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Average telecom revenue reveals problems

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Telecom companies have faced market saturation point Telecommunications businesses initially had the upper hand in setting profit sharing rates with digital content providers, but this trend has reversed as telecom companies face market saturation point. Value added services will be the main focus on ensuring increased average revenue per users.

About the relationship between digital content suppliers and network providers, Deputy Minister of Information and Communications Nguyen Thanh Hung said that with no users' demand, network providers could make high. However, when they were forced by the State to increase the added value, this would be surely changed.

The price of phone services stands close to the cost. It is difficult for telecommunications businesses to decrease the price to below the cost to attract customers as in the previous years.

At a seminar on telecommunications trend forecasts, Deputy Minister of Information and Communications, Dr. Mai Liem Truc, said ten years ago, telecommunications businesses had a good development due to the steadily increasing density and the falling price. However, the market was no longer good, pure phone service (voice) had asymptotic saturation, making ARPU decline. International Telecommunication Union (ITU) had warned if the price decreased to below the cost, businesses would have likely collapsed. Reducing profits would also decrease the businesses' reinvestment.

Dr. Mai Liem Truc also made recommendations for Vietnam's telecommunications businesses that policies and strategies were required to increase the rate between data and voice to 50-50 in 2015. The rate of voice and unvoice was currently 85-15, apparently the phone service was no longer increase.

At the same perspective, Deputy Minister of Information and Communications Nguyen Thanh Hung said that the telecommunications industry had been currently at the stage of saturation and price competition had been also saturated. Sales and user growth would be nothing sudden in 2012. In this trend, businesses with the purpose of increasing ARPU needed to increase added value, especially for 3G licensed companies, to bring benefits to customers.

In regard to telecommunications businesses, Bui Quoc Viet, the director of VNPT Information and Public Relations Center which manages two major mobile networks, MobiFone and VinaPhone, recommended the development of digital content must be recalculated. The development of digital content would have not been encouraged if phone services bring over 55 percent of total revenue of the telecommunications sector. If the rate had been at only 30-40 percent, the digital content industry would be developing. The State needs to have management policies in order to catch up markets and create an incentive for businesses to grow.

According to Viettel deputy general director of Nguyen Manh Hung, the percentage of revenue from the mobile data market needs to be pushed up to 50 percent, home internet from 10 percent to 60 percent. This would be a prerequisite for explosion of digital content services. However, digital content businesses should do whatever the network providers do not. "In terms of sharing, who will decide? If digital content providers do, although the rate is 90 percent, we will also accept," he said. The low ARPU would mean the non-existence of phone businesses.

Due to the development of digital content on mobile, Nguyen Manh Hung said that increase in sales of telecommunications businesses by providing health advice and electronic transcript services would be able to reduce the social costs and increase revenue for businesses.

In the field of land transport, Vietnam had issued Decree 91/2009/ND-CP, stipulating that transport businesses need to install the global positioning system (GPS) for trucks and passenger cars in order to manage and control the itinerary. With millions of vehicles being used daily throughout the country, this would be a great opportunity for 3G telecommunications businesses to grow strongly and bring greater revenue.

Source: VEN

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