Vietnamese 3G Market Has to Move Diligently to Succeed

With seven operators, the Vietnamese mobile market is one of the top five most competitive markets in this region. Vietnam's mobile connections grew 58% in 2009 and penetration reached 127%. However, recent operator comments suggests that 50% of these connections are inactive and as much 70% of the connections added in 2009 were multi-SIM users.

On the broadband front, the Vietnamese market has seen growth of over 60% in the past 4 years. A subscriber base of 2.1 million in 2008 gave the nation a household broadband penetration rate of 11.9&. The subscriber base is expected to grow at a Compound Annual Growth Rate (CAGR) of 15.22% from 2004 to 2014 and is forecasted to reach 4.9 million by the end of 2014. While, the household broadband penetration is projected to reach 24.9% by the same period. Consumer broadband revenues are expected to grow at a CAGR of 15.11% from 193 million in 2008 to 449 million in 2014.

Backing all these potential growth and positioning the nation as a forerunner amongst its regional counterparts is the Vietnamese Ministry of Information and Communications (MIC). The recent guidlines placed by the regulator clearly indicates the progress that the nation's telecommunications sector is posed to evolve into.

Of these guidelines, is the rise in foreign investor equity limit from 24.5%to 49%, permitting private telecoms infrastructure and lifting the foreign ownership cap. This move has sent clear signs to the international telecommunications community that the Vietnamese domestic market is eager to raise on par with its international counterparts.

Nitin Bhat, Partner at Frost & Sullivan, commented, "Prepaid still dominates Vietnam's market with 94.5% mobile connections. High multi-SIM usage and SIM churn has been encouraged by SIM usage bundling with users arbitrating promotional rates and service bundling. Data revenues do not appear to have gained the traction they have in other markets, possibly due to widespread voice credit bundling. The low penetration rate offer the opportunity for growth in internet access over affordable mobile devices and for wireless as it increasingly becomes the preferred mode of broadband access. Growth in this area would significantly increase data's contribution and importance to market revenues."

Nitin further added that Vietnamese operators will have to accelerate 3G traffic appropriately and should rely on Wi-Fi where possible to keep network costs under control.

Article published on 27th August 2010