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eGovernment Forschung | eGovernment Research 2001 - 2017

The ICT industry grew strongly 2016 but challenges await in 2017.

There was a notable change for Vietnam’s telecommunications market over the closing weeks of 2016, with providers directed to recall some pre-activated SIM cards from November 1.

The country’s three largest telecoms providers deactivated a total of 10.6 million SIM cards registered under fake names.

One of them lost VND400 billion ($17.9 million) from the exercise but overall the move barely made a dent in the business performance of the major players.

Handsome growth

According to the latest report from the Ministry of Information and Communications (MoIC), total revenue in Vietnam’s IT industry in 2016 is estimated at VND939.4 trillion ($42.1 billion), an increase of 10 per cent against 2015, accounting for 70.22 per cent of total revenue in the ICT industry.

It also contributed VND93.9 trillion ($4.2 billion) to the State budget, accounting for 64.38 per cent of all State budget contributions.

The military-run Viettel continues to be No.1 in the local telecommunications and ICT industry, with high revenue, profits, and State budget contributions last year.

It was estimated to have earned VND226.5 trillion ($10.15 billion) in revenue, equal to 100 per cent of its annual plan, while pre-tax profit was VND43.2 trillion ($1.93 billion), or 101 per cent of its annual plan. It contributed VND40.4 trillion ($1.8 billion) to the State budget.

Compared with 2015, 2016 revenue increased VND3.8 trillion ($170 million) while profit fell VND2.6 trillion ($116 million). Return on equity was 34.1 per cent.

The group will move from a telecoms services provider and become a technology enterprise, joining the global Top 20 in the process by 2030.

“The group will not only provide telecoms services and information communications and technology,” CEO Nguyen Manh Hung announced at Viettel Global’s tenth anniversary celebrations.

“It will also participate in researching and producing high technology equipment.”

Prime Minister Nguyen Xuan Phuc told the ceremony that efficient overseas investment has become a dynamic and vital resource for Viettel’s development and such achievements have inspired and created confidence among Vietnamese enterprises to do likewise.

The military-run company had 7.4 million new subscribers in 2016, bringing its total to 90 million, including 62.3 million domestic subscribers and 27.7 million overseas subscribers.

Its nine international markets, which it has operated for over three years, earned profits. Peru and Burundi recorded profits after two years in operation, while Cameroon and Tanzania are yet to record profits after one and two years.

In its nine international markets, Viettel was No.1 in Laos, Cambodia, Timor Leste, Mozambique and Burundi.

In Vietnam, the group was fourth among telecom operators four years ago but is now the leading company, while it took three years, one year, and six months to lead the local market in Cambodia, Mozambique and Burundi, respectively.

Annual growth in these markets is 20-30 per cent, ten-fold higher than the growth in the global telecommunications industry.

MobiFone, the second-largest local mobile network operator, saw revenue reach VND38.4 trillion ($1.72 billion) in 2016, equal to 107.2 per cent of its annual plan and up 14.5 per cent against 2015.

Pre-tax profit was estimated at VND5.2 trillion ($233.2 million), while return on equity was estimated at 25.6 per cent. It contributed VND4.6 trillion ($206.2 million) to the State budget.

Meanwhile, the Vietnam Post and Telecommunications Group (VNPT) recorded high growth in 2016 compared to 2015.

It successfully implemented its restructuring plans under Decision No. 888 approved by the Prime Minister and continued to conduct restructuring in its entire production and business in telecommunications services and ICT.

VNPT Chairman Tran Manh Hung said that after two years of restructuring the group has secured healthy financial resources.

Its operational model is in three parts: service - infrastructure - business.

The group has transformed from providing telecommunications services to multiple services and solutions.

2016 revenue was VND135.2 trillion ($6.06 billion), up 7 per cent year-on-year, while profit was VND4.3 trillion ($192.8 million), up 20.3 per cent and equal to 102 per cent of its annual plan.

Revenue from telecommunications and ICT was VND127.4 trillion ($5.71 billion), up 7.6 per cent against 2015.

Consolidated revenue was VND53.8 trillion ($2.4 billion), an increase of 6.3 per cent against 2015.

Its subscriber numbers totaled 38.6 million at the end of the year, including 31.6 million mobile subscribers, 6.5 million higher than in 2015 and accounting for 23.71 per cent of all mobile subscribers.

The number of new broadband internet subscribers was 3.8 million, up 700,000 against 2015, including fiber-to-the-subscriber (FTTx) subscribers of 1.6 million, double the figure last year.

It targets revenue of VND19.5 trillion ($877.5 million) in the 2016-2020 period, which would give it a market share of 33 per cent and rank it second in the mobile network market.

Profit is to be VND24.1 trillion ($1.08 billion), double the figure in the 2011-2015 period, while State budget contributions are expected to be VND21.1 trillion ($949.5 million).

At its subsidiary Vinaphone, the group has built a system of sales channels with 160,000 retail points, and sales employees increased from 4,000 to 15,000.

“The group’s profit doubled after years of restructuring,” CEO Pham Duc Long said. “Many weak points in the previous operational system have been resolved.”

In August VNPT proposed that the government allow it to secure a 20 per cent stake in MobiFone.

In 2014 it officially transferred ownership of MobiFone to MIC, which said it would be equitized before July 2016 but that deadline has now passed.

Besides the three giants, small operators also recorded solid growth in 2016. The Vietnam Post Corporation (VietnamPost) earned VND11.9 trillion ($533.6 million) in consolidated revenue, an increase of 35.8 per cent.

Consolidated pre-tax profit was estimated at VND185.5 billion ($8.32 million), up 20.6 per cent, and its return on equity was 1.6 per cent.

VTC’s CEO Dam My Nghiep said it has been officially granted a license by the State Bank of Vietnam for intermediary payment services, including payment gateway, e-wallet, and collections and payments, which are favorable factors in it expanding its markets and partnerships.

The group addressed losses of VND384 billion ($17.2 million) over three consecutive years and earned a profit in 2016, with consolidated revenue estimated at VND5.2 trillion ($233.1 million), up 39 per cent against 2015, pre-tax profit VND180 billion ($8.07 million), up 46 per cent, post-tax profit VND167.9 billion ($7.5 million), up 51 per cent, and State budget contributions VND520 billion ($23.1 million), up 8 per cent. Return on equity was 13.1 per cent, a 48 per cent increase against 2015.

Prospects in 2017

As the telecoms market reaches saturation point and revenue and profit from mobile subscribers begins to decline, telecoms providers must develop value-added services in the years to come.

VNPT has said that this year will be more challenging due to MoIC’s policy changes, particularly in managing pre-paid subscribers, and this will affect the group’s sales channels and customer approach.

Mr. Long said that Vinaphone is preparing for these changes to record growth in 2017, and its goal is to grow by at least 10 per cent and 15 per cent in revenue and profit, respectively, against 2016.

Expecting modest growth this year, VTC’s revenue estimate is the same figure as in 2016 but its profit target is higher.

According to Chairman Luu Vu Hai, VTC needs to grow slower in 2017 after devoting its efforts to addressing losses. Its goal is to expand investment in ICT and become involved in ICT projects such as e-government and intelligent transportation and to reinvest in research and development.

Viettel proved its pioneering approach to providing more benefits to customers not only in its home country but also in the global operations when it officially scrapped mobile roaming charges on subscribers using Viettel (Vietnam), Metfone (Cambodia), and Unitel (Laos) networks, from the beginning of this year, with customers only subject to local fees.

“No country in the world has removed mobile roaming charges,” CEO Hung said. “EU countries have discussed the issue but gone no further.”

For 2017, the military-run group will focus on M&A deals for potential startups by eyeing global startups and promoting the establishment of a venture capital fund.

Most major telecoms companies around the world have venture capital funds and with its target of becoming among the 20 leading global telecoms companies, Viettel has decided to follow suit.

Despite not announcing revenue, profit or subscriber figures for 2016, Vietnamobile, one of the remaining small providers, has announced a growth goal of 20-30 per cent to reach its 2020 target.

Mr. Pham Ngoc Lang, Chairman of the Board at Hanoi Telecom, holds 50 per cent of the Vietnamobile Telecommunications JSC, Hutchison Telecommunications 49 per cent, and Hanoi Telecom’s CEO Trinh Minh Chau 1 per cent. It plans to increase its market share to 15 per cent by 2020.

To do so it will invest $450 million in 2016 to expand its 3G network coverage in most cities and provinces in Vietnam and have close to 90 per cent coverage by the end of this year.

The company has been studying and assessing market demand to prepare for investment in 4G.

Four telecom providers - Viettel, Vinaphone, MobiFone and Gmobile - will begin rolling out 4G services this year, with FPT and Vietnamobile yet to receive approval to move up from 3G. 4G development, combined with increasing demand for advanced IT services, is set to drive growth in the telecoms industry.

According to a recent study by Boston Consulting Group, much of the demand is predicted to come from the country’s rising middle-income segment, which currently numbers an estimated 33 million and by 2020 one-third of the population will fall within the middle-and high-earning brackets, deepening the potential customer pool.

Local insiders say that the industry has been successful in expanding 3G services for many years but service quality remains weak, as the local providers have focused on 3G charges to compete.

4G will be an opportunity for them to change their market share and 4G services should be developed with multiple services and attractive content.

This will be the greatest challenge facing local providers in the foreseeable future.

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Quelle/Source: VietNamNet Bridge, 19.02.2017

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