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Vietnam Telecommunication Report Q1 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: March 2007 Product Code: R302-1169 Description WTO entry and growth potential are fast making Vietnam’s telecoms sector an investment hotspot. Prospective investors note low penetration rates, a large population (with a fast reducing poverty rate) and an increasingly supportive government, and sense opportunity. This is even stronger given that with the exception of SK Telecom and Hutchison, there are no other key regional investors. Little wonder the likes of Telekom Malaysia and SingTel are looking to muscle their way in. It would be a surprise if Telenor, which has made such a success in other high-growth markets, such as Pakistan and Bangladesh, were not also interested.Unusually for the region, Vietnam’s fixed-line market is still in growth mode. Penetration should, according to our forecasts, rise to 15% by the end of 2008 from the current 11%, with growth coming mainly from the country’s main urban areas. Towards the end of the decade we do expect growth to start to slow as mobile substitution begins to take over, and teledensity is likely to falter at about 17% by the end of 2011. As ever, most of the growth potential comes from Vietnam’s mobile sector. It is difficult to tell, such are the problems of collecting data in Vietnam, but we estimate just over 9mn new mobile subscribers in the country in 2006, representing y-o-y growth of just below 100%. Consumer demand, a weak fixed-line infrastructure and the growth in competition (there are currently six operators covering fewer than 20mn customers) are driving this growth. BMI estimates suggest that annual average growth over the next five years is set to be around the 35% mark, pushing penetration to 56% by the end of 2011. Not only will Viettel and S-Fone continue to push VNPT’s mobile units, Vinaphone and MobiFone, but expect EVN Telecom and Hanoi Telecom to perform well also. Vietnam remains at the bottom of BMI’s Business Environment Rankings. The market is still immature and rather too much in the hands of the government. Despite improvements in both, the country still has some political and economic instability, although the latter has been helped by Vietnam’s entry to the WTO. There is no independent regulator and there is a certain lack of transparency as to the regulator’s strategy, although we are heartened by its push towards licensing 3G mobile telephony services. What makes Vietnam attractive from an investor point of view is its growth potential. A government that sees a role for the telecoms industry in encouraging inward investment, and intense competition, will drive this potential. One only has to look at the mobile and broadband sectors to witness the beginnings of price wars, as operators turn to innovative marketing and promotional campaigns. This represents great news for the consumer and for the operators in terms of subscriber numbers. Not such great news, however, in terms of lowering ARPU and reduced profit margins. It is up to the industry therefore to encourage a growth in data services on top of voice services. With its support of 3G mobile telephony and high-speed internet access, the regulator is doing just this. Table of Contents
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