Vietnam has made significant reform to investment policies by enacting new investment laws in 2015 that will facilitate foreign investment into the telecom markets.
It’s been difficult for foreign investors to penetrate the telecom market because of government regulations that deemed telecommunications as a strategic industry that was not open to foreign investment. As a result, companies such as Viettel, Mobifone and VNPT were given monopoly status and have not been equitized or open to foreign investors.
With Vietnam a signatory to AEC (Asia Economic Cooperation) and new EU and TPP trade agreements in the works, the Vietnamese government has begun the process of planning for the initial public offer (IPO) of state-owned companies, including companies in telecommunications.
The Ministry of Information and Communications has proposed that MobiFone, one of the biggest telecom enterprises in Vietnam with 21% mobile service market shares plan for equitization in 2016.
Mr. Dau Anh Tuan, Director of the legal department of VCCI (Vietnam Chamber of Commerce & Industry), said that in the next term, Vietnam will develop IPO plans for all major telecom companies which should be considered as one of the most attractive industries for foreign investment.
HIGHLY PROFITABLE MARKET
Vietnam’s three leading mobile carriers collectively earned a profit of VND 56.47 trillion (equivalent to USD 2.52 billion) in 2015, with market leader military-run Viettel accounting for more than 80 percent of the total.
MobiFone, which owns Vinaphone, and its competitor, Viettel, raked in a total of 348.72 trillion VND (USD 15.57 billion) in combined revenue last year. Viettel has maintained industry dominance with its total revenue of USD 9.94 billion and profit of USD 2.04 billion. Operators VNPT and MobiFone earned profits of USD 147 million and USD 370 million in 2015.
Looking forward to market opening and international investment, the country’s mobile network providers have set revenue plans for the next five years that will maximize their attractiveness to both domestic and international investors.
ATTRACTION OF VIETNAMESE TELECOM INDUSTRY TO FOREIGN INVESTMENT
Despite its dynamic growth, mobile network infrastructure in Vietnam has to undergo major technology improvements for Vietnam to be considered a world-class Telco market. Consumer complaints about Vietnam’s telecom industry center around several issues including frequent internet disruptions because of breaks in undersea cables, nation-wide rollout of 4G and 3G services and consumer perception that prices for basic services are too high.
According to Dau Anh Tuan from the VCCI, the telecommunication industry in Vietnam needs significant development, the quality of its services is not good and the network technology needs improvement. This last issue, the backbone technology may lead to investment from any number of regional technology players from China, Japan, Singapore and South Korea.
Similarly, infrastructure problems in India led to the 5BARz International (BARZ) Inc., an American company, to successfully support Vodafone India by providing its plug-and-play technology to enhance indoor user experience with mobile devices in network areas. Mr. Daniel Bland, CEO of 5BARz International said that the success in India has prompted the company to expand their operations to Southeast Asia and Vietnam, with its dynamic multi-country opportunities and he believes that more technology service providers and investors will enter Vietnam in the years to come.