overview ...............................5

Country telco briefs .....................11

Spotlight: Vietnam ......................17

Economic prospects .................20Telco environment ...................22

Waves of change ...................... 37

PwC telco capabilities ..................45

Appendix: Prole of Vietnamsmajor telco operators ...................51

Glossary ......................................56


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Global, Asia and Southeast Asia

telco overview


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6 PwC

Global telco market

Global and regional telco players are positioning themselves to capitalise on thegrowth of the international marketplace. With the strong growth in the variety ofhigh speed telco products including high speed broadband (HSBB) and wirelessservices, telco revenues is estimated to reach US$3 trillion in 2010 based on aprojected compound annual growth rate (CAGR) of 9.7%.

Asia

64.2% of world population24.9% of GDP

Teledensity: Mobile: 30.9% Fixed: 17.6% Internet: 10.7% Broadband: 3.2%

Latin America

8.6% of world population

5.6% of GDPTeledensity: Mobile: 57.5% Fixed: 18.2% Internet: 18.8% Broadband: 3.1%

US & Canada


Teledensity: Mobile: 74.9% Fixed: 91.9% Internet: 69.7% Broadband: 19.5%

Source: World Bank, Merrill Lynch, TIA

Chart 1: Global and regional telco market, 2010 - strong and buoyant with multi-product expansion

Europe


Teledensity:

Mobile: 108.6% Fixed: 53.1% Internet: 56.5% Broadband: 19.0%

World

Population: 6.5 billionGDP: US$45.5 trillion

Teledensity: Mobile: 46.3%

Fixed: 25.0% Internet: 17.0% Broadband: 5.4%


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Making Waves: Southeast Asia series 7


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8 PwC

Asias telco markets

There is a broad mix of developing and mature telco sectors across Asia. Key growthmarkets include China, India and Indonesia, with a forecast subscriber CAGR of 10%to 18% between 2011 and 2015.

* Estimate/forecastSource: BMI

40 60 80 100 120 140 160 180 2

Chart 2: Asias mobile subscriber prospects - China, India and Indonesia to power telco growth

Su

bscri

bergrow

th%

(CAGR

2011-1

5*)

Penetration rate %, 2010*

Cambodia (8.1 mln)

China(846.7 mln)

Laos (3.2 mln)

Indonesia (209.8 mln)

Japan (120.5 mln)

Philippines (89.4 mln)

Thailand (70.9 mln)

South Korea (50.5 mln)Malaysia (33.2 mln)

Taiwan (28.5 mln)Singapore (7.4 mln)

Vietnam (155.5 mln)

No. of subscribers, 2010

Hong Kong (13.2 mln)

India(743.1 mln)

-5

20

25

15

10

5

0

40 60 80 100 140 160 180 200120


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Although developing countries offer better growth prospects, operators here faceintense competition, with low tariffs and high market saturation, especially in urbancentres.

In contrast, developed and mature telco markets provide higher average revenue perunit (ARPU) and a more stable environment for telco players to operate in.

Chart 3: Comparative position of Asias telco market developed telco markets have better industry environmental rating

Regional

rank

Country Telco risk

ratings20111

Country Mobile

penetration20102(%)

Country Mobile

ARPU20102(US$)

Country Broadband

penetration20102(%)

1 Japan 76.3 Hong Kong 187.0 Japan 61.4 Singapore 154.1

2 Singapore 71.9 Vietnam 174.4 Singapore 36.9 Taiwan 95.0

3 South Korea 71.7 Singapore 143.1 South Korea 33.1 South Korea 35.4

5 Hong Kong 68.5 Taiwan 122.5 Taiwan 23.9 Hong Kong 30.9

6 Malaysia 65.5 Malaysia 118.9 Hong Kong 22.9 Japan 26.6

7 Taiwan 64.5 Thailand 108.9 Malaysia 16.4 Malaysia 13.8

8 India 61.0 South Korea 103.4 China 8.6 China 9.6

9 China 58.3 Philippines 95.5 Thailand 7.6 Philippines 4.9

10 Indonesia 51.0 Japan 94.6 Philippines 7.4 Vietnam 4.2

12 Philippines 48.9 Indonesia 90.2 Laos 5.6 Thailand 4.2

13 Laos 48.1 India 63.5 Vietnam 5.0 Indonesia 1.5

14 Cambodia 47.5 China 63.3 Cambodia 4.1 India 1.0

16 Thailand 44.5 Cambodia 53.7 Indonesia 3.8 Cambodia 0.7

17 Vietnam 42.2 Laos 48.8 India 2.1 Laos 0.2

1BMI Telco Risk Rating System - Evaluation of industry specific dangers (regulatory and competitive issues)and those emanating from the states political/economic profile that call into question the likelihood ofanticipated returns being released over the assessed time period.

2Estimate/forecast

Source: BMI


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10 PwC

Developing countries such as Cambodia, Indonesia, and Laos have higher growthpotential in mobile and Internet services. Although the mobile penetration rate is highfor most Southeast Asian countries, opportunities lie in migrating prepaid subscribers to

postpaid services and moving up to value-add 3G and 4G services, like in Malaysia.

Chart 4: Key economic and telco indicators of Southeast Asias market, 2010

Country Cambodia Indonesia Laos Malaysia Philippines Singapore Thailand Vietnam

Population (mln) 14.3 234.4 6.4 28.3 94.0 5.2 63.9 88.3

GDP (US$ bln) 12.0 706.7 6.0 238.0 188.7 222.7 318.9 103.6

Per capita (US$) 814 3,015 984 8,423 2,007 43,117 4,992 1,174

Growth (%) 6.0 6.1 7.7 7.2 7.3 14.5 7.8 6.8

Inflation (%) 4.0 5.1 5.4 1.7 3.8 2.8 3.3 9.2

Telco market, 2010 estimates

Mobile

Subscribers (mln) 8.1 209.8 3.2 33.2 89.4 7.4 70.9 155.5

Penetration (%) 53.7 90.2 48.8 118.9 95.5 143.1 108.9 174.4

Growth (2011-15)f (%) 19.1 11.6 10.9 1.5 5.9 1.5 3.3 6.1

Fixed-line

Subscribers (mln) >0.1 37.9 0.1 4.4 4.1 2.0 7.0 16.1

Penetration (%) 0.3 15.7 1.8 15.8 4.4 38.6 10.7 18.1

Growth (2011-15)f (%) 1.1 8.2 6.6 -0.6 0.3 0.1 -3.0 -1.1

Internet

Users (mln) 0.2 61.0 0.4 16.5 6.3 3.9 20.0 27.1

Penetration (%) 1.0 26.2 5.5 59.3 6.8 76.5 30.7 30.4

Growth (2011-15)f (%) 33.4 18.6 9.3 0.7 7.1 2.5 2.4 3.8

Southeast Asias telco markets

f ForecastSource: IMF & BMI


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Country telco briefs

Malaysia, Thailand, Vietnam,Cambodia and Laos


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12 PwC

MalaysiaRapid broadband growth anticipated, multiple plays

Overview

One of the most mature telco marketsin Southeast Asia, with mobilepenetration rate of 118.9% in 2010.

Competitive market, dominated byprepaid sector.

Mobile broadband and HSBB to grownon-voice/data rich services.

Key players: Maxis, Celcom (owned by

Axiata), Digi (controlled by Telenor),and Telekom Malaysia.

Data hungry customers (smartphonesand tablets users) to drive industrygrowth.

Smart devices expected to grow35% in 2011. International DataCorporation (IDC) estimates that 26%of all phones shipped last year weresmartphones with estimated growth of35% in 2011.

Shift in demand from traditionalvoice services to data and media richservices.

Intense competition due to marketsaturation as mobile penetration isclose to 120%.

Entry of new players and productssuch as YTL Communications BhdsYES 4G, new foreign stakeholders inwireless and mobile operators, GreenPacket Bhd and U Mobile Sdn Bhd,and increased presence of mobilevirtual network operators (MVNOs).

Opportunities Threats

Chart 5: Malaysia mobile and broadband subscribers

No.

ofsu

bscri

bers

(m

ln)

e Estimate f ForecastSource: BMI

Rapid broadband growth anticipated,led by HSBB and mobile broadband.

Cost savings from network sharingagreements between mobile operators.

2011-15 CAGR for mobile: 1.5%; and broadband: 16.2%

40

0

5

10

15

20

25

30

35

2010e 2011f 2012f 2013f 2014f 2015f

Mobile Broadband


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No.

ofsu

bscri

bers

(m

ln)

ThailandRevitalisation of wireless services, strengthening regulations

Overview

Mature and competitive telco market,with mobile penetration rate of108.9% in 2010.

Operators face price pressures,dominated by prepaid sector.

Operators focusing on smart phones and tablets to acquire

and retain existing customers and

stimulate data usage; and service quality due to launch ofmobile number portability.

Telco players adopting convergedservices model e.g. providingcombination of mobile, WiFi, andother telco services.

Key players: TrueMove, AdvanceInfo Services and Total Access

Communication.

Commercial 3G launch expectedto help mobile operators increaserevenue from higher data usage andmobile broadband service.

Collaboration with devicemanufacturers to drive data usage andacquire new customers.

Highly competitive and mature mobilesector, with a penetration of morethan 100% in 2010.

Dominance of prepaid subscriberswith low ARPU and high churn.

Regulatory environment has not hada sustained period of consistent policye.g. delay in issuing 3G and WiMAXlicenses.

Political risk and instability deterscurrent and future investors.


Chart 6: Thailand mobile and broadband subscribers



90

80

0

10

20

30

40

50

60

70

2010e 2011f 2012f 2013f 2014f 2015f

Mobile Broadband


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14 PwC

VietnamUrban saturation, high rural and broadband potential

Overview

Mature telco market especially inurban areas. Rural parts, whichmake up 70% of the population, arerelatively untapped.

Competitive market, facing pricepressure, dominated by prepaid sector,with one of the lowest mobile ARPU inSoutheast Asia.

Looking to grow 3G and broadbandsubscribers.

Key players: Viettel and Vietnam Postsand Telecommunications (VNPT),which owns VinaPhone and MobiFone.

Rising income and cheaper phonesand IT devices are making telcoservices more affordable.

Data and media rich content frombroadband, 3G and WiMAX servicesare expected to shape the sector in thecoming years.

Untapped rural market with limitedmobile and xed line access.

Saturated mobile market, with apenetration rate of 174.4% in 2010 -subscriber growth to slow to 6.1% p.a.over the next ve years (2011-2015).

Price sensitive customers with lowARPU (US$5 per month) due to lowincome level, with GDP per capita ofUS$1,174 in 2010.

Competitive telco market with large

number of players (nine or more)across all sub-sectors mobile, xed-line, Internet, broadband and WiMAX.


Chart 7: Vietnam mobile and broadband subscribers


Market liberalisation, non-networkoperators (including foreign players)can provide telco services throughpartnership with existing networkoperators.

No.

ofsu

bscri

bers

(m

ln)


250

0

50

100

150

200

2010e 2011f 2012f 2013f 2014f 2015f

Mobile Broadband


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Cambodia and LaosLow penetration, high growth potential

Cambodia overview

Competitive and saturated mobilemarket, with nine operators anddeclining ARPU (US$4 per month in2010).

Low mobile penetration rate of 54%in 2010, providing potential room forgrowth.

Large 3G base, with about 2.2 million 3Gcustomers in 2010, equivalent to 53.7%of total mobile users.

Attracting interest from foreign telcooperators e.g. France Telecom andIndonesias Telkom.

Laos overview

Fewer mobile players, with only fouroperators.

Increased competition due to marketexpansion by foreign operator, i.e.Vietnams Viettel.

Low and declining ARPU (US$5.60 per

month in 2010). Low mobile penetration rate of 49%

in 2010, providing potential room forgrowth.

Smaller telco market potential, less thanhalf the size of Cambodias population.

Chart 8: Cambodia mobile subscribers Chart 9: Laos mobile subscribers

No.

ofsu

bsc

ribers

(mln)



2011-15 CAGR for mobile: 19.1% 2011-15 CAGR for mobile: 10.9%

0

5

10

15

20

25

2010e 2011f 2012f 2013f 2015f2014f

No.

ofsu

bsc

ribers

(mln)

0

1

2

3

5

6

4

7

2010e 2011f 2012f 2013f 2015f2014f


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16 PwC


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Spotlight: Vietnam

1. Economic prospects2. Telco environment3. Next change


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18 PwC

VietnamRegarded by many as the new AsianTiger, Vietnam has attracted manymultinational corporations (MNCs)including those which see the need todiversify operations away from China.

Vietnams 88.3 million strong populationboasts of a large and young workforcethat has also seen an increase ofdisposable income in recent years.

Starting from a low economic base sincethe early 1990s, Vietnams economygrew strongly and rapidly before thenancial crisis. Since then, the economyhas rebounded and is expected to grow

by 6.8% in 2011. With economic reformsand growing afuence, Vietnam is oneof the key emerging economies in themedium and long term.


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2010 snapshot

Land area 331,051 sq km

Population 88.3 mln

GDP US$103.6 bln

GDP per capita US$1,174

GDP growth 6.8%

Inflation 9.2%

Foreign direct investment(FDI)

US$9.1 bln

Position 6th rank for PreferredLocation for FDI(UNCTAD, 2009-11)

78th rank for Ease ofDoing Business (WorldBank, 2011)

59th position in WEFGlobal CompetitivenessIndex (2010-11)

Country credit risk rating S&P: BB Moodys: B1

Telco market, 2010 estimates

No.

subscribers

(mln)

Growth Penetration

rate

Mobile 155.5 40.4% 174.4%

Fixed-line 16.1 -10.8% 18.1%

Internet 27.1 19.1% 30.4%

Broadband 3.8 26.7% 4.2%Source: Various sources

Southeast Asia series; spotlight: Vietnam 19


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20 PwC

Economic prospectsStrong growth outlook

High growth potential, bothGDP and population

Vietnam continues to be on the radarof global and regional FDI investorsas reected in highly encouragingeconomic projections and FDI data.Vietnam has catapulted into the top10 countries with highest potential

growth in the world its expected stronginvestments, exports, GDP growthrates, and large and young populace areamong the driving factors.

In PwCs The World in 2050 report,which explored the potential growth ofthe G20 and selected emerging countriesfrom 2009 to 2050, Vietnam emergedwith the highest projected growth of

8.8% p.a., surpassing countries suchas India and China (see chart 12).Medium-term, over 2011-15, Vietnamseconomic growth is expected to average7.2% p.a., underpinned by strongdemand in consumption, domestic andforeign investments, and exports.

Despite high ination and decit

concerns, growth for 2011 is expectedto remain strong at 7.0%. Ination isprojected to increase to 14.3% beforeslowing to an average rate of 7.8% p.a.between 2012 and 2015.

Strong FDI prospects

UNCTAD reports that Vietnam is amongthe top 10 target countries for FDI from2010 to 20121. FDI disbursements in2010 rose by 10% to US$11 billion dueto a combination of factors, includingthe global economic recovery, attractivegovernment measures to attract FDI

and the countrys competitively pricedworkforce2. Prominent MNCs makinginvestments in recent years include: Intel, which opened a US$1 billion

assembly and testing plant in Ho ChiMinh City (HCMC) in 2010.

Nokia, which announced plansto build a 200 million (US$283million) hand-set manufacturing plantin Hanoi.

Addressing economicchallenges

Underlying Vietnams strong growthprospects, its economy faces the threat ofhigh ination and budget decits, as wellas a sizeable trade decit and currencyvolatilities. For stable and sustainable

growth, the Vietnamese government hasincreased interest rates for inter-bankloans and took measures to reduce creditgrowth and public spending. It has alsodevalued the Vietnam Dong (VND) by9.3% in February 2011.

1 Vietnam was ranked top 8 priority host economies for FDI for the 2010-2012 period in UNCTADs WorldInvestment Prospects Survey 2010-2012, September 2010

2Average monthly pay in 2009 for Shenzhen in China was US$235, compared with monthly manufacturing wagesof US$100 in HCMC and US$104 in Hanoi. (Source: Japan External Trade Organization)


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Growt

h(%)

Grow

th(%)

US$(bln)

US$(bln)

Chart 10: Steady GDP growth with slower inflation Chart 12: Top 10 countries with the highestgrowth potential, 2009-2050

Chart 11: Strong investments and FDI inflow

e Estimate f ForecastSource: EIU ViewsWire

e Estimate f ForecastSource: EIU ViewsWire

Source: PwC, The World in 2050, 2011

14

12

180

16

12

10

160

0

0

20

2

60

6

100

10

4

4

40

4

6

80

8

8

6

120

12

10

8

140

14

2010e

2010e

2011f

2011f

2012f

2012f

2013f

2013f

2014f

2014f

2015f

2015f

GDP GDP growth Inflation

FDI Inward direct investment(FDI) growth

Gross fixedinvestment growth

Country Average annual

real GDP growth

(2009-2050)

1. Vietnam 8.8%

2. India 8.1%3. Nigeria 7.9%

4. China 5.9%

5. Indonesia 5.8%

6. Turkey 5.1%

7. South Africa 5.0%

8. Saudi Arabia 5.0%

9. Argentina 4.9%

10. Mexico 4.7%


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22 PwC

Telco environment

Vietnams telco industry has experiencedtremendous growth over the last twoyears. Between 2008 and 2010, industry

revenue and mobile subscribers morethan doubled to US$10.3 billion and155.5 million, respectively.

Growth, however, is expected to slowover the next ve years as Vietnamstelco industry begins to transition toa mature market. The country has thehighest mobile penetration rate in theregion, reaching 174.4% in 2010, up

from 79.6% in 2008.

This brings a new set of challenges toVietnams telco operators as they searchfor new growth avenues besides focusingon market penetration. This includesincreasing usage, up selling (e.g. movingcustomers from pre-paid to post-paid),and increasing data/media rich services.

Between 2008 and 2010,industry revenue and

mobile subscribers morethan doubled to US$10.3billion and 155.5million, respectively.


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1. Vietnams telco sector

Vibrant telco sector withexpanding consumer base

Vietnams strong socio-economicfundamentals are driving income andconsumption growth, and providingan expanding base of consumers fortelco services. In 2010, Vietnams telcosector achieved an average annual

growth of 30% to 40% and is expectedto earn VND200 trillion (US$10billion) in revenue.

Vietnams telco sector is a signicantcontributor to the economy,accounting for around 6% of thecountrys GDP.

Chart 13: Vietnams telco sector experiencing strong double digit growth

US$(bln)

Grow

th%

Source: Vietnam Ministry of Information and Communications

12 60

10

10

0

10

30

4

20

6

40

8

8

50

2006 2007 2008 2009 2010

Factors driving Vietnams telco servicesindustry

GDP growth (2011-2015): 7.2% p.a.

Young population (2009): 66% of population between

15 and 59 years old

High rate of urbanisation: Close to one million ruralurban migrants per year (2010: only 30% of thepopulation lived in cities)

Strong consumption growth: Retail sales reached closeto VND1.2 trillion in 2009 from just VND200 billion in2000 or a CAGR of 22%

Telco industry revenue and growth, 2006-2010

Source: BMI & CapitalLand

Revenue Revenue growth


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24 PwC

Anticipated trends

Mobile phone services will continue tocontribute to most of the revenues of

local telco companies. Mobile internetand value-added services (VAS) broughtby 3G, WiMAX and 4G are expectedto shape Vietnams telco sector in thecoming years.

Over 2011 to 2013, MobiFone,VinaPhone, Viettel and EVN Telecom-Hanoi Telecom will invest more than

VND33 trillion (US$1.73 billion) in their3G networks, with a total of 30,000 basetransceiver stations.

Competitive and saturatedmarket

Vietnam has 11 network infrastructureenterprises and 81 internet serviceproviders. Despite the rapid marketgrowth over the last 10 years, marketplayers face stiff price competition intheir bid to capture market share andeconomies of scale.

Vietnams telco market is saturated witha mobile penetration rate of 174.4%

in 2010. Telco operators also need tocompete on low ARPU with multipleplayers. As a result, Vietnam has one ofthe lowest telco business environmentrankings in Asia, as indicated byBusiness Monitor International (BMI)(see Chart 3).

Chart 14: Vietnams telco sector driven by mobile

Vietnams telco market is

saturated with a mobilepenetration rate of174.4% in 2010.

Vietnams mobile and fxed line subscriber growth, 2010 estimate

Source: BMI

Ne

ta

dditions

42

.8m

ln

Mobile: 155.5 mln

Fixed: 16.1 mln

YoY

YoY

40.4%

10.8%

Totalsubscribers171.6 mln


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Chart 15: Analysis of Vietnams telco sub sectors


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26 PwC

Chart 15: Analysis of Vietnams telco sub-sectors

Mobile

Large, saturated and competitiveFixed-line

Stalled growth

Market size Large

155.5 mln subscribers (2010)Small

16.1 mln subscribers in 2010, hampered by

poor infrastructure network and competitivepricing from mobile providers

Competition Intense

Saturated market (penetration rate est.of 174.4% in 2010)

Low tariff rateARPU of US$5 per month in 2010 dueto competitive market, price sensitiveand low value customers - prepaidsubscribers account for about 90% ofthe market

Stiff

Competition from mobile operators

Growth Moderate

Subscriber growth of 6.1% p.a. (2011-15)FlatSubscribers expected to remain relativelyunchanged between 2011 and 2015

Market players Crowded

Nine mobile operators, but dominated bytwo state-owned players i.e. VNPT (whichowns two mobile operators, VinaPhoneand MobiFone) and Viettel. VNPT andViettel customers account for 88% oftotal mobile subscribers

Crowded

Eight fixed-line operators, however, dominatedby three players i.e. state-owned, VNPT andViettel, and private operator EVN Telecom

Prospects 3G and rural market Strong 3G subscriber growth,

averaging 8 mln p.a. over 201115 dueto aggressive promotional offers toattract customers

Rural market remains relativelyuntapped, which accounts for 70% ofthe countrys population

Rural market and fixed wireless

Rural market relatively untapped Operators investing in fixed wireless

services based on CDMA and GSMnetworks. They offer a cost effective way toservice low income rural areas as they rideon mobile networks


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Internet

Reaching urban saturationBroadband

Small, with high growth potential

Market size Moderate

27.1 mln Internet users in 2010Very small

3.8 mln subscribers in 2010 due to slow

take-up. Challenges faced: High price of broadband services Weak and inconsistent fixed-line

infrastructure, and Competitive pricing of 3G mobile

internet

Competition High

Saturated urban market, while access/infrastructure network in rural market islimited

High

Major Vietnamese mobile and fixed-lineoperators are competing to grow thisarea as mobile and fixed-line sector

growth is slowed by market saturation

Growth High but slowing

Forecast Internet user growth of 3.8%p.a. for 2011 to 2015, down from 19.1%estimated for 2010 as penetration

approaches saturation in major cities andtowns

Strong double digit

Forecast subscriber CAGR of 27.7%between 2011 and 2015, provided byinvestments to upgrade and increase

broadband capacity, expansion ofinternational Internet bandwidth andWiMAX network

Market players Crowded

There are 12 licensed Internet serviceproviders in Vietnam and six internetexchange providers, dominated by VNPT,Viettel and EVN Telecom

Crowded

Fixed-line and 3G operators competingfor the broadband market, dominated bythree players i.e. state-owned, VNPT andViettel, and privately-owned FPT Telecom

Prospects Rural market

Future growth of the rural marketwill depend on the pace of Internetinfrastructure development in the ruralareas

Increase market penetration

To provide for double digit subscribergrowth

Source: BMI and PwC analysis


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28 PwC

Chart 16: Relative position of Vietnams telco market

Su

bscri

bergrow

th%

(CAGR2011-1

5f)

Penetration rate %, 2010e

No. of subscribers, 2010

e Estimate f Forecast1No. of Internet usersSource: EIU ViewsWire

55

35

45

-5

5

15

25

0 50 100 150 250200

Mobile (155.5mln)

Internet (27.1 mln)1

Fixed line (16.1 mln)

Broadband (3.8 mln)

3G (8 mln)Growth market

Prospects: Continuedinvestments in networkinfrastructure and marketpenetration

Mature market

Prospects: Increase usage,introduce VAS and expand

into rural areas

Market lagger

Prospects: Requirenetwork infrastructureinvestment/expansion inrural areas to grow

Growth opportunities

The competitive pressures andchallenges facing Vietnam are similar

to other telco markets in the region.Countries with low ARPU and highpenetration rate still have opportunitiesto grow both revenues and margins.The potential growth opportunities forVietnams telco industry include:

Mobile internet (3G), broadband andVAS provided through high speedInternet access.

Semi-rural and rural markets, whichremain relatively untapped andaccount for 70% of the countryspopulation.

Outsourcing IT, telco networks andcall service centres can help reducecapital expenditure and provide costsavings.

Collaborations between telcooperators, telco and IT devicesuppliers, content developers, content

aggregators and users can providenew sources for VAS.

Collaborations between telcooperators especially in rolling out new3G and rural telco networks can helpreduce capital outlays and operatingcosts, and speed up the roll-out oftelco networks.


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1VNPT owns mobile operator Vinaphone and MobiFone

2SPT - Saigon Post and Telecommunication Corporation controls S-FoneSource: Vietnam Ministry of Information and Communications

Crowded market, dominated by two telcos

Vietnams telco market is dominated by two state-owned operators, VNPT andViettel. Jointly, they control more than 80% of the market in each of the telco sub-sectors (see Chart 17).

This oligopoly situation makes it difcult for smaller players to compete as they lackthe market scale or volume to compete effectively on low ARPU and narrow margins.

2. Market players

Chart 17: Vietnams telco sector dominated by VNPT and Viettel

Mobile Vinaphone1, 27.2%

VNPT

VNPT, 63.2%

VNPT, 68.6%

VNPT, 72%

MobiFone1, 27.2% Viettel, 33.8%

Viettel, 22.6%

Viettel, 15%

EVN Telecom,14.3%

S-Fone (SPT)2, 4.7%

SPT, 1%

EVN Telecom,3.2%

FPT, 13%

FPT, 13.7%Viettel,11.6%

Others, 7.2%

Others, 2.9%

Broadband

Internet

Market share %

Fixed-line

10 20 30 40 50 60 70 80 90 100

Telco sector market share, 2009


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State-owned telcos and IPOs

All key telco players in Vietnam arestate-owned (see chart 18). There were

earlier plans to list some players suchas MobiFone back in 2009. However,due to the nancial crisis, the listingwas deferred. Other operators targetedfor initial public offering (IPO) includeVinaPhone and EVN Telecom.

The listing of mobile operators couldsee entry of foreign partners such asVodafone and France Telecom. Bothhave expressed interest in a strategicstake in MobiFone.

Please refer to Appendix for proles ofVietnams major telco operators.

Company name Brand name Ownership Market

VNPT - Government Local, long-distance andinternationaltelephony, data,Internet

Vietnam TelecomServices

VinaPhone VNPT Mobile

Vietnam Mobile

Telecom Services

MobiFone VNPT Mobile

Viettel Viettel Ministry of Defence Mobile, localtelephony

S-Fone S-Fone SPT (government)1 Mobile

EVN Telecom E-mobile, E-com Electricity of Vietnam(government)

Mobile,local, long-distance andinternational

telephony, data,Internet

Hanoi Telecom HT Mobile Government Mobile

FPT Telecom - The Corporationfor Financing andPromoting Technology(government)

Broadband andWiMAX

Chart 18: Shareholdings of key telco players

1S-Fone operation is managed by a JV between SPT and South Korean SK Telecom

Source: BMI


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Industry consolidation

The competitive telco environmentis showing signs of consolidation. In

2010, EVN Telecom was targeted foracquisition by FPT Telecom. The dealwas subsequently withdrawn due torising investment cost and interest rates.

EVN Telecom also seeks to share 2Gand 3G networks with other mobileoperators to help cut cost and capitalexpenditure. It has earlier partneredwith Hanoi Telecom to launch 3Gservices in 2009.

VNPT, which owns both MobiFone andVinaPhone mobile operators, could beforced to merge the two operators orsell its stakes in one of them followinggovernment moves to restrict institutionsor individuals from controlling morethan one operator in the same telco

market in a bid to foster competition inthe industry.

Mobile 3G Fixed-line Internet3 Broadband/

WiMAX

VNPT1

- Vinaphone

- MobiFone

Viettel

SPT2

EVN Telecom

4

Hanoi Telecom

FPT Telecom

GTel Mobile

Indochina Telecom

Vietnam MultimediaCorporation (VTC)5

6

CMC Telecom

Chart 19: Vietnam key telco players product segments

1 VNPT operates its mobile operations through MobiFone and VinaPhone2 SPT operates its mobile operations through S-Fone3Currently there are 12 licensed ISPs in Vietnam and six internet exchange providers

4 EVN Telecom and Hanoi Telecom partnered to launch 3G services in 20095VTC is a subsidiary of VNPT6VTC shares wireless frequency bands with EVN Telecom to operate its 3G services


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3. Regulatory environment

Telco industry policy

The government, through its telcopolicy, is undertaking signicantstructural and institutional reformsto achieve sustainable nationalgrowth and development. The policybacks aggressive development ofmodern telco infrastructure andservices to match the achievementsand performance levels of Vietnamsregional neighbours.

The policy is formally set out ina decision of the Prime Minister,Decision No.158/QD-TTg of October18, 2001, ratifying Vietnam Post andTelecommunications developmentstrategy until 2010 and orientation

until 2020.

1. To build up and further develop thenational information infrastructurewith modern technologies.

2. To provide society and consumerswith modern, diversied andabundant telco services in all parts of

the country.

3. To increase the share of this sectorin Vietnams GDP and employmentgrowth.

Telco policy objectives

Speeding up the developmentof the Ordinance on Posts andTelecommunications.

Developing specic policies andmeasures to boost competition.

Implementing the Vietnam U.S.Bilateral Trade Agreement.

Renewing the charge rate policy in line

with competitive market conditions.

Effectively managing the radiofrequency spectrum, numberingsystems, zone and domain names, andaddresses.

Promoting productivity, quality, andefciency within business enterprises.

Key telco policy strategies:

Creating policies for networkdevelopment in rural and remoteareas.

Encouraging FDI, compliance withWorld Trade Organisation entrycommitments.

Promoting international co-operationin service development.


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Regulator

The regulation of Vietnams telcoindustry is under the responsibilityof the Ministry of Information andCommunications (MIC). The keyfunctions and responsibilities of MICincludes: Regulating the press, publishing,

posts, telco, Internet, broadcastingand TV, and IT industries.

Drafting laws, ordinances,regulations, strategies anddevelopment plans for the industriesit regulates.

Issuing telco related licences andpermits.

Assigning and allocating national

radio frequency spectrum.

Setting consumer tariffs for telcoservices and interconnectioncharges between operators.

Chart 20: MIC telco-related functions

Main function Sub-functions

Economic planning Develop national plans and strategies for the telco andInternet sectors

Develop radio frequency spectrum plans

Legal documentation

Draft laws, ordinances and policies on telco Issue decisions, directives and circulars to implement

laws and regulations Issue regulations, rules and technical standards

Supervision Issue and revoke telco licences and permits Allocate, control and monitor radio frequency spectrum

and radio equipment Regulate telco investment terms and conditions Regulate telco and Internet services, quality and tariffs Regulate numbering resources, codes, domain names

and addresses in the telco and Internet sectors Regulate access to, and the interconnection between

public and private telco networks

International relations Conduct international co-operation activities in telco Manage international treaties on telco and radio

frequency

Source: MIC and BMI


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Recent developments

Potential for more foreign JVs

The MIC has allowed a number oflocal telco companies to enter intocollaborations with foreign partners toprovide a wide range of communicationservices.For non facilities-based services (i.e.xed or mobile voice telephony serviceswith no network infrastructure) theforeign capital contribution to their jointventures (JVs) must not exceed 51% ofthe legal capital.

Foreign companies can raise their capitalup to 65% only if they have passed theinitial three-year investing period inVietnam with a capital contribution of

up to 51%.

FDI in local telco companies, however, islimited to 30%.

Some large foreign partners will bepermitted to independently providevirtual private network services andvalue-added telco services usingthe network infrastructure of a local

operator. Currently, foreign partnerswho want to provide such servicesmust select Vietnamese partners andcontribute up to 70% of capital in the JV.

4G testing

In September 2010, MIC granted 4Gtrial licences to ve mobile operators- VNPT, Viettel Telecom, FPT Telecom,

CMC Telecom and Vietnam MultimediaCorporation - to test Long TermEvolution (LTE) technology.

The operators have been given a yearto conduct tests and will be expectedto participate in an auction for thefrequencies and licences.

Market competitive structure

In 2010, the MIC approved a proposalsubmitted by the top three mobileoperators (Viettel, MobiFone and

VinaPhone) to reduce tariffs by up to15%. The average cost of a call willfall from VND1,200 (US$0.063) toVND1,000 (US$0.052) per minute.

The MIC is also studying the possibilityof Mobile Number Portability, with a setof guidelines expected to be released in2011. Mobile phone operators may nolonger own particular prexes, and the

policy could reduce the quantity of idleor discarded numbers.


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Vietnams 10-year ICT plan

In the Master Plan to make Vietnambecome an advanced country in ICTin 2020, the government aims toestablish a world-class ICT sector,contributing 8% to 10% of the GDP.

The ICT 2020 targets are: Advance to the top 10 countries

in terms of providing softwareoutsourcing and digital contentservices.

Up to 80% of enterprises and socialorganisations will employ IT in theiroperations.

Develop some strong telcocompanies.

Provide wide-band mobilecommunications to up to 85% ofresidents.

To reach that goal, the government isupgrading its telco infrastructure, anddeveloping the ICT market along withhigh-quality human resources to meetthe demands for greater sophistication

and international integration. Thegovernment will mobilise a total ofUS$8.5 billion (VND163.8 trillion)to develop the ICT sector under theMaster Plan.

Revenue: US$14.7 billion (2009)

Export: US$6.5 billion (2009)

Accounts for 6.7% of GDP (2010)

Growth of between 20% to 25% p.a.over 2001-2010

Vietnam ICT sector statistics

Around 70% of Vietnams ICT activityis in the electronics and hardwareindustry

Other key ICT activities: ITapplication, software and digitalcontent

Around 4,000 ICT companies,employing about 486,000 people(2009)


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2010-2015 2016-2020

Total investmentsUS$8.5 bln

US$3.2 bln US$5.3 bln

Ranking list of the InternationalTelecommunication Union

70 60

ICT industry contributions to the countrysGDP

17-20% 20-30%

Coverage of broadband Internet servicesto communes and wards nationwide, fibreoptic cables radio and TV broadcasttechnologies in five big cities

70% 90%

Nationwide households telephonecoverage

100% 100%

Households with computersand access to broadbandInternet services

20-30% 70-80%

Households with TV sets 90% 100%

Complete building of ICT infrastructure Urban Areas Village Areas

Software outsourcing destinations anddigital content producers

Top 20 Top 10

Chart 21: Vietnam 10-year ICT Master Plan (2010-2020) targets

Source: The Vietnam Nation

Waves of change


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Source: PwC analysis

f gGreater customer focus, simpler solutions and strategic collaborations

Chart 22: Competitive pressures facing Vietnams telco marketThe competitive landscape facingVietnam telco operators is not uniqueto them. However, the country-specicissues create signicant pressures onthem to transform their business andorganisational models. Vietnams mobiletelco market is characterised by:

Generic product offerings

Low ARPUs with the bulk of usagebeing basic telco services (voice)

Continued pressure on tariffs (recentagreement concluded to lower tariffsby 15% in 2010)

Network saturation1(poor voicequality), and

Saturated market (penetration rate at174.4% in 2010).

There is a need for telco operatorsto reassess their strategic marketingoptions and manage their capital andoperating expenditure in view of thecurrent low ARPU/tariffs.

Genericproducts

Saturatedmarket

Networksaturation1

Pressureon tariffs

Low ARPU

Vietnam

telco market

1Dramatic growth in mobile subscribers has resulted in network saturation i.e. congestion in the radiointerface/congestion in the Radio Network Controller as well as the core network


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Chart 23: Transformation of telco business model to drive revenue and lower cost

To stay competitive telco operatorsneed to:

1. Differentiate through greatercustomer centricity

2. Move towards simplicity, i.e.streamline complex organisationstructure, technology, resourcesand customer services

Operational outcomes:

Simplify organisation structure aroundcustomers and core competitiveadvantages

Asset light models, non-core assetsand resources can be outsourced orshared

Leverage on third party resources andcapabilities through collaboration

Customer outcomes:

Provide simple, value-add servicesthat offer convenience

Monetise on changing/emerging

consumer behavior Quicker roll-out of innovative services

3. Collaborate with competitors andother complementary serviceproviders

These provide the basis oftransformation to differentiate, addvalue, generate revenue and reduce cost.


Complexity Simplicity

Revenue

Cost

Collaborat

ion

Customer focus, collaborationanda move towards simplicityprovideopportunities for telco operators toimprove revenue streams and lower

operating costs.

Cust

omerCentric

ity


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Customer centricity

Vietnam telco operators have beencompeting on the basis of price toprotect and gain market share. Withprospects of further reduction inmobile tariffs and a low industryARPU, competing on price alonewill not provide sustainable returns.

Chart 24: Customer value management

Anal PLANIFICACI

Their future growth and success liesin understanding customers needsand their communication patterns.Information on customers can lead tomore personalised experiences, whichoffer differentiation and open up newrevenue opportunities.

In order to successfully manage thetransition to customer centricity, telcooperators need to be able to measureand manage the real protabilityof the customer. This needs to beoperationalised such that it becomes anintegral part of their descision making.

Profitability is at the centre of an organisation (2) Customer and profitability KPIs (4) are aligned with the customer and

commercial strategies (1) Effective and efficient capturing and analysis of information in suitable data

warehouse environment (2); It is critical that insights from profitability are used to shape-up processes,

value chain and channels that affect customer experience (3)

Customer and commercial strategies

Customer and profitability KPIs

Profitability Analytics Customer Management

Campaign Managers

Customer

Data Warehouse

Needs Acquiring Serving

RetainingGrowing

Value

Behaviour

Profiles


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Move towards simplicity

The competitive and low ARPUenvironment in Vietnam requires telcooperators to minimise duplicationsand internal competition to conserveresources and focus on servicingcustomers.

The key to achieving this lies in keepingservices and operations simple. This canbe accomplished by:

Increasing collaboration andintegration between internal units andproduct groups to operate holisticallywith the same objectives. They

shouldnt operate in silos or havecompeting objectives.

Focusing on core competitiveadvantages such as brand andcustomer management, andoutsourcing or sharing non-core assetsand resources such as IT, networkinfrastructure and customer servicecall centres.


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Exploring collaborations

Declining ARPU and the high cost ofrolling out network infrastructurelike 3G and in rural areas makes itunfeasible for Vietnam telco operatorsto own all the elements of the networkinfrastructure.

For Vietnam, collaboration among telcooperators offers opportunities to:

Reduce capital and operatingexpenditure, via sharing networkinfrastructure to achieve an asset-lightmodel, and

Roll out and introduce 3G services andmobile networks in rural areas faster.

1Foreign partners are allowed to own up to 51%in the partnership to provide non facilities-basedservices i.e. offer fixed or mobile services with nonetwork infrastructure

The move by MIC to allow local telcocompanies to collaborate with foreignpartners1offers opportunities forexisting network operators to increasenetwork utilisation (i.e. throughleasing network capacity) and allowsforeign partners1to increase marketaccess and penetration.


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Fast forward

Looking ahead, Vietnamstelco industry faces signicantchallenges but also brings a new setof opportunities for operators.

Amid rising margin pressures, theability to raise nance for capital

investment is a key concern.Operators can differentiatethemselves by developing a

value management strategywhich focuses on customers andprotability. Placing customersat the heart of their business willallow operators to make moreeffective investment decisions

which have the most impact oncustomer needs.


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PwC telco capabilities

Getting the right ft


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44 PwC

Navigating throughchallenges

Telco companies are facing newfrontiers, with decreasing growthrates and lower voice ARPU. Onthe other hand, smartphones,high-speed connections, andmultimedia rich contents aredriving mobile data volume, but

not data revenues.

Many telco companies are ndingthat their operating models aretoo complex to address the shift intelco environment from voice todata and VAS.

To remain competitive and build

value from these new frontiers,operators need to focus ongetting the right t or businessmodel for the future. Thismeans a thorough evaluationof their entire business withthe sole purpose of simplifyingthe operating model, focusingon the customer and strippingout unnecessary complexity

and cost. The evaluation beginswith a rm understanding of theorganisations business, customers,and external environment.

Customising solutions

At PwC, we recognise that telcocompanies are subjected to rapidchanges. We work to bring valuesolutions by working with you andsharing our experience and subjectmatter knowledge.

We have a dedicated regional telco

practice spanning ve countries inemerging Southeast Asia - Malaysia,Thailand, Vietnam, Cambodiaand Laos - to pull resources andexperience to best serve your needs.

Today, our telco practice is a multi-disciplinary team comprising over200 dedicated professionals. Wehave expanded our service offeringsto include areas beyond audit andtax, looking at a whole range ofbusiness issues, while taking intoconsideration industry risks andchallenges. The diagram on the nextpage depicts some of our key serviceofferings.

Breadth and depth of our service capabilities


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Corporate and functionalstrategy development andvalidation

Merger, acquisition andrestructuring advisory

Due diligence andtransaction support

JV strategic alliance andcollaboration support

Investment and exitstrategies

Value management strategy(customer centricity and

customer protability)

Audit and assurance

Tax planning and compliance

Governance, risk and compliance

Strategy, sustainability and transformation

Operations and nance

Technology

Corporate nance and deal value (transactions)

Launch managemente.g. service and networkrollout and IT deployment

Programme and projectmanagement

Business readinessassessment and rolloutsupport

Business policy and processdevelopment

Organisation design andchange

Growth and differentiationevaluation of markets andservices

New product anddistribution channeldeployment

Customer lifetimeanalysis and experienceenhancement

Churn management

Product/customerprotability analysis andmargin enhancement

Revenue assurance effective revenuemanagement solutionsto control leakage andimprove the top line

Covers key operationalissues like people, process,technology, distributionchannel, vendor and assetmanagement

Cost optimisation evaluation andimprovement of currentoperating models and costownership

Outsourcing managementsolutions

Performance review andimprovement includingstrategy, structure, process,people and systemsdimensions

Accounting and nancefunction effectiveness

Operationalise valuemanagement for customercentricity and customer

protability

Strategy LaunchMarket & customerdevelopment

Operational

efciency

Regulation and compliance services Performance improvement and deal services

Contact us


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46 PwC

PwC Vietnam

Hanoi#701, 7th Floor, Pacic Place83B Ly Thuong Kiet StreetHoan Kiem DistrictHanoi, VietnamTel: +84 (4) 3946 2246Fax: +84 (4) 3946 0705

Advisory

Stephen GaskillPartner, [email protected]: +84 (8) 3824 0125(HCMC)

Paul ColemanPartner, Corporate [email protected]

Tel: +84 (4) 3946 2233(Hanoi)

Legal

Richard [email protected]: +84 (8) 3824 0117(HCMC)

Assurance

Richard [email protected]: +84 (8) 3824 0123(HCMC)

Tax

Dinh Thi Quynh [email protected]: +84 (4) 3946 2231(Hanoi)

Ho Chi Minh CitySaigon Tower, 4th Floor29 Le Duan StreetDistrict 1Ho Chi Minh City, VietnamTel: +84 (8) 3823 0796Fax: +84 (8) 3825 1947

Website: www.pwc.com/vn


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PwC Malaysia

Level 10, 1 Sentral,Kuala Lumpur SentralPO Box 1019250706 Kuala LumpurMalaysiaTel: +60 (3) 2173 1188Fax: + 60 (3) 2173 1288

Email: [email protected]: www.pwc.com/my

PwC Thailand

15th Floor, Bangkok City Tower179/74-80 South Sathorn RoadBangkok 10120ThailandTel: +66 (0)2 344 1000, (0)2 286 9999Fax: +66 (0)2 286 5050

Website: www.pwc.com/th

Irvin [email protected]: +60 (3) 2173 0668

Uthaya [email protected]: +60 (3) 2173 1818

Andrew HamiltonHead of Operations ConsultingExecutive [email protected]

Tel: +66 (0)2 344 1123

Patrick LidderdaleExecutive [email protected]: +66 (0)2 344 1287


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Appendix and glossary

Appendix - Prole of Vietnams major telcooperators: VNPT

Viettel MobiFone VinaPhone

Glossary

VNPT

Appendix - Prole of Vietnams major telco operators


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Background

Wholly owned by the government and the countrys main telco serviceprovider.

Operates the national core telco network in 63 cities and provincial areas.

Dominant xed-line, Internet and broadband operator, with more than60% market share.

Controls 54% of total mobile subscription, through two leading mobileoperators: MobiFone and VinaPhone.

Investing heavily in mobile, broadband and VAS.

Mobile Looks to list its mobile units i.e. MobiFone and subsequently VinaPhone to

provide new capital for investments.

Seek strategic foreign partners to provide new skills set from its mobileunits listing.

Continue to expand mobile network coverage.

Engage in price war with major rival, Viettel.

Invest and expand 3G services and market penetration.

Licence to conduct trials on 4G LTE network to bid for subsequent auctionof 4G licence.

Tie-up with Russian Alltech Telecom to provide broadband Internetservices based on 4G/LTE network.

Broadband Upgrade and expand broadband bandwidth and network, including

WiMAX , to meet growing subscriber base.

Launched broadband satellite services in 2010. Investing in second telcosatellite to add capacity for Internet services.

Fixed line Continue rural expansion to grow xed-line subscriber base.

Corporate data services JV with NTT Communications to provide premium data centre to MNCs.

Partner with Cable & Wireless to provide virtual private network (VPN)services.

Merger/disposal May have to merge both its mobile units or sell one of them due to a new

regulation that limits institutions or individuals controlling more than oneoperator in the same telco market.

Investment and strategy

VNPT turnover

VND(trn

)

120

0

20

40

60

80

100

2006 2007 2008 2009 2010

VNPT mobile subscriber base

Su

bscri

bers

(mln)

100

0

20

40

60

80

2006 2007 2008 2009 2010

Source: BMI

Source: BMI

Viettel



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Background

Wholly owned by the Ministry of Defense and a major mobile, xed lineand Internet provider in Vietnam.

Mobile market leader, with 33.8% market share. Around 70% of itssubscribers are from the rural region.

Second largest xed line and broadband operator, with 22% and 12%market share, respectively.

Won the most attractive charge packages in Vietnam Mobile Awards2010.

Focus on low tariff, mobile data and overseas expansion.

Mobile Undertake network investments and improve service quality and tariffs.

Engage in price war with major rival VNPT (MobiFone and VinaPhone).

Increase revenue from mobile data services through smartphones.

Broadband Expand cable and wireless broadband and bre-optic network.

Expand 3G mobile internet services, through reducing fees, servicecharges, and offering promotions.

Fixed-line Continue rural expansion to grow xed-line subscriber base.

Focus on home phone subscribers in rural regions and enhancing basetransceiver stations.

Corporate data services JV with Taiwans Chunghwa Telecom to set-up Internet data centre.

Overseas expansion Expand overseas through strategic investments and acquisitions.

Already active in Cambodia and Laos and aims to expand its reach into 15countries by 2015 e.g. Haiti, Bangladesh, Myanmar and African countries.


Viettel turnover

VND(trn

)

0

20

40

60

80

100

2007 2008 2009 2010

Viettel mobile subscriber base

Su

bscri

bers

(mln)

50

10

0

20

30

40

Source: BMI

2006 2007 2008 2009 2010

Source: BMI

MobiFone



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Background

Vietnam Mobile Telecom Services, a VNPT subsidiary, operates theMobiFone cellular telephone brand.

Share second-largest mobile position with VinaPhone, with 27% marketshare. Also one of four 3G licence operators.

Was the rst and largest mobile provider in Vietnam, before being takenover by Viettel.

Won the most favourite mobile network title in Vietnam Mobile Awards2010.

Lower voice tariff, expand VAS, build network reach, and possible IPO.

Mobile Reducing mobile tariff rates and charges to protect market share and grow

customer base.

Look to VAS to strengthen non-voice service portfolio.

Launching 3G network nationwide, offering discounts, promotionpackage and lower fees to attract customers.

Deferred IPO listing in 2009 due to nancial crisis.

Continued interest from Vodafone and France Telecom to acquire astrategic stake in MobiFone.

Merger/disposal MobiFone may be merged with VinaPhone or sold by VNPT due to a new

regulation that limits institutions or individuals controlling more than oneoperator in the same telco market.


MobiFone turnover

VND(trn

)

40

0

10

20

30

2007 2008 2009 2010

MobiFone mobile subscriber base

S

ubscri

bers

(mln)

30

0

5

10

15

25

2003 2004 2005 2006 2007 2008 2009

Source: BMI

Source: BMI

VinaPhone



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Background

Vietnam Telecom Services Company, a VNPT subsidiary, operates theVinaPhone cellular telephone brand.

Shares second-largest mobile position with MobiFone, with 27% marketshare.

First operator to launch 3G services and claims to have the largest 3Gsubscriber base.

Won the best 3G network title in Vietnam Mobile Awards 2010.

Achieved a turnover of VND28.172 trillion in 2010.

Competitive tariff, expand 3G and VAS.

Mobile Offer competitive tariffs and promotion to protect and grow subscriber

base.

Improve overall network service quality and coverage.

Rollout and expand 3G networks.

Expand VAS portfolio to encourage non-voice spending.

Possible IPO in the footsteps of MobiFone.

Merger/disposal VinaPhone may be merged with MobiFone or sold by VNPT due to a new

regulation that limits institutions or individuals owning more than oneoperator in the same telco market.


VinaPhone mobile subscriber base

Subs

cri

bers

(mln)

30

0

5

10

15

25

2003 2004 2005 2006 2007 2008 2009

Source: BMI

Glossary


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Abbreviation Full Term Abbreviation Full Term

3G / 4G Third/fourth generation mobile phonestandards and technology

IPO Initial public offering

ARPU Average revenue per user ISP Internet Service Provider

B2B Business-to-business transaction JV Joint venture

B2C Business-to-customer transaction LTE Long Term Evolution (4G)

BMI Business Monitor International MIC Ministry of Information andCommunication

BU Business unit MNC Multinational corporation

CAGR Compound annual growth rate MVNO Mobile virtual network operator

CDMA Code division multiple access SPT Saigon Post and TelecommunicationCorporation

FDI Foreign direct investment UNCTAD United Nations Conference on Tradeand Development

GDP Gross domestic product VAS Value added services

GSM Global system for mobilecommunications

VND Vietnam Dong

HCMC Ho Chi Minh City VNPT Vietnam Posts andTelecommunications

HSBB High speed broadband WEF World Economic Forum

ICT Information and communicationtechnology

WiMAX Worldwide Interoperability forMicrowave Access

IDC International Data Corporation


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designed by Fenson Jeremy


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Documents

Making-Waves-VN.pdf