Competition spurs growth, but state affiliates still dominate

16 Dec 2003

Vietnam’s fledgling telecommunications industry has witnessed unprecedented growth in 2003, with the wireline and wireless sectors sharing almost 1.5 million new customers between them due to concerted efforts by the government to open up the market to competition. The Vietnamese government has identified the telecoms market as key to overall economic growth in the country and hopes to have completely liberalised the sector by 2005. It has offered incentives to newcomers in a bid to spur competition, including allowing start-up companies to undercut established rivals. Previously the exclusive domain of national state-owned PTO Vietnam Post and Telecommunications (VNPT), the market now houses a number of rival operators. Whilst the influx of new players have yet to wrestle significant market share from the incumbent, they have prompted widespread reductions in tariffs in both the fixed and mobile sectors.

The mobile market’s newest player, S-Phone, was launched in July using a CDMA-based network operating in the 800MHz range. It is Vietnam’s first cellco not to be majority-owned by VNPT (which has retained an 18% share) and had signed up 19,000 subscribers by the end of November. However, government-affiliated cellcos still account for 99% of the market and that is not expected to change dramatically until the sector is fully liberalised. VNPT’s 55%-owned subsidiary Vinaphone, the country’s leading mobile operator, has responded to the increasing rivalry by launching a big budget promotional campaign and slashing tariffs. It claimed to have signed up 530,000 new customers in the first eleven months of 2003, taking it’s total to 1.63 million, and expects to reach 1.7 million by year-end. Three new entrants, the Electricity Telecommunications Company (ETC), Hanoi Telecom and the military-owned Vietel, received licences for GSM and CDMA services in 2002 and are expected to launch services early next year. VNPT also dominates the fixed line market but has had to slash its call charges by as much as 40% to compete with the increasingly popular mobile offerings; it now claims that the rates for local and long-distance calls within the country are the lowest in southeast Asia.

PriMetrica's Global Comms database