making 3g work in vietnam presented by: marc daniel einstein senior industry analyst october 5th,...
TRANSCRIPT
Making 3G Work in Vietnam
Presented by:Marc Daniel EinsteinSenior Industry Analyst
October 5th, 2008Hanoi, Vietnam
2
Today’s Agenda
• Section 1: Vietnamese Mobile Market Overview
• Section 2: 3G Market Overview
• Section 3: 3G Services & Applications
• Section 4: Making 3G Work in Vietnam
3
Section 1: Vietnamese Mobile Market Overview
4
Vietnam’s Telecommunications Market in Context
Vietnam’s Mobile Market is at a medium level of maturity for an emerging market.
“The Digital Divide”
Australia
Bangladesh
China
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
PakistanPhilippines
Singapore
South Korea
Sri Lanka
Taiwan
Thailand
Vietnam
0%
20%
40%
60%
80%
100%
120%
140%
0% 20% 40% 60% 80% 100%
Household Broadband Penetration Rate (%)
Mo
bile
Pe
ne
tra
tio
n R
ate
(%
)
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Vietnam Mobile Market Forecast
Vietnam will continue to be one of the fastest growing mobile markets in terms of netsubscriber additions. Vietnam will have 4% of all AP subs by 2013.
0
10
20
30
40
50
60
70
80
90
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
To
tal
Mo
bil
e S
ub
scri
ber
s (0
00s)
0%
20%
40%
60%
80%
100%
120%
Mo
bil
e P
enet
rati
on
Rat
e (%
)
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Vietnam Mobile ARPU Evolution
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
AR
PU
(U
S$
)
Voice ARPU (US$) Data ARPU (US$)
As most of Vietnam’s future mobile market growth will come from the rural and youthSegments, we believe that the blended market ARPU will breach the US$3 level by 2013
We predict that the 2013 ARPU will only be 25% of its 2005 value
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Asia Pacific ARPU vs. EBITDA Margin Comparison
NTT DoCoMo
KDDI
SKT
KTF
SingTel
Optus
Telstra
CHT
SmarTone
M1 Starhub
Taiwan Mobile
Three
SoftBank MobileLG Telecom
China Mobile
China UnicomDTAC
SMARTGlobe Telecom
Bharti Celcom
DigiGrameen Phone
Telkomsel
XL
RelianceAISDialog
TMIB
True Move
Mobilink
0%
10%
20%
30%
40%
50%
60%
70%
$0 $10 $20 $30 $40 $50 $60 $70
ARPU (US$)
EB
ITD
A M
arg
in (
%)
This decline, however, does not necessarily correspond to low profitability, especially foremerging market incumbent operators
Emerging Market Incumbents
Emerging Market Challengers
Developed Market Operators
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But Low ARPUs are Starting to Take a Toll
While some emerging market operators in Asia are maintaining of slightly improving EBITDAmargins via wireless broadband strategies and network outsourcing, many are experiencinglarge declines in ARPUs which are putting pressure on margins.
0%
10%
20%
30%
40%
50%
60%
70%
80%
Bharti AIS Smart ChinaMobile
Telkomsel Dialog Grameen
EB
IDT
A M
arg
in (
%)
H106 H108
+3.3%+1.2%
-1.5%
-4.1%
-9.0%
-20.9%-21.0%
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Section 2: 3G Overview
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KEY CHALLENGES:
High Handset Prices Lack of Subscriber Adoption Large Markets Still Untapped QoS/Indoor Coverage
3G Deployments3G Deployments –Asia Pacific
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3G Subscriber Update
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2004 2005 2006 2007e
Japan South Korea HK, Aus, Taiwan, Spore Others
Japan & South Korea comprised 80% of the APAC 3G Subscriber Base in 2007
‘000 subscribers
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3.5G vs. 4G Technology Comparison
LTEHSPA+
LTE will offer significant advantages over 3.5G in terms of data rates, latency, transmission time interval, and is more flexible with spectrum blocks.
Latency
Data Rates
TTI
Spectrum
144/57Mbps DL/UL42/11Mbps DL/UL
10ms50ms
2ms .05ms
5MHz Blocks Flexible
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LTE Time to Market
LTE is still in the laboratory and early field testing phases as vendors such have publicly demonstrated live LTE handovers. Going forward we expect limited deployments in 2011 with wider-scale launches by 2012.
2008 2009 2010 2011 2012
Lab Testing
Field Testing
Network Deployment
First-Mover Launches
Wide-Scale Deployment
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Section 3: Making 3G Work in Vietnam
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APAC Household Penetrations Rates
0%10%
20%30%40%50%
60%70%80%
90%100%
Ba
ng
lad
esh
Pa
kist
an
Ind
on
esi
a
Sri
La
nka
Ind
ia
Vie
tna
m
Ph
ilip
pin
es
Th
aila
nd
Ch
ina
Ma
lays
ia
NZ
Jap
an
Au
stra
lia
Sin
ga
po
re
Ta
iwa
n
Ho
ng
Ko
ng
Ko
rea
Ho
us
eh
old
Bro
ad
ba
nd
Pe
ne
tra
tio
n (
%)
The “Digital Divide”
Low-bandwidth, high ARPU wireline broadband markets are ripe for competition from 4G, even in developed markets.
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PLDT – Wireless Broadband Strategy
Exhibit: PLDT’s Broadband Service Portfolio
Exhibit: PLDT’s Broadband Subscriber Uptake by Service, 2005-2007
89 113
264122
302
24
13
10
6
0
100
200
300
400
500
600
700
2005 2006 2007
To
tal
Su
bsc
rib
ers
(000
s)
Fixed SmartBro WeRoam
The PLDT has been able to diversify its revenue streams in the broadband market by deploying wireless solutions for last-mile connectivity:
• GPRS/EDGE, HSPA, WiFi and eventually WiMax are all used to compensate for low fixed-line penetration (~4%)
• In 2007 wireless broadband subscribers overtook wired subscribers (only case in the world)
• Product bundling: New subscribers can purchase a laptop with a wireless data card and service plan from the operator
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Clearwire – Wireline to Wireless Churn
Clearwire, one of the largest WiMAX operators in the world and based in the USA reported that a surprising 59% of its wireless broadband subscriber base actually churned from a fixed-line broadband service, driven by both lower price points and the added feature of mobility.
Cable Modem33%
DSL26%
Other2%
No Internet12%
Dial Up27%
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Mobile Advertising – Blyk Mobile
Blyk Mobile, an MVNO in the UK, is the first operator globally to introduce a 100% ad-funded mobile service. The service allows 16-24 year olds to receive 243 text messages and 43 voice minutes to any network in the UK every month, and additional minutes cost and messages cost £0.15 and £0.15 respectively. The company has picked up advertisers such as McDonalds, Microsoft and Adidas and boasts 100,000 subscribers.
SIM, 217 texts & 43 minutes
FREE every month
Advertisements +
16 -24 years oldMobile operator
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Section 4: Making 3G Work in Vietnam
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What does 3G Mean for Vietnam?
• Vietnam’s mobile market has rapidly caught up with other emerging markets in Asia but the broadband market still lags behind.
• Emerging market wireless operators are facing pressure on margins which will entice them to aggressively enter the broadband market.
• 3G technology has reached a point where it can adequately compete with wireline service in Vietnam.
• Service offerings should first focus on ACCESS then VAS.
• A higher broadband penetration is crucial to Vietnam’s competitiveness in the global economy and so it is ultimately in the government’s best interest to promote wireless broadband usage.
