vietnam mobile market in a regional context v6
TRANSCRIPT
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RJB ConsultantsRJB Consultants
Vietnams Mobile Market in aRegional Context
Roger BarlowRJB Consultants Limited
3rd Mobiles Vietnam Conference10th and 11th May 2006
Ho Chi Minh City
Socialist Republic of Vietnam
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1
11 Growth in Regional Mobile Markets
Growth in Regional Mobile MarketsGrowth in Regional Mobile Markets
2
22 Regional Metrics
Regional MetricsRegional Metrics
3
33 GSM/CDMA
GSM/CDMAGSM/CDMA
4
44 Data Services
Data ServicesData Services
Forecasts
ForecastsForecasts5
55
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What a difference 12 months makes.
Vietnams mobile market has taken off
The market remains the one of the fastestgrowing in Asia
Increased competition and lower pricesare key factors
Vietnams booming economy is helping
fuel this growth Demographic change is also assisting the
process
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Asia - Numbers of Mobile Subscribers 2005
393.4
7.4
75.9
45.9
94.7
38.3
19.5
34.9
4.3
21.9
30.4
9.5
0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Millions
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia Net Additional Subscribers 4Q 2005
-2000 0 2000 4000 6000 8000 10000 12000 14000 16000
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Subscribers (000s)
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia - Mobile vs Fixed Penetration 2005
30.1
106.1
6.9
20.4
74.2
79.4
74.7
40.3
97.9
96
47.7
11.4
23.6
53.1
4.1
4.5
46
54.2
17.9
4.2
43.2
59.4
10.5
7.7
0 20 40 60 80 100 120
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percent Penetration
Mobile Fixed
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia - Mobile Customer Growth Rates 2004 to 2006
-20 0 20 40 60 80 100 120
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percentage Growth
2006 2005 2004
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Market Shares in the Region
Regional Markets suggest that 2 to 3 operators
tend to dominate in most Regulation plays a part in this
Market size less so (China - 2, India Many)
Consolidation is now taking place in multi-playermarkets (India, Hong Kong)
Vietnam is now a 4 (soon to be 6) player market
Viettel has become a powerful player
EVN Telecom and Hanoi Telecom will enter this year
Will six players (plus Citifone) result in stability?
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OTHERS
Asia Mobile Market Shares 2005
0% 20% 40% 60% 80% 100%
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Vietnam Mobile Market Shares March 2006
Vinaphone
Mobifone
Citiphone
S-Fone
Viettel
Source: Vietnam News; VietnamNet Bridge; RJB Estimates
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111 Growth in Regional Mobile MarketsGrowth in Regional Mobile MarketsGrowth in Regional Mobile Markets
222 Regional MetricsRegional MetricsRegional Metrics
333 GSM/CDMAGSM/CDMAGSM/CDMA
444 Data ServicesData ServicesData Services
ForecastsForecastsForecasts555
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How does Vietnam compare?
Analysts and investors like to review a number of metricsto assess and compare mobile operators
Vietnams metrics are better accessible now ARPU key measure looked at by most:
Vietnam probably in range of US$10/month and
declining Pre-paid ARPUs may be in region of US$8/month
Not far off regional comparison group in US$10 ~
range ARPUs are falling as lower spending users come on
the networks, a trend seen not only in Asia but alsoglobally
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Asia - Average Revenue per User (ARPU) 2005
0 10 20 30 40 50 60
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
US$ per month
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Other Useful Metrics:
Proportion Prepaid Vietnam estimated at about 85% prepaid, up from 70% in 2004/5
Similar to other ASEAN countries, but as Vietnams penetrationrate increases so will prepaid proportions
Churn Most operators quote churn as a percent of new adds, resulting
in high numbers (50 to 60%) Net estimated at around 10% - but still higher than region Increased competition will drive churn higher
Minutes of Use
No official data are available for Vietnam Estimated 250 to 275 minutes per month on average Judging by usage patterns no reason to suggest that lower than
region
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Asia - Proportion of Subscribers Prepaid 2005
0 20 40 60 80 100 120
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percentage
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia - Monthly Churn Rates 2005
0.0 2.0 4.0 6.0 8.0 10.0 12.0
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percent Churn
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia - Minutes of Usage 2005
0 50 100 150 200 250 300 350 400 450 500
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Minutes per month
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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111 Growth in Regional Mobile MarketsGrowth in Regional Mobile MarketsGrowth in Regional Mobile Markets
222 Regional MetricsRegional MetricsRegional Metrics
333
GSM/CDMAGSM/CDMAGSM/CDMA
444 Data ServicesData ServicesData Services
ForecastsForecastsForecasts555
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GSM is still dominant in region
Vietnam, like most of SE Asia, remains GSM2/2.5G focused, although CDMA 2000 systemswill get a boost this year
3G is changing this:
CDMA 1x and 1x EV-DO deployments are increasing Being deployed for both mobile and WLL applications
CMDA at 450 MHz well suited to rural environments
W-CDMA later to market, but clear evolution pathfrom GSM 2G/2.5G to 3G & then HSDPA
Incumbents with existing GSM infrastructure willalmost certainly move to W-CDMA
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Excludes Fixed Wireless Deployments
Asia - Cellular Standards 2005
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
GSM/UMTS CDMA Other
Source: Merrill Lynch, Global Wireless Matrix 3Q 2005; RJB Estimates
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UMTS/3G Deployment in Asia (WCDMA)
Country Network Date of Launch
Japan NTT DoCoMo 2001
Vodafone KK 2002
Korea SK Telecom 2004
KTF 2004
PCCW/Sunday July 2005 (Data)/March 2006
(Voice)
StarHub April 2005
Malaysia Maxis December 2004
Taiwan FarEasTone July 2005
VIBO Telecom July 2005
Brunei B-Mobile December 2005
Celcom May 2005
Hong Kong 3 January 2004
CSL 1010 December 2004
SmarTone December 2004
Singapore Singtel December 2004
M1 February 2005
Source: GSM Association & UMTS Forum websites; RJB Estimates
CDMA 2000 Deployment in Asia (1)
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CDMA 2000 Deployment in Asia (1)
Country Network Type Date of Launch
Bangladesh PBTL & RanksTel Mobile/WLL 800 MHz 1X 2Q 2006
WLL in service
AZ Coms Mobile/WLL 800 MHz 1X 4Q 2006
China Unicom Mobile 2100 MHz 1X EV-DO Trials
Mongolia SkyTel Mobile/WLL 800 MHz 1X 3Q 2004 (EV-DO TBA)
WLL 450 MHz
WLL 450 MHz
Mobile 800 MHz
Mobile/WLL 800 MHzMobile/WLL 450, 800& 1900 MHz
Mobile 800 MHz
WLL 450 MHzWLL 800 MHz
Mobile/WLL 800,1900 MHz
Cambodia Cambodia Shinawatra 1X 3Q 2004
China China Telecom 1X 1H 2003 Trials (TibetProvince)
China Unicom 1X March 2003
India Several operators 1X 2002/03Indonesia Several operators 1X 2002/4
1X EV-DO - TBA
Japan KDDI 1X EV-DO 2003
Laos Lao Telecom 1X (EV-DO TBA)Malaysia Telecom Malaysia 1X - TBA
Nepal Nepal Telecom; United Tel 1X 2005
1x EV-DO - TBA
Source: CDMA Development Group website; RJB Estimates
CDMA 2000 Deployment in Asia (2)
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CDMA 2000 Deployment in Asia (2)
Country Network Type Date of Launch
Pakistan Several operators Mobile/WLL 450 &1900 MHz
1X in service
1X EV-DO 3Q 2006
Philippines Express Telecom Mobile 800 MHz 1X - TBA
Sri Lanka Several Operators WLL 800 & 1900 MHz 1X in service
1X EV-DO - Trial
SPT Mobile/WLL 800 MHz 1X 2003
1X EV-DO - Trial
Mobile 1700 MHz
LG Telecom Mobile 1700 MHz 1X EV-DO - 2002
Mobile 800 MHz
Mobile 800 MHzMobile 800 MHz
Mobile/WLL 450 MHz
Korea KT Freecell 1X EV-DO 2002
Taiwan AsiaPac Bband Coms 1X EV-DO 2003
Thailand CAT & Hutchison CAT 1X EV-DO 2003Vietnam Hanoi Telecom 1X EV-DO 3Q 2006
EVN Telecom 1X -2005 (WLL)1X EV-DO - 3Q 2006
Source: CDMA Development Group website; RJB Estimates
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111 Growth in Regional Mobile MarketsGrowth in Regional Mobile MarketsGrowth in Regional Mobile Markets
222 Regional MetricsRegional MetricsRegional Metrics
333 GSM/CDMAGSM/CDMAGSM/CDMA
444 Data ServicesData ServicesData Services
ForecastsForecastsForecasts555
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Data Service Usage in Asia
In many countries in Asia SMS is used extensively,particularly by the young
WAP not successful, although GPRS usage growing fast HSDPA will boost WCMDA data capability significantly
CDMA 1X EV-DO roll-out resulting in:
Higher data usage rates (Rev A: 3.1 Mbps downlink) Use of CDMA for data access applications
Examples of growth in data usage rates: China: 2002 2% of ARPU; 2005 20% of ARPU
Indonesia: 2002 12% of ARPU; 2005 28% of ARPU
Korea: 2002 8% of ARPU; 2005 18% of ARPU
Malaysia: 2002 6% of ARPU; 2005 18% of ARPU
Statistics Source: Merrill Lynch, Global Wireless Matrix 4Q 2005
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Asia ARPUs - percent Data Services
0 5 10 15 20 25 30 35 40 45 50
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percent
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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Asia Data Revenues % of ARPU 2003-2005
0 5 10 15 20 25 30 35 40 45 50
CN
HK
IN
ID
JP
KO
MY
PH
SG
TW
TH
VN
Percent
2003 2004 2005
Source: Merrill Lynch, Global Wireless Matrix 4Q 2005; RJB Estimates
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RJB ConsultantsRJB Consultants
111 Growth in Regional Mobile MarketsGrowth in Regional Mobile MarketsGrowth in Regional Mobile Markets
222 Regional MetricsRegional MetricsRegional Metrics
333 GSM/CDMAGSM/CDMAGSM/CDMA
444 Data ServicesData ServicesData Services
ForecastsForecastsForecasts555
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Continued Rapid Growth
Vietnam remains the fastest growing key marketin Asia
Demographic trends suggest that the boom willcontinue for at least the next 5 years, andprobably longer
As GDP and income grow Vietnams mobilepenetration has room to grow significantly Thus by 2010 we forecast:
Total market of 46 million mobiles is achievable inVietnam Mobile penetration of over 50% is thus possible
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Drivers of this Growth
Economic growth Competition Lower prices of handsets and service plans Network expansion into rural areas
Convergence between mobile and fixednetworks Demographic trends
Broadband capabilities and data usage One issue registration of pre-paid subs mayresult in one-off decrease in absolute numbers
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Key Demographic Trends
Population is ageing, with increases in key
market segments for mobile services: 25 to 39 age group will increase by 16.2% in
period 2004 to 2014
40 to 50 age group will increase by 39.3% insame period
With rising incomes the value of these twogroups over the next 5 years increases by5.4% and 7.6% respectively
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Other Demographic Factors
Labour force growing by 1.7% per annum
Household incomes increasing by 2.3% p.a. By 2014, 31.6% of the population will live in
urban areas
An additional 1.1 million people of working ageeach year
Number of households is increasing by 2.5% perannum
Some of these trends are Vietnam specific
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Impact on the market
Additional household income, and decrease inaverage size of households will result in
additional discretionary spending Mobile operators will need to develop messages
specific to the key market segments
Customer retention and loyalty schemes startbecoming important Successful branding (and sub-branding) a key to
success Population age profile suggests that youthmarket less important from 2010 onward
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Vietnam Mobile Subscriber Forecasts
0
10000
20000
30000
40000
50000
60000
2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Subscibers(Millions)
MPT Lower 06 MPT Higher 06 RJB 06 BMI 06
Source: RJB Estimates; BMI; MPT targets
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Vietnam Alternative Density Forecasts
0
10
20
30
40
50
60
70
2004 2005 2006 2007 2008 2009 2010 2011 2012
D
ensity%
MPT Lower 06 MPT Higher 06 RJB 06 BMI 06
Source: RJB Estimates; MPT targets; BMI; Asian Demographics
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Thank you!
Roger Barlow
www.rjb.hk
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Country Abbreviations
VN Vietnam
TW Taiwan
SG Singapore KO Korea
JP Japan
HK Hong Kong
BD Bangladesh
KH Cambodia
CN China IN India
ID Indonesia
LA Lao
MY Malaysia MM Mongolia
MM Myanmar
NP Nepal
PK Pakistan
PH Philippines
TH Thailand