2012 Vietnam - Telecoms, Mobile, Broadband and Forecasts

Slowing subscriber growth in Vietnam’s mobile market offset by take up mobile broadband services

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 substantial moderation in growth of late; and whilst the internet market, and particularly the roll-out of broadband Internet, is still in the early stages of development, the last five years have seen a significant surge in the country’s online access. Most significantly, there has been a major push into mobile broadband.

The broad market growth is happening amidst a confusing set of market statistics. As Vietnam’s telecom sector continued expanded in a relatively strong fashion through 2011 and into 2012, the figures published both by the government and the operators were often contradictory and earlier figures were often revised. The government reported that there were 154 million mobile subscribers by end-2010, an increase of 40% for the year and representing an overall penetration of 174%. The total figure included 16.4 million fixed-line services by end-2010. Yet in September 2012, according to Vietnam’s General Statistics Office (GSO), the number of telephone subscribers nationwide was 135.9 million, which included 15 million fixed-line subscribers and almost 121 million mobile phone subscribers. The government has been casting the recent activity in the market as positive growth; yet there appeared to be a major revision of the mobile subscriber statistics being published. The conflicting numbers made it difficult to obtain a considered view of the market. In this report, where there is any doubt about the statistics issued by the government/operators, the most likely figures are published in our tables of statistics.

In any event, there is no doubt, despite the at times puzzling statistics, that Vietnam’s telecom sector has been through a period of particularly strong growth. It is reasonable to say that the country’s mobile market has been on a long run of growth and that even as the annual rate of mobile subscriber growth fell below 10% a year in 2011 the market remained competitive and offered a good platform for further growth.

The country’s fixed-line subscriber growth has certainly not been as impressive as the mobile sector. With the government again 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 or is in decline. 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.

At the same, as of September 2012, the total number of internet subscriptions nationwide had reached 4.4 million, reaching a point that the GSO described as ‘a year-on-year surge of 14%.’ The GSO also reported that revenues in the telecommunications sector in the first three quarters of 2012 reached VND123 trillion (US$5.9 billion), up 7.6% compared with the same period last year.

Around eight years ago there had been less than three million mobile subscribers in the country; the intervening years have seen an incredible expansion in the marketplace. At the same time, the government has stepped up the process of sectoral reform, although there was sometimes a lot of rhetoric and not much action. In any event the government has allowed a sufficiently open market to basically let competition drive the growth. In recent years the revitalised telecom sector in Vietnam had become the target for a fresh round of investor interest, although recent signs of a weakening economy have been causing concern to investors. While the market continued to attract investor interest, a cautiousness exists 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.

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. But the work on reform is far from finished. One project on the drawing board is expected to allow an increased level of ‘equitisation’ (the Vietnamese government’s word for ‘privatisation’). This proposal has certainly 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 worrying. Nor is it completely clear what form the government’s involvement in the telecom sector will take in the future.

Market highlights:

• Vietnam’s mobile market stood at an estimated 130 million subscribers in early 2012, for a 144% penetration.
• The country’s annual growth rate in mobile subscribers has fallen from its boom year highs, moderating sharply in 2011/2012 to less than 10%.
• In the 2007/2011 period the country’s fixed broadband internet market has surged, jumping almost 300% in that time to reach more than 4.5 million by coming into 2012.
• 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 2012 has been in mobile wireless broadband.
• Growth in fixed-line subscriber numbers flattened out then, by 2011/2012 had started to decline (with some inconsistent figures continuing to come from the regulator).
• Following on from the successful launch of its Vinasat-1 satellite in 2008, Vietnam moved quickly to put a second satellite into orbit, launching Vinasat-2 on schedule in May 2012.
• Vietnam appears to have lost its way on plans for the so-called equitisation (privatisation) of Vietnam’s state-owned telecom operators; however, a merger of the two VNPT subsidiaries looked highly likely.
• In the meantime, rationalisation of the mobile market has started with Viettel acquiring the cash-strapped EVN Telecom at the start of 2012 and the proposed merger of Vinaphone and Mobifone.

Vietnam – key telecom parameters – 2011 - 2012

(Source: BuddeComm)