Telecoms growth slowing in Vietnam

Details: James Barton; Category: Trends & Forecasts; 20 February 2013; 8500 views

The telecommunications industry is no longer playing as great a role in Vietnam’s economic growth...

The telecommunications industry is no longer playing as great a role in Vietnam’s economic growth, according to Research & Markets. While the IT industry has made a significant contribution to the country's GDP within the past several years, the telecommunications industry seems to have fallen behind.

Vietnam is now ranked among the most attractive destinations for IT outsourcing and FDI companies such as Samsung, Nokia, Canon, Intel, Foxconn, and Gemtek Technology have increased their commitment and investment in Vietnam. However, foreign investors such as SK Telecom and VimpelCom have tried to find ways to exit and Hutchison Telecommunications have been struggling with intensified competition.

Vietnam lacks strategic investors in the sector, while local players such as Viettel and VNPT are seizing more than 80% of the market share and functioning as an oligopoly. There have been signs that such relationships are violating the competition law while ruining customers' benefits.

2011-2012 was a busy period for the telecommunications sector in Vietnam. The telecommunications industry has left its hot growth stage to dig deeper in the saturated area. Operators have to maintain or increase ARPU by introducing more new applications and value-added services and at the same time they have to reduce the frequency and strength of promotion campaigns.

This year was also a starting point for an unavoidable trend of industry consolidation and restructuring to assist the market to become more attractive and competitive. EVN Telecom was merged into Viettel. VNPT is about to choose proper solutions to meet new regulation of not owning more than 20% of two networks at the same time. The domestic market seems to be narrow so after Viettel, other Vietnamese operators have started to invest in overseas markets.