Luận văn xây dựng chiến lược kinh doanh dịch vụ gia tăng trên di động của viettel giai đoạn 2015

Role of business development of VAS for the growth of revenue and development of market share for mobile subscribers of the enterprise 27 2.1.5.. Apply theoretical bases and models to an

Thesis topic

build vat business strategy on mobile of viettel telecom in the period of 2011 - 2015

During the learning process of GaMBA program – Griggs University, the US,Group 11 of GaMBA M0709 class studied and accumulated much practicalvaluable experience, helping us apply knowledge into our work at present and even

in the future

Our group would like to express our faithful thank to GaMBA program forcreating favorable conditions for us during the process of study and capstone projectreport completion We sincerely thank all teachers for teaching enthusiastically,transmitting precise knowledge and experience during 17 past months

We would like to express heartfelt thanks to the Leadership Board of ViettelTelecom for assisting whole-heartedly, providing documents and creating bestconditions for us to complete this graduation capstone project report

Despite the fact that our group has tried our best; due to time and experiencerestriction, the capstone will make mistakes We respectfully wish to receive whole-hearted assistance of teachers and candidates for our capstone project report to bemore perfect and practical

We hereby pledge that the whole contents and figures in this capstone projectreport are collected, studied, surveyed and implemented by our group

Best regards!

TABLE OF CONTENTS Page

1.2 Mission, Vision, Objective, Policy, Core thought 12

1.3.3 Analyse the environment inside industry 16

CHARTER 2:

THE REAL SITUATION OF BUILIDING VAS BUSINESS STRATEGY

OF VIETTEL TELECOM IN THE PERIOD OF 2004-2010

2.1.4 Role of business development of VAS for the growth of

revenue and development of market share for mobile subscribers

of the enterprise

27

2.1.5 Factors have influenced on doing business on VAS 28

2.3.1 General information about Viettel Telecom 32

2.3.3 Main business areas and service products 33

2.4.5 VAS business situation of Viettel during past years 51

CHARTER 3:

BUILD VAS BUSINESS STRATEGY ON MOBILE OF VIETTEL

TELECOM IN THE PERIOD OF 2011-2015 AND SOLUTIONS

3.3 Solution to implement business strategy on VAS services of Viettel 62

3.3.1 Advertisement , communication and service contribution 633.3.2 To consolidate and strengthen Content Centre and VAS Centre

3.3.3 Strengthen cooperative program with domestic and

international content suppliers on VAS services 643.3.4 Enable clients self create services contents 643.3.5 Close cooperation with domestic and international copy right

List of designation and abbreviations

1. Viettel Viettel Telecom

3. ARPU Average revenue per user

4. CLKD Business strategy

5. IFE Internal Factor Evaluation

6. EFE External Factor Evaluation

7. QSPM Quantitative Strategic Planning Matrix

9. SWOT Strengths, Weaknesses, Opportunities, Threats

11. CDMA Code Division Multiple Access

12. GDP Gross Domestic Product

13. BTTTT Ministry of Information and Communications

14. 2G Second generation mobile network

15. 3G Third generation technology

17. IMF International Monetary Fund

18. WTO World Trade Organization

19. CNTT-TT Information Technology and Communications

25. Gtel Global Telecommunication Corporation

26. EVN Telecom Vietnam Electricity Telecommunications Corporation

List of tables

2 Table 2.1 Vietnam mobile data – Events and predictions 30

3 Table 2.2 Income Statement of Viettel (2004 - 2010) 50

4 Table 2.3 Revenue density of Viettel services (2008 - 2010) 52

9 Table 3.5 Revenue target in the period of 2011 -2013 62

List of pictures

1 Picture 2.1

Number of people who are interested in added services (VAS) in mobile phone (Source Nokia Market Study).

4 Graph 2.4 Viettel Revenue (2000 - 2010) (Internal Source) 50

5 Graph 2.5 VAS Income Statement of Viettel (2008 - 2010)

1 Reason for choosing the subject

In recent years, competition in the mobile market has become more and moresevere, seven service providers has come into operations, others are also makingprocedures for penetrating into the market However, the market has graduallyappeared saturated In order to attract buyers, networks have uninterruptedly reducedfees and released a mass of promotional programs; only in 2010, 2 big networksreduced 15-20% mobile fees In addition, subscriber’s attraction, promotion andceaseless fees reduction also make revenue and profit decrease dramatically; Ministry

of Information and Communications said that in 2009 ARPU (Average revenue peruser) of Vietnam mobile decreased 20%

Facing to this situation, telecom businesses should have new strategies inorder to increase ARPU VAS services exploitation and development is a suitablesolution for this problem Especially, 3G boom is a very favourable factor for trading inthese services

Viettel is one of businesses including large share in the Vietnam Telecom andalso is one of leading businesses in developing, building and providing 3G service Inorder to take full advantage of 3G infrastructure, it should have a business strategy andexploit VAS services correctly in accordance with the business’s capacity and thecurrent market’s characteristics in Vietnam

Wish to apply knowledge and theories into practice; therefore, our group

decided to choose the subject “Build VAS business strategy on mobile of Viettel Telecom” for our capstone.

2 Purpose of research

Research and systematize theories on establishment and implementation ofbusiness strategies, select effective models for analyzing the establishment andimplementation of business strategies

Apply theoretical bases and models to analyze, evaluate both external and internalenvironment in order to build VAS business strategy on mobile of Viettel Telecom.

Suggest solutions, recommendations on carrying out business strategies with aview of completing selected business strategies of the Company

3 Research scope of the subject

Due to time as well as resource limit, we only focus on analyzing and buildingVAS business strategy on mobile of Viettel Telecom in the period of 2011-2015

4 Research method

In order to solve the above matter, our report is drawn through using qualitativeanalyzing method (research, analyze the real situation of Viettel Telecom) Methods ofspecific data collection such as: survey questionnaires, expert interview are used forcollecting data Use National Statistical Data, specialized information and figures; usesecondary figures about previous strategies, researches and reports of Viettel Telecom

5 Structure of the capstone consists of 3 charters

Charter 1: Theoretical basis of strategic management of the business

Charter 2: Analyze the real situation of Viettel Telecom

Charter 3: Build VAS business strategy on mobile of Viettel Telecom in theperiod of 2011- 2015, solutions and conclusion

CHARTER 1 THEORETICAL BASIS OF STRATEGIC MANAGEMENT

OF THE BUSINESS 1.1 Overview on strategic management

1.1.1 Concepts

1.1.1.1 Strategy

There are a lot of viewpoints of strategy, within the framework of ourcapstone, we would like to set forth some typical concepts through developmentperiods of the theory of strategic management:

- Alfred Chander (1962): “Strategy contains defining long-term and basic objectives of a business, selecting the method or process of implementing and distributing essential resources and perfoming those objectives”.

- Michael Porter: “Strategy is creating a unique and valuable position including difference and exchangeable choice in order to muster strengths and then create advantages for the organization”.

From the above viewpoints, we can find that strategy is related to long-termand basic objectives of a business However, building and deciding objectives-oriented strategy isn’t enough, the strategy should be defined in accordance with thevision, mission of the organization and methods, means to achieve those objectives

in order to promote strengths, repair weaknesses of the organization, receiveoppotunities, avoid or reduce damages because of threats from externalenvironment

Thus, we can generally define strategy as follows:

“Strategy is a mass of complex actions in order to mobilize resources of an

organization to achieve a certain objective.”

1.1.1.2 Business strategy

As mentioned, strategy is related to objectives of a business, strategies arebuilt with the aim of helping the business achieve given objectives However,business strategy is related to how a business can compete sucessfully on a specific

market It is related to strategic decisions on selecting products, meeting the demand

of buyers, taking a competitive advantage compared to rivals, exploiting andcreating new opportunities, ETC,v.v

Fred R.David: “Business strategy is means to achieve long-term objectives”.

It can be said that business strategy is means supporting businesses toachieve long-term objectives Business strategy doesn’t draw up specific methods,but it is a general program, the most effective solution of resource mobilization with

a view of executing fixed objectives

Business strategy of a business can be generally defined as follows:

“Business strategy is an art of means organization and design in order to achieve long-term objectives of a business and it has a relationship with the change of business and competitive environment”.

1.1.1.3 Basic features of business strategy

- Business strategy is defined from basic objectives and business direction of abusiness in each period

- The orientation of strategy is to ensure that the business will developceaselessly and strongly in a changeable environment

- Business strategy ensures maximum mobilization and optimal combination

of resource usage and exploitation at present and in the future, promotes advantagesand catches opportunities in order to gain competitive advantage

- Business strategy of a business is reflected during an uninterupted process

- Business strategy always contains offensive thought, wins a victory inbusiness world

- Business strategy is often built during a long term (3,5,10 years)

1.1.1.4 Role of business strategy

- Business strategy helps the business recognize its purpose, direction, it isalso a basis and guideline for all business operations of the business

- Business strategy helps the business catch and take advantage of businessopportunities, then have positive methods to overcome risks and threats on thebusiness world.

- Business strategy contributes to improve the using capacity of resources,strengthen the business’s competitive stand in order to ensure its sustainabledevelopment

- Business strategy creates strong foundations for making policies anddecisions on business production in accordance with the market change

1.1.2 Process of strategic management

Process of strategic management is a series of operations, includingCommitments, Decisions and Actions of a business performed to achieve StrategicCompetitive Advantage; Sustainable Competitive Advantage with Profit aboveaverage

Process of strategic management can be divided into 3 periods:

 Period 1 : Form a strategy

This is the initial period playing a very important role in the whole process ofstrategic management During this period, the business defines strategicobjectives based on building mission, vision and core thought; analyzingexternal and internal factors; exactly defining opportunities, threats,strengths, weaknesses, and then select suitable strategies

 Period 2 : Implement the strategy

This is a period apply the strategy into practice in order to achieve givenobjectives During process of strategic management, this period is quiteimportant because whatever a strategy is formed systematically, it willbecome meaningless if it isn’t performed well Three basic steps in theperiod of strategy implementation are: building annual business plans/establishing annual objectives, putting forth policies and distributingresources

 Period 3 : Evaluate the strategy

This the final period of process of strategic management In this period, itshould carry out the following works: re-considering basic factors of thecurrent strategy, measuring achievements and implementing adjustments.

1.2 Mission, Vision, Purpose, Policy, Core thought

1.2.1 Vision

Strategic vision expresses the highest or the most general desires, aspirationsthat an organization wants to obtain It can be considered vision as a road map ofthe business reflecting the future destination and the road that the business willfollow to achieve its goal On the other hand, strategic vision is drawing a picture ofpurposes, reasons and methods to attain given goals

Define and declare that vision play a specially important role, because itcollects all expectations in the business and encourage all efforts of the businesswith the aim of achieving purposes, lofty cause and ideal

1.2.2 Mission

Mission is a declaration bearing a long-term value on purpose, it helpsdistinguish one business with another Such declarations are also regarded asbusiness philosophies, business principles, and the Company’s faith

Mission announcement “reason for existence” of the Company; In theviewpoint of Drucker, the mission announcement of the Company answers the

question: “What are your business works ?”, “What/ how should you do to achieve mission announcement ?”

suitable, reasonable and clear A business includes many sections, so purposesshould be built for the whole Company and each section.

1.2.4 Policy

Fred R.David: “Policy is a tool to carry out strategies, a means to achieve objectives Policies include instructions, rules and procedures designed to support efforts to achieve given objectives Policies are directions to make decisions and express repetitive circumstances or periodical ones”.

1.2.5 Core thought

Core thought defines long-term features of an organization; this is aconsistent determination exceeding the life circle of product or market, technologybreakthrough, management methods and leaders In fact, core thought creates themost important and sustainable contributions for successes of a visionary company

Core value constitutes fundamental and sustainable rules, principles of anorganization Core values don’t need external support; they are valuable andimportant to the internal organization A company should define core values whichare independent of the current environment, competitive demands and managementmethod In order to identify core values, it should select the truthfulness, and thendefine which value is the focus

1.3 The strategy’s analysis

When developing and executing the strategy, managers should perform animportant work; i.e., analyse the business environment where the business iscompeting or may penetrate in the future Systematic analysis can help managersevaluate the current rate of profitability, define opposite forces or take advantage ofthem in order to improve the business capacity, evaluate the impact of big changes;moreover, helps define ways to change the industry’s structure The businessenvironment includes internal environment and external environment

1.3.1 Analyse external environment

External environment includes factors, forces, and institutions occurringoutside the business and beyond its control, it influences the efficiency andoperations of the business.

Identify and evaluate opportunities and threats from external environmentallows the business to define its mission, task clearly and exactly; build strategiesand achieve long-term objectives and policies with a view of attaining annualobjectives

External environment includes:

 Macro environment or general environment

 The industry’s environment or micro environment or competitiveenvironment

1.3.1.1 Analyse macro environment

Macro environment is an environment covering operations and affectingdirectly or indirectly all operations of businesses

The main purpose of macro environment analysis is to identify the change inexpected tendencies from external factors Focusing on the future, external

environment analysis allows the business to identify and evaluate: O-Opportunities

of the environment where the business may take advantage and T-Threats that the

business may face up with Then, allow the business to build business tasks clearly,define long-term and feasible objectives and design strategies in conformity withbusiness objectives

We can use PEST model to analyse macro environment The model consists

influenced by them as an objective factor Based on impacts, businesses will putforth appropriate policies and actions.

1.3.1.2 Political environment

Political factors also have a big influence on the rate of opportunities andthreats from the environment The main thing of this environment is the method thatbusinesses can affect the Government and vice versa, the method that theGovernment affect them

1.3.1.3 Economic environment

The status of macroeconomic environment defines the healthiness, prosperity

of the economy; it always impacts on businesses and industries

Economic environment indicates the nature and orientation of the economythat the business is operating The economy’s influences on a company can changethe profitability Four important factors in the macro economy are the growth rate ofthe economy, interest rate, exchange rate and inflation rate

1.3.1.4 Socio-cultural environment

Socio-cultural environment is related to social attitudes and cultural values.Because cultural values and social attitudes create a social basis; so it often leadschanges and technological, political, economic and demographic conditions Similar

to technological changes, social changes also create both opportunities and threats

1.3.1.5 Technological environment

Technological environment includes institutions, operations relating to createnew knowledge, transfer them to inputs, products, processes and new materials.Technological change consists of creativity and termination, opportunities andthreats One of the most important impacts of technological change is that it canaffect the height of entry barrier and re-organization on the structure’s origin

1.3.1.6 Natural environment

Natural environment includes: geographical position, climate, naturallandscape, land, sea and rivers, mineral resources, forestry resources, purity of

water and air environment, etc,v.v ensuring necessary input factors and operatingenvironment of the business

1.3.1.7 Global environment

Global environment includes relevant global markets, changing markets,important international events, institutional features and basic culture on globalmarkets Globalize business markets creates both opportunities and threats

1.3.2 Analyse internal environment

Internal environment of a business includes internal factors In order to existand develop, all businesses carry out the following operations: management,finance, accounting, production/ business/ operation, research and development,marketing, etc… and have an information system, a management system, andfunctional sections

Internal environment analysis is to define S-Strengths as well as

W-Weaknesses of businesses

 S-Strengths: that the business is carrying out well or features help the

business have competitive ability, including:

- Secrets, skills, experience or special methods

- Have strengths in material facilities such as: abundant capital, a bigdistribution system

- Have a strong human resource,v.v

 W-Weaknesses: shortcomings of the business or factors pushing the

business in difficult circumstances, including:

- Lack of important competitive skills and experience

- Lack of resources: human resources, financial resources, etc v.v

The result of internal environment analysis is to define resources, capacities andcore capacities and then build a competitive advantage and strategic competitiveadvantage of the business Competitive advantage of the business means that thebusiness has the ability to supply the market a special value which no rival can

1.3.2.1 Matrix (Internal Factor Evaluation)

IFE Matrix summarizes and evaluates basic strengths and weaknesses of abusiness The matrix shows strengths that the business should promote andweaknesses that the business should improve to raise its achievement andcompetitive advantage This is an important tool in forming the strategy forbusinesses

1.3.2.2 Company Profile Matrix (CPM)

CPM is to compare one business with its main competitors, based on factorsaffecting the competitive ability of businesses CPM helps strategic managersidentify main competitors as well as their strengths and weaknesses, and clearlyrecognize its competitive advantage and shortcomings With this matrix, we can putmain factors of internal environment in, which influence the business’sdevelopment such as: financial stability, the efficiency of marketing

1.3.3 Analyse the environment inside industry

In order to form a strategy, apart from macro environment analysis, researchthe environment inside industry is an absolutely important content Theenvironment inside industry is an environment directly associated with eachbusiness, most of operations and competition of businesses occur directly in thisenvironment

 Five competitive forces model

Michael E Porter, a famous professor specialized in business strategies ofHarvard Business School, put forth five competitive forces model, supportingstrategic managers to analyse competitive environment, identify opportunities andthreats from this environment and then build appropriate strategies In his opinion,there are 5 competitive forces:

1.3.3.1 Competitive pressure from potential entrants

In the viewpoint of M-Porter, potential entrants are businesses which aren’tpresent in industry but may affect the industry in the future How many potentialentrants, how their pressure on the industry, weak or strong, depends on thefollowing factors:

- The industry’s attraction: This factor is reflected through criteria such as:profitability rate, quantity of buyers, and quantity of businesses in the industry.

- Barriers when entering into the industry: factors make participation into anindustry more difficult and expensive (scale advantage, product difference; capitaldemand; convertible cost; approach ability to distribution channels; costdisadvantages unrelated to the size; the Government policies; reprisals of businesses

in the industry)

1.3.3.2 Competitive pressure from substitute

Substitute is the product of industries under the demand of buyers similar toproducts in the industry The appearance of substitutes can reduce the selling price

or profits of businesses Thus, businesses should predict and analyse thedevelopment trend of substitutes of businesses

1.3.3.3 Competitive pressure from buyers

Buyers are subjects of businesses and key factor creating the market.Pressure from buyers exists chiefly under two forms: claim for discount or bargain

to have a better product/ service and they are people controlling competition in theindustry through their decision This makes competitors fight with each other andreduce the gross profit of industry

1.3.3.4 Competitive pressure from suppliers

Suppliers are individuals or organizations providing necessary resources forthe business’s operations Suppliers can create opportunities for the business whenreducing the selling price, improving the quality of products, improving the quality

of attached services On the contrary, it can also cause threats for the business whenincreasing the selling price, reducing the quality of products, services, not ensuringquantity and time of supply, etc…

1.3.3.5 Competitive pressure from the industry

Competitors are opponents trading in the same products/ services with thebusiness Competitors share market share with the business and can develop more ifthey have a higher competitive position Competitiveness increase or decrease in the

industry depends on the market scale, the industry’s growth and the investment rate

of competitors The nature and intensity of competition among available businesses

in the industry depends on many factors:

- Competitors are crowded or have similar scale

- The industry’s growth speed

- Fixed cost and storage cost are high

- Lack of product diversification and variable cost

- The industry has redundant capacities

- The industry’s diversification

- Lay a bet on the industry is high

- Barriers for withdrawal

 EFE Matrix (External Factor Evaluation)

EFE Matrix summarizes and evaluates main opportunities and threats to thebusiness from external environment It helps strategic managers assess the reactionlevel of the business for opportunities and threats, put forth external environmentappraisals which may cause advantages or disadvantages for the business

1.3.4 Business strategies

In order to exist in a severe competition, the Company should create acompetitive advantage Competitive advantage is reflected under two basic forms:the lowest cost or product differentiation Combine two forms of competitiveadvantage with the business scope of the Company will shape 3 competitivestrategies:

 Cost leadership strategy

 Differentiation strategy

 Focus strategy Focus strategy has two specific methods: cost focus ordifferentiation focus

1.3.4.1 Cost leadership strategy

Cost leadership strategy was widely applied in the 1970s of the twentiethcentury in developed capitalist countries and nowadays it has been used in many

developing countries The nature of cost leadership strategy is how achieve totalcost-leadership in the industry (production, management), on the basis ofimplementing policies: focus on investing in material facilities, equipments, massproduction in order to take advantage of large-scale, pursue the aim of costreduction from experience, cost control and expense minimization, cost reductionfor R & D, marketing, advertisement, etc,v.v

The purpose of the Company is to pursue this strategy; i.e., create newproducts, services with the lowest cost in order to overcome competitors to existand develop Companies selecting cost leadership strategy have low differentiation,market sections are low, typical strength concentrates on production managementand material supply With low cost, the Company has the ability to sell a largenumber of products, creating favourable conditions to promote production, reducethe price of products

 Strong points

- Due to low cost, the Company can sell its products lower than competitorsbut keep expected profits In case, competitors sell products at the same price, theCompany including the lowest cost will achieve higher profit

- When the business scope starts to develop, if a price war happens andcompanies compete with each other on price, the Company including lower costwill won based on better competitiveness

- The Company easily confronts when having pressure on price increase ofsuppliers

1.3.4.2 Differentiation strategy

The nature of differentiation strategy is to create things that the wholeindustry recognizes “unique, incomparable” Differentiation can be expressed undermany forms: product design, quality, trade mark, manufacturing technology,customer service, etc,v.v

The purpose of differentiation strategy is to achieve competitive advantagethrough creating unique products for buyers, meet the demand of buyers by ways

that competitors can’t do This possibility allows fixing a “dominant price” forproducts, increasing revenue and achieving above average profits “Dominant” priceoften is much higher than the price of companies pursuing cost-leadership strategyand received by buyers because they believe that products have a high quality.Hence, products are valued on the basis of market, at a level that the market accepts.

1.3.4.3 Focus strategy

Unlike cost-leadership strategy and differentiation strategy, the nature offocus strategy is to satisfy the need of a certain part of market which is definedthrough geographical factors, objects or product features, etc… Like differentiationstrategy, focus strategy can carry out under many methods: focus on low-leadership

or focus on differentiation or both, means that the Company carries out leadership strategy or differentiation strategy only in the selected part of market inorder to gain competitive advantage

cost-1.4 Tools to build and select strategies

1.4.1 SWOT Matrix

SWOT is a abbreviation set of first letters of English words: Strengths,Weaknesses, Opportunities and Threats This is an extremely useful tool helping uslearn about matters or making decisions in organization, management as well assales In other words, SWOT is a theoretical framework that we depend on and re-consider strategies, define the position as well as road of an organization, acompany, and analyze business suggestions or any ideas relating to the business’srights and interests In fact, apply SWOT in building business strategies, formingstrategies, evaluating competitors, surveying the market, developing products andreporting researches, etc… has been increasingly selected by many businesses

Analyze SWOT for the business to know more thoroughly about:

 Strengths of resources

 Weaknesses of resources

 Best opportunity

 Fundamental challenge

Then, the business can draw a conclusion that how to mobilize resourcesinside and outside the business effectively.

Table 1.1: SWOT analysis

- Expand series of product

- Transfer skills to a newproduct

- Expand to exploit newopportunities

- Expand to enhancebrand name/ image

- New regulations cost muchmoney

- The rate to be affectedbefore business pool

- Buyers or suppliers havemore advantage

- Change the need of buyers

- Good customer service

- Better quality products

- Joint and joint-venture

W: Weaknesses

- Not have a clear strategic

orientation

- Backward equipments

- Bad accounting, high debts

- Overall cost is higher than

- Narrow series of product

- Bad marketing skills

WO strategies

Repair weaknesses toexploit opportunities

WT strategies

Repair weaknesses toovercome/ avoid threats

1.4.2 Quantitative Strategic Planning Matrix (QSPM)

QSPM is a tool to decide which strategy is the best for businesses QSPMuses input factors by analysing EFE, IFE and the summary result of SWOT analysis

in order to objectively decide the best strategy for replacement In order to developQSPM, there are 6 steps as follows:

 Step 1 : List important external opportunities/ threats and internal

weaknesses/strengths of the business

 Step 2 : Classify each successful internal and external factor (this classification like IFE, EFE Matrixes)

 Step 3 : Define replaceable strategies that the Company should consider

implementing Collect separate groups of strategy if possible

 Step 4 : Define (AS) AS expresses relative attraction of each strategy

compared to other strategies Only strategies of the same group compare to eachother AS is divided as follows: 1 = unattractive, 2 = a little attractive, 3 = quiteattractive, 4 = very attractive If successful factors don’t affect the choice ofstrategies, not mark attraction for these strategies

 Step 5 : Calculate (TAS), by multiplying classification mark (step 2) with AS

(step 4) in each row

 Step 6 : Calculate TAS for each strategy This is an addition of TAS in

strategy column; the higher mark expresses, the more attractive strategy is

CHAPTER 2 THE REAL SITUATION OF VAS BUSINESS STRATEGY OF

VIETTEL TELECOM IN THE PERIOD OF 2004 - 2010

2.1 General overview on VAS on mobile

2.1.1 Concept

VAS on mobile is services except for two basic services including call andSMS, provided to users through a system and terminal of mobile telecom network

2.1.2 Types of VAS

Popular VAS services are divided into 3 types as follows:

 Amusement service: This type is to attract clients, help fill free time of users,

including: ringing tone, waiting tone, game, game show, chatting, MMS, MobiTV,music gif, etc,v.v…

ImuzikGame online

 Information supply service: allow clients short information, feeds about

economics, market, weather, lottery result, football, education, real estate, transport,address searching, locating map, etc,v.v…

 Transactional, commercial services: allow clients performing commercial

transactions through mobile, for example: Mobile Banking, pay 199, Vmail, pushmail, Ishare, etc,v.v…

 Other utilities: Video call, Missing Call Alert (MCA), Call Block, SMS

block, access to internet by mobile (use Gprs, mobilebroadband), etc,v.v…

Mobile Internet Call Block

2.1.3 Forms of service supply VAS

- Service supply is based on the available foundation of the system of networkand equipments, normally utility services and some trading exchange services…ringing tones, MCA subscriber cost, Mobile TV, Daily Express, Imail Viettel isreceived 100% of revenue from the services

- Connecting with the content suppliers through providing the short 1stnumber, for example 6xxx, 7xxx, 8xxx, 1900xxxx to the content suppliers to bringthe services to the customers, these 1st numbers are used at the same among

telecommunication enterprises Telecommunication enterprises collect the fee fromthe customers and share partly with the content suppliers.

- Self-produce or re-buy the copyright of the contents, news to provide to thecustomers through the system of short 1st number or on the foundation of networkand equipment

2.1.4 Role of business development of VAS for the growth of revenue and development of market share for mobile subscribers of the enterprise

According to Nokia Firm about VAS service of many mobile networks in the world,there is the following information:

Picture 2.1: Number of people who are interested in value-added services

(VAS) in mobile phone (Source Nokia Market Study).

Therefore, there are total 86% of users at least interested in value-added

services (VAS) in mobile phone (Source Nokia Market Study).

- In many countries in the world, VAS makes up the relatively largeproportion in total revenue: in India, total revenue of VAS accounts for 24% in

2006 and quickly grew up to 60% in 2007 (Source IAMAI & eTechnology Group)

- In Vietnam, in the more and more severe competition context amongtelecommunication enterprises, the cost is decreased more and more and gradually

is asymptote to the price, doing business on VAS is an effective method so that theenterprises increases the revenue and profit

- The subscribers gradually become saturated in some coming years, rich andattractive value-added service is the favorable factor to attract the subscribers to

14% No aVALUE ADDITIONAL SERVICE

25% verry much Interest In Mobile VALUE ADDITIONAL SERVICE

34% quite Interest In Mobile VALUE ADDITIONAL SERVICE

27% a little Interest In Mobile VALUE ADDITIONAL

SERVICE

change from the competitors’ networks to use the enterprise’s service, helping theincrease of the subscribers

2.1.5 Factors have influenced on doing business on VAS

- In order to develop business on VAS on mobile phone, it is essential thatthe enterprise must have the large number of subscribers This is the directlyinteractive relationship between doing business on VAS and development of mobilesubscribers

- Modern network infrastructure is the important factor for development ofVAS When 3G technology appears together with a series of new good VAS which2G technology did not have: Video call, MobileTV, gameonline,v.v…

- Although the infrastructure plays the important role, the ability to exploitthe technology is also necessary factor in development of VAS, especially the utilityservices This could be seen in Vietnam; large enterprises use the same GSM tool,basic equipments imported from some main suppliers such as Nokia, Alcatel,Huwei ….but only Vietel exploits the service of Callblocking, SMS bloking(service of blocking the call and SMS with the subscribers selected by the hostsubscribers)

- Because of the close attachment between the growth of subscribers andability for development of VAS, besides some specific factors, the factors whichhave influence on the market of mobile subscribers also affect the business on VASand totally could evaluate VAS market through the mobile market adding to someparticular factors of the service

2.2 General view on mobile market in Vietnam

Mobile phone service has appearred in Vietnam since 1994 with about threethousand subscribers In 2002, the number of mobile subscribers is up toapproximately 1.8 million subscribers with two mobile suppliers-Mobilephone andVinaphone, administrated by VNPT Group From 1994 to 2004, mobile phonemarket in Vietnam has been exclusive by the two suppliers

With Viettel’s access in Vietnam mobile market in 2004, monopoly in thismarket was broken, gradually turning into competition and recieved some moremobile networks

Vietnam mobile market now consists of seven suppliers, five of which use GSM technology and the two left use CDMA The rate of subscribers using GSM is about96% of the total in the end of 2008 Viettel, Mobilephone and Vinaphone are three using-GSM providers which hold great market shares (about 90%), compared with some new providers such as Vietnammobile and Beeline Rate of customers using

CDMA is only 4% with the two network-Sfone and EVN Mobile (Source Ministry

of Information and Communication).

Vietnam’s telecom market has developed strongly with considerable growthnumbers According to the latest report from General Statistics Office, the number

of mobile subscribers rised quickly in the first half of 2010 Many experts estimatethat Vietnam mobile market will probably reach 20 million subscribers next year

Graph 2.1 : Mobile users - Source: General Statistics Office and MIC, June, 2010

However, APRU of Vietnam mobile is low and Vietnam is one of countrieswhich have the lowest APRU rate APRU in Vietnam in 2010 is 4USD/month, thelowest in Southeast Asia and higher than some countries in Asia-Pacific area likePakistan, Bangladesh and Sri Lanka

Graph 2.2 : APRU in some countries in 2008 (Source: Frost & Sullivan)

Table 2.1 : Vietnam mobile data- Event and forecast (Source Ministry of

Information and Communication)

In 2009, Ministry of Information and Comunication (MIC) reported

Vietnam’s mobile ARPU decreased 20% compared with that in 2008 and continued

to decreased in many next years One of the reasons of this reduction is that manymobile netwworks focused on developing subscribers with many differentpromotion forms such as the great decrease of mobile fee in 2009 and 2010 (in June

2009, Viettel, Vinaphone and Mobile cut down 30% mobile rate, continued todecrease about 10-15% in October, 2010) Besides, economic crisis also affectedARPU and made it decrease

In 2010, mobile networks began to exploit mobile services with 3Gtechnology According to MIC, total 3G subscribers of mobile networks is about 9

million (account June 2009)

Vinaphone is the first GSM supplier which officially supply 3G service intothe market at the end of 2009 Up to now, there are about 50 added value services

on mobile phone, most of which are 3G-designed services Being the later but

MobiFone has supplied its customers about 40 services such as Mobichat (messagechatting) , Mworld (reading information and stock market situation in Vietnam andforeign cuontries, etc.) Viettel also released about 30 different servicers like Mobilenewspaper (reading newspapers on mobile phone), I-Share (money transfering),Imuzik waiting ringtones), etc.

Viettel, Mobiphone and Vinaphone, the three greatest mobile networks inVietnam now make up 90% of mobile market, in which Mobiphone and Vinaphoneaccount for 49%, Viettel 38%, other 13%

Graph 2.3: Vietnam sharing mobile phone market (Source: General Statistics Office, 2010)

Telecommunication evenue in the year of 2010 reaches 5,9 billion USD,grows double than that in 2007 This growth comes from mobile field which willstill win the majority of telecommunication turnover up to 2015, including:

 Total revenue of VNPT group estimates 101.569 billion VND, grow nearly22% than in 2009, and pay state budget 7.855 billion VND, grow 3.2%

 Viettel’s revenue estimates to implement 91.134 billion VND, reaching117% of the plan, increasing 50% than in 2009

2.3 Introduction about Viettel telecom

2.3.1 General information about Viettel telecom

Full name : Viettel telecommunications company

Transaction name : Viettel Telecom

Head office : No 1 - Giang Van Minh - Ba Dình District - Hanoi.Website : http://vietteltelecom.vn