Telecom giants race to break commitments in promotion programmes

Because of the fear that customers could shift to use other networks, the mobile providers continue racing to launch the promotion programmes despite admitting this to be a dangerous race.

Before MobiFone, VinaPhone and Viettel in turn conducted on-net calls for free in a year, these networks have many times held meetings to discuss promotion issues.

A source from Viettel said in a meeting that Viettel and MobiFone agreed to reduce the number of new activated subscribers to the same level but VinaPhone disagreed. At that time, 50,000 dong per kit carries an 180,000 dong account as being activated.

Hence, in the next meeting, Viettel and MobiFone decided to let VinaPhone have “a certain degree of flexibility.” As implied between the networks, Viettel and MobiFone will give a promotion for new prepaid subscriber less than 10,000 dong as compared with VinaPhone on a simcard. Thanks to achieve this agreement, the account of the 50,000 dong kit was reduced from 180,000 dong to 130,000 dong. However, the commitment death of these telecom giants did not exist long.

A network’s leader revealed, VinaPhone was the first to break this commitment despite MobiFone and Viettel still complied with the less promotion. He commented, when the growth of subscribers and revenues cannot reach the plans, such commitments will be no longer important. Increasing promotion will help them achieve the goal.”

One specialist said that VinaPhone is the dependent mobile network so it does have to suffer heavy pressure on profit targets like Viettel and MobiFone. Thus, the network is more interested in achieving the achievements of developing subscribers and revenue.

However, he also admitted that it will be very difficult to stop the race among telecom giants because stopping or reducing promotions while other networks do not will lose customers very quickly. Thus, the networks still have to make big efforts in offering more shocked programmes than competitors even though this makes the profit rate decline.

Quoting a representative of VinaPhone, factually there is no real commitment. Telecom service providers all are flexible in certain circumstances to meet customers’ demand and they have to accept lower profit. He cited, lately Viettel proposed to offer a floor price to avoid excessive charges. But, only a few days later, they themselves suddenly announced to cut down charges.

A telecommunication expert told VnExpress.net that the multi-sectoral group Viettel was more risky than VinaPhone and MobiFone in the promotion race. If the profit from mobile telecom provision decreases, the group’s international investment, fixed telephone, ADSL will face big difficulties. In 2009, Viettel only gained 675 billion dong in revenue for ADSL against 1.5 trillion dong spent on renting ADSL channels.

All telecom companies want to attract so many new customers through big promotion programmes. This is the reason for the dramatic upward of shocking promotion despite their promotions are alarming at danger level, a senior official of the Ministry of Information and Communications commented.

The ministry encouraged the providers to cut down charges and bring more utilities to all customers instead of offering shocking promotions to develop new subscribers or concentrate on one group of customers, he warned.

At the present time, management agencies already issued a draft circular on the operation of mobile telecom networks.
Accordingly, the promotion period of each network will be not exceeding 90 days per year, each no longer than 45 days, not exceeding 50 percent promotional value of goods and others. This circular will be issued on May 15 and effective from July 1, 2010.

Vnexpress

Tags: Vietnam Telecom, Vietnam telecom market