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Recently Released Market Study: Vietnam Telecommunications Report Q3 2012

New Fixed Networks research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 08/21/2012 -- Growth opportunities in the Vietnamese telecoms sector appear to be diminishing due to market saturation and the dominance of state-owned entities in a highly competitive landscape. BMI believes that operators should re-evaluate their strategy and focus on trying to leverage on their existing base of subscribers to generate strong revenues. Meanwhile, the government should increase its efforts to promote a level playing field and boost ailing foreign investor confidence.

Data from the General Statistics Office (GSO) indicate that the Vietnamese mobile industry has been experiencing weak growth. We believe that the phenomenon will persist given the high mobile penetration rate. By end-2016, we envisage 132.373mn subscribers, representing a penetration rate of 141.9%. Meanwhile, we believe that the slow growth in the mobile sector could explain the stability experienced by Vietnam's fixed-line market. We forecast the number of fixed-line subscribers to gradually decline to 13.035mn in 2016, down from 14.725mn in 2012. Lastly, we predict that there will be 5.938mn fixed broadband subscribers in Vietnam at the end of 2016. The sector is expected to experience significant threat from mobile broadband solutions.

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In April 2012, Russia's VimpelCom announced that it has agreed to sell its 49% interest in GTEL Mobile to its local partner in the venture, Global Telecommunications Corporation. BMI believes consolidation and rationalisation in the Vietnamese market is urgently needed, and we see this development as further proof that foreign or private investors have little room to benefit from Vietnam's economic growth. The competitive landscape could see further deterioration if the government approves the Vietnam Posts and Telecommunications Group's plan to merge its mobile operators MobiFone and VinaPhone.

Vietnam fell to 16th position in BMI's latest Asia Pacific Telecoms Risk/Reward Ratings with a Telecoms Rating score of 42.4. Latest consumer price inflation figures, which signal a broad-based decline in inflationary pressures across the economy, reinforces our view that inflation is no longer at the top of the State Bank of Vietnam (SBV)'s agenda. Instead, we expect growing evidence that the Vietnamese economy is in the midst of a sharp correction to place increasing pressure on the SBV to speed up its monetary easing cycle in a bid to support economic growth. In lieu of falling price pressures and a worsening economic growth outlook, we continue to expect an additional 100bps worth of cuts in 2012, bringing the policy rate down to 11.00% by the end of the year.

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