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Mobile & Wireless
Vietnam sets deadline to open its telecom market
Four 3G licenses granted in April to give local telcos a head start
by Ek Heng, Asia-Pacific Correspondent
Vietnam will fully open its telecom market by 2012 under an agreement with the World Trade Organization. Towards this end, Vietnam will enact a telecom law that will put the country in line with international practices. Its National Assembly was reportedly scheduled in the first week of June to be given a draft bill which has undergone many earlier revisions and updates.
The country’s Ministry of Information and Communications has been collecting feedback from the industry in preparation for opening up of the market. Local media reports have quoted experts from the ministry as predicting there would be fierce competition once the market is fully open to foreign telcos which will be allowed to provide telecom services.
As it stands, the local market opportunities have attracted industry leaders like IBM, Cisco, AT-T, Alcatel Lucent, Ericsson, Nokia and Motorola to participate in telecom infrastructure and network equipment projects. Posing strong challenges in this traditionally western dominated sector are two of China’s leading network equipment suppliers, Huawei and ZTE, which are adopting an increasingly higher profile in Vietnam.
Until the 2012 deadline, domestic telcos tying up with foreign partners still get to retain 51 percent ownership in their quest to secure technology and expertise. Local telcos—the majority of which are government-owned—have benefited from the presence of international players such as SK Telecom, Hutchison and Vimpelcom.
As at end-April 2009, Vietnam has 89.5 million mobile subscribers achieving a ratio of 105 phones per 100 people, according to the ministry. In 2008, Viet Nam Post and Telecommunications Group (VNPT) recorded the highest revenue of VND45.29 trillion (US$2.66 billion), Viettel was in second position with VND33 trillion (US$1.94 billion) turnover, while EVN Telecom earned VND3.7 trillion (US$217.6 million.)
3G success: quality and price
Just in April this year, Vietnam awarded 3G licences to four telcos, namely Viettel, Vinaphone, Mobifone and a joint venture of EVN Telecom and Hanoi Telecom.
Local telcos were given insights into what’s needed to succeed with 3G services at a subsequent second Viet Nam Telecoms International Summit held earlier in May. At the summit, international telcos shared their experience with local participants with Orange France Telecom Group’s representative highlighting its experience showing that quality is more important than speed, while the PT Telekomunikasi representative touched on price as the second important factor.
Following the award of the 3G licences, Huawei announced in May that it won a contract to build a WCDMA/HSPA network for Viettel. The media report added that Huawei will build 2,000 base stations in southern Vietnam. There was an unconfirmed media report of Ericsson getting the bulk of work for this project.
In June this year, ZTE Corporation announced it had obtained 20 percent of Viettel’s contract following an agreement reached to build its UMTS network in Vietnam. ZTE is well placed to draw on its recent experience in piloting an SDR-based all-IP network with CSL Limited in Hong Kong which was implemented in 11 months. The network for Viettel is expected to be deployed by September 2009 and will help Viettel reduce its total cost of ownership, ZTE said in its statement.
Significant challenges ahead
The four successful Vietnamese telcos have three months to deposit a total of VND8.1 trillion (US$460 million) with the government and 9 months to start-up the 3G services, according a report by Gerson Lehrman Group.
In its analysis, GLG said that implementing 3G in Vietnam is not a done deal, despite the attractions of the technology. It cited high initial investment costs, lack of 3G coverage, expensive 3G phones, and fierce competition as significant challenges for implementation of the service in Vietnam.
As an indication of investments needed to implement the new mobile technology platform, EVN Telecom and Hanoi Telecom announced in June they will invest VND6 trillion (US$351 million) over a three-year period to build 5,000 base stations.
Lending credence to GLG's analysis is a recent media report that cheap mobile handsets costing less than VND3 million (US$180) dominated sales out of a total of 8.3 million mobile phones sold in the country in 2008. Such lower end handsets are not branded and are made in China with another segment of this lower-end market comprising refurbished luxury phones.
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