Telecom operators hesitant in providing 4G services

Eight million 3G subscribers have not yet brought in expected revenues while the investment capital has totaled at 33 trillion dong. After two years of being launched, telecom operators admitted 3G was a costly game. If continuing to invest in 4G technology, they may fall into a trap any time.
According to data of Ministry of Information and Communication, 3G network has covered 93.68% of the population in the country for 2 years. However, the number of subscribers of three 3G developers has reached only more than 8 million against that of 2G subscribers at 120 million. Anyway, 3G is seen as a new network technology generation with prominent features.

Total money amount which telecom firms committed to invest 42 trillion dong in 3G network for three years from 2009 to 2011, equaling to $2.47 billion. Currently, there are four 3G service providers with total cost of 33 trillion dong to develop over 30,300 BTS. But, their revenues gained from total 3G services only attained 3.6 trillion dong.

To help customers use services perfectly, each firm will have to install at least 28,000 BTS. So, the cost for developing infrastructure is equivalent with that of building a new mobile network, estimated at $400-500 million. In order to develop a BTS, telecom firms are spending $15,000 excluding costs or switch, sales network….

Tao Duc Thang, deputy director of Viettel said that operators could fall in “trap” if considering 3G as a mobile network. Because factually, 3G is the only component to support 2G network. Then, telecom operators only need to handle with connection issues between two networks.

“3G is the extremely costly game, but the firms have no other way-out apart from continuous investment. 5,000 BTS or even 10,000 BTS will not solve any issue. To have a perfect 3G, the number of BTS must be raised to few tens of thousand”, Thang added.

Currently, the 3G users are mainly “non-residential customers”, not traditional customers. In regard of regular users who raise call costs and use services for long time, the number accounts for around 1% of total number of 2G users.

“2G now is till the main source of revenues for telecom operators. Average revenue on each 2G subscriber in Vietnam is 100,000-150,000 dong per month”, a VinaPhone official noted.

In the business plan, telecom firms expect to pour additional trillions of dong into 3G services. In which, Viettel committed to invest extra 12.789 trillion dong in next 3 years, VNPT-managed firms (VinaPhone and MobiFone) planned to invest 9.556 trillion dong in total.

Due to the problems in 3G race, so mobile service giants expressed the hesitance as talking about 4G generation. They said it is necessary to calculate further. The development of 4G technology requires a specific roadmap in which firms should focus on core network and then develop to 4G, according to Nguyen Dang Nguyen-Deputy General Director of MobiFone.

Though MobiFone was ready to use infrastructure but launching 4G is still concerned with investment efficiency. 4G should be discussed to the 2012-2013 phase, he emphasized.

Ministry of Information and Communication decided to allow 5 firms namely VNPT, Viettel, FPT Telecom, CMC and VTC to pilot 4G mobile network from September 7, 2011. The trial will last one year, and then the firms will have to auction frequency to gain 4G licensing. Pursuant to Law on Telecommunication, after the auction, firms are permitted to transfer license.

Viettel is the first mobile network operator who announced to pilot 4G services for 240 customers in two big cities (Hanoi and HCM City) from May 11. Other firms are building infrastructure. – Vietbiz24

Tags: Vietnam 4G network, Vietnam Telecom, Vietnam telecom maket