BMI View: Although Vietnam's telecoms sector is generally exhibiting declining growth momentum we believe the market still harbours significant potential given that the bulk of consumers are using basic, lowvalue services. The 3G sector is particularly attractive as consumers have yet to see the benefits of the service, in addition to other hindrances to adoption such as a lack of content. However, the competitive landscape is dominated by state companies, leaving little opportunities for foreign players.
Key Data:
- We believe that mobile sector grew by 9.7% in 2012, down from 14.1% in 2011. We forecast the momentum to decline to an average of 2.9% from 2013 to 2017.
- Vietnam fixed-line industry is rapidly contracting; we are forecasting the penetration rate to decline from an estimated 8.1% in 2012 to 4.3% in 2017.
- The fixed internet and broadband sectors are exhibiting weak growth, and we expect the trend to continue largely due to mobile substitution. We envisage 5.0mn fixed broadband subscribers in the country at end-2017.
Key Trends And Developments
Vietnam's Global Telecommunications (GTel Mobile), which markets under the brand Gmobile, has reportedly signed a principle agreement with the Vietnam Posts and Telecommunications Group (VNPT) on roaming services. VietNamNet Bridge reported in January 2013 that the network sharing agreement between Gmobile and VNPT would be implemented in 2013. Smaller operators have, in general, proved unsuccessful in convincing larger players to enter into network sharing agreements.
VietNamNet Bridge citing VNPT's deputy head of the business division, Vu Tien Duong, has reported that the group could be incurring losses of as much as trillions of Vietnamese dong a year. VNPT said in January 2013 that it had only 5mn subscribers, down from a peak of 13mn. Additionally, subscribers are using less of the service even though they continue to own the line.
Vietnam retained its 16th position in BMI's Asia Pacific Telecoms Risk/Reward Ratings, although its telecoms ratings score has declined from 43.8 the previous quarter to 42.7. The decrease was largely due to the skewed competitive landscape and operators' low ARPU levels. We expect private consumption to grow at a robust pace of 5.6% in 2013. However, we note that the risk of a sustained collapse in exports and further bankruptcies among small and medium enterprises, could potentially lead to widespread job losses in export-driven sectors. Uncertainties over the outlook for employment could, in turn, prompt households to cut back on spending.