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Telecoms and technology report
(Forecast closing date: December 11th 2009)
Total IT spend, international comparison
(US$ bn) Vietnam US Japan China Germany
Source: Economist Intelligence Unit.
2005 a 1.2 419.2 101.7 42.9 78.8
2006 a 1.5 455.6 106.9 48.7 74.8
2007 a 2.0 493.2 108.5 60.6 85.0
2008 a 2.2 503.6 124.1 68.4 92.9
2009 b 2.1 493.0 125.7 74.5 82.7
2010 c 2.3 505.6 127.2 83.6 84.8
2011 c 2.7 527.3 128.5 97.3 89.9
2012 c 3.1 550.3 131.2 112.0 95.6
2013 c 3.5 574.8 135.1 129.5 101.5
2014 c 4.0 600.5 139.1 149.8 107.8
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Vietnam"s telecommunications industry has experienced rapid growth in recent years, and this is particularly true in the case of the mobile-phone and Internet sectors. Vietnam"s membership of the World Trade Organisation (WTO), which took effect in January 2007, will open up the industry to greater private competition from both foreign and domestic firms in the forecast period. This will serve to make telecoms and technology services cheaper and more accessible. However, the country’s position in the Economist Intelligence Unit"s e-readiness rankings is poor, at 64th out of the 70 countries surveyed in 2009. This is largely an indication of the country"s inadequate technology infrastructure and its low broadband penetration rate. The government plans to facilitate the upgrade of the country"s information and communications technology infrastructure and is intent on opening up the industry to greater competition. The right to invest in the sector will gradually be extended to foreign firms under the terms of Vietnam"s membership of the WTO. At present foreign firms may own up to 51% of the shares in Vietnamese telecoms firms (up from 49% before WTO accession), but this limit will rise to 65% in 2010. The government has agreed to fully liberalise the sector to foreign investment and ownership by 2012.
Income and demographics
Nominal GDP (US$ bn) Population (m) GDP per head (US$ at PPP) Private consumption per head (US$) No. of households ('000)
Source: Economist Intelligence Unit.
2005 a 2006 a 2007 a 2008 a 2009 a 2010 b 2011 b 2012 b 2013 b 2014 b 52.9 c 61.0 c 71.1 c 89.9 c 91.9 94.1 104.2 116.8 131.6 149.1 c 83.5 84.4 85.3 86.1 87.0 87.8 88.7 89.5 90.4 91.3 2,132 2,358 2,604 2,796 2,940 3,131 3,355 3,605 3,893 4,227 402 c 458 540 702 699 755 853 970 1,101 1,248 25,154 25,595 26,335 27,114 27,935 28,780 29,651 30,548 31,472 32,425
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Actual.
The mobile-phone sector will grow significantly in 2010-14. There were an estimated 86 mobile subscriptions per 100 population in 2009. The number of total subscribers will continue to rise in the forecast period, although the pace
Industry Report: Telecoms and technology December 2009
© The Economist Intelligence Unit Limited 2009
As the vast majority of mobile-phone subscriptions are pre-paid. 2005 a 1.015 2.186 9.813 2010 b 1.4 79. up from just 5.9 14.091 3.9 4.com/viewswire © The Economist Intelligence Unit Limited 2009 .715 2012 b 2.6 121.9 1. This trend is expected to continue. as the provision of services improves.2 3. drives demand.3 68.7 19.752 5.111 13.8 13. b Economist Intelligence Unit estimates.773 11. 2005 a 6.0 74. Demand.456 7. Internet service provision will also see strong growth in 2010-14 as personal computer usage increases and improvements in infrastructure. before slowing declining.846 587 2006 a 1. particularly as providers offer more services on expanded networks and costs fall.8 103.126 2008 a 1. However.3 22. However.0 93.761 13. Demand for telecoms services in rural areas will depend largely on service provision.094 11.8 82.6 per 100 people in 2004.6 110. b Economist Intelligence Unit forecasts.0 2.107 12.eiu. The majority of Vietnamese living in such areas do not have the sort of access to goods and services as their compatriots have in the major cities. There were an estimated 13.7 102.253 13.5 12.129 820 2007 a 2.9 Vietnam of expansion will slacken as the market is already becoming saturated. Industry Report: Telecoms and technology December 2009 www.486 2.763 2009 a 1.9 2.5 2006 a 8. Telecoms penetration Telephone main lines ('000) Telephone main lines (per 100 people) Mobile subscriptions (m) Mobile subscriptions (per 100 people) Source: Economist Intelligence Unit.5 14. particularly in rural areas.8 14.805 1.9 2.535 2014 b 3.7 14.009 12.7 9.397 1.3 90. owing to inefficiency and waning demand for such services. This means that customer loyalty in the market is weak.5 4.6 11.8 in 2012. Low income levels and high prices have suppressed demand for telecoms services until recently.1 108.5 96.838 1.9 41.2 114.8 14. Telecoms expenditure Telecoms investment (% of GDP) Fixed telecoms revenue (US$ m) Mobile telecoms revenue (US$ m) Source: Economist Intelligence Unit.877 a Economist Intelligence Unit estimates.7 2.9 3.3 35. c Economist Intelligence Unit forecasts.139 2011 b 2.831 4.9 2007 a 2008 a 2009 b 2010 c 2011 c 2012 c 2013 c 2014 c 9. the growth in average personal disposable income and the rapid expansion of the private sector have sharply increased demand for telecoms and technology services in urban areas. demand in rural areas is set to rise rapidly. customers can easily switch networks in order to receive the latest discount or new services.505 2013 b 2.9 main lines per 100 people in 2009.282 13. Growth in fixed-line services is likely to be weak in the forecast period. This number is expected to peak at 14.0 86.5 a Actual.2 5.
MobiFone follows closely with a market share of around 31% and VinaPhone is the third-largest player.Vietnam 10 Telecoms costs (US$) Fixed-line call (peak) Fixed-line rental (monthly) Mobile call (peak) Mobile call (off peak) Mobile connection charge a Actual.05 11. but are still counted as mobile accounts. Determining the exact number of mobile phone subscribers is difficult.com/viewswire © The Economist Intelligence Unit Limited 2009 . almost all of the country’s communes now have at least limited access to the fixed-line network. which is expected to come on line in early 2010. Moreover.4 – – – Supply. This reflects the fact that Vietnamese often take advantage of free SIM cards with a set number of minutes or texts offered by mobile carriers as promotions. Source: Economist Intelligence Unit. VNPT also operates a low-cost mobile-phone service.eiu. the SIM cards are usually discarded. and it is also the parent company of two mobile-phone operators.43 0. The government has indicated that it intends to equitise both VinaPhone and MobiFone.0 – – – 2009 b 0. as a result. according to the Ministry of Information and Communications (MIC). EVN Telecom. Thus the country"s reported mobile penetration rate can be greatly misleading. which has a market share of around 33%.5 0. The largest mobile service provider is Viettel. GTEL Mobile and Hanoi Telecom. There is good access to telecoms services in the major cities and access in rural areas is expected to improve in the forecast period. The stateowned Vietnam National Post and Telecommunications (VNPT) holds the largest market share in both fixed-line and mobile networks. VietnamMobile.06 10.2 2006 a 0. the military operates the country"s second-largest telecoms firm in terms of market share. compared with less than 60% a decade ago. has raised concerns about the capacity of networks.8 – – – 2008 a 0. A licence has recently been granted to Indochina Mobile to operate a mobile-phone service. Other domestic service providers include S-Fone.05 9. However. mobilephone service providers have been cutting tariffs and subscription fees in the face of rising competition and. The government plans to improve the quality of access through a rural telecoms development project that will make use of the existing Code Division Multiple Access (CDMA) network. b Economist Intelligence Unit estimates.05 8. given the fact that around 50% of mobilephone accounts are inactive.31 3. The government has a strong interest in the telecoms sector. After the minutes and texts are used. according to the MIC. Rising demand for telecoms services.05 11. 2005 a 0.43 0. City Phone.1 2007 a 0. Over 70% of subscriptions are pre-paid. Viettel. according to the MIC. they may struggle to raise sufficient Industry Report: Telecoms and technology December 2009 www. the government has taken steps to break the virtual monopoly of VNPT by licensing other state-owned and jointstock telecoms firms and equitising (part-privatising) a number of VNPT’s subsidiaries.6 0. although a timeframe has not been given. VinaPhone and MobiFone. and particularly for mobile-phone services. Moreover.30 3. Following a period of fairly rapid growth in telecoms.
eiu.8% in 2010.gpc.vn Viettel: www. which regulates the telecoms industry. VinaPhone rolled out its 3G network in October 2009 in 13 of the country"s largest cities and provinces.com.gov. Viettel has committed to offering its new 3G services by April 2010. S-Fone. banning people from engaging in political discussions and restricting their posts to personal matters.vinaphone. largely through improving telecoms infrastructure. Government control over Internet use may curtail demand if users are prevented from fully exploiting Internet technology (a proportion of websites are blocked by government firewalls).vn Internet Internet use is expanding rapidly: the number of users has almost doubled since 2006.vn Vietnam Telecoms Services (GPC): www.vn Vinaphone: www. However. which is also faster than GSM. VinaPhone and MobiFone received individual licences. The three leading operators are upgrading their networks to Enhanced Data GSM Environment (EDGE) technology. The network will be extended across the country in the next three years. The authorities appear to have no qualms about blocking user access to websites in a bid to prevent criticism of the party or its politics from appearing on the Internet. has awarded four licences for third-generation (3G) services (3G technology allows mobile phones to connect to the Internet. Vietnam National Post and Telecommunications: www.vnn. (GSM stands for Global System for Mobile Communications. demand for the data services that CDMA can support has been fairly flat. appears to have come under very Industry Report: Telecoms and technology December 2009 www.9m Internet users in 2009. which was equivalent to 31 out of every 100 people. there is a chance that they will attempt to roll out their 3G networks sooner than expected. A social networking site. There were an estimated 26.com/viewswire © The Economist Intelligence Unit Limited 2009 .vnpt. are popular access points.viettelmobile.com. which provides greater bandwidth than GSM. MobiFone will lag behind. but the number of Internet users will continue to grow in the forecast period. offer services using CDMA technology. Viettel. which has more than 300m active users worldwide. Facebook. and download and send e-mail). rolling out its 3G network in December 2010. while a joint licence was issued to EVN Telecom and Hanoi Telecom.mic. This target is in line with the Economist Intelligence Unit"s forecast for an Internet penetration rate of 36.11 Vietnam funds to develop their networks.mobifone.com. Meanwhile.com. which are now common in most urban areas. Earlier this year the government introduced new restrictions on blogging. Internet cafes. The MIC. although the number of people accessing the Internet at home is rising dramatically.vn MobiFone: www. Owing to strong competition between the network providers. send and receive video clips. Hanoi Telecom and EVN Telecom. and EVN Telecom and Hanoi Telecom are expected to unveil their network by mid-2010. The government hopes to increase Internet penetration rates to 35% by 2010.vn Ministry of Information and Communications: www.) Three smaller operators.
the new and largely untested legal framework for the protection of consumers and Vietnam"s poor infrastructure.6 4. despite the various impediments that exist.8 43. as young people are keen users of mobile phones.8 17. the government has said that network security is still a major hindrance to the development of e-commerce.294 2. E-readiness Economist Intelligence Unit e-business readiness rating (10=high) a Index score.684 17.7 11.711 14.73 2008 a 4.3 8.713 10.328 38.920 26.6 18. Online payment systems were launched in Vietnam in 2007 and online retailers offered their services in the country for the first time in the same year. Industry Report: Telecoms and technology December 2009 www. and a number of these services are also available via mobile phones. The banking sector has begun to offer a range of e-commerce services.eiu. but has made huge strides in recent years.152 16.03 2009 a 3. In addition.5 2.0 a Actual. Internet penetration Internet users ('000) Internet penetration (per 100 people) Broadband subscriptions ('000) Broadband subscriptions (per 100 people) Source: Economist Intelligence Unit. Available services include online account management and payment of certain types of utility and insurance bills. These include the relatively small percentage of the population who have bank accounts (around 10%).06 2006 a 3. The government is increasingly concerned that the Internet could become a hotbed of political dissent that threatens political stability.1 70. The enthusiasm for these services suggests that e-commerce will develop further in the forecast period.866 32.7 210 517 1. c Economist Intelligence Unit forecasts.2 6.12 2007 a 3.3 0.494 7. which could hinder goods delivery.486 12. 2005 a 3. and this trend is likely to continue throughout the forecast period.5 30.9 36.4 51.80 E-commerce in Vietnam is still at a modest level. b Economist Intelligence Unit estimates.5 14. The Internet is a potential thorn in the side of Vietnam"s leaders. mobile banking should take off in the medium term and this could eventually transform the cash culture in the country"s major cities. However. However.739 54.490 45.258 3. a new e-commerce law was passed that provides a legal framework for the regulation of online commercial activities.0 25.297 64.com/viewswire © The Economist Intelligence Unit Limited 2009 .Vietnam 12 close scrutiny after the site"s owners introduced a Vietnamese-language service that was designed to add to the 1m people who already use the site in Vietnam.872 21.4 21. 2005 a 2006 a 2007 a 2008 b 2009 b 2010 c 2011 c 2012 c 2013 c 2014 c 10.6 1. Source: Economist Intelligence Unit.271 13.643 5.407 0.1 60. the cash culture that still prevails in the country.
Vietnam"s hardware sector is now seeing signs of a recovery.885 1.134 37. Hardware expenditure IT hardware spend (US$ m) IT hardware spend (D m) IT hardware spend (D. with spending up by 3.4 61.1 2.6 15.923 20.773 50. 2005 a 2006 a 2007 a 2008 a 2009 b 2010 c 2011 c 2012 c 2013 c 2014 c 1.3%. In the long term.1 2. businesses) DSL annual rental costs (US$.9 2.360 16.8 17.0 1.141 20.732 57.0 17. b Economist Intelligence Unit estimates.eiu. Vietnam Datacommunications controls around 40% of the market.0 1.807 1.3 a Actual. and chipmakers are becoming more optimistic.8 26.200 7.6 3.9 11.743 1.5 2006 a 2007 a 2008 a 2009 b 2010 c 2011 c 2012 c 2013 c 2014 c 8. b Economist Intelligence Unit estimates.9 12. after growing by more than 4% in 2008. PC ownership is forecast to rise to around 29 per 100 people in 2014.300 2.9 21. Demand. businesses) VoIP call costs (US$) a Actual. from an estimated 31 in 2009. which controls around 25% of the market.6 12. the dominant Internet service provider (ISP) in the country.7 17.3 20.3 2. the Economist Intelligence Unit expects global hardware spending to contract by nearly 13% in 2009. Source: Economist Intelligence Unit.5 10.7 8.3 750.0 2007 a 142. a Actual.989 3.7 Hardware penetration Stock of personal computers ('000) Stock of PCs (per 100 people) Stock of PCs (% growth) Source: Economist Intelligence Unit.304 1. and the number of Internet users is set to increase to 71 per 100 people in 2014.261 9.com/viewswire © The Economist Intelligence Unit Limited 2009 . which has around 10%.8 29.841 28.3 2.4 22. greater incomes and improvements in Internet service provision.221 43. Interest in Industry Report: Telecoms and technology December 2009 www.0 2.5 2. is a subsidiary of the state-owned telecoms company. Viettel.222 64.7 7. Vietnam Datacommunications.8 68. sales volumes of PCs and notebook computers will rise in line with Internet usage.1 29.660 2. c Economist Intelligence Unit forecasts.0 2008 a 141.2 2.300 12.625 15. % growth) IT hardware spend (% of GDP) Source: Economist Intelligence Unit.3 750.8 24. However.142 26. we are forecasting a recovery in 2010. with around 15%. Even so. Shipments of personal computers (PCs) have been higher than expected.0 2009 – – – Supply.4 18. 2005 a 6.3 25. Expenditure will return to its 2008 level in 2011.100 10.026 30.1 34.7 15.7 7.7 28. Hardware After bearing the brunt of the business spending cuts that were introduced after the global financial crisis of late 2008.13 Vietnam Internet costs DSL connection costs (US$.4 68. It faces keen competition from three local firms: FPT. Vietnam National Post and Telecommunications.982 2.1 1.1 14.0 2006 a 143.220 22.195 24. from an estimated 17 in 2009.1 2. The government is planning to invest heavily in telecoms infrastructure in order to improve Internet services and increase Internet penetration rates. 2005 a 143.8 1.997 32.018 1.8 12.569 17. c Economist Intelligence Unit forecasts.051 17.7 1. and EVN Telecom. thanks to the economic pain that continues to be felt around the world and a stronger US dollar.
with global growth rising by 5% and 5. However. From only a handful of firms in 1998. some of which are exported.Vietnam 14 technology that integrates the functionality of televisions and PCs is also expected to rise. In the enterprise sector software systems now underpin the business processes of the world"s biggest corporations. The use of "cloud computing" will be one of the most significant IT developments in coming years. The most affordable country will have the lowest percentage and be ranked first. Affordability rank: for each country the price of an item as a percentage of monthly personal disposable income is calculated. The PC market is dominated by locally assembled non-branded models. Industry Report: Telecoms and technology December 2009 www.7% in 2009. Another notable player in the local-branded PC assembly sector is Mekong Green. which have accounted for around 70% of sales in recent years.eiu. Vietnam"s software industry has developed strongly in recent years. Yet sales of new software by the biggest providers have fallen this year and customers have been signing contracts that do not require them to make maintenance payments over such a long period. Pricing Item Desktop PC. There are also other pressure points. Software Software companies have suffered less than their hardware counterparts in the economic downturn. both IT services and packaged software will bounce back in 2010. The most famous example already offered is a suite of applications by a US firm. Software vendors also enjoy the safety net of their annual maintenance fees. Countries are ranked according to these percentages. according to the Vietnam Software Association. The investment is an explicit acknowledgement of the segment"s importance to the development of the country"s burgeoning information and communications technology sector. the sector has grown to comprise more than 700. which imitates the Office suite produced by another US company. The government is spending heavily to boost the development of the software segment. Trung Computer Manufacturing and Services produces the leading Vietnamese-assembled PC brand. but global sales will still shrink by an estimated 3. More software will be offered to customers over the Internet. The Corporation for Financing and Promoting Technology (FPT) is a leading domestic supplier of a range of technology services and products. which amount to around 20% of original licensing costs. Imported brand-name PCs include models made by Hewlett-Packard (HP) and IBM (both of the US) and Acer (of Taiwan). It produces computer hardware and software.com/viewswire © The Economist Intelligence Unit Limited 2009 . Google. and this trend will continue in the forecast period as the local industry matures. CMS. Microsoft.3% respectively. 512MB RAM (av) Price (US$) 1. There are a number of competitive local manufacturers of IT hardware. Supply. There are important reasons why software is holding up better than hardware. It also runs training centres for software experts.701 Affordability rank 57 out of 59 Note. some of which will be free.000 % of monthly personal disposable income 2. Both CMS and FPT hold original equipment manufacturer status. although the market for these items will remain small. distributes hardware and provides services for multinational companies.
Cisco Systems.com/viewswire © The Economist Intelligence Unit Limited 2009 . and the sector has been growing rapidly in recent years. blames “lax enforcement. including IBM. Much to the chagrin of a US-based lobbying organisation. The government aims to make Vietnam an attractive outsourcing location for foreign firms. resulting in losses estimated at US$257m. are already outsourcing work to Vietnam.eiu. Vu Manh Chu. HP and Compaq (all of the US). The director of the Copyright Office of Vietnam. the Business Software Alliance.15 Vietnam Business-process outsourcing has major growth potential. Nortel of Canada. and Sony and Fuji of Japan. Vietnam is the world’s tenth worst offender in terms of the level of software piracy. An estimated 85% of software used in Vietnam in 2008 was pirated. ignorance and disrespect for copyright laws” for the high levels of piracy. This compares with an average of 61% in Asia as a whole. A number of major global players. Industry Report: Telecoms and technology December 2009 www.
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