2011 Vietnam - Telecoms, Mobile, Broadband and Forecasts

Subscriber growth in Vietnam’s mobile market stalls but broadband services power on

This report profiles what has been a vibrant telecom market in Vietnam. By some measures the country is still in a comparatively early stage of its telecommunications development. However, Vietnam has for some years now been aggressively expanding its national infrastructure and growing its subscriber bases across all market segments. Progress in developing the mobile market has been especially impressive, although there has been a moderating of growth recently; and whilst the Internet market, and particularly the roll-out of broadband Internet, is still very much in an early stage of development, the last four years have seen a significant surge in the country’s online access.

Another year of 40% mobile subscriber growth, combined with healthy expansion of broadband internet and consolidation of the fixed line market, suggested ‘business as usual’ for the Vietnam telecom sector in 2010. However, 2011 saw the initial signs of a slowing market led by the rapid decline in growth in mobile subscribers. Whilst the mobile market was certainly nearing saturation, the speed with which the slow down seemed to occur was particularly striking. The market will no doubt be watched closely to see what happens next.

In recent years the revitalised telecom sector in Vietnam had become the target for a fresh round of investor interest. Even in the wake of the global financial crisis numerous foreign telcos were turning their attention to this most significant of South East Asian markets. The government has overseen the introduction of a level of competition into the telecoms market and this, combined with a generally improved economic climate within the country, triggered a round of strong growth in the telecom sector. A significant milestone in this changing business environment was Vietnam’s accession to the WTO in 2007. More recently it was generally believed that the move to allow an increased level of ‘equitisation’ (the Vietnamese government’s word for ‘privatisation’) had sent a message to would-be investors that the rules were changing in a positive way and the investment door was open. However, the fact that these equitisation plans have not yet been acted upon has been causing concern. Nor is it completely clear what form the government’s involvement in the telecom sector will take in the future.

The market continues to attract investor interest, but there is a cautiousness now as the global industry senses that ‘the bubble has burst’ in Vietnam. It is generally agreed that the country has come out of a period of wishful thinking and must now face certain realities.

In the meantime strong growth in Vietnam’s mobile sector delivered around 165 million subscribers by end-2011 for a penetration of 183%. The country’s fixed-line subscriber growth has not been so impressive. With the government seeming to be hedging somewhat on reporting fixed-line statistics, this market segment has been struggling to a certain degree over the last few years. It seems that growth has now flattened out. This is not to underestimate the fixed line infrastructure that has been already been put in place. The excellent national coverage already achieved is indeed impressive. As for the internet, the government continues to take a cautious position; government reticence has not, however, stopped the online market from moving along a solid growth path. Internet user penetration was estimated at a very healthy 38% coming into 2012. The broadband segment growth was particularly strong, although much of the growth was in mobile wireless broadband rather than fixed broadband.

Market highlights:

• Vietnam’s mobile market passed 165 million subscribers in early 2012, for a penetration of 183%.
• The country’s annual growth rate in mobile subscribers ran at close to 40% in 2010 but was moderating sharply in 2011/2012 with annual growth falling to under 10%.
• In the 2007/2011 period the country’s fixed broadband internet market has surged, jumping almost 300% to reach more than 4.5 million by end-2011.
• Overall fixed broadband penetration remained relatively low, however, at under 5% of population.
• Although interest in broadband services in Vietnam had finally picked up, much of the growth in 2011 and into 2012 was in mobile wireless broadband.
• Fixed-line subscriber numbers appeared to be stagnating in 2010/2011 and into 2012 (with some inconsistent figures continuing to come from the regulator).
• Following on from the successful launch of its Vinasat-1 satellite in early 2008, Vietnam was quickly moving towards the country’s second venture into the satellite market, with Vinasat-2 on schedule for an April 2012 launch.
• Another year has gone by and we are still awaiting progress on the equitisation of Vietnam’s state-owned telecom operators.
• In the meantime, rationalisation of the mobile market has started with Viettel acquiring the cash-strapped EVN Telecom at the start of 2012.

Vietnam – key telecom parameters – 2011 - 2012

(Source: BuddeComm)