VietNamNet Bridge – Fifteen years have passed since the first mobile network in Vietnam (MobiFone) was put into operation. Vietnam’s mobile information market has witnessed impressive development.

MobiFone, the first mobile network of Vietnam, officially became operational on April 16, 1993. This network faced a lot of difficulties in the first two years because of lacking experience and poor infrastructure.

In 1995, MobiFone signed a business cooperation contract (BCC) with Sweden’s Comvik Group to build and develop its network. Since then, MobiFone has grown powerfully thanks to cooperation, technology and experience transfer, etc. with Comvik.

When MobiFone began operating strongly, the Vietnam Post and Telecommunications Corporation (VNPT) set up a board to build the second mobile network named VinaPhone in 1996.

This board learnt a lot of experience from MobiFone and Comvik’s experts. Over one year later, VinaPhone was put into operation (June 14, 1997).

Vietnam then had two mobile networks but most of the new services, policies and technologies originated from MobiFone. But as both of them were under VNPT’s management, they offered the same services and followed the same policies. The only difference between them was customer care services. MobiFone, with the assistance of its foreign partner, supplied more professional services.

Development with new factors

In July 2003, S-Fone, the first CDMA-based mobile network in Vietnam, was inaugurated. In late 2004, Viettel Mobile, the third GSM-based mobile network, also became operational.

From then till the end of 2006, Viettel Mobile was praised as a phenomenon in the mobile market, providing services at low charges. In this period (2004-2006), Viettel Mobile gained the highest growth rate among mobile networks.

Besides Viettel Mobile’s dynamism in business, another significant factor contributing to its success was the large gap between the charges of Viettel Mobile and those of MobiFone and VinaPhone. The latter two were not allowed to cut their charges because they held the major market shares. Moreover, both VinaPhone and MobiFone’s expansion was hindered by complicated formalities and procedures.

Not allowed to reduce charges to the same levels as Viettel Mobile, MobiFone and VinaPhone focused on improving their services, upgrading technology and solving investment-related matters. MobiFone gained great leaps in service quality and prepared carefully to apply the most advanced technology of GSM network. The firm professionally invested in its trademark and imprinted itself on its clients’ minds as a mobile network of the best quality.

Market turning-point

In 2006-2007, the mobile information market welcomed two more CDMA-based networks, HT Mobile and EVN Telecom. Yet, besides its impressive promotion campaign in the first days, HT Mobile didn’t make any impression while EVN Telecom proved its position for wireless fixed phone service only.

In this period, the two leading networks, MobiFone and Viettel Mobile, ran a fierce race. Viettel Mobile still maintained its growth rate and low-charge advantage. MobiFone, after solving problems associated with investment formalities, sped up the expansion of its network. In October 2007, the Ministry of Information and Communications announced the results of its quality inspection of mobile networks and MobiFone received most of the accolades. Notably, MobiFone’s voice quality reached 3.576 points – equal to the quality of fixed phone service.

When the Ministry of Information and Communications made MobiFone the standard network for quality, the mobile information market of Vietnam entered a new period: competing for quality.

In the second half of 2007, though Viettel Mobile’s charges were lower than those of MobiFone, the latter network exceeded Viettel Mobile in the number of new subscribers thanks to higher service quality.

What is happening now?

In early 2008, the market began burning when the three leading GSM-based networks MobiFone, VinaPhone and Viettel Mobile reduced their charges to the same level, which are reasonable for most clients.

For the first time mobile networks are competing on a fairly equal playground in terms of charges and the biggest difference between them is service quality and trademark.

While GSM-based networks are entering a new period, CDMA-based networks are trying to find a way out. HT Mobile officially announced the death of its CDMA network to turn to GSM network. EVN Telecom hasn’t found a way to develop its E-Mobile service while S-Fone, despite its great effort, can’t compete with GSM-based networks.

What will come?

According to telecom experts, ownership model will be the key issue of mobile networks in the coming time.

The three GSM-based mobile networks – MobiFone, VinaPhone and Viettel Mobile –, which account for more than 90% of the market, are wholly owned by the state.

According to the development experience of mobile networks in other countries, after gaining success, if a network still maintains the wholly state-owned form for a long time, it will not be able to develop further because that ownership structure is not good in a fiercely competitive environment.

At present, MobiFone is the sole mobile network conducting equitisation. It plans to select a strategic partner and perform initial public offering (IPO).

“We are speeding up to transform into a joint stock company because this form is the most appropriate for MobiFone’s development in the new situation,” said MobiFone’s Director Le Ngoc Minh.

(Source: TP)