Mobile charges to decrease

Mobile phone connection charges are anticipated to continue declining over the year after the Ministry of Information and Communications introduced new regulations for inter-operator connection charges.

The policy on new connection fee of the ministry would create call charge price decreases from the domestic telecommunications carriers, and EVN Telecom will be no exception, said Vo Quang Lam, deputy director of the Electricity of Viet Nam’s Telecommunications.

As of mid-January, connection fees had already decreased by 30 per cent to VND500 per minute from the previous rate of VND700. The decrease was followed by a similar cut in connection charges by the country’s telecommunication networks at the beginning of March.

The price controls levelled by the ministry are expected to pass on substantial savings for telecommunication operators since connection charges currently account for 50-70 per cent of an average one minute call.

Military-run Viettel, who previously announced reductions in call rates for subscribers of 15-20 per cent in January, would follow with further reductions, according to a worker at the company who wished to remain unnamed.

But the announcements may worry investors, who historically, have noted cuts in call rates coincide with a reduction in the industry’s profitability.

In 2009, a year characterised by discounts and promotions by operators, Viettel’s profits totalled VND10,000 billion, 16.6 per cent of total revenue, compared with 20 per cent in 2008.

According to a survey by the Business Monitor International, for the same year the average revenue per user also decreased by 21 per cent (US$6 per user) due to fierce price competition.

To prevent a price war between operators, the ministry has announced plans to organise a conference this month with the country’s telecommunication enterprises to achieve consensus on price changes for 2010.

Tags: Vietnam Mobile charges, Vietnam Telecom, Vietnam telecom sector