Competition unsustainable, say Vietnam ministers

Melissa Chua
07 Jan 2011

Research firm Pyramid Research may have projected that revenues for Vietnam’s telecom industry will reach $5.9 billion this year, double the figure for 2007; but Vietnam’s deputy minister of information and telecommunication Tran Duc Lai has come forward to say that these figures may not be reached due to a saturated local market.

Vietnam currently has 162.88 million phone subscribers out of which 91.2 per cent are mobile phone users.

Pyramid had cited the country’s large scale development of 3G as the reason behind its projected figures - the country’s largest operator, military-run Viettel, has alone set up 20,000 3G base stations.

But another minister for the country, deputy minister of information and communication, Le Nam Thang, has admitted this same situation has led to unsustainable market development. Le cited decreasing profits, investment capital and tax payments by operators as evidence of this disconcerting situation.

The intense competition brought about by several operators’ offerings of 3G services has led to a situation where price slashes are commonplace and subscription charges have been lowered dangerously close to cost.

According to the country’s online newspaper VietnamNet Bridge, Vietnam’s regulatory authority had issued a circular in 2010 to address this situation, stipulating service providers could cut prices by no more than 15%.

Vietnam’s market looks to be in danger of further competition this year, when MVNO operators Indochina Telecom, VTC and FPT enter the market.

These providers are expected to purchase capacity wholesale from infrastructure owners Viettel, MobiFone and VinaPhone before retailing their branded services to the market.

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