The impact of the recent 3G license attribution on Vietnamese mobile market

Ngoc-Anh Vu ngoc-anh.vu@polytechnique.org +33 6 78 61 83 44

Telecom ParisTech

09 May 2009

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Vietnamese mobile market before 3G license attribution

Winners & engagement

Potential services

Impacts on holders & non-holders of 3G licenses

Wild-card

Agenda

Seven MNO and one MVNO are currently present in Vietnamese mobile market

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1993

1996

Jul. 2003

Oct. 2004

June 2006

Jan 2007

Nov. 2007

April 2009

BCC between VNPT and Swedish Comvik

BCC between Saigon Postel Group and Korean SK Telecom

Mobile branch of VNPT Mobile branch of Viettel Telecom, an economic

entity of Ministry of Defense

Mobile branch of Electricity of Vietnam

BCC between Ministry of Public Security and Russian

Vimpelcom

MVNO of Vietnam Media

Corporation

MNO: Mobile Network Operator

MVNO: Mobile Virtual Network Operator

BCC: Business Corporation Contract

VNPT: incumbent Vietnam Post & Telecommunication Corporation

BCC between Hanoi Telecom and Hongkongese Hutchison Telecom

Local market is relatively concentrated: 3 leading actors have more than 93% market share (in volume)

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Market share (in volume) in June 2008 (latest availably consistent information)

• Three clear leaders

• Viettel: lower segment with

aggressive pricing plans

• Mobifone: higher segment with focus

on client relationship management

• Vinaphone

- S-phone missed Vietnamese market

dynamics

- EVN did not meet expected results

- HT Mobile decided to end its CDMA

services at early 2008 and changed its

trademark to Vietnamobile

Total: 48 millions subscribers

Penetration rate: 58% (*)

Source(s): MIC(*) Multiple SIM ownership means penetration rate is far lower

In April 2009, four 3G licenses are attributed to 5 players who have different engagement levels

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Viettel Vinaphone MobifoneEVN Telecom &

Vietnamobile

Investment

Network deployment

Deployed technology

US$ 800M US$ 600M US$ 350M US$ 370M

• 9 m: 87% population (5000 Nodes B)

• 1 yr: 9000 Nodes B

• 3 yr: 100% population

• Q3’09: 20% population

• 3 yr: 50% population

• 6 yr: 75% population

• 3 m: 2000 Nodes B

• 1 yr: 100% big suburbs

• 3 yr: 98% population

• 9 m: 50% population (2500 Nodes B)

• 3 yr: 5000 Nodes B

HSPA WCDMA HSPA N/C

First 3 years

Security money

US$ 280M US$ 93M US$ 93M US$ 37M

Service launch9 months after license

allocation (i.e. April 2010)

Q3 ‘093 months after license

allocation (i.e. Oct. 2009)

Q1 ‘10

One of the main drivers of 3G network deployment is to provide multimedia services in order to increase ARPU

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Profit Revenue Cost= -

Subscribers ARPUx

Customer needs formultimedia services

Web2.0 trend

TV/video

Music

M-CommerceNomadic usage

Web-browsing

ARPU: Average Revenue Per User

Mobile TV could be a successful service thanks to premium content and suitable data plans

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• Field experience elsewhere (before flat data plans)

• Nokia-TeliaSonera in Finland : 20’ per day

• Orange France : 40’ per month, 54% at home

• SFR (France) : 20’ per day, 50% at home

• Opportunities

• Premium content (sports) is the main driver for Mobile TV

• Alternative TV screen is preferred in certain conditions

• Obstacles

• Flat data packages are necessary to develop services

• Field experience elsewhere

• Obstacles

• Local lifestyle is unfavorable for mobile music usage

• Piracy would be too strong for mobile music to become a real success

TV/video

Music

3 Music Store• 500k tracks• £ 0.99 (€1.48) per track• Dual download (both on

PC hand handset)

M-commerce could become the next killer application in local market

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• Field experience elsewhere

• Opportunities

• Vietnamese population uses micro-payment every single day

• Obstacles

• A strong synchronized deployment between different operators or with financing institutions is essential

• Field experience elsewhere

• Strategic partnership on embedded PC-card

• Opportunities

• Nomadic corporate usage would increase rapidly with the growing awareness of information security

• Obstacles

• 3G PC-card would face a strong competition from wifi networks

M-commerce Nomadic usage

Felica contract (million)

Suitable business models would boost mobile Web and Web2.0 services

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• Opportunities

• Vietnamese young population is eager to

access web everywhere to stay update with

information

• Obstacles

• Almost all popular website are not designed

for mobile access but this is not a serious

issue

• Flat data packages are necessary to develop services

• Example of services elsewhere

• Video blog, post

with MMS

• Facebook in Iphone

• Opportunities

• Vietnamese young population is addicted to

online social networks

• Obstacles

• Suitable business partnership agreements

are essential to develop the services

Web-browsing

Web2.0

3G holders have the opportunity to define the local market evolution

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Market readiness in the next 3 years

Mobile TV

Mobile music

M-commerce Market preemption

Risk on an early & undefined 3G service market

Marketing impact

Normandic usage

InvestmentWeb-browsing

Web 2.0

++--

Pros & cons for the 3G license holders

Market leaders=

Non-holders of 3G license would eventually withdraw from market unless they would receive strong support from regulatory bodies

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Announced movement after 3G license attribution

Segmentation of local market to find market niche

Development of adapted services

Creation of new business models with different partners (ISP, taxi companies, etc.)

Increase its market

capital

M&A with leading actors

Unless they will have a strong protection from a more complete regulation

Gtel S-fone VTC (MVNO)

• Services not yet available

• Partnership with Vinaphone to provide 3G services

N/C Services not yet available

Wild-card

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If 3G services will be used at nomadic usage, what would happen?

Bandwidth

Usage

Mobile

Fixed

Low Bandwidth

Dial up

GSM / GPRS

Broadband

UMTS / HSDPA / CDMA

ADSL

/ FTTx

Wimax / WBS

Wireless ADSL/FTTx

Nomadic

?

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Thank you!