Vietnam is privatizing its telecom sector to gain growth

Vietnam is restructuring its telecom sector to gain growth

There is a huge gap between big and small operators in Vietnam, with state-owned enterprises, Viettel, Vinaphone and MobiFone accounting for 95% of the market share. As a result, smaller operators cannot compete, and have no other choice but to merge or more likely face the risk of bankruptcy.

Pham Hong Hai, Director of Telecommunications Authority in Vietnam said that the restructuring plans paves the way for the future sustainable development of Vietnam telecoms market. Under the plan, Vietnam Mobile Telecom Service Company (Mobifone) will be spun off from Vietnam Post and Telecommunications Group (VNPT) and privatized, to level the playing field and renew the momentum for growth in the Vietnamese telecom sector.

According to Mobifone’s Chairman, Le Ngoc Minh, Mobifone’s conversion from a state-owned enterprise to a private company is planned to be completed in 2 years.

Minister of Information and Communications Nguyen Bac Son pointed out that the Ministry has stepped up the pace of restructuring the state-owned enterprises in the Vietnamese telecom industry, and added that that once the VNPT restructuring process is complete, Vietnam’s telecom market is likely to receive a boost to its development.

The ministry has also directed the Vietnam Multimedia Corporation (VTC) to outline a plan to separate its digital television operations. A plan to restructure the corporation will be decided after the spin-off of the television operations is complete.

Pham Hong Hai, Director of Vietnam’s Telecommunications Authority, believes that after the market restructuring, smaller operators who are capable of taking advantage of opportunities can survive and grow. They can merge with partners or provide innovative new services based on their existing networks. One such example was the merger between military-owned Viettel and the struggling operator Electricity of Vietnam (EVN) Telecom.

VNPT posted a revenue of $5.6 billion in 2013, up 102.5% from 2012, while Viettel’s total revenue is estimated at $7.7 billion, up 15.2%. The export value of the Vietnamese Telecom and IT sector climbed to $33.9 billion in 2013, accounting for 25.6% of total export turnover ($132.2 billion).

Author: Allan Rasmussen
Managing director at Yozzo. Allan’s expertise includes the development and execution of growth strategies, market insights, trends and opportunities, new business models and strategies
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