Some measures to improve the competitive capability of S Telecom in telecommunication industry

Company which obtains high productivity and low cost will get competitive advantages, dominate market with large revenue and high profit.. Service radius of one BTS in CDMA technology is

studies a lot from the systematic way of evaluation to realistic knowledge The most important thing I learnt is enthusiasm, knowledge of Professors and true values of studying

Secondly, I would like to express the deep thanks to Vice Professor, Doctor

who is very enthusiastic and devoted to help and to mentor me in researching and writing this thesis In addition, I would like to thank Professor who has taught me Strategic Management course, cared and given me advices in writing this thesis

Next, I’d like to express my deep gratitude to my colleagues at

who help me to complete this thesis

Finally, I’d like to wish Professor healthy and successful I wish this cooperation is more and more fruitful and provides society with useful and true talents in order to help Viet Nam stronger and prosperous

Writer

1- The theory of competition, competitive capacity and competition model is introduced completely and creates the strong base for analysis and suggested measures in later chapters

2- The analysis of S-Telecom operation is done comprehensively from general environment to industry environment by 5 competitive forces model The writer has analyzed SWOT matrix, value chain of S-Telecom to find the competitive advantages and disadvantages in competition

3- The system of measures is suggested matching with analyzed content The proposed system of measures serves objectives and development plans of S-Telecom rather well

4- This thesis is with high scientific content, measures are applicable and practical In my opinion, this thesis is rated excellently

Page

1.1.1 The concept of competition 1

1.1.2 Competitive capability 1

1.1.3 Factors influencing competitive capability 2

1.2 Introducing Michael Porter Five Forces Model 3

1.2.1 New entrants 4

1.2.2 Rivalry 5

1.2.3 Customers .6

1.2.4 Suppliers 6

1.2.5 Substitutes 7

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: Analysing the operations of S-Telecom in the telecommunication industry 8

2.1 – S-Telecom overview 8

2.1.1 Creation and development process of S-Telecom 8

2.1.1.1 History of establishment 8

2.1.1.2 Operation professions 9

2.1.1.3 Project objectives, scale and scope 9

2.1.1.4 CDMA technology introduction 10

2.1.2 Vision and Mission 12

2.1.3 Organizational structure of S-Telecom 13

2.1.3 Business Results of S-Telecom over past years 14

2.2.1 General environment 20

2.2.1.1 Economic factors 20

2.2.1.2 Political and Legal factors 20

2.2.1.3 Social factors 22

2.2.1.4 Technological factors 23

2.2.1.5 Natural factors 23

2.2.2 Industry environment 23

2.2.2.1 Rivalry among competing companies 23

2.2.2.2 Customer 32

2.2.2.3 Suppliers 33

2.2.2.4 Subsitutes 34

2.2.3 SWOT analysis 35

2.3 – Analysing the value chains of S-Telecom 38

2.3.1 Primary activities 39

2.3.2 Support activities 40

42

: Measures to improve the competitive capability of S-Telecom 47

3.1 Proposing new vision and mission based on competitive analysis 47

3.2 Suggested measures based on the analysis of Company value chains 48

3.2.1.3 Building customer focused culture 51

3.2.2 Marketing Strategy 52

3.2.2.1 Handsets and services 52

3.2.2.1.1 Diversifying handsets to have good and affordable ones 52

3.2.2.1.2 Widening network coverage and upgrading quality 53

3.2.2.1.3 Diversifying services and providing VAS based on CDMA 54

3.2.2.2 Pricing strategy 55

3.2.2.2.1 Renewing and updating price strategy 55

3.2.2.2.2 Designing attractive tariff aiming at low ARPU segment 56

3.2.2.2.3 Adjusting prepaid card duration 57

3.2.2.2.4 Discounting for customers using large volume 57

3.2.2.2.5 Adjusting price of VAS 58

3.2.2.3 Distribution channels 59

3.2.2.3.1 Expanding and upgrading distribution channels 59

3.2.2.3.2 Reenforcing and upgrading the quality of channels 60

3.2.2.4 Promotion activities 62

3.2.2.4.1 Building up the strong images in community 62

3.2.3 Human Resources Management 63

3.2.3.1 Building up proper recruitment and selection process 63

3.2.3.2 Training and retraining 65

3.2.4 Customer Relationships Management 73

3.2.4.1 Building up the strong commitment 74

3.2.4.2 Identifying and treating customers differently 75

3.2.4.3 Improving processes and reducing transaction cost of customer 76

3.2.4.4 Building up communication channels 82

83

For a long time, Telecommunication was a monopoly industry which restricted competition and limited the choice of customer Since 1995, the policy and

WTO, there will be many international corporations with the strength of financial, technological, management experience joining Viet nam market These are the threat and opportunities for current firms

Although S-Telecom was established and operated in Viet nam for many years, it seemed that it cannot compete well due to internal and external factors Facing the threat and opportunities, there are only two choices,

in such a fierce competition Of course, Korean investor not only want to be but also develop because they invested a lot of money in this potential market The unique way for its survival and development is improving the competitive capability

ϖ Analysing the environment and its factors influencing competition

ϖ Analysing and evaluating opportunities and threat from environment

ϖ Analysing and evaluating the capability of S-Telecom in the communication industry

This thesis just focuses on improving the capability of S-Telecom and doesn’t have conditions to research and suggest common measures for all service providers

In order to meet the above mentioned objectives, I used following method for

my thesis such as statistic, analyse, compare and social survey

There are 3 main chapters in this thesis:

communication industry

S-Telecom

1.1.1 The concept of competition

The Vietnamese dictionary explains,” Competition is a concept which is used

in different fields To simplifying, we can understand that competition is a rival between parties so that whose position increased will lead to another’s decreased The required condition in market is that there are at least two parties who have antagonistic relationship and correlativeness between the devotion and benefits of each party in market”

1.1.2 Competitive capability

Competitive capability is a term that is widely used with different level such

as at national, company and product level However, there is no clear concept as well as common measure about it Competitive capability is evaluated under different views:

According to traditional commercial theory, competitive of one company is evaluated through competitive advantages in cost and labor productivity Company which obtains high productivity and low cost will get competitive advantages, dominate market with large revenue and high profit This theory suggested that the way to improve competitive capability is focusing on improving labor productivity and reducing cost

In Michael Porter’s view, companies now facing the fast development of Internet and globalization movements should develop competitive advantage including resources and capabilities Resources of company are:

Tangible resources are assets that are seen and quantified such as financial resources, organizational resources, physical resources and technological resources

Intangible resources include assets that typically rooted deeply in the firm’s history and have accumulated over time They are human resources consisting of knowledge, trust, managerial capabilities and organizational routines They are innovation resources including ideas, scientific capabilities and capability to innovate They are reputation resources comprising reputation with customers, brand name, perceptions of product quality, durability, and reliability; reputation with suppliers and for efficient, effective, supportive and mutually beneficial interactions and relationships

According to Michael Porter’s point of view, competitive capabilities are the firm’s capability to deploy resources that have purposely integrated to achieve a desired end state These resources and capabilities will create core competencies that serve as a source of a firm’s competitive advantage over rivals They help to distinguish a company competitively and reflect its personality

For a capability to be a core competence, it must be valuable and non substitutable from a customer’s point of view, and unique and inimitable, from a competitor’s point of view

1.1.3 Factors influence the formation of competitive advantages

In classic economists’ view, factors of production like land, capital and labor are considered as resources to form competitive advantage

However, this theory didn’t explain the success of rose growing industry in Holland with higher labor cost and land than others It is difficult to understand Japan

is very famous for their machinery while it never possesses any mineral resources

To explain this case, Michael Porter brought out the theory stated that the availability of production factors and low cost were only one of available resources formed competitive advantages and weren’t the critical factor if considered it on a relative scale compared with others The long term competitive advantage depends much on the capability of continuous improving Michael Porter underlined the influence of national environment to implementation of continuous improvement in company He concluded that conditions of each country would have a great influence

on capability of improvement and competitive capability of company They are:

− Conditions of production factors

− Conditions of demand

− Related and supporting industries

− Strategy of company, industry structure, and competitive degree

− Opportunities and governmental policies

Industry environment has direct influences on each business or company compared with general environment Michael Porter brought out the five forces of competition model in order to help company analyze and define critical factors that directly affect company operation The five forces of competition are:

− Threat of new entrants

− Rivalry among competing firms

− Threat of substitute products

− Bargaining power of buyers

− Bargaining power of suppliers

Michael Porter said that influence of these forces will decide the investment degree, competitive intensity and profit margin of industry When they are stronger, profit margin and ability to increase price are more limited In opposite, when they get weaker, they will allow company to gain more profit According to view of business strategy, manager should take these factors into account and pay more attention to their threats before exploiting their opportunities

1.2.1 Threats of new entrants

It’s difficult for companies to define new entrants Identifying new entrants is important because new entrants can threaten the market share of existing companies One reason is that they bring additional production capability The ability to enter market of new entrants is affected by two factors: barriers to entry and retaliation expected from current industry participants

Entry barriers make it difficult for new firms to enter an industry and often place them at a competitive disadvantage even when they are able to enter Several kind of potentially significant entry barriers are:

− Economies of scale

− Product differentiation

− Capital requirements

− Switching costs

− Access to distribution channels

− Cost disadvantages independent of scales

− Government policy

Firms seeking to enter an industry also anticipate the reactions of firms in the industry

1.2.2 Intensity of rivalry among competitors

Because an industry’s firms are mutually dependent, actions taken by one company usually invite competitive responses The more intensive among competitors, the less price consumers have to pay and the less profit they get The most prominent factors that experience shows to affect the intensity of firm’s rivalries

− Slow industry growth make firms battle to increase their market share by attracting competitor’ customers

− High fixed costs or high storage costs make companies try to maximize the use of their productive capability Doing so allows firm spread costs across a larger volume of output To then reduce inventories, individual companies typically cut their price of their product and offer rebates and other special discounts to customers These practices often intensify competition

− Numerous or equally balanced competitors

− Lack of differentiation or low switching costs

− High strategic stakes

− High exit barriers Sometimes companies continue competing in an industry even though the returns on their invested capital are low or negative Common exit barriers are:

¬ Specialized assets

¬ Fixed costs of exit

¬ Strategic relationships

¬ Emotional barriers

¬ Government and social restrictions

1.2.3 Bargaining power of buyers

Firms seek to maximize the return on their invested capital Alternatively, buyers want to buy products at the lowest possible price To reduce their costs, buyers bargain for higher quality, greater levels of service, and lower prices These outcomes are achieved by encouraging competitive battles among the industry’s firms Customers are powerful when

− They purchase a large portion of an industry’s total output

− The sales of the product being purchased account for a significant portion of the seller’s annual revenues

− They could switch to another product at little if any cost

− Products are undifferentiated or standardized

1.2.4 Bargaining powers of suppliers

Increasing prices and reducing the quality of their products are potential means used by suppliers to exert power over firms competing within an industry If a firm is unable to recover cost increases by its suppliers through its pricing structure, its profitability is reduced by its suppliers’ actions A supplier group is powerful when

− The market is dominated by a few large companies

− Satisfactory substitute products are not available

− Industry firms are not a significant customer for the supplier group

− Suppliers’ goods are critical to buyers’ marketplace success

− High switching costs for industry firms because of the effectiveness of suppliers’ products

1.2.5 Threat of substitute products

Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces In general, product substitutes present a strong threat to a firm when customers face few, if any, switching costs and when the substitute product’s price is lower or its quality and performance capabilities are equal to or greater than those of the competing product Differentiating a product along dimensions that customer’s value reduces a substitute’s attractiveness

In general, this is the overview of competitive theory on two sides: company internal factors to create competitive advantages and the five forces of competition which affects directly the company competitive capability It’s the base of arguments

to examine, identify, analyze and evaluate the competitive capability of S-Telecom

in telecommunication industry As a result of analyzing, I will suggest some measures to improve the competitive capability of S-Telecom in such current situation

2.1.1 Creation and development process of S-Telecom

2.1.1.1 History of establishment

The Ministry of Planning and Investment (MPI) issued license number 2223/GP dated 12 Sep 2001 to Saigon Postel Corporation (SPT) and SLD Telecom Company which was set up in Singapore and consisting of SK Telecom, LG Electronics and Dong Ah Elecomm This collaboration aims at telecommunication business in Viet Nam under BCC – Business Corporation Contract according to Foreign Investment Law

– Saigon Postel Corporation is the first stock company in Viet Nam operating in Telecommunication industry and different fields such as import – export, real estate, tourism, household appliances, production of IT, electronic and telecommunication equipments SPT is established under document number 7093/DMDN issued by Prime Minister on 8 December 1995 and officially set up according to Decision number 2914/ GP-UB signed by People Committee of Ho Chi Minh city The business certificate number 064090 is issued by Department of Planning and Investment of Ho Chi Minh city on October 17, 1996

is a joint venture under BOT – Build Operate Transfer among three Korean companies: SK Telecom, LG Electronics, and Dong Ah Telecomm This joint venture was set up in Singapore in October, 2000 and was considered as one of the leading services provider of telecommunication industry in the world In

2000, Asian Telecommunication Magazine chose SLD Telecom be one out of three best companies which provide CDMA – Code Division Multiple Access in Asia

is a project cooperated between SPT and SLD under BCC form signed on 10 October, 2000 and provide telecommunication services and value added application on CDMA 2000 – 1x nationwide This contract is valid for 15 years since receiving investment certificate

2.1.1.3 Objectives, scale and scope of project

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¬ Cooperating to build, exploit and develop networks; providing telecommunication services of CDMA technology on 800 MHz frequency in Viet Nam Network will be upgraded to 3rd generation technology and IS-2000 system

¬ Providing voice services and other value added services on mobile network such as fax, date transmitting, international calls, Internet in Viet Nam

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¬ Providing services for 700,000 to 1,000,000 subscribers

¬ Designing, installing, and maintaining equipments

¬ Providing high speed Internet services (ADSL)

¬ Upgrading to 3rd generation network and IS-2000 system from CDMA

2000 1x

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¬ The total investment capital is 229,617,000 USD consisting working capital and fixed capital SPT’s capital contribution is the frequency exploiting and using right, numbers, business license and working capital SLD’s contribution includes CAPEX and working capital

2.1.1.4 technology introduction

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technology is the abbreviation of Code Division Multiple Access This technology allows customers connect simultaneously and signal is transmitted on the same frequency Subscriber channels are separated and coded by different random codes They are then mixed and transmitted on the same frequency and only restored

at correlative handsets

CDMA technology was started with the birth of spectrum theory in 1950s with

a lot of advantages and applied in telecommunication of US Army To 1980s, CDMA technology was commercialized and officially suggested by Qualcom, one of the leading telecommunication firms

In 1995, CDMA IS – 95A was the first version commercialized in Hong Kong through Hutchison with 14 Kbitz per second and was considered as the 2nd generation system CDMA dominated the market in the North of America in 1995 SK Telecom

and LG Telecom, the two leading telecommunication in Korea deployed the first CDMA 2000 1x in the world in the year 2000 and the subscriber jumped from 127 million to 134 million in only three months

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¬ Clear and reliable call quality because of applying voice coding Voice coding helps to limit jam and improve voice quality at the same level of cable telecommunication

¬ Reduce battery waste, increase time of conversation

¬ High security because of using wide spectrum band

¬ Providing voice services and data transmitting with high speed

¬ Easy to deploy at lower cost and less BTS The theoretical effects are 9

to 10 times higher than the same technology; it can receive and subscribe 3 to

5 times faster than GSM

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– Global System for Mobile Communication and – Code Division Multiple Access is the state of the art digital mobile system is applied widely in the world now

is the version of – Time Division Multiple Access, digital and press data and then transmit to the channel via two different data flows in which each flow occupied one time slot The band at first divides into 200 KHz wave channel and then separates channels based on time The channel user will take turn one another; therefore, there is one person for one channel and he can use it for a very short time period

is different from because after digitalizing, data are stretched on the wide band As a result, many calls can be connected simultaneously on the same band One voice bits identifies one specific code and this signal is transmitted on the 1.25 MHz band CDMA allows managing the number of subscribers 5 to 20 times higher than GSM with faster speed of data transmission CDMA uses less battery and have long time of conversation Service radius of one BTS in CDMA technology is bigger than GSM; it means less operating costs because of less BTS and saving for both users and service providers but ensures the optimal quality of phone calls

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International Telecommunication Union establishes the 3G concept with the effort to unite the mobile technologies in the world 3G systems should qualify the strict criteria of mobile world CDMA technology is highly evaluated because of their voice and data transmission advantage It provides services at low cost, high security and more applications There are absolutely opportunities that permit remote and far areas approaching a whole new world of voice and data

2.1.2 Vision and Mission of S-Telecom

2.1.2.1 Vision

Becoming one of the leading telecommunication service providers in Viet nam by integrating communicating services, entertainment, business in comprehensive and modern solution, with own character for customer and S-Telecom

2.1.2.2 Mission

ϖ Popularizing CDMA technology: building mobile network of CDMA technology in nationwide

ϖ Focusing on customer: every activity of S-Telecom directs to customer satisfaction and their practical benefits

ϖ Attracting and developing human resources: build working environment professional, active and creative in order to contribute and build the solid S-Telecom family as well as bring profits to partners

ϖ Having strategic collaborations with partners: cooperate equally with partners leading to the same success

ϖ Constructing community: actively contributing and taking part in social activities to make society brighter and better

2.1.3 Organizational structure of S-Telecom ()

The special point in the organization of S-Telecom is the parallel mechanism

of management in which one side is Vietnamese Managers and other side is Korean experts Beside Vietnamese Chief Executive Officer – CEO, there will be the

decisions are made if two parties involved all agree

CEO is appointed by Vietnamese party and in charge of business operation while Korean Experts play the role as Advisors although they really like to directly manage the business In reality, due to the lack of management experience and knowledge in this technology, Vietnamese managers cannot make decisions or manage this business well The deep cause of this situation is of investment form – BCC and telecommunication is the monopoly and sensitive industry that Vietnamese government wants to keep control Therefore, foreign investors can only enter telecommunication industry under cooperation form and are not permitted to form joint venture or 100% foreign capital companies

This parallel mechanism causes a lot of difficulties in business, slower the decision making process to adapt to market demand timely and make employees confused who is the real boss

2.1.4 Business results of S-Telecom over past years

Analyzing the structure of prepaid subscriber, we found that some tariffs are less developed than others Specifically, the development rate of Happy and Friend are low in quantity and growth rate compared with Economy and Daily The growth rate of Friend tariff in 2005 is 1% and of Happy nearly 20% while Economy 30% and Daily 3 times higher than number of subscriber in 2004 It shows that these two tariffs are less favored and Daily is more and more attractive to customer This is the lesson that company learn in designing suitable tariff in competition

2.1.4.2 Financial results in past years

From the financial table of S-Telecom, we can see that variable cost for handset supporting is over 96 billion VND about 63.3 % in total variable cost in 2004

It is decreased by 46.8% in 2005 while number of new subscriber increasing As a result, variable cost per subscriber is reduced from 1 million to 674,000 VND The variable cost will be decreased much more than that if the duty of handset importing

is outsourced out of company value chains

The special thing in this table is the private cost of two partners in BCC out of which, SLD expense occupied over 95.5% of total cost in 2005 These costs will be merging into one item of one partner if joint venture is allowed by Investment Law

in this industry Management cost is increasing each year from 28 billion VND in

2004 to 68 billion VND in 2005 which is 2.4 times higher This is due to expansion the operation in Da Nang

Table 2.1: Subscriber development situation

(Source: Sales Planning Department)

Chart 2.1: Subscriber development over past years

(Source: Sales Planning Department)

Table 2.2: Business results in past years

Unit: VN Dong

2.2.1 General environment influence to the development of telecommunication services of S-Telecom

2.2.1.1.Economic factors

Viet Nam overcomes economic crisis and continues to develop with the average growth rate above 7% per year These are results of efforts of Vietnamese people combined with “doi moi” policies of Government High economical development will increase income and create good conditions of developing services The economy will move more to service and industry field and reduce the large percentage in agriculture field Telecommunication industry is considered as one of the most critical base of Vietnamese economy

According to the 2nd mobile conference held on 11 and 12 May, 2005 including telecommunication services providers in Viet nam, handset producers, banks and technical supporting companies, mobile market of Viet nam will develop fast thanks to the fact that Vietnamese economy continues to grow highly and income per capita increases The average growth rate of Viet Nam mobile market will be 40% in 2004 – 2008 periods

2.2.1.2 Political and legal factors

Law of Post and Telecommunication is going to issue in order to create legal frame for healthy and competitive environment in this industry The law will replace the current ordinance of Post and Telecommunication It is estimated that the law draft will be presented to government by Ministry of Post and Telecommunication in the beginning of 2007

Law will consist of two parts: one part is communication professional competence and other is business with clear rules Besides, common regulations of WTO will be applied such as provisions of non – competition behaviors, connecting delays…

They also stipulate the conditions of giving license to foreign investors in telecommunication industry and are not discriminated The issuance of Law will create better conditions for both public competent authority and service providers as well as improve the legal environment in telecommunication industry Regulations are loosen the entry criteria for other companies, gradually break the monopoly force and increase the number of service providers including S-Telecom, Viettel, Hanoi Telecom, EVN beside VinaPhone and MobiFone

Specially, according to the commitment of Viet Nam for entering WTO, Viet Nam will open telecommunication market to foreign investor’s right after being official member of WTO Viet Nam also commits that foreign investors in BCC will have the possibility to renew current arrangements or to convert them into other form

of establishment with conditions no less favorable than those they currently enjoy

Viet Nam also accepts the basic Reference Paper in Telecommunication with highly competitive character This Reference Paper plays the role of the independent adjustor and has the obligations to prevent the non competitive behaviors of large companies in industry These are opportunities for mobile phone service providers to exploit the potential market, to compete fairly and threats to current companies with the new entrants

2.2.1.3 Social factors

Population of Viet Nam is currently over 84 millions people out of which over 60% under the age of 30 Furthermore, the standard of living is increased day by day According to National Statistic department, the expense for living per person was 370,000 VND in 2003-2004, increasing 37.5% compared with the rate in 2001-2002 This rate is increasing around 17.2% per year The poverty rate in the country has decreased from 28.9% in year 2001-2002 to 24.1% in year 2003-2004 City-dwellers

in Hanoi, Ho Chi Minh City and Da Nang have high income and high consumption rate Many of them are ready to spend on high quality services like mobile phone service

Vietnamese standard of living, however, is not high enough for all people There is the big gap between the rich and poor, between city and countryside; therefore, it’s one of obstacle to develop mobile phone services For example, although the poverty rate in 2004 decreased, Viet Nam was on the list of poor countries with the rate of poor family accounted over 24% The average income of city dweller is 795,000 VND per month while it is 337,000 VND for farmers On average, the income of city dweller is 2.11 times higher than countryside’s The ratio

of income difference per month between the rich and the poor in 2003-2004 was 13.5 times while it was 10.6 times in 1996, 12 times in 1999 and 12.5 times in 2001-2002

Beside the rich in big cities, most of people are not afford to pay for high quality services and only spend on necessities They care for tangible goods rather than intangible services, price than quality In order to meet this group of customers’ demands, the mobile phone service provider should balance between value added services, quality with related cost to set a reasonable price

2.2.1.4 Technological factors

Viet Nam and ASEAN countries currently exploit GSM 2-2.5 The general trend is that service providers are now directing to 3G together with applying CDMA

in mobile phone system because of its advantages compared with GSM’s Specifically, the exploitation of CDMA 1X and 1x EV-DO are increasing and being applied in both mobile phone services and WLL applications W-CDMA lately enters market but is the way for GSM 2-2.5 providers upgrading to 3G Thus, CDMA will become the main technology in the future and will change the world market, increase the current market of CDMA subscriber to 14% compared with 74.9% of GSM market share

2.2.1.5 Natural factors

The S shape of Viet Nam makes providers difficult in setting BTS and saving money due to narrow and stretched territory The wide area in both sides will be easier to set up network and to save investment in BTS The mountainous terrain is one of factors influence network quality The climate of Viet Nam is tropical and high humidity Therefore, equipments are easily rusty and difficult to maintain Besides, due to large rains and thunders, BTS is easily hit and disconnected and affect the quality of services

2.2.2 Industry environment

2.2.2.1 Rivalry among competing firms

Analyzing competitors to know what they are doing, what they did and their development orientation in the future will help S-Telecom much in strategic making and market competition There are currently 5 mobile service providers; 3 out of which are GSM technology providers such as VinaPhone, MobiFone, Viettel and the

rest are CDMA technology providers like S-Telecom and EVN Telecom In addition, there is Cityphone exploiting IPAS/PHS technology

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VinaPhone launched mobile services on 26 June, 1996 with national coverage network currently Turnover in 2004 was 6,000 billion VND Accumulated investment is nearly 500 million USD VinaPhone has 10 switches and 1,200 BTS and its network capability is 3.8 million subscribers and increases to 5 million at the end of 2005 VinaPhone is exploiting both GSM-900 MHz and GSM-1800 MHz and can be roamed internationally with 150 operators in 50 countries

♣ : prepaid service was launched on 1/11/1999 under brand name

♣ : daily subscription fee prepaid service was launched on 1/7/2002, daily fee and charge per call applicable, lower tariff than Vinacard, account usage period based on balance available

♣ : launched in 7/2003, SMS only prepaid services: send and receive SMS (short message), call receiving only, longest account usage period

♣ Market leader position with huge subscriber base, is considered as “trustful network”

♣ Full GSM network with nation-wide coverage Always considered as the largest coverage in Viet Nam

♣ Viet Nam market takes off at high speed since 2003-2004; estimated to reach 10 million subscribers in 2006 and 20 million in 2009-2010

♣ Independent accounting; being equalized to get more power for a fast growth

♣ Have strong support from all provincial Post and Telecommunication in sale and customer care

♣ To remain market leader position with at least 50% of market share in 2006 and 45% in following years

♣ To build VinaPhone as the most advanced mobile network in Viet Nam

♣ To make mobile communication accessible for all Vietnamese

♣ To play a major role in supporting economy growth and regional international integration

♣ GPRS coverage extended to all cities 3G deployment in main cities

♣ More services and tariff reduction for prepaid subscriber

♣ Network capability to be upgraded to 6-8 million of subscribers

♣ Reinforced Customer Loyalty Programs and Marketing/ Promotion campaigns

♣ Equitilization in order to get more financial resources

We can see that VinaPhone is a strong competitor with ambitious objectives and able to make it real But some strength is converting to weaknesses or become weaker They are difficulties in upgrading switches and make call disconnected often Roaming between VinaPhone and MobiFone in the country makes VinaPhone

lose its strength as the national wide coverage network The support of provincial Post and Telecommunication used to be the strength, now seems to be a confrontation due to the sharing ratio between VinaPhone and them The price policy

is rather inflexible combined with reduced promotion compared with other providers Therefore, number of subscriber decreased and cost of developing prepaid subscriber increase due to the fact that other suppliers carry out attractive and continuous promotion campaign in order to attract new as well as win customers from others As a result, MobiFone take over the leading position of VinaPhone in mobile phone service market

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According to Decision number 321/ QÑ-TCBC of Department of Post (which

is currently Ministry of Post and Telecommunication), VMS, a business unit of VNPT has signed the BCC with Comvik International Vietnam AB belonging to Kinnevik Corporation of Sweden on 16 April, 1993 This contract aimed to build a mobile network in Viet Nam under the English name Vietnam Mobile Telecom Services (VMS) and trade name is MobiFone VMS was responsible for managing, exploiting, maintaining and trading GSM equipments nation wide

Together with VinaPhone, MobiFone deployed national roaming permitted MobiFone and VinaPhone subscribers use the shared coverage network in case of weak coverage In addition, MobiFone signed international roaming with various operators in many countries contributing to widen the coverage network beyond the territory

¬ MobiFone services

♣ Post paid tariff: MobiFone

♣ Prepaid tariff: Mobicard, Mobi 4U and MobiPlay

♣ Build a mobile network that can cope with the market demand

♣ Guarantee continuous service quality in coverage area

♣ Offer new applications for mobile network

♣ State of art technology – future proof network design

MobiFone was the first mobile network in Viet Nam and established with poor infrastructure Thanks to technological and financial support and experts of Comvik, MobiFone gradually develops and gets improvement in all fields The coverage of MobiFone in Ho Chi Minh City and Hanoi is in good quality combined with reasonable price and diversified services, attractive promotion campaign that has contributed to the success of MobiFone MobiFone invested 23 million USD more in order to upgrade network and set up BTS to increase the network capability and avoid disconnecting failures MobiFone tested 3G successfully and estimated to deploy this technology in the future in order to support the voice services and multimedia data such as audio and video

From this analyzing, we can find that MobiFone is as strong as VinaPhone MobiFone has taken over the leading position of VinaPhone and it will become a stronger competitor after equitization and IPO is issued on the stock market

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Viettel Mobile Company established on 31 May, 2002 was a business unit of Viettel, a corporation of army forces and entered market on 15 October, 2004 Viettel Mobile uses GSM 2.5 with nationwide network coverage and exploiting number 098 Although it is a new member, Viettel Mobile shows itself that it is a redoubtable player with creative strategic movements Viettel now occupies 10% of market share, reached 1 million subscribers after one year of service launching Viettel reached 2 million subscribers on 7/1/2005 and becomes one of three largest mobile service providers in Viet Nam with over 1,700 BTS nation wide

Viettel applies penetration strategy:

♣ Nationwide coverage at the day one

♣ Attractive tariff

♣ High capability network

♣ Customer oriented service

♣ Consistent branding and advertising

♣ Basic and VAS service at the beginning