Intense competition has negatively affected Vietnam’s ARPU levels and the country’s mobile market is fast-approaching saturation. However, mobile penetration will rise as fixed-to-mobile migration picks up, according to BMI.
Vietnam’s mobile growth rate slowed in H210 largely because of the country’s high mobile penetration rate. That said, the mobile penetration rate is still expected to surge past the 200% mark in 2011 when the subscriber base reaches a total of 184.492mn. This figure is not necessarily representative of the true situation in Vietnam, as it is thought that operators are reluctant to deduct inactive subscriber SIM cards as this would reduce their market shares.
Meanwhile, the number of fixed-lines in the country held stable at 16.4mn from August to November 2010. The industry grew by 27.4% year-on-year to reach a peak of 20mn in May 2010 but has since declined steadily. Strong competition and aggressive pricing in Vietnam’s mobile sector have accelerated the fixed-to-mobile service migration. The industry is now expected to grow slightly in the near future as a result of investments from fixed-line players, but the numbers are expected to trend downwards over the next five years.
The MIC said overcrowding in Vietnam’s mobile market has led to intense competition and declining profitability, which has jeopardised operators' long-term sustainability. However, the regulator has not taken concrete steps to improve the situation. In fact, the regulator is instead contemplating implementing mobile number portability (MNP) in the country and could release a set of guidelines in 2011. The benefits of MNP are typically more apparent in countries where the industry has matured and is experiencing stagnant growth as a result. This is not the case in the Vietnamese market, even though the mobile penetration rate for the country is among the highest in the Asia-Pacific region.