The impact of the recent 3G license attribution on Vietnamese mobile market

1. The impact of the recent 3G license attribution on Vietnamese mobile market Ngoc-Anh Vu ngoc-anh.vu@polytechnique.org +33 6 78 61 83 44 Telecom ParisTech 09 May 2009

2. Agenda • Vietnamese mobile market before 3G license attribution • Winners & engagement • Potential services • Impacts on holders & non-holders of 3G licenses • Wild-card

3. Seven MNO and one MVNO are currently present in Vietnamese mobile market Mobile branch of Electricity of Vietnam BCC between Ministry of Public Security and Russian Vimpelcom BCC between Saigon Postel Group and Korean SK Telecom BCC between VNPT and Swedish Comvik 1993 Jul. 2003 June 2006 Nov. 2007 1996 Oct. 2004 Jan 2007 April 2009 Mobile branch of VNPT Mobile branch of Viettel Telecom, an economic entity of Ministry of Defense MVNO of Vietnam Media Corporation MNO: Mobile Network Operator MVNO: Mobile Virtual Network Operator BCC: Business Corporation Contract VNPT: incumbent Vietnam Post & Telecommunication Corporation BCC between Hanoi Telecom and Hongkongese Hutchison Telecom

4. Local market is relatively concentrated: 3 leading actors have more than 93% market share (in volume) Market share (in volume) in June 2008 (latest availably consistent information) Total: 48 millions subscribers Penetration rate: 58% (*) • Three clear leaders • Viettel: lower segment with aggressive pricing plans • Mobifone: higher segment with focus on client relationship management • Vinaphone • S-phone missed Vietnamese market dynamics • EVN did not meet expected results • HT Mobile decided to end its CDMA services at early 2008 and changed its trademark to Vietnamobile Source(s): MIC (*) Multiple SIM ownership means penetration rate is far lower

5. In April 2009, four 3G licenses are attributed to 5 players who have different engagement levels Viettel Vinaphone Mobifone EVN Telecom & Vietnamobile Investment First 3 years US$ 800M US$ 600M US$ 350M US$ 370M US$ 280M US$ 93M US$ 93M US$ 37M Security money Network deployment • 9 m: 87% population (5000 Nodes B) • 1 yr: 9000 Nodes B • 3 yr: 100% population • Q3’09: 20% population • 3 yr: 50% population • 6 yr: 75% population • 3 m: 2000 Nodes B • 1 yr: 100% big suburbs • 3 yr: 98% population • 9 m: 50% population (2500 Nodes B) • 3 yr: 5000 Nodes B Deployed technology HSPA WCDMA HSPA N/C Service launch 9 months after license allocation (i.e. April 2010) Q3 ‘09 3 months after license allocation (i.e. Oct. 2009) Q1 ‘10

6. One of the main drivers of 3G network deployment is to provide multimedia services in order to increase ARPU Revenue - Cost Profit = Subscribers ARPU x Web2.0 trend TV/video Customer needs for multimedia services Web-browsing Music Nomadic usage M-Commerce ARPU: Average Revenue Per User

7. Mobile TV could be a successful service thanks to premium content and suitable data plans TV/video Music • Field experience elsewhere • Obstacles • Local lifestyle is unfavorable for mobile music usage • Piracy would be too strong for mobile music to become a real success • Field experience elsewhere (before flat data plans) • Nokia-TeliaSonera in Finland : 20’ per day • Orange France : 40’ per month, 54% at home • SFR (France) : 20’ per day, 50% at home • Opportunities • Premium content (sports) is the main driver for Mobile TV • Alternative TV screen is preferred in certain conditions • Obstacles • Flat data packages are necessary to develop services • 3 Music Store • 500k tracks • £ 0.99 (€1.48) per track • Dual download (both on PC hand handset)

8. M-commerce could become the next killer application in local market M-commerce Nomadic usage • Field experience elsewhere • Strategic partnership on embedded PC-card • Opportunities • Nomadic corporate usage would increase rapidly with the growing awareness of information security • Obstacles • 3G PC-card would face a strong competition from wifi networks • Field experience elsewhere • Opportunities • Vietnamese population uses micro-payment every single day • Obstacles • A strong synchronized deployment between different operators or with financing institutions is essential Felica contract (million)

9. Suitable business models would boost mobile Web and Web2.0 services Web2.0 Web-browsing • Example of services elsewhere • Video blog, post with MMS • Facebook in Iphone • Opportunities • Vietnamese young population is addicted to online social networks • Obstacles • Suitable business partnership agreements are essential to develop the services • Opportunities • Vietnamese young population is eager to access web everywhere to stay update with information • Obstacles • Almost all popular website are not designed for mobile access but this is not a serious issue • Flat data packages are necessary to develop services

10. 3G holders have the opportunity to define the local market evolution Market readiness in the next 3 years Mobile TV Pros & cons for the 3G license holders Marketing impact Mobile music + Market preemption M-commerce + Risk on an early & undefined 3G service market Normandic usage - Investment Web-browsing - Web 2.0 Market leaders =

11. Non-holders of 3G license would eventually withdraw from market unless they would receive strong support from regulatory bodies Gtel S-fone VTC (MVNO) Announced movement after 3G license attribution • Services not yet available • Partnership with Vinaphone to provide 3G services N/C Services not yet available Increase its market capital M&A with leading actors Segmentation of local market to find market niche Development of adapted services Creation of new business models with different partners (ISP, taxi companies, etc.) Unless they will have a strong protection from a more complete regulation

12. Wild-card

13. If 3G services will be used at nomadic usage, what would happen? Usage Mobile UMTS / HSDPA / CDMA GSM / GPRS ? Nomadic Wimax / WBS Wireless ADSL/FTTx ADSL / FTTx Dial up Fixed Bandwidth Low Bandwidth Broadband

14. Thank you!