Telecommunication Equipment and Services
Vietnam
Overview
Telecommunications Equipment 2005(actual) 2006(estimated) 2007 (estimated)
Total Market Size 1,155 1,650 2,060
Total Local Production 453 589 735
Total Exports 21 24 30
Total Imports 854 1,085 1350
Imports from the U.S. 97 135 170
Telecommunications Services 2005(actual) 2006(estimated) 2007 (estimated)
Total Market Size 2,197 2,571 3,200
Total Local Production 2,282 2,669 3,300
Total Exports 228 285 355
Total Imports 144 187 230
Imports from the U.S. 56 73 90
The above statistics are in million $and are unofficial estimates.
Vietnam has become a promising destination for investors in the Information and Communication Technology (ICT) industries. Vietnam is putting considerable effort into modernizing and expanding its telecommunications systems, although its performance continues to lag behind that of its neighbors in the region. The telecommunications industry continues to be among the top priorities for development by the Government of Vietnam.
Annual growth in the telecommunications sector is running approximately 25%. In the period 2005-2006, Vietnam’s ICT growth rate has been double the average in the Asia region and triple the world average expansion rate. In the first 9 months of 2006 alone, the number of new phone subscribers in Vietnam was double the total number of subscribers for the period 1975-2000.
In Vietnam’s “Strategy for Development of ICT Industries to 2010 with Orientation to 2020”, it is predicted that by 2010 Vietnam’s ICT industries will achieve an annual growth rate of 20-25% and annual revenue of $6-7 billion, and new telecom entrants (non-VNPT – the dominant stated-owned provider) will achieve a 40-50% market share.
Such new technologies as 3G, 4G, WiMax, mobile TV, and NGN will be promoted in Vietnam and become major trends in the development of Vietnam’s telecommunications industry. With decreasing prices and increasing investment, the business environment has and will continue to become more competitive. Foreign telecom companies will initially be invited to enter the market by participating in the equitization/privatization of State-owned enterprises (SOEs).
In the past, Vietnam’s telecommunications industry was partially opened to foreign telecommunication companies, but mainly as suppliers of equipment and finance in the building of network infrastructure for transfer to Vietnamese local operators. However, with Vietnam’s accession to the WTO, limitations on foreign companies providing telecommunications services will be relaxed, resulting in increased competition.
Some bumps in the road affecting the development of Vietnam’s telecommunications industry could result from excessively rapid growth, price competition, problems with network connectivity and indifference to the fixed telephone market.
Best Prospects/Services
American suppliers should find excellent opportunities in almost every sub-sector, from equipment for telecom infrastructure to value-added services.
Telecommunication Carriers
At present there are six telecommunications infrastructure operators in Vietnam, of which two are regional with geographical restrictions on their operations and another with only the ability to provide maritime communication services. Almost all Vietnamese telecommunication companies are state-owned enterprises with minor private investment, and there is cross ownership among carriers. Vietnam Post and Telematics (VNPT) is a major SOE operating in almost all telecommunications fields except for maritime telecommunications, and holds approximately 94% of the market. Viettel is under the Ministry of Defense, and provides fixed line, long distance and IP-based telecommunications services as well as lease lines, and mobile communications. EVN Telecom, wholly owned by the State-run Electricity of Vietnam Group, also provides fixed line, long distance and IP-based telecommunications services, lease lines, and mobile communications. Vishipel is a 100% owned subsidiary of Vietnam Maritime Corporation that provides marine communications services. SPT is the first enterprise to be equitized with a number of large shareholders including VNPT, which holds 18% of the total shares. Hanoi Telecom is the first telecom carrier with private investment, and this company provides services for fixed lines limited to Hanoi areas only and long distance and IP-based telecommunications, lease lines, and mobile communications. Among the licensed telecom operators, VNPT is still the dominant player accounting for 94% of fixed telephone market share and 72% of cell phone market share.
Fixed Telephone Networks
According to the Ministry of Post and Telematics of Vietnam (MPT), as of September 2006, Vietnam had about 22.2 million phone subscribers, with a telephone density of 26.43 lines per 100 inhabitants. Telephone access is currently available to all communities nationwide.
Cell Phone Networks
2006 marked outstanding growth in Vietnam’s telecommunications industry, especially the cell phone sector. The cell phone market has seen markedly lower phone charges and higher service quality over the past two years.
Figures for subscribers nationwide provided by a top VNPT executive show 2.7, 4.5 and 8.7 million people subscribing in 2003, 2004, and 2005 respectively. Estimates put the number of cell phone subscribers in 2006 at 16 million. In 2006, cell phone subscribers accounted for 61% of total phone subscribers. Predictions are that the number of cell phone subscribers will hit 20 million and 25 million in 2008 and 2010 respectively, with a phone density of 42 lines/100 inhabitants; of which 2/3 will be cell phone subscribers.
The market in Vietnam is currently divided among five cell phone network operators, with one new entrant planning to launch service soon. Investments by the major cell phone networks are: Vinaphone ($130 million), Mobifone ($456 million), S-Phone ($230 million), EVN Telecom ($630 million), and Hanoi Telecom ($656 million). The market is dominated by the three top carriers: Vinaphone (by GPC of VNPT), Mobifone (by VMS of VNPT), and Viettel Mobile, with approximately 4, 4.7, and 2.5 million subscribers respectively. S-Fone (an SPT venture with a Korean consortium) has only 4.24% market share. EVN Telecom just launched CDMA service this year, so it has a modest market share of several hundred thousand subscribers only. Hanoi Telecom will be the first to apply 3G technologies in Vietnam. This is a project between Hanoi Telecom and Hutchison Telecommunications on a CDMA2000 3G mobile network valued at $655.9 million for a period of 15 years. Hanoi Telecom is under intensive preparation for the new CDMA mobile phone network.
It is anticipated that EVN Telecom and Hanoi Telecom will bring a new breath to Vietnam’s telecommunications market, though these two new cell phone carriers have not created any remarkable changes, except the action balancing the number of carriers using two different GSM and CDMA technologies, i.e. three licensed mobile network operators are running or will operate GSM mobile networks operators and three run CDMA mobile networks. Although there are now 3 CDMA networks, their development is rather weak and the number of subscribers is low. However, EVN Telecom and Hanoi Telecom use CDMA technology with advanced 3G capabilities (faster than GSM). This will certainly help them to become top carriers in the future.
Internet
Apart from the telephone market, the Internet market has also developed rapidly. Internet has become very popular with the entry of several new Internet Service Providers (ISP). WiFi is no longer a just a fancy word, with widespread usage and connectivity. Vietnamese have also become familiar with WiMax, as the Internet is being popularized nationwide.
As of September 2006, the number of Internet subscribers in Vietnam stood at 3.86 million, of which there were 375,000 broadband subscribers; with an estimated 14 million people or 16.85% of the population using the Internet regularly, expected to reach 35% by 2010. At present, the country’s international bandwidth is 3,625 Mbps. Broadband market demand has increased significantly and has vastly surpassed local Internet capacity. However, Internet distribution is not uniform with 72.76% of Internet subscribers in the two cities of Hanoi and HCMC. Seven other cities and provinces including Hai Phong, Thua Thien-Hue, Quang Nam, Da Nang, Khanh Hoa, and Binh Duong account for 10.48%, and the remaining 55 provinces account only for 16.76%.
So far, there are 9 Internet service providers in operation with market shares divided as follows as of September 2006: VNPT/VDC (41.56%), FPT (22.36%), Viettel (16.49%), EVN Telecom (12.29), SPT (3.94%), Netnam (2.56%), OCI (0.54%), Tienet (0.15%), and Hanoi Telecom (0.07%).
Satellite
In May 2006, U.S.-based Lockheed Martin and VNPT held a signing ceremony to award the U.S. firm a $168 million contract to supply Vietnam's first communications satellite. Including ground facilities, the total project is expected to cost $230 million. The satellite will be manufactured in Lockheed's Pennsylvania facility and will be launched in two years, providing roughly 15 years of service. Vinasat will be a geostationary satellite, employing eight C-band channels and 12 Ku-band channels to provide broadcast and telecommunications service (video, data, voice) to the Asia-Pacific region. With the launch of its first telecom satellite scheduled for 2008, Vietnam expects to save tens of millions of dollars each year paid by Vietnamese state-owned firms to foreign satellite operators for use of international channels.
Opportunities
To meet increasing market demand and increased competition following Vietnam’s accession to WTO, Vietnamese telecommunication operators need to enhance their competitiveness by adopting new technologies and enhancing human resource capabilities. They are seeking considerable transfer of technology and know-how via foreign involvement in the telecommunication sector, although the market is likely to open at a gradual pace in line with Vietnam’s commitments.
The major buyers for the telecommunication equipment and services are listed below:
Fixed telephone service operators:
· VNPT (Vietnam Posts and Telecommunications Group)
· EVN Telecom (Electricity of Vietnam)
· Viettel (Military Electronics Telecommunications Corporation)
· SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation)
· Hanoi Telecom (Hanoi Telecommunications Company)
International telecommunications service operators:
· VNPT (Vietnam Posts and Telecommunications Group)
· EVN Telecom (Electricity of Vietnam)
· Viettel (Military Electronics Telecommunications Corporation)
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Long distant and international telephone service based on IP protocol operators:
· VNPT (Vietnam Posts and Telecommunications Group)
· EVN Telecom (Electricity of Vietnam)
· Viettel (Military Electronics Telecommunications Corporation)
· SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation)
· Hanoi Telecom (Hanoi Telecommunications Company)
· Vietnam Maritime Communications and Electronics Company (Vishipel)
Mobile communications service operators:
· VNPT (Vietnam Posts and Telecommunications Group)
· Viettel (Military Electronics Telecommunications Corporation)
· SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation)
· Hanoi Telecom (Hanoi Telecommunications Company)
Internet services providers:
· VNPT (Vietnam Posts and Telecommunications Group)
· FPT (FPT Group)
· Viettel (Military Electronics Telecommunications Corporation)
· EVN Telecom (Electricity of Vietnam)
· Hanoi Telecom (Hanoi Telecommunications Company)
· SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation)
· OCI (One-Connection Internet Service Joint Stock Company)
· Tienet (TIE/Trade Import Export Company)
· Netnam Company (Netnam)
Resources
For more information, please contact the following addresses or visit the following websites:
· Nguyen Dzung, Commercial Specialist
U.S. Commercial Service
U.S. Embassy in Hanoi
E-mail: nguyen.dzung@mail.doc.gov
· Nguyen Hoa, Commercial Specialist
U.S. Commercial Service
U.S. Consulate General in Ho Chi Minh City
E-mail: nguyen.hoa@mail.doc.gov
U.S. Commercial Service: www.buyusa.gov/vietnam
Vietnam’s Ministry of Posts and Telematics: www.mpt.gov.vn/
Vietnam Post & Telecommunications Group: www.vnpt.com.vn/