Mobile virtual network operators find it hard to exist in Vietnam

8/13/2019 9:49:00 AM

 The first mobile virtual network operator (MVNO) has been providing service for three months, and more MVNOs are expected to be launched. However, experts believe that it will be difficult to succeed in current conditions.


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 In late April 2019, Indochina Telecom launched ITelecom, the first MVNO in Vietnam, with the prefix 087.

ITelecom got a license from the Ministry of Information and Communication (MIC) to provide service tens of years ago. At first, the network operator intended to use Viettel’s infrastructure, but the two sides could not reach consensus on the issue.

Due to the frequency limitation (frequency band), the State only allows four companies to develop network infrastructure. The other companies have to lease infrastructure from the four companies to provide telecom services to clients.

However, others still believe they have opportunities. Sources said a Vietnamese company is negotiating with MobiFone on leasing infrastructure to develop an MVNO. In the past, VTC and FPT also intended to ask for permission to run MVNO, but they finally gave up as they could not see opportunities for success.
 
Meanwhile, a Malaysian company has decided to lease infrastructure from VNPT to provide services.

Nguyen Phong Nha, director of the Telecommunication Agency, said at the ITelecom opening ceremony that there are 120 million mobile subscribers, and only 50 million are using 3G and 4G mobile data, which means that there are still opportunities for more MVNOs to join the market.

A big challenge for ITelecom, and other MVNOs, is that they have to compete with the ‘big three’ - Viettel, MobiFone and VinaPhone – to provide services at competitive fees.

For ITelecom, the mobile network operator focuses on providing services to workers in IZs in nine cities and provinces, including Hanoi, Thai Nguyen, Vinh Phuc, Bac Giang, Bac NInh, Binh Duong, HCMC, Long An and Dong Nai. It designs diverse service packages that fit different groups of customers – low income earners, students and factory workers.

ITelecom will connect the network operators which have excessive capacity to create high-quality convenient services at reasonable prices.

However, experts doubt the capability of MVNOs to attract clients.

In principle, MVNOs can only exist when mobile network operators with their own infrastructure systems don’t have large sale networks.

Le Dang Dung, president of Viettel, thinks that MVNOs can succeed in some European countries, where the average revenue per subscriber is high. If the price is high, MVNOs, which can save investment costs as they cannot spend money on infrastructure, can cut prices.

Meanwhile, the average spending on mobile service in Vietnam is low, just VND70,000-90,000 a month. Therefore, it is difficult for MVNOs to compete to for subscribers.