VIETNAM TELECOMMUNICATION MARKET REPORT...

VIETNAM TELECOMMUNICATION MARKET REPORT Q1/2018

Contents

Executive summary 4 Market scale 38

1. Business environment 6 Internet 40

1.1 Macroeconomic situation 6 Mobile phones 49

1.2 Legal framework 9 Landline phones 51

2. Industry overview 18 2.2.3 Competitive analysis 54

2.1Current status of the telecommunications industry in

the world18 2.3 Industry development trends 60

2.1.1 Market scale 19 2.4 Industry planning 66

2.1.2 Internet 20 3. Enterprise analysis 72

2.1.3 Mobile phones 28 3.1 VNPT 73

2.1.4 Landline phones 30 3.2 VNPT – VinaPhone 75

2.2Current status of Vietnam telecommunications

industry33 3.3 Viettel 78

2.2.1 History of the industry 34 3.4 MobiFone 83

2.2.2 Telecommunications market scale and infrastructure 38 3.5 Evaluation of the top three business results 85

MIC Ministry of Information and Communications

IT Information Technology

FIA Foreign Investment Department

FPT FPT Telecom Joint Stock Company

GfK VietnamGfK Vietnam Technology and Retail Market Research

Company Limited

GSO General Statistics Office

Gtel Global Telecommunications Corporation

IoT Internet of Things

M2M Machine to Machine

Abbreviations

IPv6/ IPv4 Internet Protocol version 6/4

ITU International Telecommunication Union

MobiFone MobiFone Telecommunications Corporation

Vietnamobile Vietnamobile Mobility Telecom Joint Stock Company

Viettel Viettel Telecom Group

VinaPhoneVNPT Telecommunications Services Corporation -

VinaPhone

VIRAC Vietnam Industry Research And Consultant

VNPT Vietnam Posts and Telecommunications Group

VNTA Department of Telecom

Executive summary

Content is intentionally removed for demo purpose

Vietnam's telecom sector continues to have significant growth potential,

especially in the field of 3G for mobile phones and FTTH for wired

networks.

The high cost of 3G in the end of 2013 has caused telecom revenues to

increase in recent years

In the period of 2010 - 2017, Internet revenue had been growing

continuously over the years with an average growth rate of 30% per

In general, the trend of using 2G services has decreased sharply over the

years, while 3G has been increasing continuously in recent years

Executive summary

Source: VIRAC, MIC

trillion VND

In 2017, International Data Group (IDG) also announced the results of the

"Consumer Satisfaction Survey on 4G Services in Vietnam in 2017"

Revenue from mobile services in 2012-2015 showed signs of a sharp drop

as average revenue per subscriber decreased

Landline phone revenue has been steadily decreasing over the years. This

is due to a decrease in subscriber numbers as well as ARPU reduction.

Revenue from typical businesses, 2014 – Q1/2018e

1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

Contents

trillion VND

Source: VIRAC, GSO

Source: VIRAC, GfK

gross domestic product in the Q1/2018 was estimated to

increase by 7.38%, compared to the same period in the previous year

Market scale of electronics retail in Vietnam by quarter, Q1/2013

– Q1/2018

GDP growth, 2011 – Q1/2018

Source: VIRAC, GSO

Vietnam's population has grown rapidly over the last few decades.

Rate of urbanization, 2012 – 2017The rate of urbanization has increased over the years

Source: VIRAC, GSO

Population pyramid, 2016

1.2 Legal framework

Contents

1.2 Legal framework

Telecommunications Law issued in 2009 on 23/11/2009, effective from 7/1/2010:

1.2 Legal framework

Decree No. 25/2011/ND-CP issued by the Government dated 6 April 2011, the decree includes 46 articles detailing the contents of telecommunication

services business, network establishment and telecommunication services , telecommunication licensing, resources, technical standards, quality and

telecommunication charges, telecommunications works.

1.2 Legal framework

Decree No. 174/2013/ND-CP stipulates the sanctioning of administrative violations in the fields of post, telecommunications, information technology and

radio frequencies effective from January 15, 2014.

1.2 Legal framework

1.2 Legal framework – Telecoms macro policies

• Directive 11/CT-BTTTT dated 18 March 2016 on enhancing the protection of private information of users of services and preventing the illegal trading

of mobile SIM.

• MIC and ITU signed cooperation agreements on satellite control

On June 23, 2017, Ministry of Information and Communications issued Circular No. 11/2017/TT-BTTTT on amending and supplementing some articles of

Circular No. 08/2013/TT-BTTTT on regulation of service quality management and the Circular No. 14/2007/TT-BTTTT amending and supplementing some

contents of the Circular No. 18/2011/TT-BTTTT on the process of verifying base stations of public land mobile phones..

On December 29, 2017, Ministry of Information and Communications issued Circular No. 47/2017/TT-BTTTT

On January 12, 2018, Ministry of Finance issued Circular No. 03/2018/TT-BTC

Contents

2. Industry overview

2.1 Current status of the telecommunications industry in the world

2.2 Current status of Vietnam telecommunications industry

2.3 Industry development trends

2.4 Industry planning

2.1 Current status of the telecommunications industry in the world– 2.1.1 Market scale

Among the telecommunications services markets, Asia-Pacific is the

region with the highest telecom service market value, and is consistently

growing at a steady rate.

billion Euro

Source: VIRAC, Statista

billion Euro

World Telecommunication Market Revenue, 2005 - 2017f

Telecommunications market revenue by region,

2012 - 2019fContent is intentionally removed for demo purpose

With over 41% of the world population, Asia-Pacific is the region with the

highest number of Internet users in the world.

More than 50% of the population do not use the Internet.

Million subscribers

Source: VIRAC, ITU

2.1 Current status of the telecommunications industry in the world– 2.1.2 Internet

Number of internet users in the world, 2005 - 2017

Number of internet users by region, 2010 - 2017

Internet penetration in all regions of the world tends to increase in the

period 2010 - 2017

Number of Internet subscribers in Asia-Pacific region, 2005 – 2017

Million subscribers

Source: VIRAC, ITU

2.1 Current status of the telecommunications industry in the world and in Asia-Pacific – 2.1.2 Internet

%Penetration rate per 100 people by region, 2005 - 2017

Internet bandwidth technology has been constantly changing throughout

the years since the Internet was founded and developed.

Fixed broadband penetration, 2008 – 2017eNumber of fixed broadband Internet subscribers worldwide, 2005 – 2017e

Million subscribers

Source: VIRAC, ITUSource: VIRAC, ITU

Fixed broadband penetration rates by region, 2010 – 2017eThe number of fixed broadband subscribers in Asia Pacific,

2005 – 2017e

European countries are leading the world in penetration/population.

Million

subscribers

The number of fixed-line subscribers in Asia-Pacific declined sharply in

Source: VIRAC, ITU Source: VIRAC, ITU

Million

subscribers

Million

subscribersAsia-Pacific also has the largest mobile broadband subscriber base in the

world,

Source: VIRAC, ITU

Number of mobile broadband subscribers in the world, 2010 - 2017

Number of mobile broadband subscribers by region, 2010 - 2017

Mobile broadband has become an important strategy for the Asia-Pacific

region.

Europe and America continue to be the top two regions in penetration

rates for mobile broadband.

Source: VIRAC, ITU

Mobile broadband penetration rates by region, 2011-2017

The number of mobile broadband connections in Asia-Pacific, 2010 -

Content is intentionally removed for demo purposemillion people

2G wireless penetration is trending in contrast to 3G, 4G.

Source: VIRAC, ITU

The penetration rate of 2G, 3G, 4G networks in the world, 2008 -

Internet penetration rate in Southeast Asia, 2016

70% of countries reach their target charges

Rate of monthly income/income per capita by country group, 2015Source: VIRAC, ITU

Source: VIRAC, ITU

2G, 3G and 4G wireless penetration in Asia Pacific, 2008 - 2020f

Mobile phone penetration rates and subscribers worldwide, 2010 - 2016e

Million subscribers

Source: VIRAC, ITU

2.1 Current status of the telecommunications industry in the world and in Asia-Pacific – 2.1.3 Mobile phones

Number of mobile subscribers in the world, 2008 - 2017

Mobile penetration per 100 people by region, 2010 - 2017Mobile subscribers in Asia Pacific, 2005 - 2017

Asia-Pacific is the largest contributor to the global mobile subscriber market over the past five years and forecast to extend this position over the next 10

years.

Million subscribers

Source: VIRAC, ITU Source: VIRAC, ITU

Source: VIRAC, Statista

In 2016, AT&T was the largest telecom operator in the world

billion Euro Top 25 telecom operators that have the highest revenue, 2016

Landline phone service penetration rate by country group, 2005 - 2017

Million subscribers %

Source: VIRAC, ITU

2.1 Current status of the telecommunications industry in the world – 2.1.4 Landline phones

Number of subscribers and fixed service penetration, 2005 - 2017

Number of fixed subscribers per 100 people in the world, 2015

Source: VIRAC, ITU

Million subscribers

Source: VIRAC, ITU

Total landline phone subscribers by region, 2005 - 2017

Penetration rate per 100 people by region, 2005 - 2017

Contents

2.2 Current status of Vietnam telecommunications industry – 2.2.1 History of the industry

According to WTO’s definition:

Telecommunications services are divided into two groups:

History of Vietnam telecommunications

1990 1995 2005

1992 19968/1987 04/1990 1995 2002 2003 2005

Service stage:

Corporate stage

Market opening phase to create competition

Preparatory phase for international integration

Vietnam's telecommunications sector continues to have significant growth potential, particularly in the field of 3G for mobile phones and FTTH for wired

networks.

2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Market scale

billion USD

Source: VIRAC, MICContent is intentionally removed for demo purpose

Telecoms revenue, 2011 – Q1/2018e

Source: VIRAC, FIA

2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Market scale

FDI attraction by sector, Q1/2018

2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure - Internet

Source: VIRAC

Million users

Source: VIRAC, VNTA

Revenue from Internet, 2010 – Q1/2018e

Number of internet users, 2010 – Q1/2018e

Source: VIRAC, VNTA

Source: VIRAC

Million

subscribers

Market share (subscribers) of broadband Internet service,

Number of fixed broadband internet subscribers and

3G mobile network, 2012 – Q1/2018e

Source: VIRAC, VNTA

Vietnam Internet market still maintains its niche with the majority of

the market share of the three major networks such as VNPT, Viettel

and FPT Telecom.

Market share under xDSL internet subscribers, 2017e

Market share under FTTH internet subscribers, 2017eContent is intentionally removed for demo purpose

Source: VIRAC, VNTA

Total Internet connection in domestic and international,

2010 – Q1/2018e

Source: VIRACSource: VIRAC, MIC

Source: VIRAC* Gtel has not yet been 3G licensed

Million subscribers

In general, the trend of using 2G services has decreased sharply over the years,

while 3G has been increasing continuously in recent years.

Market share by 3G service subscriber of enterprises, 2013-2017e

Market share by subscribers of 2G services of enterprises, 2013-2017e2G and 3G subscribers, 2011 – Q1/2018e

Thousand

stations

Source: VIRAC

Number of 2G and 3G BTS stations, 2016-2017e

According to the test plan from the beginning of 2017, the

Department of Telecommunications has carried out quality

measurement of 4G network of 3 operators namely VinaPhone,

MobiFone and Viettel.

Source: VIRAC, OpenSignal

Source: VIRAC

MbpsSpeed of Internet access in some countries, 2017

Quality of 2G/3G/4G services of main telecom operators, 2017

Time to use wifi in some countries, 2016

3G & 4G universality in some countries, 2016

Wifi has a great influence on the majority of the world using smart

phones to optimize costs.

billion

2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Mobile phones

Source: VIRAC

Source: VIRAC* Number of subscribers incurred charge

Million

subscribers

Mobile market, 2011 – Q1/2018

Revenue from mobile services, 2010 – Q1/2018e

Source: VIRAC

2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Mobile phones

Million subscribers

Market share (subscribers) by businesses, 2017e

Number of mobile subscribers by business, 2013 - 2017e

Landline phone revenue has been steadily decreasing over the years. This is

due to a decrease in subscriber numbers as well as ARPU reduction.

Source: VIRAC

2.2 Current status of Vietnam telecommunications industry – 2.2.3 Industry scale – Landline phones

Source: VIRAC

Million subscribers

billion VND

Revenue of Landline phone, 2010 – Q1/2018e

Number of landline subscribers, 2011 – Q1/2018e

The number of fixed-line subscribers increased sharply in the period

before 2009, then dropped sharply over the years.

Source: VIRAC, MIC, ITC

Market share (subscription) of landline phone service, 2014-2016

Source: VIRAC

Landline subscriber rate per 100 people, 2006 - 2016

(billion VND) VNPT Viettel SPT

Turnover by service constitutes of businesses, 2015

Source: VIRAC, MIC

Number of new and outgoing subscribers, 2015

Distribution model of Viettel

Source: VIRAC, Viettel

2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis - Distribution channel

Viettel's weaknesses in the distribution channel are:Content is intentionally removed for demo purpose

Distribution model of VinaPhone

Source: VIRAC, VinaPhone

Distribution model of MobiFone

Source: VIRAC, MobiFone

Distribution channel of MobiFone is formed in the form of vertical marketing system.

Distribution model of VinaPhone and MobiFone

Viettel MobiFone VinaPhone Vietnamobile

2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis – Service charges

Comparison among 4G package prices from typical operators, 2017

Telecom

operator

Pack of data Charges

Viettel

MobiFone

VinaPhone

Comparison among internet prices from typical operators, 2017• VNPT:

Comparison among internet prices from typical operators, 2017• FPT:

Pack of data

Comparison among internet prices from typical operators, 2017• Viettel:

The cost of landline calls is lower.

In general, MobiFone's promotions are more diversified and attractive than Viettel and VinaPhone's.

2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis – Promotions

Contents

IT - Telecoms operators will be aggressively preparing for the adoption of the MNP

The most discounted price is roaming charges.

With the growth of the Internet, smartphones and especially the sensors, Internet of Things (IoT) and M2M (Machine to Machine) are becoming the new

trend of the world.

Although most firms have achieved impressive growth, Vietnam's telecommunications infrastructure still needs to be upgraded and improved.

Threats from abroad investment

Contents

Decision No. 32/2012/QD-TTg dated July 27, 2012 on approving the National Telecommunications Development Plan up to 2020

Decision No. 149/QD-TTg of January 21, 2016 approving the program on development of broadband telecommunications infrastructure up to 2020

3. Enterprise analysis

Contents

3.1 VNPT

Introduction VNPT Telecommunications Group:

Strengths

Weaknesses

Opportunities

Threats

3.1 VNPT

Introduction of VNPT Vietnam Posts and Telecommunications Group -

VinaPhone:

3.2 VNPT - VinaPhone

In 2017, Vietnam Post and Telecommunications Group has the following outstanding activities:

Strengths

Weaknesses

Opportunities

Threats

Introduction of Vietnam Military Telecoms Company - Viettel telecom:

3.3 Viettel

In 2017, Viettel Military Telecommunications Group has the following outstanding activities:

3.3 Viettel

Strengths

Weaknesses

3.3 Viettel

Opportunities

Threats

3.3 Viettel

Introduction of Vietnam Mobile Telecom Services Corporation - Mobifone:

3.4 MobiFone

In 2017, Vietnam Mobile Telecom Services Corporation has the following outstanding activities:

3.4 MobiFone

Source: VIRAC, MIC

trillion VND

trillion

3.5 Evaluation of the top three business results

Pre-tax profit of typical enterprises, 2014 – Q1/2018e

Revenue from typical businesses, 2014 – Q1/2018e

REPORT DISCLAIMER

This document has been prepared in good faith on the basis of information available at the date of publication without any

independent verification. VIRAC has produced this report for private circulation to professional clients only. All information and

statistical data herein have been obtained from sources we believe to be reliable and made to ensure the accuracy of the contents of

the pages of the report at the time of preparation. Such information has not been independently verified and VIRAC makes no

representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and

materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use.

You agree that you will not use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it

outside your organisation, or place it on a website for public access without the express written permission of VIRAC.

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VIETNAM TELECOMMUNICATION MARKET REPORT...

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