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Prepaid is star of Vietnam’s mobile year

SINGAPORE-The dominant rise of prepaid cards compared with subscription-based accounts has been the defining element of Vietnam’s mobile phone environment during the last six months.

Almost entirely due to the introduction of these cards, by the end of May, the number of mobile-phone users had reached the 500,000 level for the first time ever in Vietnam. This represented a rise of 57.7 percent in overall subscribers since the beginning of the year.

Otherwise, the market promised plenty in terms of market deregulation, greater competition and more advanced services, but delivered little in the way of concrete results.

Vietnam’s mobile-phone market will be the first part of the telecommunications environment to be liberalized as part of a thorough deregulation, according to Tran Ngoc Binh, deputy secretary general of Vietnam’s Department General of Post and Telecommunications (DGPT), the country’s regulatory body.

“Market deregulation will proceed from domestic services to international services, from value-added services to basic services, and from mobile services to fixed services,” she said at the CommunicAsia conference in Singapore in June.

Tran gave no timetable for the deregulation of the mobile market, where foreign companies are restricted to business cooperation contracts (BCC), which afford less freedom to operate independently than joint ventures.

With no firm moves to open the market, the recent wireless focus remained on new services, principally relating to prepaid cellular subscriber identity module (SIM) cards.

Prepaid card accounts, which became available only in October 1999, increased from a total of 70,155 at the end of 1999 to 254,042 at the end of May, a 262 percent increase in five months.

During the same period, subscription accounts rose 0.4 percent from 250,580 to 251,678, according to Vietnam Posts & Telecommunications (VNPT), although VNPT did not say if postpaid customers changing to prepaid card schemes were removed from the subscription accounts list.

This means that phones using prepaid cards now account for more than half the market, from a standing start seven months ago, and accounted for virtually all the market’s total growth of 57.7 percent since the start of this year.

The country’s two main operators both introduced prepaid SIM cards last year and have benefited about equally, according to VNPT figures.

VNPT-owned Vinaphone attracted 108,935 customers to its Vinacard scheme, and VMS-Mobifone, jointly operated by VNPT and Swedish company Comvik AB, picked up 145,107 customers for its Mobicard scheme, almost sustaining Mobifone’s 58-percent overall market share.

The two operators took their competition overseas, with the introduction of roaming services to a wide range of countries.

Between them, they have now obtained roaming agreements with GSM networks in a total of 29 countries.

VMS-Mobifone has agreements in 17 countries and aims to increase the countries its roaming services covers to 30 by year-end. Currently, it covers Australia, Cambodia, China, Finland, Indonesia, Israel, Malaysia, the Netherlands, the Philippines, Poland, Romania, Russia, Singapore, Sweden, Switzerland, Thailand and the United Kingdom.

Vinaphone claims roaming agreements with 12 nations and recently announced ambitious plans to spread its roaming coverage to some 60 countries by the end of 2000.

Possible competition

But the two companies, which enjoy a relatively cozy relationship due to their common control by government monopoly VNPT, may at last be in for some serious competition.

Saigon Mobile Telephone Co. (SMTC), which operates an obsolete D-AMPS system called Call-Link to around 1,000 low-end subscribers, will announce within the next two weeks a tie-up with Korea’s SK Telecom for a new network, according to SMTC sources who declined to be named.

If the network goes ahead, it seems certain to be based on CDMA technology, as SK Telecom is a CDMA-only operator.

Apart from providing competition to VNPT and becoming Vietnam’s first CDMA network, the deal will come as a blow to Singapore Telecommunications (SingTel), the overseas partner in Call-Link that has been negotiating for several years to operate a CDMA network in Vietnam. Likely, if SK Telecom forms a BCC with SMTC, the SingTel BCC in place will lapse.

The impact of a well-funded alternative network would be considerable, especially as Vinaphone and Mobifone have apparently abandoned plans to achieve greater operational efficiency by merging their similar networks.

“It would be very difficult to merge the networks as one of them is jointly operated by a foreign company, and the other is wholly owned by VNPT,” a DGPT official said at CommunicAsia.

Maintaining the illusion of competition could prove to be a more difficult trick to pull off for VNPT if a formidable alternative emerges in the shape of CDMA.

Subscribers, long accustomed to the frustrations of dealing with a near-monopoly, must be hoping that the rest of 2000 brings more exciting advances than the last year has seen.

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