March 5, 2021

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Communications operators benefit from digitalisation

With a sharp drop in revenue from traditional telecommunications services, carriers are focusing on their digital offerings and rapidly accelerating their digital strategies.

Last year continued to witness the decline in revenue of voice and SMS in the telecommunications sector. Vietnam’s traditional telecommunication service revenue reduction trend is even faster than the world. The Ministry of Information and Communications reported that telecommunications service revenue increased by just over 0.3% last year as compared to the same period of 2019.

State-owned Viettel Group, achieved total revenue of more than VNĐ 263 trillion (US$11.4 billion), a year-on-year increase of 4.1% with a profit before tax touching just over VNĐ 42 trillion (US$ 1.8 billion).

Vietnam Posts and Telecommunications Group, VNPT, recorded total revenue of more than VNĐ 162.7 trillion (US$ 7 billion), fulfilling 95% of its plan, with a profit was VNĐ 7.1 trillion (US$ 300 million).

According to the Vietnam Telecommunications Authority, Ministry of Information and Communications, mobile service revenue is still mainly based on traditional types of services, especially voice and SMS, which account for more than 54%. Meanwhile, these services are saturated.

This is the result of a series of factors such as saturated mobile subscribers, continuously decreasing rates to compete among carriers, the popularity of calling and texting services on OTT.

Notably, the telecom market has seen a drop in data prices since 2018, causing data traffic to double or triple, but data revenue of carriers has only increased from 10-20 per cent. This trend has forced operators to shift to provide digital infrastructure and services such as digital services, fibre optic infrastructure, digital payment, and cloud services in recent years.

VNPT has deployed a wide range of products for government customers and state agencies such as the national public service portal and solutions, products for education, healthcare, smart cities and smart travel.

Do Minh Phuong, Deputy General Director of Viettel Group, confirmed that while the group still reached its target with a slight growth last year, it was due to its stable operation of the foreign telecommunications markets and the favourable exchange rate.

Traditional services decreased by 7%-10%, especially SMS with a sharp decline. Value-added services were stable and data services increased by about 20% but revenues of fixed and mobile broadband had grown strongly.

Pham Duc Long, Chairman and General Director of VNPT Group, said that VNPT’s data revenue increased by 18.9% last year. Its proportion of data revenue in total mobile revenue increased from 28.3% in 2019 to 35.2% last year. Broadband revenue grew by 5.5% while subscribers increased by 39%.

Telecom companies have expanded their service portfolio to capitalise on growth opportunities in technology, media and telecommunications (TMT) across sectors such as cloud, television and IoT (Internet of Things) in recent years.

Experts said that telecom companies in Vietnam have opportunities to strongly transform their strategy to TMT, especially as universalising 4G and 5G mobile network services and smartphones was one of the goals of the National Digital Transformation Programme by 2025. Most recently, the deployment of 5G telecommunications technology is preparing to be commercialised with an investment of up to $2.5 billion in the 2020-2025 period.

The number of subscribers using data is about 70 million currently and the growth rate has been steadily increasing in recent years. The rapid spread of smartphones is driving growth in areas such as mobile advertising and new service packages including fixed, mobile and TV services.

The Ministry of Information and Communications is also keen to convert 2G/3G devices to 4G/5G smartphones and eager to manufacture cheap 4G and 5G devices. OpenGov Asia had reported that the production and import of phones using 2G and 3G technology would stop from the beginning of July, according to a new circular from the Ministry of Information and Communications.

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