Vietnam Reports 92 mil. Mobile Subscribers at End-2009

According to statistics from Vietnam's Ministry of Information and Communications (MIC), the total turnover of the Vietnamese telecoms sector was estimated at over 150 trillion dong (US$8.1 billion) in 2009, increasing by over 62% on the previous year. The Ministry also reported that the total number of telephone subscribers in the country reached 107.5 million at the end of 2009, averaging 126.4 phones per 100 people. Of the total, mobile phone subscribers accounted for 85.7%, equating to approximately 92.1 million. The MIC also said that the country's three largest mobile operators—VinaPhone, MobiFone and Viettel—reached tens of million of mobile subscribers each, without reporting the exact figures. It added that new market entrants, such as Vietnamobile and Beeline, also exceeded 1 million mobile subscribers each.

Outlook and Implications

• High Multi-SIM-Card Ownership: The mobile subscriber data reported by the MIC includes both active and inactive subscribers. Service providers have said that only around 50% of the 92-million mobile subscribers reported are active users; the remainder are "virtual" subscribers. This means that customers make use of the promotion programmes offered by service providers to buy SIM cards and then they often throw away these SIM cards when they run out of money. The MIC has acknowledged that the situation wherein a person owns many SIMs and can buy SIMs easily is a big challenge for the country's telecom sector. As competition in the mobile market continues to intensify as more operators enter the market, the country's mobile service providers have stepped up their service promotions to attract customers in the past two years, but this has resulted in a high level of multi-SIM-card ownership.

• Increasing Competition: Although the official mobile subscriber figure was somewhat exaggerated with the inclusion of inactive SIM card numbers, the Vietnamese mobile market has indeed experienced significant growth over recent years. Even if the active subscriber number is estimated at around 46 million (half of the total mobile subscriber number reported by the MIC), this still represents a mobile penetration level of above 50%. The market has so far been dominated by military-run Viettel and state-owned VinaPhone and MobiFone. Viettel, the country's largest mobile operator, was reported to have 42.5 million mobile subscribers at end-2009, close to half of the total mobile subscriber number reported by the MIC. The remaining growth potential in the market has attracted a number of foreign operators to launch mobile services in the country, including Hutchison Telecom-owned Vietnamobile and VimpelCom (see Vietnam: 10 April 2009: Hutchison Venture Launches GSM Services in Vietnam and 21 July 2009: VimpelCom Launches Commercial Mobile Operations in Vietnam).

• 3G Deployment: Despite the continuous subscriber growth, mobile operators in Vietnam have experienced increasing pressure on their profit margins as a result of aggressive price cuts over recent years. Therefore, they are keen to deploy advanced mobile data services to generate additional revenue streams. In light of this, the MIC last year issued 3G licences to four mobile operators, which have pledged to invest a minimum of around US$2 billion for rolling out 3G services over the first three years. Vinaphone, the mobile unit of state operator VNPT, was the first to launch a 3G network in October 2009 and reported 500,000 3G users by mid-January 2010 (see Vietnam: 12 October 2009: Vinaphone Launches 3G Services in Vietnam). According to the operator, at this stage the demand for 3G usage in Hanoi and Hochiminh City is high, accounting for the majority of its 3G users. MobiFone, the other mobile unit of VNPT, also launched 3G services in December 2009. The other 3G licence holders, Viettel and a consortium of EVN Telecom and Hanoi Telecom, are also rolling out their 3G infrastructure.

• MobiFone and Vinaphone Privatisation: A big question regarding the Vietnamese mobile market is when the government will privatise VNPT's two mobile units, MobiFone and Vinaphone. The government had originally planned to sell shares in MobiFone through an initial public offering (IPO), followed by an IPO for Vinaphone. The move attracted investment interest from a mixture of Asian and European telecoms companies, including Vodafone, France Telecom, SingTel, and NTT DoCoMo. However, the privatisations have now been delayed for over two years and it remains to be seen whether the plans will materialise this year. For MobiFone and Vinaphone, which are falling behind Viettel in new subscribers, the introduction of a strong strategic player should help to enhance their market position in the increasingly competitive Vietnamese mobile sector.