Factors driving the 4g related service sales performance analysis and implication to the mobifone

vii LIST OF ABBREVIATIONS MIC Ministry of Information and Communication MobiFone Vietnam Mobile Telecom Services One Member Limited Liability Company VIETTEL Viet nam Telecommunication

Lunghwa University of Science and Technology Department of Business Administration

Thesis for a Master’s Degree

Factors driving the 4G-related service

sales performance – Analysis and Implication to

the MobiFone

Researcher: DANG THI ANH DAO

Supervisor: Nguyen Phu Hung

May 2017

MINISTRY OF EDUCATION AND TRAINING

INTERNATIONAL SCHOOL – VNU

-

MASTER THESIS OUTLINE

Major: Business Administration

Branch code:EMBA

Factors driving the 4G-related service sales performance –

analysis and implication to the MobiFone

STUDENT:DANG THI ANH DAO INSTRUCTOR: NGUYEN PHU HUNG

Hanoi,05/2017

Lunghwa University of Science and Technology Approval Certificate of Master's Degree Examination Board

This is to certify that the Master’s Degree Examinations Board has

approved the thesis Factors driving the 4G-related service sales

performance - Analysis and Implication to the MobiFonepublished by

Ms.Dang Thi Anh Dao in the Master Program of Graduate School of Department of Business Administration

Master’s Degree Examination Board

Board

Members：

Advisors： Professor Fengi Hu

Doctor Nguyen Phu Hung

Chair：

Date：／ ／ 2017

ABSTRACT

Thesis Title：Factors driving the 4G-related service sales performance Analysis and

Implication to the MobiFonePages：58 University：Lunghwa University of Science and Technology

Graduate School：Department of Business Administration

Date：July, 2017 Degree：Master

Graduate Student：Dang Thi Anh Dao Advisor： Dr Nguyen Phu Hung

Keywords：Sales performance, telecommunication,

This thesis is dedicated to study factors driving sales performance of MobiFone’s

4G-related services The survey findings showa number of factors The most impacting factor is the capability of the mobile data should be improved to match with the need

of customers so that to attract more customers Younger customers always have high potential mobile data demand growthfor their social network interaction (e.g., facebook, tweeter), but slow network capability make them reluctant to pay Affordability is the second most important factor – as most of the hardware are recently installed, the price tag to mobiledata customers are high but that in turn driving down the demands, making the pay-back period longer, hiting the financial sustainability of MobiFone Among several implications of the findings, the most important proposal is MobiFone should price different customer groups flexibly

ACKNOWLEDGEMENT

It is a great pleasure for me to work with this dissertation I would especially like to thank all teachers, professors for all knowledge, skills and information I received It is very wonderful chance to work with so excellent and enthusiastic professors

I am also very grateful to my tutor, Professor Nguyen Phu Hung, for his support I appreciate all his time and efforts to encourage and guide me during my dissertation writing

I would like to thank my colleagues, my customers for helping me to support me information to complete this dissertation and answer the questionnaire for my research This thesis cannot be done without their help

Finally, I would like to thank and dedicate this dissertation to my family for the unconditional support, who consistency motivated me to complete the thesis

Best regards,

Thank you!

Dang Thi Anh Dao

iii

TABLES OF CONTENTS

ABSTRACT i

ACKNOWLEDGEMENT ii

TABLES OF CONTENTS iii

LIST OF TABLES vi

LIST OF FIGURES vi

LIST OF ABBREVIATIONS vii

FOREWORDS viii

CHAPTER 1 INTRODUCTION 1

1.1 The rationale of the study topic of thesis 1

1.2 Objectives of thesis 1

1.3 Objects and scope of thesis 2

1.4 Study questions 2

1.5 Research Methodologies and Data 2

1.5.1 Research process 2

1.5.2 Data 3

1.5.3 Handling collected data 4

1.6 Plan of thesis 4

CHAPTER 2 BACKGROUND OF THE MOBILE PHONE AND ITS CONTEXTS 5

2.1 Historical developments of MobileFone 5

2.2 Organizational structure 7

2.3 MobileFone Vision and Missions 10

2.4 Development policy 11

2.5 Current status of the reorganizing, renovating and restructuring enterprise program 12

iv

2.6 SWOT Analysis of MobiFone performance 13

2.6.1 Threats 13

2.6.2 Strength 14

2.6.3 Weakness 15

2.6.4 Opportunities 15

2.7 Vietnam’sTelecommunications current status and future paths 17

2.7.1 History of broadband service in the Vietnam market 17

2.7.2 Structure of broadband in Vietnam 18

2.7.3 Emergence of 4G services 20

2.7.4 Competition in the mobile market 21

2.8 Conclusion 24

CHAPTER 3 LITERATURE REVIEWS 25

3.1 Overview of mobile data service and the 4G network 25

3.1.1 History of mobile technology generations 25

3.1.2 Outstanding features of the 4G network over previous generations 27

3.2 Drivers of mobile service demands 28

3.2.1 Demand-side drivers 28

3.2.2 Supply-side drivers 32

3.3 Factors affecting sales in telecommunication industry 35

3.4 International mobile market experiences 36

3.5 The future market of mobile data 39

3.6 Conclusions 41

CHAPTER 4 DATA ANALYSIS RESULTS 42

4.1 Introduction 42

4.2 Results of survey 42

4.2.1 The relevant of sample size 42

4.2.2 How the affordability of 4G services influences customers' usage? 42

4.2.3 How the pricing flexibility of service influence your 4G usage? 43

4.2.4 Influence of the affordability of 4G capable mobile devices 43

4.2.5 Influence of Availability of 4G capable mobile devices 44

4.2.6 Influence of the marketing campains 44

4.2.7 Influence of the Customer Relationship Management program 44

4.2.8 Customer demands for high data rate applications(youtube, facebook video, etc.) 45

4.2.9 Influence of Competition in the 4G mobile data market 45

4.2.10 The status of the national and international economy 46

4.2.11 Influene of the Availability of Free Wi-Fi Access Points 46

v

4.2.12 The influence of personal income to customers’ demands of 4G service 47

4.3 Results of secondary data 47

CHAPTER 5 FINDING DISCUSSIONS AND IMPLICATION TO MOBIFONE 49

5.1 Summary of factors driving 4G market 49

5.2 Implications to MobiFone 49

5.2.1 Pricing Flexibility 49

5.2.2 The requirement to upgrade mobile data service to 4G 50

5.2.3 Working with CSPs and mobile app developers do to generate while harness data growth 51

5.2.4 Targeting younger customer groups 51

5.2.5 Solutions on business, marketing 52

5.2.6 Measures of Technology 52

5.2.7 Measure to improve management and operation performance 53

5.3 Conclusions 54

LIST OF REFERENCES 57

APPENDIX 59

Questionnaire 59

vi

LIST OF TABLES

Table 1 Total revenues of MobiFone (billions) 14

Table 2 4G licenses in the Vietnam Market 20

Table 3 An example of flexible plan offered in the Latin American region 32

LIST OF FIGURES Figure 1 The study model of the thesis 3

Figure 2 Organization of MobiFone 7

Figure 3 SWOT analysis on MobiFone 16

Figure 4 Mobile technology evolution 26

Figure 5 Structure of the 4-G network 27

Figure 6 Annual global mobile data traffic (in Exabytes) 39

Figure 7 How the affordability of 4G services influences customers' usage? 42

Figure 8 Influence of pricing flexibility of service to 4G usage 43

Figure 9 Influence of the affordability of 4G capable mobile devices 43

Figure 10 Influence of Availability of 4G capable mobile devices 44

Figure 11 Influence of the marketing campains 44

Figure 12 Influence of the Customer Relationship Management program 45

Figure 13 Customer demands for high data rate applications 45

Figure 14 Influence of Competition in the 4G mobile data market 46

Figure 15 The status of the national and international economy 46

Figure 16 Influene of the availability of Free Wi-Fi Access Points 47

Figure 17 The influence of personal income to customers’ demands of 4G service 47

vii

LIST OF ABBREVIATIONS

MIC Ministry of Information and Communication

MobiFone Vietnam Mobile Telecom Services One Member Limited

Liability Company

VIETTEL Viet nam Telecommunication corporation

VNPT Vietnam Posts and Telecommunication Corporation

CHAPTER 1 INTRODUCTION

1.1 The rationale of the study topic of thesis

Facing the strong growth trends of smartphone devices and mobile communication networks 4G / LTE, the ways in which consumers use telecommunications services including voice, data and other services haveprogressively changed This impact significantlybusiness activities of the mobile communication networks 4G networks with their many advantages over 3G ones will impact the behavior and habits of customers The proliferation of smart devices will bring about new business opportunities for telecommunication service providers/operators, and this trend will also include challenges if the service provider attempt to direct customers to alter their habits

To grasp this fact, the topic "Factors driving the 4G-related service sales performance - analysis and implication to the MobiFone" aims to study the waysto

provide 4G servicesin the current MobiFone platform that responds to the requirements

of customers whose devices support 4G/LTE, under the anticipated assumptions on the future development market trends

1.3 Objects and scope of thesis

The research object is the MobileFone’s the MobiFone 4G / LTE services

Regarding study scope, under the constraints in resources, data, and time, this thesis just focuses on the following issues:

o Characteristics of the provision of 4G services in Hanoi markets;

o Factors driving the sales of 4G services;

o Mobile data market situation from 2012 to present

1.4 Study questions

 What are the business performance of the MobiFone? What are the strength, weakness, challenges, and opportunities for MobiFone in time of hard competition?

 Why 4G network is critical to the survival of MobiFone?

 What is the status-quo of the mobile data market and its projected development?

 How 4G service should be integrated into the provision of Mobifone to maintain current customers and attract new customers?

 How to improve performance of 4G sales?

1.5 Research Methodologies and Data

1.5.1 Research process

The picture below shows the study model of thesis

Figure 1 The study model of the thesis

1.5.2 Data

This thesis will get data from two sources, primary and secondary

1.5.2.1 Primary data

Data can be collected via 3 ways:

 In-depth interviews with customers to identify customer demands and customer

impressions on the quality of current 4G services;

 Direct interview with internal employees to get overall picture on thematch of

current capacity with current and future requirements to serve 4G services;

 Survey by questionnaire: Use a electronic form sent to a large number of targeted

customers to gather their assessment about the telecommunications network

1.5.2.2 Secondary data

 Reports published by the Government regulatory bodies, such as VNPT, MIC, etc;

 Reports published by international organizations, such as World Bank and IMF, ITU

related to telecommunications networks and service outlooks in recent years and

Investigation

Observation

The potential to develop systems 4G / LTE MobiFone

Deployment process analysis

The situation of telecommunications network services system without 4G /

LTE

1.5.3 Handling collected data

Using statistical and synthesis methods, using SPSS software

1.6 Plan of thesis

1/2017 Proposal submission

2/2017 Tutor comments proposal

4/2017 First Draft of thesis

5/2017 Second Draft of thesis

6/2017 Turn in final thesis

8/2017 Thesis defense

CHAPTER 2 BACKGROUND OF THE MOBIFONE

2.1 Historical developments of MobileFone

MobiFone Corporation is one of the top 2 telecommunication service provider in Vietnam MobiFone locates at Lot VP1, Yen Hoa Ward, Cau Giay District, Hanoi MobiFone has come a long way since 1993, when we are the first mobile network operator in Vietnam Today, it is our pleasure to be the communication way of nearly 50 million subscribers (about 30% of market share) In 2014, MobiFone Corporation’s revenue exceeded 2 billion dollars, which let us remain one of the three largest mobile operators in Vietnam(MobiFone, 2017)

Since its establishment, quality plays as a key strategy to all MobiFone leaders We are honored to be awarded “The most favorite mobile operator” 6 years-in-a-row, which means MobiFone is trusted by customers

Communicate is vital to all of us Hence, MobiFone Corporation now provides a diverse range of services including mobile, data, internet, IPTV/cable TV, business solutions, infocomm technology (ICT), and investment We understand, in an increasingly connected world, it’s no longer just about being able to talk and text With our network, you can capture and share your feelings as soon as they created

1993: Vietnam Mobile Telecom Services Company (VMS) was formed Director

Mr Đinh Văn Phước

1994: Vietnam Mobile Telecom Services Centers I and II were formed (in the North and South)

1995: VMS entered into the Business Cooperation Contract (BCC) with Swedish Kinnevik/Comvik Vietnam Mobile Telecom Services Center III was formed (in the Central region of Vietnam)

2005: The BBC between VMS and Swedish Kinnevik/Comvik came to the end Vietnam Ministry of Posts and Telecommunications (now called Vietnam Ministry of Information and Communications) finalized the decision on the equitization of VMS

Mr Le Ngoc Minh took the office after former Director Dinh Van Phuoc stepped down for retirement

2006: Vietnam Mobile Telecom Services Center IV was formed

2008: Vietnam Mobile Telecom Services Center V was formed VMS celebrated 15th anniversary of establishment

Value Added Services Center was formed

April 2008, MobiFone has been the first market share holder on Vietnam’s telecom market

2009: VMS received the Excellent Operator Prize 2008 awarded by Vietnam Ministry of Information and Communications VMS-MobiFone officially launches 3G services; The Business Support Center was formed

7/2010: VMS was transformed into the One member liability State company 2013: VMS celebrated 20th anniversary of celebration and receives 3rd Rank of Independence Medal

2014:26/06: Mr Mai Van Binh was appointed Chairman of VMS MobiFone 10/07: Handing over the right to represent the owner of the State in VMS MobiFone from VNPT to MIC

13/08: Mr Le Nam Tra was appointed General Director of VMS MobiFone 01/12: MobiFone Corporation was established based on the reorganization of Vietnam Mobile Telecom Services One Member Limited Liability Company

2015:21/04: Mr Le Nam Tra was appointed Chairman of the Board Members MobiFone Corporation Mr Cao Duy Hai was appointed General Director of MobiFone Corporation

2.2 Organizational structure

MobiFone Corporation includes 20 functional departments and 20 under units including 09 MobiFone services companies, International Telecom Center, Network Operator Center (NOC), Multimedia – Value Added Services Center, MobiFone IT Center, Northern/Central/Southern MobiFone network, Testing and Maintenance Center, Billing and Services Support Center, Research and Development Center, Consultation – Design Center

Also, MobiFone has three subsidiaries: MobiFone Services, JSC., MobiFone Global, JSC and MobiFone Plus, JSC

Figure 2 Organization of MobiFone

MobiFone service company region 1 is headquartered in Hanoi, responsible for deliver services to all customers in Hanoi, comply with the development plan of corporation

Add: MobiFone Building – Duy Tan 5/82 Duy Tan Street, Cau Giay District, Hanoi

MobiFone Corporation

20 functional departments 20 Units

9 MobiFone services companies

8 Centers

Subsidiaries

MobiFone service company region 2 is headquartered in Hochiminh City, responsible for deliver services to all customers in Hochiminh City, comply with the development plan of corporation

Add: MM 18, Truong Son Street, Ward 14, District 10, HCM City

MobiFone service company region 3 is headquartered in Danang City, responsible for deliver services to all customers in Central Region: Danang, Quang Tri, Thua Thien Hue, Quang Nam, Quang Ngai, Binh Dinh and Phu Yen, comply with the development plan of corporation

Add: 391 Nguyen Van Linh Street, Danang City

MobiFone service company region 4 is headquartered in Vinh Phuc, responsible for deliver services to all customers in: Lao Cai, Lai Chau, Dien Bien, Yen Bai, Son La, Phu Tho, Hoa Binh, Ha Nam, Nam Dinh, Ninh Binh and Vinh Phuc, comply with the development plan of corporation

Add: 414 Me Linh Street, Khai Quang Ward, Vinh Yen City, Vinh Phuc

MobiFone service company region 5 is headquartered in Hai Phong City, responsible for deliver services to all customers in: Hai Phong, Quang Ninh, Hai Duong, Thai Binh, Hung Yen, Bac Ninh, Bac Giang, Lang Son, Thai Nguyen, Bac Can, Tuyen Quang, Cao Bang and Ha Giang, comply with the development plan of corporation

Add: No 8, Lot 28A, Le Hong Phong, Ngo Quyen District, Hai Phong City

MobiFone service company region 6 is headquartered in Nghe An, responsible for deliver services to all customers in: Thanh Hoa, Nghe An, Ha Tinh and Quang Binh, comply with the development plan of corporation

Add: 10 Nguyen Thi Minh Khai Street, Hung Binh Ward, Vinh City, Nghe An

MobiFone service company region 7 is headquartered in Khanh Hoa, responsible for deliver services to all customers in: Kon Tum, Gia Lai, Dac Lac, Dac Nong and Khanh Hoa, comply with the development plan of corporation

Add: 21 Hai Ba Trung Street, Huong Xuan Ward, Nha Trang City, Khanh Hoa

MobiFone service company region 8 is headquartered in Dong Nai, responsible for deliver services to all customers in: Dong Nai, Lam Dong, Ninh Thuan, Binh Thuan, Binh Phuoc, Binh Duong, Tay Ninh, Ba Ria – Vung Tau and Long An, comply with the development plan of corporation

Add: 22/8 Nguyen Ai Quoc Street, Quang Vinh Ward, Bien Hoa City, Dong Nai

MobiFone service company region 9 is headquartered in Can Tho, responsible for deliver services to all customers in: Can Tho, Tien Giang, Ben Tre, Vinh Long, Tra Vinh, Dong Thap, An Giang, Hau Giang, Soc Trang, Bac Lieu, Ca Mau and Kien Giang, comply with the development plan of corporation

Add: 06 Hoa Binh Street, Ninh Kieu, Can Tho

MobiFone International Telecomunications Center specializes in managing and doing business in international telecommunications and roaming services; researching solutions, devices and applications to develop international telecommunications services; routing international traffic; maintaining the quality of international telecommunication services

Network Operator Center (NOC) specializes in managing, operating and maintaining equipment, transmission and infrastructure of core network; Troubleshooting core network; Ensuring the quality of traffic directions and services delivering to customers; Coordinating other departments in development of network, deploy new services, safety and security

MobiFone Research and Development Center specializes in researching and applying the results to develop new technological solutions at the Corporation; Designing new products and services, including telecommunication services, value-added services, IT services…; Researching to improve quality and optimise cost of products and services; Organizing research and deployment of technology which have been delivered; Co-operating with partners working on technology; Consulting on technology transfer, intellectual property rights; Consulting on technology, products and services to MobiFone Corporation and units

MobiFone Multimedia – Value Added Services Center specializes in implementing business plans, business policy, developing products and value-added service, data; Co-operating with partners which provide content…

MobiFone IT Center specializes in researching and developing new software for IT service units in the Corporations, as well as customers outside; Managing system’s software which is implementing by partners, technology transfer, upgrading and expanding the feature of system; Researching, updating and testing new technology; proposing plans to apply new technology; providing new software services; System integration, technical support, maintenance, training… to customers

MobiFone Testing and Maintenance Center specializes in installing and fixing telecommunications equipment and components; Testing network quality; Providing data optimization of the units in Corporation; Researching, testing technology solutions…

MobiFone Billing and Services Support Center specializes in extracting billing systems of internal Corporation’s IT, as well as support network technical and provide data for the business activities of the Corporation

MobiFone Consultation – Design Center specializes in consulting investment in constructing mobile communication, information and telecommunications for units inside and outside the Corporation

Northern/Central/Southern MobiFone network specializes in managing, operating and maintaining equipment, transmission and infrastructure of networks components; Troubleshooting of broadcast station; Ensuring the quality of network in the area; Co-operating in the development of network, deploying new services and flood prevention

2.3 MobileFone Vision and Missions

MobiFone attempts to put a highlighted mark in this great era to sharp significant values of happiness for a future In 2015-2020, our vision is obviously expressed in the Declaration: Connecting values, evoking potentials This vision reflects the commitment

of MobiFone towards the comprehensive and sustainable development based on

relationships between the three pillars: customers, partners, and every single employee

We are to become the most beloved telecommunication brand in Vietnam and achieve revenue of $5 billion by 2020

MobileFone believes its mission is to bring its products and services that will be able to connect all people in one ecosystem where the demands of life, work, study and entertainment are detected, waken up and satisfied to achieve development and happiness The development in cognition, relationships and business opportunities and the happiness will be achieved by kindly care and encouragement Growth and happiness are driving forces for the development of both individual and society

MobiFone has identified four key “pillars” of its growth strategy in the coming time, including (i) Mobile, (ii) TV, (iii) Retail, and (iv) Multi-service The message

given to customers is "Connecting Value, Raising Potential" and the business guideline

is "Consulting - Training - Communication - Link - Segment - Resonance" MobiFone's

4G / LTE services are therefore based also on the pillars and business motto of MobiFone

However, the deployment of new services are facing many difficulties and challenges, can be seen in the following SWOT of MobiFone

2.4 Development policy

Development investment projects of the MobiFone Telecommunications Corporation are accelerating Major projects focus on the development of network infrastructure, broadcasting 3G stations with the aim of getting data business as the focus, enhancing quality and coverage

Apart from traditional investment programs, MobiFone has initially expanded into new investment programs such as transmission and information technology systems for production and business In 2015, the MobiFone Corporation has completed 82/278 projects (7 Group B projects and 75 Group C projects) The total capital disburssement

is about VND 2,448 billion The total value of additional assets put into business lines reach about 3,177 billion

In addition, the Corporation continues to accelerate investment, construction of architectural works(MobiFone, 2016; MobiFone, 2015)

2.5 Current status of the reorganizing, renovating and restructuring enterprise program

MobiFone is under governmental control from the Ministry of Information and Communication Technology (MIC) MIC has directed MobiFone to restructure to adapt with the new market and legislative environment

Implementing Decision No 1798 / QD-BTTTT dated 1 st December 2014 by the Ministry of Information and Communications that requires to establish MobiFone Telecom Corporation, as well as the directive given in the Official Letter No 663 / BTTTT dated March 13, 2015, a new corporation was created on the basis of the reorganization of then incumbent Mobile Communication One Member Limited Liability Company

The new MobiFone now has three division The first division includes back-offices, consisting of 20 units and offices Thesecond division include 20 subordinate units There are 3 subsidiary companies

MobiFone has appointed the key leaders for all units, run program to improve the personnel qualification

In 2015, MobiFone cooperated with the third-party consultancy firm to implement the valuation process on MobiFone All major results of enterprise valuation were submitted to the Steering Committee of the Corporatization Program as well as to the Ministry of Information and Communications The MobiFone also submitted an draft of the Equitisation Plan(MobiFone, 2015)

2.6 SWOT Analysis of MobiFone performance

2.6.1 Threats

In 2015, the competition in the telecom market is fierce MobiFone's telecom, as well as other telecom companies, is facing variety of challenges from external factors First, the competition from competitors are growing: customers now are having many choices to select from and to switch to, thus the customer base become less stable Second, the competition from substitute products are growing: OTT applications make traditional and basic telecom service sales revenue decline quickly; Public wifi reduces need of telecom communication services

Third, growing demands from customers require MobineFone to keep enhancing its service provisions and introducing new products, Value-Added services

Forth, shifting customers’ demands are making MobiFone to change its system, mofifying offers to customers Currently, the structure of MobiFone's services still focuses on SMS and 3G mobile internet services, with low quality and almost no special content licensing

Fifth, GSMA Intelligence notes that users may change to Wi-Fi networks since most of them are provided free in the Vietnam Market

These threats directly affecting the profitability of MobiFone

The Annual Report of MobiFone (MobiFone, 2016) lists the following threats:

• Government over-regulatory policy

• Free OTT provisions taking away potential revenues for MobiFone

• Strong competition from other mobile service providers

2.6.2 Strength

Overcoming many obstacles and challenges in 2015, MobiFone continues to focus

on developing its core business of telecommunications to ensure stable revenue and profit targets

MobiFone has completed its restructuring programme in 2014 MobiFone has transformed into a new organizational structure, a group corporation, to stabilize its operations and production systems

The business indicators show performance in well in excess of the MIC plan expectation:

- Consolidated revenue: reached VND 33,553 billion, completing 105.6% of the plan

- Consolidated profit before tax was VND 7,199 billion

Table 1 Total revenues of MobiFone (billions)

Consolidated profit before tax 6.709 7.200 7.483 7,199

(Source: MobiFone, 2016)

Annual report of MobiFone (MobiFone, 2016) provides the following strength:

• MobiFone is a top brand

• Good working environment

• Multiple service provision

• Social policy

• Large customer-base

• Good sales channels

2.6.3 Weakness

MobiFone has just been splited structurally from the VNPT, however, it would take time to separate MobiFone brandname out of the former parent corporation

MobiFone is a state-owned enterprise which is very politically influenced

The report of MobiFone (MobiFone, 2016) lists the following weakness:

• Lack of motivating environment for workers

• Procedures and processes are to be improved

• Low Productivity due to absence of KPI

• Misses of profounding systems (VAS platform, Big Data, LBS, Mobile Payment, Mobi Ads, M2M, Clould,…)

• Over-set sales targets

2.6.4 Opportunities

There are many opportunities for MobiFone First, 4G mobile service would provide change for MobiFone to cooperate with other competitive content service providers to provide additional value-added service to customers

Second, the data traffic is expected to continue to soar Although mobile data traffic has grown dramatically in the past five years, there are plenty of reasons to believe there

is far more growth still to come In the next ten years, millions more younger people and modern machines will use mobile networks to access online services and connect with each other Especially, at the same time, smartphones will become increasingly ubiquitous and each new smartphone user will send and receive far more data than they

did with their previous handset because the contents in internet will be more available and affluent

Third, usage of video-on-demand services will continue to rise and the resolution of these videos will continue to improve Fore example, many years ago, the resolution of youtube was limited at 240 Nowaday, a lot of videos can be upload at full HD resolution A report of the International Telecom Universal expected that by 2020, people would be able to watch videos in HD whenever and wherever they want regardless of how the content is being streamed to their device Every day people watch hundreds of millions of hours YouTube on mobile devices, generating billions of views Facebook is also a source for potential data consumption Though being a relative newcomer to the world of video delivery but now Facebook serves four billion videos per day - 75% of which are consumed on mobile devices

In addition, many users are expected to keep continuing to use 4G even when Wi-Fi

is available to maintain the consistency of their experience, especially when the 4G service can provide a faster download/upload speed than a Wi-Fi service does

The Annual Report of MobiFone (MobiFone, 2015) lists the following

“Opportunities”:

• National Economy growth

• 4G development

• Growing demands on leasures, shopping, education, healthcare

• Customer buying behaviors shift to online

Figure 3 SWOT analysis on MobiFone

2.7 Vietnam’sTelecommunications current status and future paths

2.7.1 History of broadband service in the Vietnam market

Vietnam is a populated country with more than 90 million inhabitants, rank 13th in the world Thus, the communication demands are high Solid economic growth has lead

to risen incomes so that more people can afford broadband, leading to increased broadband usages For example, regarding wireline broadband alone, the supplies have grown over 1,000 percent since 2005, reaching 3.6 million subscriptions in 2010; Vietnam has the ninth largest network among developing counties The wireline broadband penetration was the sixth highest among lower middle income economies with 4.4 subscriptions per 100 people

Liberalization of the telecommunications sector has led to growing competition among 3 largest ICT corporations and with many smaller enterprises Service providers have developed modern IP-based networks with extensive fiber optic backbones This

•National Economy growth

•4G development

•Growing demands on leasures, shopping, education, healthcare

•Customer buying behaviors shift to online

•Government

over-regulatory policy

•Free OTT provisions

•Strong competition from

other operators

•Lack of motivating environment for workers

•Procedures and processes are to be improved

•Low Productivity due to absence of KPI

•Misses of profounding systems (VAS platform, Big Data, LBS, Mobile Payment, Mobi Ads, M2M, Clould,

•Over-set sales targets

•MobiFone is a top brand

in turn has created a virtuous circle with explosive demand creating a larger market, resulting in economies of scale and lower prices Another factor driving fixed broadband growth is that Vietnam was a latecomer to the IMT-2000 WCMDA mobile broadbandtechnology Major mobile operators did not launch their networks until 2009 with around 15 percent of mobile subscribers having WCDMA capability towards the end of 2010

Despite these successes, Vietnam faces challenges broadening broadband access, particularly in rural areas where some 70 percent of the population resides Young people in urban areas ―live with high-speed Internet access; however, less than one percent of rural households had any type of Internet access in 2008 Most businesses are focused on using the Internet for basic needs such as email and finding information while more advanced applications such as ecommerce are not used as widely

Mobile networks now cover the entire country (to the center of provinces/cities) Vietnam was one of the early countries to deploy GSM technology Since 2002, CDMA technology has also been used, and from late 2009, 3G mobile networks based on WCDMA technology are being deployed with four licensed operators: Viettel, Vinaphone, MobiFone and a partnership of EVN and HT Mobile The Vietnam Government granted trial WiMAX licenses using the 802.16e standard in the 2.3 - 3.3 GHz band (compared to 800-1800 MHz for 2G and 1900-2100 MHz and 2200 MHz for 3G) WiMAX service was first implemented in Lao Cai province in 2006 The government ultimately decided to postpone its licensing decision due to unfavorable market conditions; these included the high cost of the WiMAX CPE equipment, delays

in the 3G licensing schedule, and the regulatory change caused by the creation of the MIC Accessing the Internet via satellite is now deployed although it is mainly offered for large enterprises

2.7.2 Structure of broadband in Vietnam

According to the MIC, in Vietnam, telecommunications operators are gradually building and completing Next Generation Network (NGN) infrastructure This makes competition in Vietnam's telecommunications market increasingly vibrant and provides

customers many new services at reasonable prices The backbone network has great reliability by using multiple fiber optic cables and microwave The inter-provincial transmission network has been liberalized in all provinces and cities Since 2008, when the first satellite of Vietnam, Vinasat I, was lunched, the telecommunications sector has turned into a new stage Information can now be transmitted to all regions of the country: mountainous area, border and sea, island and all means of traffic on the territorial waters Information exchange with other countries is enhanced Many new information services can be provided such as e-commerce, e-customs, e-banking, e-library, remote health, remote education, remote meeting, etc The older systems continue to operate Equipment comes from many different manufacturers making it difficult to manage and develop the network

According to the MIC, Vietnam has not built a unique and shared national broadband network yet Eleven enterprises have been granted licenses to build network infrastructure However, in practice, only three major companies have built telecommunications network infrastructure on a national scale, including Viettel, VTN (VNPT), and EVN Telecom These networks are interconnected with each other

In terms of physical structure, the Vietnam telecommunications network is divided into two main layers: (i) The core/transmit layer: includes transmission and switching systems: inter-regional transmission systems, transmission trunk lines connect to the region switches; international gateway switches, toll and tandem transition switch, region switch; (ii) The access layer: Wireline access systems include copper and optical cables access Wireless access systems include mobile communication and fixed wireless access

The backbone network in Vietnam is built on fiber optic technology, and is basically divided into three levels: (i) International level, including satellite earth stations, submarine landing stations and overseas switching, (ii) National level (inter-province), including backbone route and national transit exchange, and (iii) Provincial level, including inner-provincial transmission lines, host exchanges, branch exchanges and inner-provincial exchanges (tandem) Vietnam‘s large coastline is an advantage for connecting to submarine fiber optic cable systems The country‘s international Internet bandwidth has grown dramatically, increasing 36 times between 2005 and 2010 and stood at 194 Gbit/s in July 2011

The Vietnam National Internet Exchange (VNIX) reports show that the leading ISPs are connected with 95 Gbit/s of capacity, and the exchange handled 89,195,660 Giga bytes of traffic in July 2011

The voice and data networks converge on the NGN common network To meet market needs, all facilities-based telecommunications enterprises are changing their network to the NGN model based on the existing backbone network This involves building a new core NGN and adapting the existing Public Switched Telephone Network (PSTN) into the NGN architecture Operators are exploiting new services based on NGN, such as Internet TV (MegaWan of VNPT), virtual private networks, prepaid VoIP services, etc

2.7.3 Emergence of 4G services

In April 2010, Vietnam‘s Ministry of Information and Communications (MIC) announced its intention to invite proposals for a 4G plan in the country Given that several operators had already conducted trials of WiMAX services, it is thought that WiMAX would emerge as the preferred technology for developing 4G networks The MIC sought to ensure that either WiMAX or LTE technology could be used for deploying 4G wireless broadband

In September 2010, the MIC granted trial LTE licenses to five operators: VNPT, Viettel, FPT Telecom, CMC and Vietnam Television, Technology, Investment and Development Company (VTC) According to the terms of the license, the companies will be allowed to operate LTE networks over a trial period of 12 months The MIC‘s Telecommunications Department director said that operators will be required to participate in an auction in order to be granted a 4G license

Table 2 4G licenses in the Vietnam Market

Corporation

Mar-08 Trials to be carried out in Ho Chi Minh

City and one neighboring province Vietnam Post and

Telecoms (VNPT)

Mar-06 Trials carried out in Hanoi, Ho Chi Minh

City and Lao Cai Vietnam

Sep-10 To carry out trials of LTE for 12 months

(Source: retrieved from Tuan, 2011)

2.7.4 Competition in the mobile market

According to MIC, the national plan expects that 95 percent of Vietnam’s population will have high-speed 3G and 4G connections in 2020

During 2000s, a number of trial WiMAX licenses have been issued and pilots are being carried out throughout different locations in the country However WiMAX has yet to be deployed on a major commercial basis The country‘s CDMA operators have introduced mobile broadband using EV-DO technology EVN Telecom launched EV-

DO in February 2006, S-Fone in October 2006 and Hanoi Telecom (Vietnamobile) in January 2007 In August 2009, the four winners of Vietnam‘s third generation (3G) WCDMA mobile concessions were issued licenses The recipients were military-owned Viettel, VNPT subsidiaries Mobifone and Vinaphone, and a joint venture between EVN

Telecom and Hanoi Telecom Although applications were received from six operators, a lack of available spectrum in the 1900-2200 MHz frequency band was the deciding factor behind 3G licenses being limited to four The operators have to accomplish coverage and investment targets GTel (a Russian-Vietnamese Joint Venture) and Saigon Postel also applied for license, they are a major shareholder in Vietnam’s fourth largest mobile operator, S-Fone Although GTel and S-Fone were not granted a concession, they were permitted to partner with one of the four 3G-licensed corporations to provide 3G services in the country GTel partner with Vinaphone to build a 3G network and provide the relevant services Two other companies are reportedly planning to provide 3G services over the network of one of the market’s established telecommunications

The first 3G WCDMA-based network was commercially launched in October 2009

by Vinaphone followed by Mobifone in December To encourage subscribers to upgrade from 2G to 3G, Mobifone launched a three-month special promotion, which allowed customers to make video calls at the same tariffs applied to normal calls, and offering a 50% discount for mobile Internet and mobile TV By September 2010, all of the licensees had launched their networks and there were some 8.5 million 3G subscriptions, exceeding fixed broadband within one year of launch Three operators have launched HSDPA with download speeds up to 14.4 Mbit/s (Wireless Intelligence, 2010)

The tariff for 3G services is freely set and does not differ much between operators Mobifone offers packages depending on the speed (3.6 Mbit/s or 7.2 Mbit/s) Within those two speeds, daily, weekly or monthly options are available with each having a different amount of data included The price of a monthly 3G package (including 1 GB

of data) is the second lowest in Vietnam in comparison to other countries analyzed for the World Bank‘s broadband case studies

The gap between rural and urban areas in access to the Internet, especially broadband Internet service is quite large Broadband in Vietnam is considered saturated

in the cities and major centers However, 72% of population living in rural areas and the market of potential customers have not been fully exploited, leaving huge segments in the development of telecommunication services and broadband Internet Vietnam has

adopted various polices in an effort to minimize the broadband divide between urban and rural areas

In order to achieve that goal, the Vietnamese Government has given 4G licences to the top three telecom comapines After a trial run of nearly a year, the two major wireless carriers Viettel and VinaPhone have been licensed to officially launch their 4G services

in Vietnam.Vietnam’s Ministry of Information and Communications (MIC) licence to provide 4G services to MobiFone Telecommunications Corporation, the country’s second largest wireless operator by subscribers, in 2015 That the move follows the licensing to the military-owned Viettel Telecom and state-owned VNPT-Vinaphone to establish and operate 4G networks using the 1800MHz band

The Ministry of Information and Communications is also said to be evaluating an LTE licence application from the market’s smallest wireless operator, GTel Mobile The new concessions are valid until September 2024 (VnExpress, 2016 a) The three telecom leaders are controlling 99 percent of the 3G market, which had more than 35.7 million subscribers as of January this year

According to the TeleGeography’s GlobalComms Database, big three mobile network operators have all recently launched 4G trial networks The market leader Viettel corporation, a military-owned enterprise, which accounts for nearly half of the market with more than 120 million mobile subscribers, launched 4G services in the southern beach town of Vung Tau last December Viettel was the first to install hardware for service in Ba Ria-Vung Tau province in December 2015 Around 200 4G-BTS were installed to provide coverage in parts of Vung Tau City, Ba Ria City and the rural Long Dien District (VnExpress, 2016 a) Viettel guaranteed that the speed is much higher than its 3G services and customers can watch HD videos at 720p resolution smoothly

VNPT-Vinaphone, a network operated by Vietnam Posts and Telecommunications Group (VNPT), introduced its own services in the southern resort island Phu Quoc and some areas of Ho Chi Minh City in January VinaPhone launched LTE-Advanced (LTE-A) trials over 50 BTS on the island of Phu Quoc and 100 BTS in several districts

of Ho Chi Minh (HCM) City VNPT said its 4G technology is on par with a fiber optic internet cable

MobiFone is a late comer in this market segment, only after July 2016 the market saw MobiFone started to provide the service, activating a pilot LTE-A network, in the country’s three largest cities Hanoi, Da Nang and HCM

The policy makers informed that all three mobile network service providers are expected to launch their commercial 4G networks in the coming years

A source from the MIC also confirmed the licensing is a sight of growing competition in the market, as well as signaling higher service quality for incoming times Representatives from the top-3 corporations said they have been prepared to provide the services to the wide public right from this year

By now to 2020, Vietnam will give priority to the development of broadband in rural areas, especially to bring broadband to rural districts and poor communes In addition to the general policy priorities for rural broadband development, the government also has special offers to help people in poor regions have access to technology and help develop production and improve quality of life Broadband can contribute to poverty reduction, maintain social order and national security, raise education levels and create conditions for accelerating the modernization of agriculture and rural areas Besides priority policies of broadband development for poor rural regions, the government is encouraging investment in broadband for schools and public hospitals in rural areas aimed at uniformly developing and narrowing the digital gap between regions

2.8 Conclusion

MobiFone need to find new market to improve the sales performance The 4G market is in initial stage in Vietnam, and it would provide good opportunities for MobiFone

CHAPTER 3 LITERATURE REVIEWS

3.1 Overview of mobile data service and the 4G network

3.1.1 History of mobile technology generations

The connection technologies have changed fundamentally in the last 40 years with

4 generations The development of mobile services from the first generation 1G to the 4th generation have gone through many periods The first design is called as 1G in the 1970s, based on analog technology and basic cellular structure of cellular information Many fundamental principles have been addressed in these systems

Second generation (2G) systems came in the 1980s, made on the basis of digital signal processing techniques, were still in use as of today, but primarily for voice These 2G systems provide low-speed circuit-switched data communication information services (such as GSM in Europe, TDMA Time division IS-54 / IS-136 in the US, PDC (Private Digital Cellular System) in Japan and CDMA (Code Division Multiple Access) also in the United States These systems operate extensively on national or international territory and currently they still play the role of backbone systems, although the data rates of subscribers in the system are very limited

The third generation 3G was introduced in 1990s, eliminated the incompatibilities

of previous systems and actually became a global system The 3G network allows network operators to provide users with a broader range of higher-end services while achieving greater network capacity through improved spectral efficiency The service includes wide area wireless voice telephony, video calls, and wireless broadband data, all in a mobile environment Other features also include HSPA (High Speed Packet Access) data transfer capability that can provide speeds up to 14.4 Mbps downlink and 5.8 Mbps downlink However, 3G networks it is very difficult to increase the