Vietnam Posts and Telecommunications Group

VIETNAM TELECOM

MARKET & PRICE REGULATION

ITU Regional Seminar on Costs and Tariffs for Member Countries

of the Regional Group for Asia and Oceania (SG3RG-AO)

Bali, Indonesia, 28-30 May 2012

CONTENT

• VNPT GROUP INTRODUCTION

• VIETNAM TELECOM MARKET

• PRICE REGULATION

2

CONTENT

• VNPT GROUP INTRODUCTION

• VIETNAM TELECOM MARKET

• PRICE REGULATION

3

4

• State-Owned Group

• Largest Operator in Vietnam: Annual Growth 15%

• Experienced: 60 years

• Diverse Range of Services

– Mobile Broadband

– Fixed-line Broadband (Internet, Entertainment…)

– Satellite

– Postal

• Employees 90,000

VNPT GROUP INTRODUCTION

5

VNPT BUSINESS LINE

ICT

business (Telecom

and IT services) as

network carrier, operator,

service provider,

equipment vendor

CONTENT

• VNPT GROUP INTRODUCTION

• VIETNAM TELECOM MARKET

• PRICE REGULATION

6

VIETNAM OPERATOR

• Fixed Broadband : 09

• Mobile-2G: 07

• Mobile Broadband - 3G: 05

• MVNO: 02

• Internet Service Provider: 80

7

8

VIETNAM MARKET GROW

Telecom service user

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

2006 2007 2008 2009 2010

Internet User

Fixed User

Mobile User

Telecom revenue

2769.3

3552.98

5144.14

6867.55

9410.79

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2006 2007 2008 2009 2010M

US

D

9

VIETNAM MARKET REVENUE

Fixed Revenue

600.52 601.67570.01

290.68

211.42

0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010

M U

SD

Mobile Revenue

1547.47

2306.98

3250.77

4032.5

5741.97

0

1000

2000

3000

4000

5000

6000

7000

2006 2007 2008 2009 2010

M U

SD

10

VIETNAM MARKET REVENUE

Internet Revenue

107.73

162.24

248.43

356.89

390.82

0

50

100

150

200

250

300

350

400

450

2006 2007 2008 2009 2010

M U

SD

11

VIETNAM MARKET- INTERNET

93%

91%

76%

73%

69%

68%

59%

46%

43%

40%

0% 20% 40% 60% 80% 100%

News

Information seeking

Music

Study

Chat

Email

Music download

Forum

Film

blog

Internet application Percentage Internet User per

Inhabitant

3.80%7.69%

12.90%17.67%

21.05%24.40%

26.55%31.11%

0.00%5.00%

10.00%15.00%

20.00%25.00%

30.00%35.00%

2003 2004 2005 2006 2007 2008 2009 2010

12

VIETNAM MARKET SHARE

Telecom revenue in 2010

Mobile

91%

Fixed

3%

Internet

6%

ADSL market share

SPT

1.22%CMC

0.25%

Viettel

10.13%

Netnam

0.31%

FPT

20.57%

VNPT

67.52%

VIETNAM MARKET SHARE

13

7.43%

1.08%

0.12% 0.10%

18.32%

72.94%

Fixed market share

EVN

SPT

VTC

FPT Telecom

Viettel

VNPT

57.82%

38.31%

3.18%

0.53%

0.17%

Mobile Market share

VNPT

Viettel

Vietnammobile

SPT

Gtel

Fixed Market Share

MOBILE ARPU – HITORICAL & FORECAST

14

5.52

5.00

4.49

4.11 3.85

3.60 3.51 3.41

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2009 2010 2011e 2012f 2013f 2014f 2015f 2016f

Mobile ARPU(US$)

VIETNAM MARKET SWOT

• Strengths - Highly competitive mobile sector.

- Continued positive growth in mobile

sector in 2011, with subscribers up by

5.4%.

• Fixed-line penetration and internet

user rate are high in major urban

centre

• Joining the WTO in 2008 has made

Vietnam a more appealing investment

centre.

• Weakness: • - Market’s dependency on prepaid

services exerts strong downward

pressures on ARPU levels.

• Lack of key strategic investors in the

sector’s main operators.

• Although communications are

relatively advanced in the larger cities,

many rural areas have little or no

access to telecommunications

services.

15

VIETNAM MARKET SWOT

• Opportunities • Many operators in telecom sector,

some of them have not yet launched

their services.

• Broadband penetration rate remains

low => the sector has considerable

growth potential.

• Significant opportunities exist to

develop alternative broadband

technologies

• Open for foreign investors.

• Threats: • It is difficult to deploy new networks in

mountainous areas.

• ARPU is low

• Fixed line is declining

• Mobile data services grow, this could

have potentially negative impact for

the growth of fixed broadband

services.

• Slower economic growth in 2012 could

undermine wireline investment and

expansion plans.

16

CONTENT

• VNPT GROUP INTRODUCTION

• VIETNAM TELECOM MARKET

• PRICE REGULATION

17

OPERATOR IN REGULATION

• Definition of SMP:

- An operator: more than 30% market share

- Group of 3 operators: more than 50% market share

- Group of 3 operators: more than 70% market share

- Group of 4 operators: more than 75% market share

• In-Live from 2007

• Segment:

– Fixed Services

– Mobile Services

– International Outgoing Call

– Leased Line Services

SERVICES UNDER REGULATION

- Local call service

- Mobile

- ADSL

- International lease line

- International outgoing call

ADMINISTRATION OF TELECOM TARIFF

• Government stipulates: Local Call Service

• MIC regulates by registered Model:

– Mobile Services: Voice

– ADSL Service

– Leased Line Service Model

• MIC regulates by announcing Model:

– Long Distance Call

– International Outgoing

• Operators make tariff decision

– As Government Decision

– In-frame of MIC FORM

– For others services

21

OPERATOR RETAIL TARIFF

Pay as you go

– Speed Based

– Volume Based

– On-time Based

• Prepaid volume Package

• Postpaid monthly package

OPERATOR RETAIL TARIFF

• Bundle package:

– Voice, data

– Voice, VAS

– Voice, data, VAS

– Fixed, Mobile, data

• Customer Focus

– Mass Customers

– Enterprise Customers

– Valuable Customer

22

INTER-CONNECTION CHARGING

• MIC regulates interconnection charges:

– Fixed to Fixed Network (long distance call)

– Fixed to Mobile and Mobile to Fixed

– Mobile to Mobile

23

VIETNAM TARIFF CHALLENGES

• Inflexibility to make regulated services tariff

• Price war

• Price of non SMP out of control

• Promotion out of control

• Lack of attractive services

• Alternative services by next generation mobile

technologies LTE and WIMAX

24

TARIFF SOLUTION

• Free of installation in promotion time

• Free of equipment

• Lease/deposit/ step buy of equipment

• Provide new attractive VAS services

• Promotion in first months of service offerings

• Quality of services

• Bundle with other services

25

CHANGING REQUIREMENT

• Revise Definition of SMP

• Policy to Regulate on Flat Rate or Basic Package

• Supervise Operator Tariff Plan on Cost-Based

• Regulate Local Interconnection Charge

• Promotion Policy under Control

• Cost-Based Model between Operators

26

27

VINASAT