Vietnamese mobile operators are preparing themselves for a price war, with Viettel setting the trend. Theoperator announced that it would look to reduce its mobile tariffs by as much as 15%, pending Ministry ofInformation and Communication approval. Similarly, VinaPhone and MobiFone both followed, with thelatter stating that it would go further, with a reduction of between 25% and 28% in an effort to boostsubscriber figures and to fill out the existing capacity available over its network. Furthermore, the smalleroperators CDMA-based HT Mobile, S-Fone and EVN Telecom could also be swayed to follow Viettelin reducing tariffs. This should enable mobile operators to grow their subscriber bases, as the rest of theeconomy heads towards double digit inflation, leading to higher prices. However, the authorities haveremained tolerant of a stronger currency in order to contain inflation. There are several reasons that haveforced the government to allow a strong currency: rapid economic growth, rising foreign directinvestment (FDI), rising remittances, equity inflows, inflationary pressures and increased foreign aid.The mobile sector has seen a flood of FDI, particularly with MobiFone set for partial privatisation in mid-2008. Both NTT DoCoMo and Telenor have announced of their intentions to bid for a 30% stake, withthe Japanese operator setting aside US$1bn. Its sister unit, NTT Communications has also announced ajoint venture with VNPT over the creation of data centres in both Hanoi and Ho Chi Minh City (HCM)city in 2008. Meanwhile, Russia’s VimpelCom has signed an agreement with the Vietnamesegovernment over the creation of a GSM network into which it will invest up to US$1bn over the next fewyears. Interest by foreign companies in the Vietnamese mobile market has also extended to the 3G sector.Vietnam’s government has finally approved the deployment of both 3G licences and mobile WiMAXlicences in 2008. BMI does have some reservations with regard to this. GDP per capita in the countryremains relatively low compared with a country such as China. With mobile services set to becomecheaper, the majority of Vietnamese will favour prepaid tariffs to those of postpaid or 3G. Furthermore,the cost of 3G handsets will be out of reach for many Vietnamese, not to mention that the number ofhandset models to be made available will be few. China, which has been witness to a rapidly-developingmobile sector, has also yet to award 3G licences, and it would appear that the only demand for NGN willarrive from major cities and those supporting the Beijing 2008 Olympics.
Meanwhile, we have witnessed a soaring demand for broadband services. This has been helped by greaterPC and laptop penetration rates, greater government-led investment, the growth of foreign companies,which have economically empowered the local workforce, as online content continues to grow. BMI hasretained its existing forecast, but would expect that by the end of our forecast period 2012, the number ofbroadband subscribers to have reached a little over 10mn subscribers.
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