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

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 . 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 2004 . 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 high-speed 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. 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. 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. 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.

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

SOLVAY-BRUSSELS SCHOOL

First of all, I would like to extend my sincere gratitude to all Belgian and Vietnameseprofessors for their informative lectures and valuable support, which have broaden myview and knowledge

I am also grateful to the staff of International Training Faculty of NEU for theirprecious 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 forhis quite evaluable support for his students, myself included

I would like to express my thanks to managers and staffs at MobiFone, Vinaphone andViettel where I have made my acknowledgement and information collection

I am indebted to my wonderful friends, colleagues and family members, especiallymembers in group 8, who encouraged me and provided me with the great supportwhenever needed

Lastly, I offer my regards and blessings to all of those who supported me in anyrespect during the completion of this final project

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

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 services41 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

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 High speed package access

MIC 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

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

EXECUTIVE SUMMARY

Vietnam mobile market is highly competitive with the presence of 7 services operatorsand a new fierce race of launching and exploiting 3G technology has started Vietnammobile telecom services company (MobiFone) is facing a serious problem with 3Gservices which will be a real factor threatening MobiFone’s performance andcompetitiveness in the near future In order to give out recommendations towards 3Gvalue 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 towardsMobiFone 3G mobile broadband value added services

3 To identify the main factors that influence the customers’ behavior towardsMobiFone 3G mobile broadband value added services

4 To propose recommendations for marketing activities towards MobiFone 3Gmobile broadband value added services

The research methodology of qualitative and quantitative research is applied in thewhole process of the research Secondary data was gathered both from internal andexternal sources In-depth interviews with MobiFone leaders is to understand theiridentification to MobiFone 3G services in particular and the mobile market in generaland a quantitative survey of 150 respondents were undertaken in Hanoi for bothMobiFone customers those who haven’t yet used 3G services and those who have used3G services

Besides the overview of 3G market, following are some main research findings fromthe survey:

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

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

- 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; tariffspackage options and promotion.

- When customers want to search information for 3G services, the first choice issearching web page Followed is getting information from MobiFone’s shop andasking MobiFone service centers

- MobiFone 3G customers only nearly slightly satisfy with the services and they feltnot certain to introduce 3G value added services to relatives, friends andcolleagues

From these findings, I have come up with several recommendations proposed for 3Gvalue added services marketing activities that are worth to be considered to solve theproblem In details:

- Diversifying charges and tariff packages for 3G services: the solution of reducingcharges should be considered and proposed gradually; tariff packages are applied toall services Regarding to students and those who are finding chance to try on many3G services, the special low tariff packages should be prepared to welcome them

- Concentrating on main services: Fastconnect should be received the priorities toreintroduce its benefits to customers New services could attract more customersand give more services options to customers

- Increasing the attraction and frequency of promotion programs: more promotionprograms should be continued to keep customers staying For the newer, thepromotion should be combined with special tariff packages and impressiveintroduction events

- Focusing on providing detailed information to customers through onlineadvertising, 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

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 mixedeconomy under one-party rule Vietnam has been one of the fastest-growingeconomies in Asia in recent years, with GDP growth averaging 6.5% annually between

2000 and 2010 and income per capita reached 1,160 USD1 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 mobilemarket continues to grow strongly, with the sales of 2009 reaching 4.032,5 millionUSD seizing 59% the sales of the whole telecommunications industry Vietnam hasalso 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 millionmobile 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 servicesoperators 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 EVNTelecom And it was a signal to start up the next phase in Vietnam mobile market’sdevelopment The most prominent improvement of 3G technology is to provide high-speed communications and to implement communication services based onmultimedia mobile technology 3G developments are expected to make a breakthroughfor digital content services to exploit the value of the future’s technology, bring moreand more benefits to customers

Vietnam Mobile Telecom Services Company, the first GMS mobile telephony servicescompany provider in the brand name MobiFone with 17 years of operating, is one ofthree biggest mobile operators which are dominating Vietnam mobile market AndVietnam 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 thefierce competition in the mobile market, 3G technology can be an opportunity, but canalso be a challenge for MobiFone, especially in the near future while the secondposition in the market of MobiFone is threatened

1 http://www.nhandan.com.vn/cmlink/nhandan-online/homepage/economics

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

At the moment, MobiFone’s 3G networks now cover most of the nation's cities withcostly investments for setting up the network and deploying services to customersaround the country The total investment MobiFone committed to Post andTelecommunication 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 ascommitted have been installed And the budget for 3G advertising campaign throughmasses 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 ofcustomers using 3G services in July 2010 is around 1 million customers, meanwhile atthat moment MobiFone has around 32 million subscribers And the revenue of 3Gservices accounted only for 0.1% of total company revenue and the growth ratemonthly 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 markethas been very exciting with a variety of marketing activities held everywhere aroundand continuously The two competitors, Viettel and Vinaphone, have attractedcustomers with many promotions and impressive introduction events And despite ofthe fact that Viettel had to launched 3G network 4 months after MobiFone andVinaphone, Viettel had better results in many aspects with double numbers ofcustomers and many times higher in data traffic which is linked directly to therevenue And Vinaphone also expressed the determination to be the technologypioneer 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 nearfuture

That’s why, the questions posed to MobiFone were How to attract more customers totry on and use 3G services? How to increase the revenue of 3G services? What aresolutions for the problem? What are customers’ behaviors towards 3G services Andfirstly it’s required to propose the recommendations for MobiFone, especially inmarketing activities which have the most feasibility And it’s also emphasized that thenext campaigns deployed must be based on the current 3G services’ situation and theunderstanding of MobiFone customers’ behaviors towards 3G services

3 , 4 MobiFone’s 6 months 3G services internal report, 7/2010

4

2 Research objectives

In order to understand the current 3G situation, customers’ behaviors towards 3Gservices 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 towardsMobiFone 3G mobile broadband value added services

3 To Identify the main factors that influence the customers’ behavior towardsMobiFone 3G mobile broadband value added services

4 To Propose recommendations for marketing activities towards MobiFone 3Gmobile broadband value added services

3 Research questions

In order to understand the current situation, customers’ behaviors and give outrecommendations towards MobiFone 3G value added services, the research objectivesare 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 broadbandvalue added services?

3 What are recommendations to improve marketing activities applied towardsMobiFone 3G mobile broadband value added services?

4 Research scope and limitations

Due to limited time frame and budget, this research cannot make a nationwidecoverage at this stage and to all potential customers segments Hence, it basically aims

to understand the customers’ behaviors towards MobiFone 3G mobile broadband valueaadded services in order to propose recommendations for marketing activities inHanoi The quantitative survey was held with 150 questionnaires gathered for bothMobiFone customers those who haven’t yet used 3G services and those who haveused The survey was run in Ha Noi and questionnaires were distributed to MobiFonecustomers 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

Introduction

Chapter I Research Methodology

This chapter presents the key concepts, basic theories relating to understandingcustomers’ behaviors, especially factors influencing customers’ behaviors Thischapter also introduces research methodology, including secondary and primaryresearch applied to information searching and survey The details of secondary datasources and method to collect primary data and analyze data are all presented in thischapter

Chapter II Overview of 3G market in Vietnam

This chapter covers a brief overview of 3G technology; 3G value added services andtheir benefits to customers and opportunities of 3G value added services development

in Vietnam The market share overview of 7 Vietnam mobile services operators andtheir 3G launching schedules are presented after that

Chapter III MobiFone Overview

This chapter provides an overview of Vietnam Mobile Telecom Services Companyand detailed information on MobiFone and competitors’ 3G value added servicesactivities 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 withthe facts and figures illustrated either in the charts or data tables to answer the researchquestions raised: finding out the main factors that influence the customers’ behaviorstowards MobiFone 3G services

Chapter V Recommendations

Based on the findings from survey on the customers’ behaviors towards MobiFone 3Gvalue added services, some recommendations and suggestions are proposed to improvemarketing activities for MobiFone 3G value added services

Conclusion

CHAPTER I RESEARCH METHODOLOGY

This chapter presents the key concepts, basic theories relating to customers’ behaviors,especially factors influencing customers’ behaviors This chapter also introducesresearch methodology, including secondary and primary research applied toinformation searching and survey The details of secondary data sources and method tocollect 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 tocustomers’ behaviors understanding written by Phillip Kotler were applied as a basefor the research

I.1.1 Definition of consumers’ behavior:

“The aim of marketing is to meet and satisfy target customers and wants better thancompetitors Consumer behavior is the study of how individuals, groups, andorganizations select, buy, use, and dispose of goods, services, ideas, or experiences tosatisfy their needs and wants Studying consumers provides clues for improving orintroducing 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

(Source: Phillip Kotler, Marketing Management, twelfth edition 2006, P.178)

Cultural Factors: According to Phillip Kotler (2006), culture, subculture, and socialclass are particularly important influences on consumer buying behavior Culture is the

Consumer Psychology

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

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 showstyle, lifestyle, high technology Especially for the young and middle-aged, the maintarget group of mobile networks, with a modern, young, dynamic, creative andsuccessful style, the mobile phone is often seen as an indispensable device to expressthemselves 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 bysuch social factors as reference groups, family, and social roles and statuses Groupshaving a direct influence on a person are called membership groups Somemembership groups are primary groups, such as family, friends, neighbors, and co-workers, those with whom the person interacts fairly continuously and informally.People also belong to secondary groups, such as religious, professional, and trade-union groups With mobile phones, membership groups: family, friends, and co-workers 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 InVietnamese 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 theorder 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 lifecycle, occupation, economic circumstances, lifestyle and personality and self-concept Psychological Factors: Maslow’s theory on motivation explained why people aredriven by particular needs at particular time Maslow assumed that human needs arearranged 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 self-actualization For mobile users, the basic needs of customers are met through the basicmobile services like voice and short message…With the value added services, the nextpressing 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

(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 informationwith 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 processlook for solutions to their problems or needs Customers also discuss their needs withfriends and relatives to see what solutions they may suggest For more expensivepurchases, customers may read reviews, look through newspapers or research theproduct online

Alternative Evaluation: Consumers evaluate their purchase options based on productattributes 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 tobuy, when to buy and whether to buy For routine goods such as groceries, consumersmay simply go to their favorite grocery store, but for electronic and hi-tech productspurchases, they may browse multiple stores which have more choices

Post-Purchase Behavior: After making a purchase, a consumer mentally ranks herpurchase satisfaction Customer’s evaluation determines whether the customer willpurchase the product or brand again Customers, who are happy with their purchasesand feel they received a quality product at a good price, will become repeat customersand will tell others about their experience

I.2 Research methodology

I.2.1 Research process

Diagram 3: Research process

Proposing recommendations for 3G services

Problem

recognition

Information search

Evaluation of alternatives

Purchase decision

Post- purchase behavior

(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’sreports, 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 ServicesCompany: one vice general director (marketing CEO) and one manager of value addedservices department Information collected from the interviews was used to assess andoverview 3G services and 3G market situation

For the quantitative survey, 150 questionnaires were gathered at the end of the surveyand there were 2 groups: MobiFone customers those who haven’t yet used 3G servicesand those who have used And in order to have clear and firm findings for MobiFonecustomers who have used MobiFone 3G services, the respondents of that group wasoriented to reach over one third of the total The questionnaires collected are 98 ofMobiFone customers who haven’t yet used MobiFone 3G services and 52 of thosewho have used the services

The questionnaires were distributed mainly at the reception tables in MobiFoneshowroom, MobiFone shops and MobiFone dealers’ shops by MobiFone andMobiFone dealers’ staffs They were released and collected under the MobiFonemanner as in MobiFone 8 commitments to customers Also the survey was made inHanoi universities, Vietnam commercial universities and some offices in Hanoi

Information collected was related to MobiFone customers’ behaviors towards 3Gservices The questionnaires had 20 questions of customers’ behaviors and 6 generalquestions 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 whichwas helpful to analyze and describe the statistics All the questionnaires and eachcontent of the questions were quoted by numbers and then were input into the databaseand the analyzing was published by the output of SPSS, based on the chosen

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

CHAPTER II: OVERVIEW OF 3G MARKETS IN VIETNAM

This chapter covers a brief overview of 3G technology; 3G value added services andtheir benefits to customers and opportunities of 3G value added services development

in Vietnam The market share overview of 7 Vietnam mobile services operators andtheir 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 mobiletelephone technology and mobile telecommunications services fulfilling specifications

by the International Telecommunication Union 3G allows data transfer both voice andnon voice data (data, email, instant messaging, images .) The forerunner of 3Gtechnology is 1G (launched in the late 1970s, early 1980s) and 2.5G and 2G (digitalmobile phone system)

The strengths of this technology compared to 2G and 2.5G technology that allowstransmission and reception of data, voice, and image quality for both subscribers andfixed subscribers at the speed of 20-30 Kps are moving to a different stage with themaximum speed up to 14.4 Mbps

Around the world, 267 HSPA/3G commercial operators launched widely in 114countries/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% annualgrowth It’s expected that in 2010 the mobile broadband subscriptions worldwidewould speed up to 1.3 billion and HSPA/3G would seize up to nearly 70% marketshare of wireless broadband Number of 3G users in 10 EU countries expected toincrease 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 theoperation and conditions to exploit of 3G services Businesses have focused necessaryand sufficient elements to deploy 3G technology MIC also believes that the adoption

of 3G technology will not only bring benefits to the telecommunications industry butalso 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

and introduce 3G toward customers from Q4 2009 Vinaphone was the first operatorpermitted to launch 3G network in November 10-2009, MobiFone is the second oneputting 3G into operation from December 15- 2009 As one of three giants, Viettelbecame the next operator to launch 3G in May 04- 2010 And EVN and HanoiTelecom partnership committed after 9 months from the date of receiving the officiallicense 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 thebenefits to customers, especially with a lot of 3G mobile broadband value addedservices Faster data rates and mobiles with larger color screens will enable newservices to be created giving a new cyber-air-space So, customers don’t have to losetime anymore to wait for downloading data and begin to access internet smoothly formany purposes, in real time, with not only their own mobile but also their laptop and3G devices, even when they are traveling on the transport vehicles

Service providers, content providers, value-added applications providers andapplication developers are all competing for end customers to create more newproducts and business opportunities Some popular 3G mobile broadband value addedservices can be listed as followed:

 Web connectivity: mobile web browsing at high speed

 Live entertainment& media: Mobile TV–TV channels directly to thesubscriber'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 trafficconditions 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 that3G 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

continuously in five years, but the ARPU (Average Revenue per User) is decliningseriously ARPU is important because it provides a breakdown of what is drivingrevenue 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 at7-8 USD per month, statistics consulting firm RJB was raised at the InternationalTelecommunications Conference 2008 fell 8% yearly6 Price war is currently underway between the country’s three leading cellos; this will likely also put considerabledownward pressure on mobile ARPU levels Besides, according to its report, Vietnamhas around 85% of mobile subscribers use prepaid form Small market, lowconsumption with low ARPU and decreased deployment is why 3G value addedservices is considered the door to mobile telecommunication business can continue togrow "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 astrong infrastructure for the national services such as electronic commerce, electronicgovernment, interdisciplinary connections, privacy and security When consumershave the opportunity to choose services matching with their money, the operators’competition must base on content providing and quality of services, not on loweringthe 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 transmissiontechnology, if the 3G network does not successfully deployed to consumers, wastefulresources from operators will be enormous Therefore, it’s a top priority issue foroperators to successfully deploy 3G services to customers, solve the problem of ARPUand 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 (HanoiTelecom), Beeline (G-Tel)) and two operators licensed MVNO (Mobile virtualnetwork 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

the saturation point, Vietnam is one of the most intense competition mobilecommunication 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 anincrease 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 Theother mobile services operators namely: S-Fone, G-Tel, EVN, Vietnamobile with thetotal numbers of customers around 4.48 million Therefore, the Vietnam mobilemarket is witnessing the fierce competition among the three biggest mobile operatorsnot 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 Telecom 7, under the Military Telecommunications Corporation, established aradio network in 1998 However, its major breakthrough came in 2003 when it startedrolling out a GSM mobile network And with its fastest impressive developmentgrowth rate, Viettel has quickly become the business seizing the biggest market share

In 2009, Viettel continues to maintain high growth in the mobile market, reaching81% Turnover reached 60.2 trillion VND By the end of 2009, cumulative mobile

7 http://www.viettel.com.vn/

subscribers of Viettel reached 33.2 million, make up 33.8%8 Viettel has developedtelecommunications 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 hasactively implemented various commercial activities to introduce 3G services tocustomers, so as soon as Viettel has launched 3G, there were a number of customersusing 3G services Viettel said that the network has installed 8.000 3G stations, 1.5times higher than the commitment to MIC and coverage to the district centers and theneighboring communes of 63 provinces and cities across the country Viettel alsoshows its determination of reaching 40% of Viettel customers using 3G within 04years and by the end of 2010, Viettel is expected to complete the installation of 3G20,000 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 andTelecommunication Corporation (VNPT) and was transformed to be one memberlimited 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 isstill considered to be the second largest mobile operator in Vietnam market, servingapproximately 26.6 million customers by the end of 2009 (equivalent to 27.15% of thetotal mobile market) MobiFone’s 2009 revenues reached VND17.5trn, up by 25% inthe year, despite economic downturn It’s estimated that by the end of 2010, thenumber of customers reached the number of 34 million MobiFone’s strengths are itsbrand and network quality which is built and maintained right from the early years ofestablishment 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 wasofficially launched 3G networks on December 15- 2009, with the commitment thatMobiFone will have the coverage of 3G network to 100% of the 63 urban cities acrossthe 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 denselypopulated urban areas, urban, suburban, rural and highway connection By the end ofJuly 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 http://www.mobifone.com.vn

country Mr Le Ngoc Minh, Director of MobiFone, confirmed that MobiFonedetermines 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 andbecame 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 itsposition that held in some previous years Vinaphone has made more positive changessince 2007 through a self-renewal commercial campaign titled "Vinaphone- moremodern, more dynamic" And by the end of 2009, the number of mobile customersserved by Vinaphone is estimated to have risen to 26.7 million, seizing 27.19% marketshare

On November 12-2010, Vinaphone has become the first mobile operator to provide 3Gservices to customers According to its commitments, Vinaphone has 3G coverage inmajor cities and provinces across the country Along with the inauguration, Vinaphonealso conducted highly competitive advertising and promotions campaigns for 3Gservices.10

S-Fone 11 is a cooperation project between Sai Gon Postel and SLD Co., Ltd (now

called SK Telecom Vietnam), under the form of Business Cooperation Contract toprovide nationwide mobile telephony services, fixed-wireless telephony services andother value added services using CDMA (Code Division Multiple Access) technology

It will be the very first Business Cooperation Contract to be converted to a JointVenture 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 3GMobile Telecommunications Services However, because of CDMA’s disadvantages

in mobile handsets devices and limited coverage (only available in 13 provinces andcities), S-Fone had only around 460.000 subscribers, 4.67% market share

Vietnamobile (Hanoi Telecom), established in 200112 The majority of shares ofHanoi 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 deployingits services in January 2007 By the end of 2007, Hanoi Telecom’s mobile service, HTMobile, was reported to have just fewer than 403.000 customers, up to 4,11% market

10 http://www.vinaphone.com.vn

11 http://www.sfone.com.vn/

12 http://www.vietnamobile.com.vn/

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 mobilesubscribers As expected, EVN will be equitized in 2010 The state capital will beremained and the shares will be sold to strategic investors, outside investors andofficials and public employees The two strategic investors, Singapore and Malaysiawas officially made a strategic partner proposal with EVN If EVN Telecomcompleted the equitization process in September next, then this will be the firsttelecommunications enterprise equitization is done.13

In April 2009, Hanoi Telecom and EVN Telecom received a joint license to build andoperate a 3G network in Vietnam The two companies plan to construct 5,000 basetransceiver stations (BTS) over the next three years to provide 50% of residential areaswith third generation services On June 09-2010, EVN Telecom was officiallylaunched 3G network with the number of 2.500 stations initially installed, 46%population coverage At the first phase of 3G deploying, EVN focused on goodservices in five main provinces and cities in the nation EVN's goal is to bring a highquality, 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 integratedtelecommunications operator in Eastern Europe & Central Asia GTEL Mobile is notonly a business enterprise purely but also the international combination aiming tobring Vietnamese peoples a new trend and style in telecommunications industry.Beeline marking its new entrance to Vietnam mobile market with very cheap Big Zeropackage tariff has created the impression with customers in the earlier releasingmonths However, due to the limitations: a newcomer, limited coverage, limiteddistribution channels .GTel got a number of 212.162 customers, 2,16% marketshare.14

13 http://www.evntelecom.com.vn/

14 http://beeline.vn/vn/default.aspx

CHAPTER III MOBIFONE OVERVIEW& MOBIFONE 3G SERVICES

This chapter provides an overview of Vietnam Mobile Telecom Services Companyand detailed information on MobiFone and competitors’ 3G value added servicesactivities and results at the first stage of introduction

III.1 History& Organization

Vietnam Mobile Telecom Services Company, a state-owned company under MIC, was founded on April 16th 1993 MobiFone has become the first GMS 900/1800MHz mobile telephony services provider in the brand name MobiFone, with businesssector of building, developing network and providing mobile telephony MobiFone has

VNPT-a distribution network of over 130 offices VNPT-and 320 mVNPT-ain deVNPT-alers throughout VietnVNPT-am15.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 servicescenters and one design Factory MobiFone’s strengths is its brand name and networkquality 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 andmarketing techniques MobiFone is the leading mobile phone service provider inVietnam in term of network quality and is selected as of the best mobile operator inthree consecutive years (from 2005-2008) in the Vietnam Mobile Awards Ceremonyorganized by E-chip Mobile Magazine In 2009, MobiFone was received the ExcellentOperator 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 servingnearly 36 million nationwide

15 http://www.mobifone.com.vn

III.2 Vision, Mission & business philosophy

- We are always innovative to provide new value added services to customers

- All information is shared in the most transparent manner

- We are place of sending and sharing most trusted benefits of the staff members,customers, shareholders and communities

Core values

Transparency

The transparency is reflected from the awareness to actions of each individual in thecompany Governance transparency, cooperation transparency, accountability andinterests transparency

Consensus

Highlight the consensus and cohesion in a friendly working environment, to developMobiFone to become a strong and reliable partner of all stakeholders in Vietnam andinternational telecommunications sector

Prestige

Being proud of the superiority of a leading brand in the field of mobilecommunications in Vietnam, customers are always served considerately and havemany options The friendly way in serving and a firm stuff makes the difference toMobiFone and help MobiFone having a special place in customers’ mind

Creation

Dissatisfied with what it has, but always dream of reaching up, learning, creating andinnovating to better meet the growing needs and constantly changing of the market

Responsibilities

The development associated with social responsibility is the tradition of MobiFone

We are committed to providing social services products and excellent mobilecommunication, sharing and shouldering the responsibility to society for a sustainablefuture

III 3 Core services

MobiFone are providing 3 main groups of mobile services to customers:

- Postpaid services: the customer is charged for usage in the prior month, and hencedoes not feature any limitations on volume of service used MobiFone postpaidservices: MobiGold

- Prepaid services: credit is purchased in advance of service use MobiFone prepaidservices: MobiCard, Mobi4U, MobiQ and Mobi365

- Value added services are all services beyond standard voice calls, used by bothpostpaid and prepaid customers Besides of basic value added services: shortmessage service, there are a variety of value added services which are provided andcreated continuously to meet the demand of customers

 MobiFone 2G value added services: GPRS, MMS, Roaming, mGame, mStory,mSpace, Chat and Push mail, Call baring, mWorld, Funring, Call me back…

 MobiFone 3G value added services: Videocall, Mobile Internet, Fastconnect,Mobile TV and others

III 4 Commitment to customers

Since MobiFone’s mission is to provide telecommunication services for customers, thevalues are mainly focusing on the staff’s attitude to provide best services forcustomers, including high quality service, politeness and joyfulness, listening andcooperating, quick and accurate manner, devotedness and innovativeness These arethe standards that MobiFone’s staffs perceive as values of their company and theyconvey these values in their daily services for customers They are summarized in 8norms with customers:

 Greeting every customer with a friendly smile

 Listening to customers and treat them with respect

 Trying to understand, find out and anticipate the customer needs

 Providing accurate information on all MobiFone’s services

 Taking the responsibility to the customers

 Keeping promises and being honest

 Apologizing personally when customers are not satisfied with the services, regardless offault

 Saying thank you to every customer and encouraging them to give their feedback

III.5 Company Performance

MobiFone is still operating under the governance of VNPT and independent in someresources Telecommunication is directly related to national security and plays a

crucial role to the infrastructure of the country, so it is received highly concern andcontrolled by the Government and other regulatory bodies, not only on outsiderelations but also internal operations Like other telecommunication companies,MobiFone is regulated by the MIC, VNPT, Ministry of Natural Resources andEnvironment, Frequency Agency and some other national institutions MIC andVNPT’s main current managing functions to MobiFone including: giving guidance inimplementation of laws as well as development strategies; regulating the developmentplan; regulating charges and tariffs; regulating the quality and regulating numberingresources.

By the end of 2010, MobiFone has completed the planned targets set by VNPT traffic,with revenue growth of 30% compared with 2009, reaching 36,034 billion, completed100.09% of the plan This revenue accounted for 35% of all sales VNPT In particular,MobiFone has paid to the state budget is 4.200 billion, profit before tax reached 5.860billion, accounting for 52.32% of VNPT ‘s profit, up 6% Thus, with total sales above,

in 2010, the labor productivity of MobiFone turnover is over 6.5 billion/person/ peryear, 16% up compared to 2009.16

Financial Data

- Annual Revenues (2005): VND7.5trn & Gross Profit (2005): VND2.2trn

- Annual Revenues (2006): VND8.1trn & Gross Profit (2006): VND2.8trn

- Annual Revenues (2007): VND14.5trn & Gross Profit (2007): VND4.5trn

- Annual Revenues (2008): VND16trn & Gross Profit (2008): VND5trn

- Annual Revenues (2009): VND17.5trn & Gross Profit (2009): VND6trn

- Annual Revenues (2010): VND36trn & Gross Profit (2010): VND5.8trn

III.6 MobiFone 3G value added services

III.6.1 6 months results of launching 3G services

16 MobiFone internal reports, 2010

In accordance with the commitments to MIC, MobiFone was officially launched 3Gnetworks on December 15- 2009 And after 6 months, from January 2010 to June

2010, of installing the infrastructure, 2.548 3G stations have been installed around thecountry, mainly concentrated in big cities MobiFone’s 3G network now covers most

of the nation's cities around the country The stations were installed in order ofpriority: the centre city, town and provinces…high-density residential areas and thengradually expand into the suburbs However, the quality of the network is still on theway of completing The following data is about the distribution of stations in theprovinces and cities:

Table 5 MobiFone’s 6 months network results of 3G services (1/2010-6/2010)

N o Number of stations provinces/cities Number of Namely

1 Over 100 stations 5 Hanoi, HoChiMinh, Danang,CanTho, Haiphong

2 From 30-100 stations 9 KhanhHoa, Hue, Quang Ninh,….ThanhHoa, DongNai, VungTau,

3 From 16-30 stations 17 HaTinh, NinhBinh, BinhDuong,BinhDinh, SocTrang…

4 From 2-15 stations 31

NamDinh, ThaiNguyen, KonTum,LamDong, VinhPhuc…

(Source: Vietnam mobile telecom services company, Report of 3G value added

services 6 months results, 7/2010, P.2)

MobiFone is the second services provider officially launched 3G in the market withsome main 3G value added services at the beginning: Mobile Internet, Mobile TV,FastConnect, Video Call and others

 Mobile Internet allows customers connect internet on mobile phone Customers areserved with 11 tariff package from the speed of 1 Mbps to 7.2 Mbps, and thecharges are from 5.000 VND to 225.000 VND

 Mobile TV service allows MobiFone customers watch live local and internationaltelevision programs and/or on demand Customers are served with 3 packs from3.000 VND to 50.000 VND

 Video Call is image telephone That helps MobiFone customers see each other’sface while making calls through a camera on handset

 Fast Connect allows customers access mobile broadband and send outgoing text inMobiFone coverage via 3G internet devices Customers are served with 5 chargingfee cases for prepaid and post paid customers Fastconnect is considered to be one

of the strength of 3G services; it can help customers to access internet wirelessanytime and anywhere, even when customers are moving on vehicles

In order to introduce 3G value added services and attract customers to try on services.Some promotion programs have been applied since 3G services were put intooperation and referrals to customers such as: free tariff program for customersregistered to use the Mobile TV service in the first 15 days, a package servicesprogram charging low tariff, the program encouraging customers using 3G servicesduring World Cup, decrease 50% tariff in 30 days …

After launching 3G networks, advertising for MobiFone 3G appeared on many means

of masses media: television, newspapers, magazines, radios, billboards, banners,leaflets and direct marketing campaigns to introduce the 3G services towardcustomers have been deployed in major cities: Ha noi, Ho Chi Minh, Hai Phong, Danang, Can Tho…The budget for 3G advertising campaign through masses media andevents over six months from December 2009 to June 2010 is over 20 billion VND for

5 centres national wide

However, after 6 months (from January 2010 to June 2010) officially introducedwidely to customers, 3G services got moderate results both in numbers of customersand in revenue contributing to the total revenue of the company

Table 6 MobiFone’s 6 months business results of 3G services (1/2010-6/2010)

3G services Counter register (subscribers) subscribers/sum (%) Proportion of Revenue (VND) revenue/sum (%) Proportion of

(Source: MobiFone’s 6 months 3G services internal report, 7/2010, P.2)

III6.2 Comparison of competitors’ 3G services

The competition in Vietnam 3G market at the first stage of launching 3G could be seenclearly through the comparison table between MobiFone and others in each field:

Table 7 Comparison of 3G services results between MobiFone and other competitors (July/2010)

1 Target Determines 3G is the

future of mobile services and become the largest 3G network

in Vietnam

No 1 in broadband inVietnam

Determines to rank the first in the quality

of 3G

Technology pioneer and market leader

Tariff packages formain services

8 3G device price 1,2 million - 1,7

million

680.000VND - 1,7million

1,2 million - 1,7million

9 Sales promotion Free tariff program for

customers registered touse the Mobile TV in

15 days, a lower tariffpackage services,decreasing 50% tariff

in 30 days forWorldCup services

Free tariff programfor 4 main services,decrease 50% tariff in

6 months, data trafficawarded, 50%

reduction on the price

of 3G devices

100% credit more torecharging card, freetariff program forMobile TV service in

15 days, 50%reduction of tariffpackages in the firstmonth of using

10 Advertising Mass media (mainly on Direct marketing Mass media (mainly

TV, magazines…);

Direct marketing(cities); PR

(cities& provinces);

banners, leaflets…

on TV, radio…);Direct marketing

Currently, MobiFone is focusing on customers who use MobiFone services MobiFonemake many sales promotion to attractive those customers As mentioned in the table 7,there are no big differences in sales promotion activities between MobiFone andVinaphone After 6 months of launching 3G services, there are few MobiFone’s salespromotions However, Viettel-large competior still have a lot of sales promotions.Advertising for 3G services on TV is always after sport program (19h:30-20h:00),showgame, etc How advertising impact to customers behaviors is still big questionsfor MobiFone

The comparisons show that the competition in 3G mobile market is fierce and the 3Gracing will continues and will be received much more consideration from operators.The competitor Viettel had better results in many aspects: the installation of 3Gstations, the diversification of services and tariff package, the number of customers…With the double numbers of customers and the much better results in the data traffic,Viettel surely, at the moment, was the leader in the 3G market Especially, Viettel hasrecognized the broadband service is the strategic 3G service with the brand “D-Com3G” and the slogan “3G is the computer” and has been investing much activities in thisservices Meanwhile, Vinaphone has also deployed serious of promotion programs,services diversification and others

III.6.3 Objectives for 3G services up to 2013 of MobiFone

The ambition and target of MobiFone for 3G network up to 2013 is MobiFone willhave 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 thedecreasing levels of priority, MobiFone will coverage from densely populated urbanareas, urban, suburban, rural and highway connection MobiFone determines tobecome the future of mobile services and the largest 3G network in Vietnam Thenumber of 3G services customers will reach at least 10 million and the revenue of 3Gservices will account up to over 15% of total company revenue

The results from the in-depth interview with MobiFone leaders also showed that theyhave recognized the current problem with MobiFone 3G services as above, however,it’s said that not much solutions and activities have been applied and it’s acquired thefunctional departments to propose the solutions, and emphasized that the nextprograms to be deployed must be based on the current situation and MobiFonecustomers’ behaviors That’s why, it’s very essential to understand the market andcustomers’ behavior toward 3G value added services at the first stage of introduction.Studying the level of awareness, usage and satisfaction of customers and the mainfactors that influence the customers’ behavior towards MobiFone 3G services will help

to find out and propose suitable recommendations and solutions towards 3G services