Dominated by three telecom giants, Viettel, VinaPhone and MobiFone, the Vietnamese mobile market had over 116 million subscriptions at the end of 2011.

Vietnamese telecom market saturated

After the appearance of Viettel, numerous small mobile providers joined the market, including EVN Telecom, S-fone, HT Mobile, Beeline, and Vietnamobile. They helped to foster the development of mobile telecommunication networks nationwide.

Over the past decade, the telecom industry in Vietnam has seen rapid development, becoming one of the world’s eight most competitive markets for the telecom sector.

The development is shown in skyrocketing number mobile subscribers, at over 116 million subcribers by the end of last year. This figure is 1.5 times higher than the nation’s population.

However, the major providers have seen a slowdown in the number of customers recently because of market saturation.

This year there have been no mobile service providers that have set a target of more than 5 million new subscribers.

There were also been a number of smaller providers who have set out to sell their stakes.

EVN Telecom was acquired by Viettel in early 2012. Shortly after, in late April, VimpelCom Group decided to sell all of its 49% stake in Gtel Mobile Joint Stock Company (Gtel Mobile), who ran the Beeline mobile network in Vietnam, for USD45 million.

Beeline was the first foreign-invested mobile provider in Vietnam. Their 2G network, Gtel Mobile changed the marketing landscape for mobile services in Vietnam, with their partnership with Manchester United and the ‘billionaire’ package.

Despite record growth in the number of subscribers after these promotion programmes, Beeline’s revenues were modest, less than USD1 per subscriber per month during the fourth quarter of 2011. The figure was too low compared to USD4 each in Laos, and from USD2-3 in Cambodia, to continue business in the country. Among the 19 countries in which it operated, Vietnam brought in the lowest revenues.

In the race to lower rates, mobile providers have seen their revenues decrease. A survey by Business Monitor International (BMI) showed that the average revenue per unit (ARPU) in the Vietnam’s mobile market gradually fell to USD6.5 per subscriber per month in 2007, USD6 in 2008 and USD5.52 in 2009. The rate is expected to decrease to USD3.51 by 2015.

The withdrawal of Beeline, along with the merger of EVN Telecom with Viettel and S-fone’s decision to end its CDMA service have indicated that Vietnam has become a less attractive telecom market.

Still, FPT decided not to enter the market after several months of looking for investment opportunities.

Looking for new business opportunities

Experts forecast a gloomy future for smaller telecom operators in Vietnam. The telecommunications market is dominated by three major players, VinaPhone, MobiPhone and Viettel, which hold a combined 95% of the market share, while Beeline, Vietnamobile, S-Fone and EVN Telecom had only 5%.

Mobile providers seeking new potential markets

In order to maintain operations, the larger companies' strategy has been to improve their service quality and provide more services.

Vietnam Posts and Communications Group (VNPT), with its hefty infrastructure, has sought approval from the Government to merge VinaPhone with MobiFone, in a bid increase its competitiveness with Vettel.

On the other hand, VNPT has made plans to boost co-operation with international partners to seek new investment opportunities overseas.

In terms of overseas investment, Viettel seems to have made greater strides than VNPT.

Viettel, the military-run telecom group, launched its first overseas mobile network, Metfone, in Cambodia in February 2009. They also continued to expand their operations in the region by setting up the Unitel network in Laos in 2009.

They launched Natcom, a mobile network in Haiti in 2011, and recently started a mobile phone network, named Movitel, in Mozambique with an initial investment of more than USD400 million.

Nguyen Manh Hung, Deputy General Director of Viettel said that the group has set a target to have one billion subscribers. In the five markets in which they do business the group currently has a total of 60 million.

Last year, Viettel reported a total revenue of USD6 billion, Hung added.

After pulling out of the Vietnamese market, Vimpelcom still has plans to further invest in Southeast Asian countries such as Cambodia and Laos.

Many other mobile providers that have withdrawn investment from Vietnam, such as Hutchison and SK Telecom, are looking at other potential markets in developing countries.