UNDERSTANDING CUSTOMERS’ BEHAVIORS TOWARDS 3G MOBILE BROADBAND VALUE ADDED SERVICES IN VIETNAM MOBILE TELECOM SERVICES COMPANY

SOLVAY-BRUSSELS SCHOOL
OF ECONOMICS AND MANAGEMENT

NATIONAL ECONOMICS UNIVERSITY

Vietnam- Belgium Master Programs
MASTERS IN BUSINESS MANAGEMENT

FINAL PROJECT
UNDERSTANDING CUSTOMERS’ BEHAVIORS TOWARDS
3G MOBILE BROADBAND VALUE ADDED SERVICES IN
VIETNAM MOBILE TELECOM SERVICES COMPANY

Supervisor: Dr. Le Lan Huong
Prepared by: Tran Thi Quynh Hoa

Hanoi 2011


ACKNOWLEDGE

First of all, I would like to extend my sincere gratitude to all Belgian and Vietnamese
professors for their informative lectures and valuable support, which have broaden my
view and knowledge.
I am also grateful to the staff of International Training Faculty of NEU for their
precious support extended to me during the whole course of study.
I owe my deep gratitude to my supervisor, Dr. Le Lan Huong, whose wide knowledge,
encouragement and enthusiastic guidance from the initial to the final level enabled me
to develop the completion of this final project.
I take this opportunity to express my sincere thanks to Professor Daniel Vanhoutte for
his quite evaluable support for his students, myself included.

I would like to express my thanks to managers and staffs at MobiFone, Vinaphone and
Viettel where I have made my acknowledgement and information collection.
I am indebted to my wonderful friends, colleagues and family members, especially
members in group 8, who encouraged me and provided me with the great support
whenever needed.
Lastly, I offer my regards and blessings to all of those who supported me in any
respect during the completion of this final project.

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TABLE OF CONTENTS
Acknowledgement......................................................................................................2
Abbreviation.............................................................................................................. 5
Lists of tables& figures..............................................................................................6
Executive Summary...................................................................................................7
INTRODUCTION...................................................................................................9
1. Research rationale.................................................................................................9
2. Research objectives.............................................................................................11
3. Research questions...............................................................................................11
4. Research scope....................................................................................................11
5. Final Project structure..........................................................................................12
CHAPTER I: RESEARCH METHODOLOGY.................................................13
I.1 Theoretical framework.......................................................................................13
I.2 Research methodology.......................................................................................15
I.2.1 Research process..................................................................................15
I.2.2 Sources of secondary data....................................................................15
I.2.3 Method to collect primary data.............................................................16
I.2.4 Data Analysis........................................................................................16
CHAPTER II: OVERVIEW OF 3G MARKET IN VIETNAM.........................17

II.1 3G technology and opportunities of 3G value added services development in
Vietnam...................................................................................................................17
II.1.1 3G technologies and its development overview..................................17
II.1.2 3G value added services and their benefits to customers....................18
II.1.3 Opportunities of 3G value added services development in Vietnam. . .18
II.2 Vietnam mobile services operators....................................................................19
CHAPTER III: MOBIFONE OVERVIEW& MOBIFONE 3G SERVICES....24
III.1 History& Organization....................................................................................24
III.2 Vision, Mission& business philosophy............................................................25
III.3 Core services...................................................................................................25
III.4 Commitment to customers...............................................................................26
III.5 Company Performance...................................................................................27
III.6 MobiFone 3G value added services...............................................................28
III.6.1 6 months results of launching 3G services.........................................28
III.6.2 Comparison of competitors’ 3G services...........................................30
III.6.3 MobiFone’s objectives for 3G services up to 2013............................32
CHAPTER IV: ANALYZING CUSTOMERS’ BEHAVIORS TOWARDS 3G
VALUE ADDED SERVICES................................................................................33
IV.1 Demographic of respondents............................................................................33
IV.2 Customers’ awareness of 3G services..............................................................34
IV.3 The level of customers’ usage..........................................................................35
IV.4 Customers’ awareness of the benefits of 3G services.......................................36
IV.5 Customers’ satisfaction towards 3G services...................................................36
IV.6 The social factors and influencing persons in customers’ decision making......37

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IV.7 Information searching for 3G services.............................................................38
IV.8 The important level of main factors in evaluating alternatives.........................39

IV.9 The way to install 3G services.........................................................................40
IV.10 Post-purchase behaviors towards 3G services................................................41
IV.11 Other findings for customers who haven’t used 3G services..........................41
IV.11.1 The reasons for customers haven’t yet used MobiFone 3G services 41
IV.11.2 Future desired services.....................................................................42
IV. 12 Summary of findings.....................................................................................43
CHAPTER V: RECOMMENDATIONS ON MARKETING ACTIVITIES
FOR MOBIFONE 3G VALUE ADDED SERVICES.....................45
V.1 Target market for MobiFone 3G services up to 2013………………………….45
V.2 Diversifying charges and tariff packages for 3G services..................................45
V.3 Concentrating on main services.........................................................................46
V.4 Improving promotion programs........................................................................46
V.5 Providing detailed information to customers.....................................................47
V.6 Improving 3G customer care services...............................................................47
V.7 Supporting 3G handset providers......................................................................48
CONCLUSION.......................................................................................................50
LIMITATION& FUTURE RESEARCH.................................................................50
References or bibliography.....................................................................................51
Annex

4


ABBREVIATIONS

ARPU

Average Revenue per User

BCC

Business Cooperation Contract

CDMA

Code Division Multiple Access

CEO

Chief Executive Office

GPRS

General Packet radio service

GDP

Gross domestic product

GSM

Global system for mobile communications

HSPA
MIC

High speed package access
Ministry of Information and Communications

MVNO

Mobile virtual network operator

MMS

Multimedia messaging service

3G

Third Generation Mobile Technology

SMS

Short message service

TV

Television

UMTS

Universal Mobile Telecommunications System

VNPT

Vietnam Posts and Telecommunications Corporation

VMS

Vietnam Mobile Telecom Services Company

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LISTS OF TABLES & FIGURES

Diagram 1: Model of Consumer Behavior.....................................................................13
Diagram 2. Buying decision process...............................................................................14
Diagram 3. Research process for methodology.......................................................15
Figure 4. Vietnam mobile services market share.....................................................20
Table 5. MobiFone’s 6 months network results of 3G services (1/2010-6/2010) ....28
Table 6. MobiFone’s 6 months business results of 3G services (1/2010-6/2010) . . .29
Table 7. Comparison of 3G services results between MobiFone and other competitors
(July/2010) .............................................................................................................. 30
Table 8. Respondents’ total amount spend on mobile services per month...............34
Figure 9. Customers’ awareness of 3G services......................................................34
Figure 10. The level of customers’ usage.................................................................35
Figure 11. Customers’ awareness of the benefits of 3G services.............................36
Figure 12. Customers’ satisfaction towards 3G services.........................................37
Table 13. The description of 3G current customers’ lifestyle...................................38
Figure 14. Sources of information searching..........................................................39
Table 15. The important level of main factors in evaluating alternatives.................39
Table 16.The way to install 3G services..................................................................40
Table 17. The reasons for customers haven’t yet used 3G services.........................41
Figure 18. Future desired 3G services.....................................................................42

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EXECUTIVE SUMMARY

Vietnam mobile market is highly competitive with the presence of 7 services operators
and a new fierce race of launching and exploiting 3G technology has started. Vietnam
mobile telecom services company (MobiFone) is facing a serious problem with 3G
services which will be a real factor threatening MobiFone’s performance and
competitiveness in the near future. In order to give out recommendations towards 3G
value added services for MobiFone, the research objectives are:
1. To overview 3G market in Vietnam at the stage of introduction.
2. To Study the level of awareness, usage and satisfaction of customers towards
MobiFone 3G mobile broadband value added services.
3. To identify the main factors that influence the customers’ behavior towards
MobiFone 3G mobile broadband value added services.
4. To propose recommendations for marketing activities towards MobiFone 3G
mobile broadband value added services.
The research methodology of qualitative and quantitative research is applied in the
whole process of the research. Secondary data was gathered both from internal and
external sources. In-depth interviews with MobiFone leaders is to understand their
identification to MobiFone 3G services in particular and the mobile market in general
and a quantitative survey of 150 respondents were undertaken in Hanoi for both
MobiFone customers those who haven’t yet used 3G services and those who have used
3G services.
Besides the overview of 3G market, following are some main research findings from
the survey:
-

There are still a significant number of young customers who have advantages of
accessing the new technology, in the group of high schools and college/university
completed, haven’t yet used 3G services.

-

Most basic 3G services are aware of. But Fastconnect, strength of 3G services, is
known only by a third of the respondents. And those who haven’t used the services
had little detailed knowledge of 3G services. Besides, the other reasons that
customers haven’t used 3G services are “the handsets don’t support 3G”, “not
effort it” and “has little attractive promotion”. However, the expectation of the
customers for services is rather high and they are eager to try on 3G services.

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-

In most cases, the customers take care of charges and tariff package of 3G services.
And the statistics show that customers are fairly dissatisfied with price; tariffs
package options and promotion.

-

When customers want to search information for 3G services, the first choice is
searching web page. Followed is getting information from MobiFone’s shop and
asking MobiFone service centers.

-

MobiFone 3G customers only nearly slightly satisfy with the services and they felt
not certain to introduce 3G value added services to relatives, friends and
colleagues.

From these findings, I have come up with several recommendations proposed for 3G
value added services marketing activities that are worth to be considered to solve the

problem. In details:
-

Diversifying charges and tariff packages for 3G services: the solution of reducing
charges should be considered and proposed gradually; tariff packages are applied to
all services. Regarding to students and those who are finding chance to try on many
3G services, the special low tariff packages should be prepared to welcome them.

-

Concentrating on main services: Fastconnect should be received the priorities to
reintroduce its benefits to customers. New services could attract more customers
and give more services options to customers.

-

Increasing the attraction and frequency of promotion programs: more promotion
programs should be continued to keep customers staying. For the newer, the
promotion should be combined with special tariff packages and impressive
introduction events.

-

Focusing on providing detailed information to customers through online
advertising, direct marketing and other detailed advertising activities.

-

Improving 3G customer care services and using word of mouth advertising.

-

Supporting 3G handset providers to increase 3G handsets used by customers.

8


INTRODUCTION
1. Research rationale
Vietnam is in the period of integrating into the world's economy, as a part of
globalization and is in transition from a planned economy to a market-oriented mixed
economy under one-party rule. Vietnam has been one of the fastest-growing
economies in Asia in recent years, with GDP growth averaging 6.5% annually between
2000 and 2010 and income per capita reached 1,160 USD 1. The government, in spite
of the current macroeconomic woes, continues to move forward with market reforms.
In telecommunications industry, the spearhead sector of the economy, Vietnam mobile
market continues to grow strongly, with the sales of 2009 reaching 4.032,5 million
USD seizing 59% the sales of the whole telecommunications industry. Vietnam has
also been busy opening up the market to new players, importantly including some with
no involvement of the state-owned corporations. According to the latest data published
by the Ministry of Information and Communications (MIC), it’s said to be 98 million
mobile users in the country by the end of 2009 from only 5 millions in 20042.
Currently, Vietnam mobile market has high competition with a presence of 7 services
operators and in April 2009, the government issued four 3G licenses for five of them:
Vinaphone, MobiFone, Viettel and a joint license for Hanoi Telecom and EVN
Telecom. And it was a signal to start up the next phase in Vietnam mobile market’s
development. The most prominent improvement of 3G technology is to provide highspeed communications and to implement communication services based on
multimedia mobile technology. 3G developments are expected to make a breakthrough
for digital content services to exploit the value of the future’s technology, bring more
and more benefits to customers.

Vietnam Mobile Telecom Services Company, the first GMS mobile telephony services
company provider in the brand name MobiFone with 17 years of operating, is one of
three biggest mobile operators which are dominating Vietnam mobile market. And
Vietnam Mobile Telecom Services Company itself couldn’t stand out of the fierce race
of launching and exploiting 3G technology which really began from the second half of
2009. However, with a huge amount of capital investment in infrastructure and the
fierce competition in the mobile market, 3G technology can be an opportunity, but can
also be a challenge for MobiFone, especially in the near future while the second
position in the market of MobiFone is threatened.
1

/>MIC, White book 2010 on Vietnam Information and communication technology, 2010

22

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At the moment, MobiFone’s 3G networks now cover most of the nation's cities with
costly investments for setting up the network and deploying services to customers
around the country. The total investment MobiFone committed to Post and
Telecommunication Ministry is over 5.000 billion VND in 3 years, for the installation
of 5.000 stations around the country. After 6 months, a over half of stations as
committed have been installed. And the budget for 3G advertising campaign through
masses media and events over six months from December 2009 to June 2010 is over
30 billion VND for 5 Canters national wide.3
However, consumers are fairly slow to sign up for the new services and the number of
customers using 3G services in July 2010 is around 1 million customers, meanwhile at
that moment MobiFone has around 32 million subscribers. And the revenue of 3G
services accounted only for 0.1% of total company revenue and the growth rate

monthly is low and decreasing also (around 3% and lower). The results of 3G business
at the early months of deploying services are low both in terms of revenue and number
of subscribers using the service. 4
Meanwhile, after 3G network was launched by 3 giant operators, the mobile market
has been very exciting with a variety of marketing activities held everywhere around
and continuously. The two competitors, Viettel and Vinaphone, have attracted
customers with many promotions and impressive introduction events. And despite of
the fact that Viettel had to launched 3G network 4 months after MobiFone and
Vinaphone, Viettel had better results in many aspects with double numbers of
customers and many times higher in data traffic which is linked directly to the revenue.
And Vinaphone also expressed the determination to be the technology pioneer and
market leader. It’s showed that the fierce competition in 3G mobile market is going on
and MobiFone is facing a serious problem with 3G services which will be a real factor
threatening MobiFone’s performance and competitiveness in the near future.
That’s why, the questions posed to MobiFone were How to attract more customers to
try on and use 3G services? How to increase the revenue of 3G services? What are
solutions for the problem? What are customers’ behaviors towards 3G services. And
firstly it’s required to propose the recommendations for MobiFone, especially in
marketing activities which have the most feasibility. And it’s also emphasized that the
next campaigns deployed must be based on the current 3G services’ situation and the
understanding of MobiFone customers’ behaviors towards 3G services.
2. Research objectives
3 4

, MobiFone’s 6 months 3G services internal report, 7/2010

4

10

In order to understand the current 3G situation, customers’ behaviors towards 3G
services and give out recommendations towards MobiFone 3G value added services,
the research objectives are set as followed:
1. To overview 3G market in Vietnam at the stage of introduction.
2. To study the level of awareness, usage and satisfaction of customers towards
MobiFone 3G mobile broadband value added services.
3. To Identify the main factors that influence the customers’ behavior towards
MobiFone 3G mobile broadband value added services.
4. To Propose recommendations for marketing activities towards MobiFone 3G
mobile broadband value added services.
3. Research questions
In order to understand the current situation, customers’ behaviors and give out
recommendations towards MobiFone 3G value added services, the research objectives
are set as followed:
1. What is the situation of 3G market in Vietnam at the stage of introduction?
2. What are the customers’ behaviors towards MobiFone 3G mobile broadband
value added services?
3. What are recommendations to improve marketing activities applied towards
MobiFone 3G mobile broadband value added services?
4. Research scope and limitations
Due to limited time frame and budget, this research cannot make a nationwide
coverage at this stage and to all potential customers segments. Hence, it basically aims
to understand the customers’ behaviors towards MobiFone 3G mobile broadband value
aadded services in order to propose recommendations for marketing activities in
Hanoi. The quantitative survey was held with 150 questionnaires gathered for both
MobiFone customers those who haven’t yet used 3G services and those who have
used. The survey was run in Ha Noi and questionnaires were distributed to MobiFone
customers at MobiFone shops, MobiFone dealers’ shops, some universities and offices
in Ha noi…The timing for the survey was in November- December 2010.

5. Final Project structure
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Introduction
Chapter I. Research Methodology
This chapter presents the key concepts, basic theories relating to understanding
customers’ behaviors, especially factors influencing customers’ behaviors. This chapter
also introduces research methodology, including secondary and primary research
applied to information searching and survey. The details of secondary data sources and
method to collect primary data and analyze data are all presented in this chapter
Chapter II. Overview of 3G market in Vietnam
This chapter covers a brief overview of 3G technology; 3G value added services and
their benefits to customers and opportunities of 3G value added services development
in Vietnam. The market share overview of 7 Vietnam mobile services operators and
their 3G launching schedules are presented after that.
Chapter III. MobiFone Overview
This chapter provides an overview of Vietnam Mobile Telecom Services Company and
detailed information on MobiFone and competitors’ 3G value added services activities
and results at the first stage of introduction.
Chapter IV. Analyzing customers’ behaviors towards 3G value added services
This chapter provides the research findings from the survey which are presented with
the facts and figures illustrated either in the charts or data tables to answer the research
questions raised: finding out the main factors that influence the customers’ behaviors
towards MobiFone 3G services.
Chapter V. Recommendations
Based on the findings from survey on the customers’ behaviors towards MobiFone 3G
value added services, some recommendations and suggestions are proposed to improve
marketing activities for MobiFone 3G value added services.

Conclusion

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CHAPTER I. RESEARCH METHODOLOGY
This chapter presents the key concepts, basic theories relating to customers’ behaviors,
especially factors influencing customers’ behaviors. This chapter also introduces
research methodology, including secondary and primary research applied to
information searching and survey. The details of secondary data sources and method to
collect primary data and analyze data are all presented in this chapter.
I.1. Theoretical framework
In order to reach the research objectives above, key concepts and theories relating to
customers’ behaviors understanding written by Phillip Kotler were applied as a base
for the research.
I.1.1 Definition of consumers’ behavior:
“The aim of marketing is to meet and satisfy target customers and wants better than
competitors. Consumer behavior is the study of how individuals, groups, and
organizations select, buy, use, and dispose of goods, services, ideas, or experiences to
satisfy their needs and wants. Studying consumers provides clues for improving or
introducing products or services, setting prices, devising channels, crafting messages,
and developing other marketing activities.” - Phillip Kotler, Marketing Management,
twelfth edition 2006, Chapter 6, P.173.
I.1.2 Factors influence consumers’ behavior:
Diagram 1: Model of Consumer Behavior
Consumer
Psychology
Marketing
Stimuli

Other Stimuli

Products&
services
Price
Distribution
Communication

Economic
Technological
Political
Cultural

Motivation
Perception
Learning
Memory
Consumer
Characteristics
Cultural
Social
Personal

Buying
Decision
Process
Problem
recognition
Information
search

Evaluation of
alternatives
Purchase
decision
Post- purchase
behavior

Purchase
decision
Product choice
Brand choice
Dealer choice
Purchase
amount
Purchase
timing
Payment
method

(Source: Phillip Kotler, Marketing Management, twelfth edition 2006, P.178)
Cultural Factors: According to Phillip Kotler (2006), culture, subculture, and social
class are particularly important influences on consumer buying behavior. Culture is the

13


fundamental determinant of a person's wants and behavior. In Vietnam’s cultural,
mobile phones are used not only as a connected device, but also used as a way to show
style, lifestyle, high technology... Especially for the young and middle-aged, the main
target group of mobile networks, with a modern, young, dynamic, creative and

successful style, the mobile phone is often seen as an indispensable device to express
themselves. Gender differences also influences the customers’ behavior. In Vietnam,
men are considered to be related to high- tech and doing business more than women.
Social Factors: In addition to cultural factors, a consumer's behavior is influenced by
such social factors as reference groups, family, and social roles and statuses.. Groups
having a direct influence on a person are called membership groups. Some
membership groups are primary groups, such as family, friends, neighbors, and coworkers, those with whom the person interacts fairly continuously and informally.
People also belong to secondary groups, such as religious, professional, and tradeunion groups. With mobile phones, membership groups: family, friends, and coworkers interact directly or indirectly to consumer's behaviors.
Family: The family is the most important consumer buying organization in society, and
family members constitute the most influential primary reference group. In Vietnamese
families, while wife traditionally decides to purchase daily categories: food, clothes…,
husband often gives out decisions on electronic and hi-tech products. Besides, the
young often takes care more factors in buying decisions rather than the order and that
can be seen clearly in the buying decisions of hi-tech products.
Personal Factor: The personal factors comprise of some elements: age and stage of life
cycle, occupation, economic circumstances, lifestyle and personality and self-concept.
Psychological Factors: Maslow’s theory on motivation explained why people are
driven by particular needs at particular time. Maslow assumed that human needs are
arranged in a hierarchy, from the most to the least pressing. In order of importance,
these five categories are: physiological, safety, belonging-love, self- esteem and selfactualization. For mobile users, the basic needs of customers are met through the basic
mobile services like voice and short message…With the value added services, the next
pressing needs of customers will be satisfied through more specific benefits.
I.1.3 The Buying Decision Process: The Five-Stage Model
Buying behavior is the decision processes and acts of people involved in buying and
using products.
Diagram 2: Buying decision process

14

Problem
recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Post- purchase
behavior

(Source: Phillip Kotler, Marketing Management, twelfth edition 2006, P.191)
Problem Recognition: Consumers recognize a problem based on physical cues,
stimulus response or a need. For example, a customer has to exchange information
with his colleague but he doesn’t have chance to make an direct meeting immediately,
he could decide to buy a mobile service to meet his demand.
Information Search: Customers in the information search stage of the buying process
look for solutions to their problems or needs. Customers also discuss their needs with
friends and relatives to see what solutions they may suggest. For more expensive
purchases, customers may read reviews, look through newspapers or research the
product online.
Alternative Evaluation: Consumers evaluate their purchase options based on product
attributes through subjective factors, such as brands, and through personal experience.
Consumer and company reviews can influence a consumer's product evaluation.
Purchase Decision: A consumer's decision to purchase something includes where to
buy, when to buy and whether to buy. For routine goods such as groceries, consumers

may simply go to their favorite grocery store, but for electronic and hi-tech products
purchases, they may browse multiple stores which have more choices.
Post-Purchase Behavior: After making a purchase, a consumer mentally ranks her
purchase satisfaction. Customer’s evaluation determines whether the customer will
purchase the product or brand again. Customers, who are happy with their purchases
and feel they received a quality product at a good price, will become repeat customers
and will tell others about their experience.
I.2. Research methodology
I.2.1 Research process
Diagram 3: Research process
Secondary data
relating 3G market

3G Market

Secondary data
relating MobiFone and
competitors’ 3G services

MobiFone 3G
current situation and the
problem

Primary data
+ Survey (150
questionnaires)

Proposing
recommendations
for 3G services

Customers’ behaviors
towards 3G services

15


(Source: Author designed for the research process)
I.2.2 Sources of secondary data
Internal sources: MobiFone’s reports, Viettel’s reports, Vinaphone’s reports, VNPT’s
reports, MIC’s reports…
External sources: internet, newspapers and magazines, on-line databases, data supplied
by marketing organizations…
I.2.3 Methods to collect primary data
In- depth interviews were made with leaders of Vietnam Mobile Telecom Services
Company: one vice general director (marketing CEO) and one manager of value added
services department. Information collected from the interviews was used to assess and
overview 3G services and 3G market situation.
For the quantitative survey, 150 questionnaires were gathered at the end of the survey
and there were 2 groups: MobiFone customers those who haven’t yet used 3G services
and those who have used. And in order to have clear and firm findings for MobiFone
customers who have used MobiFone 3G services, the respondents of that group was
oriented to reach over one third of the total. The questionnaires collected are 98 of
MobiFone customers who haven’t yet used MobiFone 3G services and 52 of those
who have used the services.
The questionnaires were distributed mainly at the reception tables in MobiFone
showroom, MobiFone shops and MobiFone dealers’ shops by MobiFone and
MobiFone dealers’ staffs. They were released and collected under the MobiFone
manner as in MobiFone 8 commitments to customers. Also the survey was made in
Hanoi universities, Vietnam commercial universities and some offices in Hanoi.

Information collected was related to MobiFone customers’ behaviors towards 3G
services. The questionnaires had 20 questions of customers’ behaviors and 6 general
questions. The sample of questionnaire was attached in the annex.
I.2.4 Methods to analyze primary data
Data analysis from the survey then was analyzed with SPSS software program which
was helpful to analyze and describe the statistics. All the questionnaires and each
content of the questions were quoted by numbers and then were input into the database
and the analyzing was published by the output of SPSS, based on the chosen

16


characteristics. After that, in order to make it easy to view and compare the findings,
the statistics were supported with chart and table illustrations.

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CHAPTER II: OVERVIEW OF 3G MARKETS IN VIETNAM
This chapter covers a brief overview of 3G technology; 3G value added services and
their benefits to customers and opportunities of 3G value added services development
in Vietnam. The market share overview of 7 Vietnam mobile services operators and
their 3G launching schedules are presented after that.
I.1 3G technology and opportunities of 3G value added services development in
Vietnam
I.1.1 3G technologies and its development overview
International Mobile Telecommunications-2000 (IMT-2000), better known as 3G
(UMTS/HSPA) or 3rd Generation, is a new generation of standards for mobile
telephone technology and mobile telecommunications services fulfilling specifications
by the International Telecommunication Union. 3G allows data transfer both voice and

non voice data (data, email, instant messaging, images ...). The forerunner of 3G
technology is 1G (launched in the late 1970s, early 1980s) and 2.5G and 2G (digital
mobile phone system).
The strengths of this technology compared to 2G and 2.5G technology that allows
transmission and reception of data, voice, and image quality for both subscribers and
fixed subscribers at the speed of 20-30 Kps are moving to a different stage with the
maximum speed up to 14.4 Mbps.
Around the world, 267 HSPA/3G commercial operators launched widely in 114
countries/territories and 306 HSPA/3g commitments of developments in 126 countries.
The number of 3G subscribers added 103.8 million in 2008, for over 55% annual
growth. It’s expected that in 2010 the mobile broadband subscriptions worldwide
would speed up to 1.3 billion and HSPA/3G would seize up to nearly 70% market
share of wireless broadband. Number of 3G users in 10 EU countries expected to
increase six-fold in next five years up to over 200 millions in 2010.5
In Vietnam, MIC said that this is an appropriate time to deploy 3G technology in 2009.
At present, Vietnam have enough policies, mechanisms and regulations on the
operation and conditions to exploit of 3G services. Businesses have focused necessary
and sufficient elements to deploy 3G technology. MIC also believes that the adoption
of 3G technology will not only bring benefits to the telecommunications industry but
also promote economic and services development, contribution to GDP growth. Then,
under the licenses issued by MIC, mobile services operators are on the way to launch
5

Huawei’s 3G market development overview training documents, 2010

18


and introduce 3G toward customers from Q4 2009. Vinaphone was the first operator
permitted to launch 3G network in November 10-2009, MobiFone is the second one

putting 3G into operation from December 15- 2009. As one of three giants, Viettel
became the next operator to launch 3G in May 04- 2010. And EVN and Hanoi
Telecom partnership committed after 9 months from the date of receiving the official
license to provide 3G services to customers in August 4-2010.
I.1.2 3G value added services and their benefits to customers
Applications are at the heart of the next generation, so it focuses on upgrading the
benefits to customers, especially with a lot of 3G mobile broadband value added
services. Faster data rates and mobiles with larger color screens will enable new
services to be created giving a new cyber-air-space. So, customers don’t have to lose
time anymore to wait for downloading data and begin to access internet smoothly for
many purposes, in real time, with not only their own mobile but also their laptop and
3G devices, even when they are traveling on the transport vehicles.
Service providers, content providers, value-added applications providers and
application developers are all competing for end customers to create more new
products and business opportunities. Some popular 3G mobile broadband value added
services can be listed as followed:
 Web connectivity: mobile web browsing at high speed
 Live entertainment& media: Mobile TV–TV channels directly to the
subscriber's phone, live and coloured music and games.
 Multimedia messaging: checking email easily, instant message, video message,
blogging…
 Video conferencing – subscribers can see as well as talk to each other.
 Location-based services: a provider sends localized weather or traffic
conditions to the phone, asset track…
 Personalization: Mobile portal, colourful ringtones, ring backtones
 Mobile commerce: Mobile transaction, auction, advertising
 Community: Surveys, Contest, Social networking
 Others: Productivity, Telemedicine, Public safety…
In general comparison between 2G and 3G value added services, the main benefits that
3G gives customers are faster, richer and better services.

I.1.3 Opportunities of 3G value added services development in Vietnam
In Vietnam, the market for mobile telecommunication services has made competition
at fierce level. Statistics on mobile phone subscribers in Vietnam increased
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continuously in five years, but the ARPU (Average Revenue per User) is declining
seriously. ARPU is important because it provides a breakdown of what is driving
revenue growth, and it also gives some indications of what is driving margins. In 2007,
the index is 12 USD ARPU per month. Currently, the average ARPU in the country at
7-8 USD per month, statistics consulting firm RJB was raised at the International
Telecommunications Conference 2008 fell 8% yearly6. Price war is currently under
way between the country’s three leading cellos; this will likely also put considerable
downward pressure on mobile ARPU levels. Besides, according to its report, Vietnam
has around 85% of mobile subscribers use prepaid form. Small market, low
consumption with low ARPU and decreased deployment is why 3G value added
services is considered the door to mobile telecommunication business can continue to
grow "by competing services”.
Moving to 3G is the foundation to offer the services on broadband networks,
stimulating the digital content services on mobile network development. This is also a
strong infrastructure for the national services such as electronic commerce, electronic
government, interdisciplinary connections, privacy and security. When consumers
have the opportunity to choose services matching with their money, the operators’
competition must base on content providing and quality of services, not on lowering
the tariff as today. 3G technology will create an environment of healthy competition,
fair and exert pressure on operators and will change behavior with their clients, seeing
“the customer as the God”.
However, with a huge amount of capital investment in infrastructure and transmission
technology, if the 3G network does not successfully deployed to consumers, wasteful
resources from operators will be enormous. Therefore, it’s a top priority issue for

operators to successfully deploy 3G services to customers, solve the problem of ARPU
and it’s also a guarantee for enterprises to develop and compete in the future.
II. Vietnam mobile services operators and 3G launching schedules
With the presence of 07 mobile services operators having the network infrastructure
(MobiFone, Vinaphone, Viettel, S-Fone, EVN Telecom and Vietnamobile (Hanoi
Telecom), Beeline (G-Tel)) and two operators licensed MVNO (Mobile virtual
network operator) (Indotel and VTC), when the market demand is gradually reaching

6

Business Monitor International, Vietnam Telecommunications Report Q1 2010 including 5-year industry
forecasts by BMI, 2010

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the saturation point, Vietnam is one of the most intense competition mobile
communication market in the region and Asia.
According to the latest set of figures published by Vietnam’s MIC, there were a total of
98 million mobile subscribers in the country by the end of 2009, reflecting an increase
of 117% since 2007. It is also reported that the number of mobile users served by
VNPT-owned cellos, MobiFone and Vinaphone, jumped by 33.5% in 2009, compared
to the same period a year earlier, to reach 53.3 million. Vietnamese military-owned
operator, Viettel’ numbers of customers reached 33.8 million in 2009. The other
mobile services operators namely: S-Fone, G-Tel, EVN, Vietnamobile with the total
numbers of customers around 4.48 million. Therefore, the Vietnam mobile market is
witnessing the fierce competition among the three biggest mobile operators not only
on price, but also on quality and services; and absolutely the 3 giants’ activities are
dominating the market.
Figure 4: Vietnam mobile services market share

(Source: MIC, White book 2010 on Vietnam Information and communication
technology, 2010, P. 40)
Viettel Telecom7, under the Military Telecommunications Corporation, established a
radio network in 1998. However, its major breakthrough came in 2003 when it started
rolling out a GSM mobile network. And with its fastest impressive development
growth rate, Viettel has quickly become the business seizing the biggest market share.
In 2009, Viettel continues to maintain high growth in the mobile market, reaching
81%. Turnover reached 60.2 trillion VND. By the end of 2009, cumulative mobile
7

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subscribers of Viettel reached 33.2 million, make up 33.8% 8. Viettel has developed
telecommunications network infrastructure in Vietnam with 24,000 BTS.
Nearly 02 months earlier than the commitment to MIC, Viettel has officially launched
a 3G network on March 25-2010. In the process of testing 3G network, Viettel has
actively implemented various commercial activities to introduce 3G services to
customers, so as soon as Viettel has launched 3G, there were a number of customers
using 3G services. Viettel said that the network has installed 8.000 3G stations, 1.5
times higher than the commitment to MIC and coverage to the district centers and the
neighboring communes of 63 provinces and cities across the country. Viettel also
shows its determination of reaching 40% of Viettel customers using 3G within 04
years and by the end of 2010, Viettel is expected to complete the installation of 3G
20,000 stations nationwide.
MobiFone (Vietnam Mobile Telecom Services) is the first GMS mobile telephony
services company, founded in 1993. MobiFone is a subsidiary of Vietnam Post and
Telecommunication Corporation (VNPT) and was transformed to be one member

limited company under VNPT from July 2010. Years of success of MobiFone are from
1995 to 2005 while MobiFone was approved to have a Business Cooperation Contract
(BBC) with Kinnevik/Comvik (Sweden mobile operator). Nowadays, MobiFone is
still considered to be the second largest mobile operator in Vietnam market, serving
approximately 26.6 million customers by the end of 2009 (equivalent to 27.15% of the
total mobile market). MobiFone’s 2009 revenues reached VND17.5trn, up by 25% in
the year, despite economic downturn. It’s estimated that by the end of 2010, the
number of customers reached the number of 34 million. MobiFone’s strengths are its
brand and network quality which is built and maintained right from the early years of
establishment and 10 years of BBC.9
In April 2009, MobiFone was awarded a license to operate 3G services by the Ministry
of Information and Communication (MIC). As committed to the MIC, MobiFone was
officially launched 3G networks on December 15- 2009, with the commitment that
MobiFone will have the coverage of 3G network to 100% of the 63 urban cities across
the country and in 3 years the coverage will be 98% of Vietnam’s population.
According to the decreasing levels of priority, MobiFone will coverage from densely
populated urban areas, urban, suburban, rural and highway connection. By the end of
July 2010, MobiFone has completely installed nearly 3.000 3G stations around the

8

MIC, White book 2010 on Vietnam Information and communication technology, 2010
9

9

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country. Mr. Le Ngoc Minh, Director of MobiFone, confirmed that MobiFone

determines to become the largest 3G network in Vietnam.
Vinaphone (Vietnam Telecom Services Company) is a wholly owned subsidiary of
Vietnam Post and Telecommunication Corporation (VNPT), launched in 1996 and
became one member limited company under VNPT from July 2010, as MobiFone.
Vinaphone ranks the third position in the market, with the ongoing effort to regain its
position that held in some previous years. Vinaphone has made more positive changes
since 2007 through a self-renewal commercial campaign titled "Vinaphone- more
modern, more dynamic". And by the end of 2009, the number of mobile customers
served by Vinaphone is estimated to have risen to 26.7 million, seizing 27.19% market
share.
On November 12-2010, Vinaphone has become the first mobile operator to provide 3G
services to customers. According to its commitments, Vinaphone has 3G coverage in
major cities and provinces across the country. Along with the inauguration, Vinaphone
also conducted highly competitive advertising and promotions campaigns for 3G
services.10
S-Fone11 is a cooperation project between Sai Gon Postel and SLD Co., Ltd (now
called SK Telecom Vietnam), under the form of Business Cooperation Contract to
provide nationwide mobile telephony services, fixed-wireless telephony services and
other value added services using CDMA (Code Division Multiple Access) technology.
It will be the very first Business Cooperation Contract to be converted to a Joint
Venture Company and that changing stage is intended to be taken place in 2010.
CDMA has been commercialized in the world's telecommunications market since
1995, with high packet data through up to 144 kbps and accepted standards for the 3G
Mobile Telecommunications Services. However, because of CDMA’s disadvantages in
mobile handsets devices and limited coverage (only available in 13 provinces and
cities), S-Fone had only around 460.000 subscribers, 4.67% market share.
Vietnamobile (Hanoi Telecom), established in 200112. The majority of shares of
Hanoi Telecom are owned by the Vietnamese government through two entities, Hanel
(belonging to the Hanoi People’s Committee) and HTI (Vietnam Science Institute).
Hanoi Telecom launched its CDMA network in November 2006 and started deploying

its services in January 2007. By the end of 2007, Hanoi Telecom’s mobile service, HT
Mobile, was reported to have just fewer than 403.000 customers, up to 4,11% market
10


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share. Disappointed with its progress, Hanoi Telecom started to convert its subscribers
to a GSM network offering from April 2008, under the name of Vietnam Mobile,
EVN Telecom, The telecoms arm of Electricity of Vietnam and the country’s second
CDMA operator, EVN Telecom launched its services by the end of February 2006,
making it the country’s sixth commercial operator. Currently it has over 88.000 mobile
subscribers. As expected, EVN will be equitized in 2010. The state capital will be
remained and the shares will be sold to strategic investors, outside investors and
officials and public employees. The two strategic investors, Singapore and Malaysia
was officially made a strategic partner proposal with EVN. If EVN Telecom completed
the equitization process in September next, then this will be the first
telecommunications enterprise equitization is done.13
In April 2009, Hanoi Telecom and EVN Telecom received a joint license to build and
operate a 3G network in Vietnam. The two companies plan to construct 5,000 base
transceiver stations (BTS) over the next three years to provide 50% of residential areas
with third generation services. On June 09-2010, EVN Telecom was officially
launched 3G network with the number of 2.500 stations initially installed, 46%
population coverage. At the first phase of 3G deploying, EVN focused on good
services in five main provinces and cities in the nation. EVN's goal is to bring a high
quality, stable and competitive 3G network with more utility value for customers.

However, Hanoi Telecom, the partner with EVN Telecom in the 3G joint license made
no announcement and activities to deploy 3G network.
Beeline (GTEL), is the joint venture established in July 2008 under the cooperation
agreement between Vietnam’s GTEL Corporation & VimpelCom, the integrated
telecommunications operator in Eastern Europe & Central Asia. GTEL Mobile is not
only a business enterprise purely but also the international combination aiming to
bring Vietnamese peoples a new trend and style in telecommunications industry.
Beeline marking its new entrance to Vietnam mobile market with very cheap Big Zero
package tariff has created the impression with customers in the earlier releasing
months. However, due to the limitations: a newcomer, limited coverage, limited
distribution channels ...GTel got a number of 212.162 customers, 2,16% market
share.14

13
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CHAPTER III. MOBIFONE OVERVIEW& MOBIFONE 3G SERVICES
This chapter provides an overview of Vietnam Mobile Telecom Services Company and
detailed information on MobiFone and competitors’ 3G value added services activities
and results at the first stage of introduction.
III.1 History& Organization
Vietnam Mobile Telecom Services Company, a state-owned company under VNPTMIC, was founded on April 16th 1993. MobiFone has become the first GMS 900/1800
MHz mobile telephony services provider in the brand name MobiFone, with business
sector of building, developing network and providing mobile telephony. MobiFone has
a distribution network of over 130 offices and 320 main dealers throughout Vietnam 15.
Some important milestones of Vietnam Mobile Telecom Services Company:

1993: Foundation of Vietnam Mobile Telecom Services Company (VMS).
1994: Foundation of the Mobile Telecom Services Center I ( In the North) & II (In the
South)
1995: Committed a Business Cooperation Contract (BCC) with Kinnevik/Comvik
(Sweden) with a period of 10 years operating
Foundation of the Mobile Telecom Services Center III ( In the Centre)
2005: VMS liquidated the BBC with Kinnevik/Comvik (Sweden)
2006: Foundation of the Mobile Telecom Services Center IV (In the South)
2008: Foundation of the Mobile Telecom Services Center V ( In the North). 15 years
establishment anniversary was held. The Value Added Services Center was founded.
2010: Converted into one-member limited company under VNPT
Nowadays, MobiFone has total over 3.000 staffs in 5 centres mobile telecom services
centers and one design Factory. MobiFone’s strengths is its brand name and network
quality which is built and maintained right from the early years of establishment and
10 years of BBC with the support from Comvik (Sweden) both in technology and
marketing techniques. MobiFone is the leading mobile phone service provider in
Vietnam in term of network quality and is selected as of the best mobile operator in
three consecutive years (from 2005-2008) in the Vietnam Mobile Awards Ceremony
organized by E-chip Mobile Magazine. In 2009, MobiFone was received the Excellent
Operator 2008 granted by Vietnam Ministry of Information and Communications.
Being the first mobile services provider in Vietnam, in some early years of operating,
MobiFone had only fewer than 500.000 customers, up to now MobiFone is serving
nearly 36 million nationwide.
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