MVNOs, except Dong Duong Telecom, still not ready to join the market

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VietnamNet English - 49 month(s) ago 3 readings

MVNOs, except Dong Duong Telecom, still not ready to join the market

VietNamNet Bridge – Though operation licenses were granted to mobile virtual network operators (MVNO) in 2009, the operators, except Dong Duong Telecom, have not made any moves to join the telecom market.

VTC takes no action towards virtual network

On June 22, 2010, the Ministry of Information and Communication officially granted the license to operate a mobile virtual network to VTC. The license stipulates that VTC will provide mobile services on the basis of 3G network infrastructure of EVN Telecom. Besides, VTC Digicom, a subsidiary of VTC, said VTC will considering roaming with 2G networks in order to expand the coverage and provide services to the places, where EVN Telecom’s 3G networks has not reached out. Right at the license granting ceremony, VTC promised to officially begin providing services by the end of 2010 nationwide.

However, to date, VTC Digicom still has not “thrown its troops into battle”. At the latest working session with the Electricity of Vietnam, VTC said no progress has been made in the implementation of the virtual network between VTC Digicom and EVN Telecom. The noteworthy thing is that VTC now does not urge EVN Telecom to kick off the virtual network, while it has put forward the idea of teaming up with EVN Telecom to establish a company specializing in infrastructure leasing. The moves show that virtual network is no more the important business plan of the enterprise.

Meanwhile, EVN is now busy with the plan to equitize EVN Telecom and sell stakes to FPT. Analysts say that “the matter of allowing VTC Digicom to use EVN Telecom’s network infrastructure will be put on the table, and FPT surely does not want to have one more rival in the market which has been very stiff already.”

The analysts have also pointed out that in current economic conditions, it will be a hard decision for network operators to spend thousands of billions dong to develop a virtual network, while the future remains unclear. Meanwhile, in order to compete with each other, mobile network operators have slashed the mobile service fees continuously, which have come closer to the production costs. This means that it will be very difficult to negotiate with the suppliers who have network infrastructure, so that the two sides can reach an agreement on reasonable wholesale prices.

In other words, analysts say they still cannot see any good opportunities for virtual networks. Therefore, it is understandable that people do not expect the market joining of VTC.

Two scenarios for Dong Duong Telecom

Unlike VTC, Dong Duong Telecom seems to be determined to join the market after a one-year delay. A manager of Dong Duong Telecom has revealed that the company will begin providing services by mid-2011.

Though being a new comer in the telecom market, Dong Duong Telecom still has big advantages. Especially, it has the right to use “golden prefix numerals” for mobile subscribers - 0998 and 0999 (people like these numerals because they are easy to remember. 9 is also considered a lucky number for Vietnamese people). Besides, Dong Duong Telecom can use the mobile network of Viettel to provide services.

Currently, Viettel is considered the network with the biggest 2G and 3G infrastructure. Especially, Viettel’s 3G network is considered the biggest in ASEAN countries.

As such, there is only one more thing that Viettel needs to do to be able to provide services: negotiating with Viettel about the wholesale price and output, so that Dong Duong Telecom can have good profits.

Analysts say Dong Duong Telecom now has two choices. With the first choice, it will have to spend several trillions dong to run the virtual network. This is really a huge sum of money, and of course, Dong Duong will have to think carefully before making decision. The second solution is that Dong Duong just needs to “sell goods” under its brand, while it will absolutely rely on Viettel and it does not have to make investment. If so, the profit will be low, and of course, Dong Duong Telecom will never become a telecom giant.

Tuyet Ngan

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