The Ministry of Information and Communications has finally issued Circular 11 to restrict mobile network promotions, after a long period of drafting and collecting opinions from related agencies.

As of July 1, 2010, mobile service providers must end their “promotion war”.

The circular stipulates that mobile operators will be permitted to use promotions like reducing the prices of SIMs, recharge cards, and the prices of mobile phones that are sold with a service pack for pre-paid subscribers.

For post-paid subscribers, permitted promotions include reducing activation charges, daily and monthly subscription rates and information fees, as well as increasing time allowancess for communication, the volume of information and the information pack when the charges are unchanged. Any other form of promotions must be approved by MoIC.

The maximum promotional reduction must not exceed 50 percent of the selling price applied before the campaign. For example, if the information charge before promotion is 1000 dong per minute, the promotional charge must be at least 500 dong per minute.

A new point in the circular is that telecom firms can present mobile charge cards as gifts, up to 100 percent of the value of the card. For example, if a customer buys a charge card worth 100,000 dong, mobile firms can present the customer another card worth up to 100,000 dong.

Promotion will be restricted to just 90 days a year and the total time limit on a single campaign is 45 days. The mobile charges in promotional campaigns by major operators must not drop lower than their production costs registered with MoIC.

Mobile service competition is very fierce. In quest of high profits, operators have launched many promotional programmes and even accepted losses to attract new customers.

Since the telecom market exploded, sales campaigns have been launched often, even several times a month. The promotional values for recharge cards were raised 50 percent to 100, 130, 150 and even 200 percent. Prize lotteries for new subscribers escalated from mere motorbikes to rewards such as tours to Europe, Innova cars and then even Mercedes autos.

In late 2009, the Ministry of Industry and Trade’s Trade Promotion Agency proposed that MoIC allow mobile operators to launch promotional campaigns with limited values of up to 50 percent of recharge cards.

The ministry claimed that the telecom market was a mess because mobile operators were always involved in promotional races. During these campaigns, mobile networks could attract 5000-8000 new subscribers a day, but most abandoned the service after they used up its promotional value.

PV