Huge opportunities await foreign investors in Vietnam’s telco industry
Vietnam’s telecommunication market is becoming more attractive to foreign investors as it has returned to the growth path in the first half of 2019 after a long period of saturation.
Domestic mobile network operators are racing to test and roll out 5G services.
Foreign investors are having big opportunities in Vietnam’s growing telecom sector as the government considers it a key driver for the country’s development in the digital economy and steps up the divestment from state-owned telco corporations.
According to experts, the Vietnamese government’s strategic plans on the Fourth Industrial Revolution, smart cities, startups, and the National Innovation Network Program, enabled by state-of-the-art 4G and next-generation 5G Internet of Things mobile telecommunications networks, is clearly helping the ICT sector continue to record strong revenue growth.
Sesto E Vecchi, managing partner of international law firm Russin & Vecchi, said there is room to grow for foreign investors in Vietnam’s telecommunication industry. The number of households with internet access at home is only 27 per 100 households while only 9.3 percent of Vietnamese households have fixed-line telephone.
The number of mobile subscribers with 3G data connection is also still below the world average (39 subscribers per 100 people) while the number of subscribers with 4G data connection is much lower and the 5G network has only been deployed on trial basis in Vietnam.
Data demand is on the rise in Vietnam and will keep increasing in the near future, Sesto said, citing predictions from the Ministry of Information and Communications (MIC) and telecom experts that the number of 4G subscribers will increase by over nine-fold from 2019 to 2024.
Meanwhile, the government is speeding up to finish the divestment from the country’s giant telco corporations, namely MobiFone and VNPT, in 2019 and 2020 to meet the country’s commitments in newly-signed trade agreements.
Besides, opportunities exist for foreign exporters in providing equipment and infrastructure and value-added services, such as developing wireless and alternative broadband technologies as well as partnering with established network operators to provide 3G/4G/5G services. Besides, Pay TV infrastructure and media broadcasting services, among others still have much room to grow.
In addition, since the satellite-based telecom market is not yet developed in Vietnam, it is expected there will be an opportunity for foreign companies to provide satellite services into Vietnam on a cross-border basis.
Vietnam’s telecommunication market is becoming more attractive to foreign investors as it has returned to the growth path in the first half of 2019 after a long period of saturation. It is expected to become even more vibrant in the time ahead as carriers are racing to test and roll out 5G services.
A MIC report showed that the total number of mobile subscribers in the first six months of 2019 reached 134.5 million, up 12.3 percent over the same period of last year. Such a high figure indicates a recovery in the market after a long period of sluggishness.
Analysts said that such a positive result was due to several major policy changes taken by the MIC, first of which is the mobile number portability service introduced in late 2018.
Besides, the MIC licensed 5G trials to three major carriers, giving way to a technological race which is expected to become fierce in the months ahead. Military-run Viettel has announced the successful testing of the fifth-generation wireless technology in Hanoi and is expanding trials in Ho Chi Minh City. VNPT Vinaphone and Mobifone are also gearing up to test the technology in major Vietnamese cities.
The MIC has also worked with the Vietnamese central bank to formulate a plan that allows mobile carriers to pilot mobile payment, a move lauded as a breakthrough to help reduce cash payments, make the national financial market more transparent, and open new growth opportunities for mobile carriers. Hanoitimes
Mr. Sesto E Vecchi, Managing Partner at Russin & Vecchi, and Mr. Chu Bao Khanh, Associate, talk about the prospects for Vietnam's telecommunications industry attracting foreign investment.
New entrants will face certain obstacles given the changes in Vietnam's telecoms market, though interest from foreign investors remains.