VietNamNet Bridge – Experts believe that the year 2011 will witness a new stage of development in the telecom market with telecom companies shaking hands to co-exist and develop side by side instead of fiercely competing by lowering charges.
Large scale development of 3G technology has been considered as one of the most important breakthroughs in Vietnam’s telecom industry in 2010. According to Nguyen Manh Hung, Deputy General Director of the Military Telecom Company Viettel, Vietnam has built up the largest 3G infrastructure in ASEAN.
“To date, Viettel alone has set up 20,000 3G base transceiver stations nationwide. Meanwhile, Thailand still has not granted us a license for 3G services, while the Philippines and Malaysia have been developing 3G for the last many years, but the number of transceiver stations remains modest,” Hung said.
However, the development of 3G technology has pushed the telecom market into a fiercer competition in the last year. The wave of lowering charges and offering sale promotions has led to a situation in which the mobile service charges have been lowered to the levels dangerously close to production costs. This has forced the Ministry of Information and Communication to tighten the promotion activities by releasing the Circular No 11, stipulating that service providers could only slash the charges by 15 percent at maximum in 2010.
Commenting on stiff competition on the mobile telecom market in 2010, amanager of a small service provider said that the three biggest companies already hold 90 percent of the market share. Therefore, the pieces of the market left for them are very small, which explains why it is very difficult for them to attract more subscribers.
Though they have modest revenue, small service providers still have to spend money to run promotional campaigns. Therefore, they are facing financial difficulties, making them unable to continue the price slashing race. Even the three giants on the market have also suffered from the stiff competition.
The bad consequence of the stiff competition is that Vietnam’s telecom market bears signs of unsustainable development.
Deputy Minister of Information and Communication Le Nam Thang also admitted that Vietnam’s telecom has expanded considerably in the last 10 years, but there have been signs of unsustainable development. This can be seen in the decreasing figures in profit turnover, investment capital and tax payments by telecom companies to the state.
In 2011, mobile virtual network operators MVNO like Indochina Telecom, VTC and FPT will officially provide services to the market. The operators will purchase wholesale the capacity from the infrastructure developers such as Viettel, MobiFone and VinaPhone and then retail to clients under their brands.
In another move, in 2011 as small service providers cannot continue the battle with big providers, they will try to “shake hands” with the partners with high financial capability in order to leverage their strengths. The trend was initiated by EVN Telecom in 2010 when the operator sold 66 percent of its chartered capital to FPT. With the affair, EVN Telecom got 3000 billion dong to invest in the 3G infrastructure.
It is expected that in 2011, similar cooperative deals will be made, including deals between CMC and VTC to develop 4G/LTE technology, or between SPT and a partner in the S-Fone project.
“The convergence of telecom, broadband Internet, broadcasting and televising will be more clear in 2011, with telecom and multimedia entertainment services to be developed. With 3G technology and 4G/LTE technology in the near future, operators not only provide connection services, but will also provide other services to consumers and enterprises,” said Jan Wassenius, General Director of Ericsson Vietnam.