Vietnam Announces Four 3G Licence Winners 

The Ministry of Information and Communication (MIC) in Vietnam yesterday officially announced the results of the country's first 3G auctions. The military-run Viettel, Vinaphone, and MobiFone, both run by state-owned telecoms group VNPT, and a consortium between EVN Telecom and Hanoi Telecom were selected to offer 3G mobile services in the country. The four companies have pledged to invest nearly US$2 billion within the next three years to develop 3G infrastructure, the government said. Under the MIC’s requirement, the winners will have three months to make deposits and prepare finance to carry out their commitments. After that, the ministry will formally grant licences on the 1900-2200 MHZ frequency band with a term of 15 years. The total deposit by the four telcos is estimated at over US$450 million. According to Dow Jones, Viettel has pledged that its 3G coverage will reach between 46% and 86% of the country's population of 86 million within the next eight months; MobiFone has pledged to provide the 3G services in all 63 provinces within the next three months, while Vinaphone will focus on providing 3G services initially in the country's major cities and urban areas. Le Nam Thang, Deputy Minister of Information and Communication, was cited by the media as saying that after granting the 3G licences to the telecom providers, the ministry would issue regulations to supervise 3G deployment, including penalties against those providers failing to implement what they commit. According to the MIC, those telecoms enterprises who failed at the first competition are likely be allowed to supply 3G service at a different frequency band in the next competition or they can join forces with other 3G licence winners to provide services via roaming or sharing network infrastructure. These include Saigon Postel and GTel—the latest mobile operator to enter the Vietnamese market and a joint venture between Vietnam's Gtel Corporation and Russian operator VimpelCom.

Outlook and Implications

• 3G Gives Competitive Edge: The 3G licensing takes place at a time when the Vietnamese operators are increasingly focused on service quality and value-added services to increase revenues, having launched significant sales promotions and discount packages in 2008. After the rapid subscriber growth over the recent years, mobile penetration level in the country has also significantly increased. At the end of 2008, there were about 70 million mobile subscribers in Vietnam, a penetration level of around 80%. Military-based Viettel held 34% of the market, while the combined market share of the two mobile units of VNPT—Vinaphone and Mobifone—was about 55%.The award of 3G licences will particularly give the three a further competitive edge, enabling them to attract and upgrade high-end users to the more advanced networks and enhance their value-added services offerings.
• Privatisation Plans: The Vietnamese mobile market is set to experience another major development this year, as the government plans to partially privatise its two mobile units—MobiFone and Vinaphone—a move which has been repeatedly delayed. Based on the latest timetable, MobiFone will carry out its initial public offerings (IPO) in the second quarter, while Vinaphone will follow suit later this year. The stake sale has attracted investment interest from a mixture of Asian and European telecoms companies, such as Vodafone, France Telecom, Comvik, SingTel, and NTT DoCoMo. The privatisation would provide MobiFone and Vinaphone with much-needed capital and expertise for them to compete more effectively against Viettel, which has been growing far more rapidly based on its aggressive roll-out of networks and services, particularly into the rural areas.
• Viettel Expanding Overseas: Viettel, which has grown into Vietnam’s largest mobile operator since its market entry in 2004, is seeking to expand its overseas presence, while aiming to strengthen its leadership at home. The company has made a foray into Cambodia and Laos, two other fast-growing emerging markets in the region. The company is also preparing to provide telecoms services in Myanmar, while looking for business opportunities in North Korea, Cuba, and Venezuela. Viettel is keen to replicate its success in operating its domestic operation in other emerging market (see Myanmar – Vietnam: 15 January 2009: Viettel Seeks Myanmar Entry; Eyeing Other Emerging Marketsand Vietnam: 27 November 2008: Viettel Telecom Selects Nokia Siemens Networks for Network Expansion across Vietnam, Cambodia, Laos).