VIETNAM TELECOMMUNICATION MARKET REPORT Q2/2018...Contents 2 Executive summary 4 Landline phones 56 1. Business environment 6 2.2.3 Competitive analysis 59 1.1 Macroeconomic situation

1

VIETNAM TELECOMMUNICATION MARKET REPORT Q2/2018

Contents

2

Executive summary 4 Landline phones 56

1. Business environment 6 2.2.3 Competitive analysis 59

1.1 Macroeconomic situation 6 2.3 Issues in industry development 69

1.2 Legal framework 9 Industry risks 70

1.3 Trade agreements 17 SWOT analysis 72

2. Industry overview 23 Industry development trends 73

2.1Current status of the telecommunications industry in

the world23 2.4 Industry planning 78

2.1.1 Market scale 24 Industry planning 79

2.1.2 Internet 25 Forecast 84

2.1.3 Mobile phones 33 Recommendations 85

2.1.4 Landline phones 35 3. Enterprise analysis 88

2.2Current status of Vietnam telecommunications

industry38 3.1 VNPT 89

2.2.1 History of the industry 39 3.2 VNPT – VinaPhone 91

2.2.2 Telecommunications market scale and infrastructure 43 3.3 Viettel 94

Market scale 43 3.4 MobiFone 99

Internet 45 3.5 Evaluation of the top three business results 101

Mobile phones 54

MIC Ministry of Information and Communications

IT Information Technology

FIA Foreign Investment Department

FPT FPT Telecom Joint Stock Company

GfK VietnamGfK Vietnam Technology and Retail Market Research

Company Limited

GSO General Statistics Office

Gtel Global Telecommunications Corporation

IoT Internet of Things

M2M Machine to Machine

Abbreviations

3

IPv6/ IPv4 Internet Protocol version 6/4

ITU International Telecommunication Union

MobiFone MobiFone Telecommunications Corporation

Vietnamobile Vietnamobile Mobility Telecom Joint Stock Company

Viettel Viettel Telecom Group

VinaPhoneVNPT Telecommunications Services Corporation -

VinaPhone

VIRAC Vietnam Industry Research And Consultant

VNPT Vietnam Posts and Telecommunications Group

VNTA Department of Telecom

Executive summary

4

Vietnam's telecom sector continues to have significant growth potential,

especially in the field of 3G for mobile phones and FTTH for wired

networks.

The high cost of 3G in the end of 2013 has caused telecom revenues to

increase in recent years

In the period of 2010 - 2017, Internet revenue had been growing

continuously over the years with an average growth rate of 30% per

year,

In general, the trend of using 2G services has decreased sharply over the

years, while 3G has been increasing continuously in recent years

Content is intentionally removed for demo purpose

Executive summary

5

In 2017, International Data Group (IDG) also announced the results of the

"Consumer Satisfaction Survey on 4G Services in Vietnam in 2017"

Revenue from mobile services in 2012-2015 showed signs of a sharp drop

as average revenue per subscriber decreased

Landline phone revenue has been steadily decreasing over the years. This

is due to a decrease in subscriber numbers as well as ARPU reduction.

Source: VIRAC, MIC

trillion VND

Revenue from typical businesses, 2014 – Q1/2018e


1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

1.3 Trade agreements

Contents

6

gross domestic product in the Q1/2018 was estimated to

increase by 7.38%, compared to the same period in the previous year



7

trillion VND

Source: VIRAC, GSO

Source: VIRAC, GfK

Market scale of electronics retail in Vietnam by quarter, Q1/2013

– Q1/2018

GDP growth, 2011 – Q1/2018




8

Source: VIRAC, GSO

Vietnam's population has grown rapidly over the last few decades.

Rate of urbanization, 2012 – 2017The rate of urbanization has increased over the years

Source: VIRAC, GSO

Population pyramid, 2016




1.2 Legal framework


Contents

9

10


1.2 Legal framework

Telecommunications Law issued in 2009 on 23/11/2009, effective from 7/1/2010:


11


1.2 Legal framework

Decree No. 25/2011/ND-CP issued by the Government dated 6 April 2011, the decree includes 46 articles detailing the contents of telecommunication

services business, network establishment and telecommunication services , telecommunication licensing, resources, technical standards, quality and

telecommunication charges, telecommunications works.


12


1.2 Legal framework

Decree No. 174/2013/ND-CP stipulates the sanctioning of administrative violations in the fields of post, telecommunications, information technology and

radio frequencies effective from January 15, 2014.


13


1.2 Legal framework


14


1.2 Legal framework – Telecoms macro policies

• Directive 11/CT-BTTTT dated 18 March 2016 on enhancing the protection of private information of users of services and preventing the illegal trading

of mobile SIM.


15




16

• MIC and ITU signed cooperation agreements on satellite control




17

On June 23, 2017, Ministry of Information and Communications issued Circular No. 11/2017/TT-BTTTT on amending and supplementing some articles of

Circular No. 08/2013/TT-BTTTT on regulation of service quality management and the Circular No. 14/2007/TT-BTTTT amending and supplementing some

contents of the Circular No. 18/2011/TT-BTTTT on the process of verifying base stations of public land mobile phones..




18

On December 29, 2017, Ministry of Information and Communications issued Circular No. 47/2017/TT-BTTTT




19

On January 12, 2018, Ministry of Finance issued Circular No. 03/2018/TT-BTC




20






1.2 Legal framework


Contents

21



22

1995 1998 2000 2002 2007 2008 2009 2011 2015

Vietnam's integration process since 1995 to date

By the end of the first quarter of 2018, Vietnam has signed, implemented, and has been negotiating a total of 17 free trade agreements (FTAs).

2016 20172006




23

Electronics and Telecommunications in CPTPP negotiations




24




The ASEAN Economic Community (AEC) was formally established by the end of 2015:

25




Impact of WTO accession:

26


Contents

2. Industry overview

2.1 Current status of the telecommunications industry in the world

2.2 Current status of Vietnam telecommunications industry

2.3 Issues in industry development

2.4 Industry planning, Forecast và Recommendations

27


2.1 Current status of the telecommunications industry in the world– 2.1.1 Market scale

Among the telecommunications services markets, Asia-Pacific is the

region with the highest telecom service market value, and is consistently

growing at a steady rate.

28

billion Euro

Source: VIRAC, Statista


billion Euro

World Telecommunication Market Revenue, 2005 – 2017e

Telecommunications market revenue by region,

2012 - 2019fContent is intentionally removed for demo purpose

With over 41% of the world population, Asia-Pacific is the region with the

highest number of Internet users in the world.

More than 50% of the population do not use the Internet.

29

Million subscribers

Source: VIRAC, ITU

Source: VIRAC, ITU


2.1 Current status of the telecommunications industry in the world– 2.1.2 Internet

Number of internet users in the world, 2005 - 2017

Number of internet users by region, 2010 - 2017


Internet penetration in all regions of the world tends to increase in the

period 2010 - 2017

30

Number of Internet subscribers in Asia-Pacific region, 2005 – 2017

Million subscribers

Source: VIRAC, ITU

Source: VIRAC, ITU


2.1 Current status of the telecommunications industry in the world and in Asia-Pacific – 2.1.2 Internet

%Penetration rate per 100 people by region, 2005 - 2017


31

Internet bandwidth technology has been constantly changing throughout

the years since the Internet was founded and developed.

Fixed broadband penetration, 2008 - 2017eNumber of fixed broadband Internet subscribers worldwide, 2005 – 2017e

Million subscribers

Source: VIRAC, ITUSource: VIRAC, ITU




32

Fixed broadband penetration rates by region, 2010 – 2017eThe number of fixed broadband subscribers in Asia Pacific,

2005 - 2017e

European countries are leading the world in penetration/population.

Million

subscribers

The number of fixed-line subscribers in Asia-Pacific declined sharply in

2014.

Source: VIRAC, ITU Source: VIRAC, ITU



%


33

Million

subscribers

Million

subscribersAsia-Pacific also has the largest mobile broadband subscriber base in the

world,

Source: VIRAC, ITU

Source: VIRAC, ITU



Number of mobile broadband subscribers in the world, 2010 - 2017

Number of mobile broadband subscribers by region, 2010 - 2017


Mobile broadband has become an important strategy for the Asia-Pacific

region.

34

million people

Europe and America continue to be the top two regions in penetration

rates for mobile broadband.

Source: VIRAC, ITU

Source: VIRAC, ITU



%

Mobile broadband penetration rates by region, 2011-2017

The number of mobile broadband connections in Asia-Pacific, 2010 -

2017


2G wireless penetration is trending in contrast to 3G, 4G.

35

Source: VIRAC, ITU

Source: VIRAC, ITU



The penetration rate of 2G, 3G, 4G networks in the world, 2008 -

2020f

Internet penetration rate in Southeast Asia, 2016


36

70% of countries reach their target charges

Rate of monthly income/income per capita by country group, 2015Source: VIRAC, ITU

Source: VIRAC, ITU



2G, 3G and 4G wireless penetration in Asia Pacific, 2008 - 2020f


37

Mobile phone penetration rates and subscribers worldwide, 2010 - 2016e

Million subscribers

Source: VIRAC, ITU

Source: VIRAC, ITU


2.1 Current status of the telecommunications industry in the world and in Asia-Pacific – 2.1.3 Mobile phones

%

Number of mobile subscribers in the world, 2008 - 2017


38

Mobile penetration per 100 people by region, 2010 - 2017Mobile subscribers in Asia Pacific, 2005 - 2017

Asia-Pacific is the largest contributor to the global mobile subscriber market over the past five years and forecast to extend this position over the next 10

years.

Million subscribers

Source: VIRAC, ITU Source: VIRAC, ITU



%


39


In 2016, AT&T was the largest telecom operator in the world

billion Euro Top 25 telecom operators that have the highest revenue, 2016




40

Landline phone service penetration rate by country group, 2005 - 2017

Million subscribers %

Source: VIRAC, ITU

Source: VIRAC, ITU


2.1 Current status of the telecommunications industry in the world – 2.1.4 Landline phones

Number of subscribers and fixed service penetration, 2005 - 2017


41

Number of fixed subscribers per 100 people in the world, 2015

Source: VIRAC, ITU




42

Million subscribers

Source: VIRAC, ITU

Source: VIRAC, ITU



Total landline phone subscribers by region, 2005 - 2017

Penetration rate per 100 people by region, 2005 - 2017


43

Source: VIRAC, ITU

Source: VIRAC, ITU

Top 10 countries that have the highest indicators of information technology

and communication development in the world, 2017



Top 10 countries that have the highest indicators of information technology

and communication development in Southeast Asia, 2017


Contents






44

45


2.2 Current status of Vietnam telecommunications industry – 2.2.1 History of the industry

According to WTO’s definition:

Telecommunications services are divided into two groups:


46

History of Vietnam telecommunications

1990 1995 2005

1992 19968/1987 04/1990 1995 2002 2003 2005

Service stage:




47

Corporate stage

Market opening phase to create competition




48

Preparatory phase for international integration




49

Vietnam's telecommunications sector continues to have significant growth potential, particularly in the field of 3G for mobile phones and FTTH for wired

networks.


2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Market scale

billion USD

Source: VIRAC, MIC

Telecoms revenue, 2011 – Q1/2018e


50

Source: VIRAC, FIA


2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Market scale

FDI attraction by sector, Q1/2018


51

Source: VIRAC

Million users


2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure - Internet

Source: VIRAC, VNTA

Revenue from Internet, 2010 – Q1/2018e

Number of internet users, 2010 – Q1/2018e


52

Source: VIRAC, VNTA

Source: VIRAC



Million

subscribers

Number of fixed broadband internet subscribers and

3G mobile network, 2012 – Q1/2018e

Market share (subscribers) of broadband Internet service,

2017e


53

Source: VIRAC, VNTA

Source: VIRAC, VNTA

Vietnam Internet market still maintains its niche with the majority of

the market share of the three major networks such as VNPT, Viettel

and FPT Telecom.

Market share under xDSL internet subscribers, 2017e



Market share under FTTH internet subscribers, 2017eContent is intentionally removed for demo purpose

54

Source: VIRAC, VNTA



Total Internet connection in domestic and international,

2010 – Q1/2018e


55

Source: VIRACSource: VIRAC, MIC

Source: VIRAC* Gtel has not yet been 3G licensed



Million subscribers

In general, the trend of using 2G services has decreased sharply over the years,

while 3G has been increasing continuously in recent years.

Market share by subscribers of 2G services of enterprises, 2013-2017e

Market share by 3G service subscriber of enterprises, 2013-2017e

2G and 3G subscribers, 2011 – Q1/2018e


56

Thousand

stations

Source: VIRAC



Number of 2G and 3G BTS stations, 2016-2017e


57

According to the test plan from the beginning of 2017, the

Department of Telecommunications has carried out quality

measurement of 4G network of 3 operators namely VinaPhone,

MobiFone and Viettel.

Source: VIRAC, OpenSignal

Source: VIRAC



MbpsSpeed of Internet access in some countries, 2017

Quality of 2G/3G/4G services of main telecom operators, 2017


58

Time to use wifi in some countries, 2016


3G & 4G universality in some countries, 2016


Wifi has a great influence on the majority of the world using smart

phones to optimize costs.




59

billion

USD


2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Mobile phones

Source: VIRAC

Source: VIRAC* Number of subscribers incurred charge

Million

subscribers

Mobile market, 2011 – Q1/2018

Revenue from mobile services, 2010 – Q1/2018e


60

Source: VIRAC

Source: VIRAC


2.2 Current status of Vietnam telecommunications industry – 2.2.2 Telecommunications market scale and infrastructure – Mobile phones

Million subscribers

Market share (subscribers) by businesses, 2017e

Number of mobile subscribers by business, 2013 - 2017e


61

Landline phone revenue has been steadily decreasing over the years. This is

due to a decrease in subscriber numbers as well as ARPU reduction.

Source: VIRAC


2.2 Current status of Vietnam telecommunications industry – 2.2.3 Industry scale – Landline phones

Source: VIRAC

Million subscribers

billion VND

Revenue of Landline phone, 2010 – Q1/2018e

Number of landline subscribers, 2011 – Q1/2018e


62

The number of fixed-line subscribers increased sharply in the period

before 2009, then dropped sharply over the years.

Source: VIRAC, MIC, ITC



Market share (subscription) of landline phone service, 2014-2016

Source: VIRAC

Landline subscriber rate per 100 people, 2006 - 2016


63

(billion VND) VNPT Viettel SPT

Turnover by service constitutes of businesses, 2015

Source: VIRAC, MIC

Source: VIRAC, MIC



Number of new and outgoing subscribers, 2015


64

Distribution model of Viettel

Source: VIRAC, Viettel


2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis - Distribution channel

Viettel's weaknesses in the distribution channel are:Content is intentionally removed for demo purpose

65

Distribution model of VinaPhone

Source: VIRAC, VinaPhone




66

Distribution model of MobiFone

Source: VIRAC, MobiFone

Distribution channel of MobiFone is formed in the form of vertical marketing system.




67

Distribution model of VinaPhone and MobiFone

Viettel MobiFone VinaPhone Vietnamobile




68


2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis – Service charges

Comparison among 4G package prices from typical operators, 2017

Telecom

operator

Pack of data Charges

Viettel

MobiFone

VinaPhone


69



Comparison among internet prices from typical operators, 2017• VNPT:


70



Comparison among internet prices from typical operators, 2017• FPT:

Pack of data


71



Comparison among internet prices from typical operators, 2017• Viettel:


72




73




74

The cost of landline calls is lower.




75

In general, MobiFone's promotions are more diversified and attractive than Viettel and VinaPhone's.


2.2 Current status of Vietnam telecommunications industry – 2.2.3 Competitive analysis – Promotions


Contents






16

77

❖ Competitive risks


2.3 Issues in industry development – 2.3.1 Industry risks


78

❖ Business strategy risk


2.3 Issues in industry development – 2.3.1 Industry risks


79

S W

O T


2.3 Issues in industry development – 2.3.2 SWOT analysis


80

IT - Telecoms operators will be aggressively preparing for the adoption of the MNP

The most discounted price is roaming charges.


2.3 Issues in industry development – 2.3.3 Industry development trends


81

With the growth of the Internet, smartphones and especially the sensors, Internet of Things (IoT) and M2M (Machine to Machine) are becoming the new

trend of the world.




82

Although most firms have achieved impressive growth, Vietnam's telecommunications infrastructure still needs to be upgraded and improved.




83

Threats from abroad investment


2.3 Issues in industry development – 2.3.3 Industry development trends – Learnings from abroad investment


84


2.3 Issues in industry development – 2.3.3 Industry development trends – Learnings from abroad investment


Contents





2.4 Industry planning, Forecast and Recommendations

16

86


2.4 Industry planning, Forecast and Recommendations – 2.4.1 Industry planning

Decision No. 32/2012/QD-TTg dated July 27, 2012 on approving the National Telecommunications Development Plan up to 2020


87




88




89




90

Decision No. 149/QD-TTg of January 21, 2016 approving the program on development of broadband telecommunications infrastructure up to 2020




91


2.4 Industry planning, Forecast and Recommendations – 2.4.2 Forecast

Million subscribers

Source: VIRAC

Forecast for telecommunication subscriber growth, 2017f-2020f


92

❖ Recommendations on developing distribution channels and marketing


2.4 Industry planning, Forecast and Recommendations – 2.4.3 Recommendations


93

❖ Recommendations on developing and improving products and services

❖ Recommendations on infrastructure development




94

❖ Research and deploy IoT applications to help operators leverage their revenue growth potential:

In addition, network operators can add other IoT applications such as:




3. Enterprise analysis

Contents

86


3.1 VNPT

15

Introduction VNPT Telecommunications Group:


97

Strengths

Weaknesses

Opportunities

Threats


3.1 VNPT


15

Introduction of VNPT Vietnam Posts and Telecommunications Group -

VinaPhone:


3.2 VNPT - VinaPhone


99

In 2017, Vietnam Post and Telecommunications Group has the following outstanding activities:




100

Strengths

Weaknesses

Opportunities

Threats




15

Introduction of Vietnam Military Telecoms Company - Viettel telecom:


3.3 Viettel


15

In 2017, Viettel Military Telecommunications Group has the following outstanding activities:


3.3 Viettel


103

Strengths

Weaknesses


3.3 Viettel


104

Opportunities

Threats


3.3 Viettel


15

Introduction of Vietnam Mobile Telecom Services Corporation - Mobifone:


3.4 MobiFone


106

In 2017, Vietnam Mobile Telecom Services Corporation has the following outstanding activities:


3.4 MobiFone


107

Source: VIRAC, MIC

Source: VIRAC, MIC

trillion VND

trillion

VND


3.5 Evaluation of the top three business results

Pre-tax profit of typical enterprises, 2014 – Q1/2018e

Revenue from typical businesses, 2014 – Q1/2018e


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109

VIETNAM TELECOMMUNICATION MARKET REPORT Q2/2018...Contents 2 Executive summary 4 Landline phones 56 1. Business environment 6 2.2.3 Competitive analysis 59 1.1 Macroeconomic situation

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