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Viet Nam telecom firms all set for 4G race

Update: February, 01/2016 - 07:56

VNPT and Viettel were two out of five telecom firms issued licences by the ministry to test 4G technology last year, the others being CMC, FPT, and VTC. — Photo hanoimoi

by Thien Ly

On January 18 Viet Nam Posts and Telecommunications Group (VNPT) began commercial testing of its 4G, or fourth generation mobile telecom technology, services in HCM City and the Phu Quoc Island, with speeds reaching as high as 100 Mbps.

Vinaphone's 3G subscribers could switch to 4G for free if within a week and use 4G at the same price as 3G for services like mobile TV, mobile broadcast, and video conferencing.

Earlier the telecom group Viettel had also got permission from the Ministry of Information and Communications to test its 4G services for seven months from last May in the southern province of Ba Ria-Vung Tau. Again it was found that 4G broadband was up to seven times faster than 3G.

It seems that a new race has begun among the biggest telecom players.

VNPT and Viettel were two out of five telecom firms issued licences by the ministry to test 4G technology last year, the others being CMC, FPT, and VTC.

To carry out their testing, both Viettel and VNPT built hundreds of 4G base transceiver stations.

VNPT has installed around 100 stations in HCM City and 50 in Phu Quoc.

It plans to expand its 4G services to Ha Noi, Hai Phong, Nam Dinh, Da Nang, Can Tho, Ca Mau, and Bac Lieu immediately upon getting a licence to provide 4G services.

Viettel said it has funds ready to begin 4G services at several locations in the country. For the trial, it installed nearly 200 stations in the cities of Vung Tau and Ba Ria and the rural Long Dien District.

Thus, of the country's three biggest telecom firms, only Mobifone has yet to reveal its 4G plans.

But the company is unlikely to stand out the race. At a review meeting in the first half of last year, one of Mobifone's most important demands from the ministry was permission to provide 4G services in the 1800 mHz band starting in early 2016.

The company also revealed plans to provide several mobile value-added services in 4G.

The goals of the major mobile players in this new race seem to be quite different: While Viettel targets expanding its market share at home and abroad, Mobifone wants to improve its image, service quality and profits.

VNPT general director Pham Duc Long said the company would introduce 4G services very quickly and apply the technology to various mobile services to provide customers with the best service quality.

Experts say 4G LTE [long term evolution] has been growing rapidly all over the world. With its advantages like high-speed internet access and the popularity of mobile phones and tablets, clearly 4G LTE will remain a key development trend in the telecom industry.

By the end of last year more than 300 telecom firms in over 100 countries were providing 4G services, 61 of them in Asia. In 2014 the world had around 450 million 4G subscribers, and the number is expected to have nearly doubled to 830 million by the end of last year.

The ministry had planned to launch 4G in the country last year, but delayed the issue of operational licences until this year for assessing the demand, technology, devices, and other conditions.

Analysts say it is right time for the country to deploy 4G since this technology has increased speed and security in mobile devices, brought in new business models and improved access to education and health.

In addition, local network operators now have the advantage of infrastructure provided by State-run companies.

But others say that the MoIT and service providers should make a careful study before introducing 4G services since 4G devices remain rather costly in Viet Nam at VND4-20 million.

Besides demand, the two other decisive factors in the deployment of 4G are technology and ecosystem, they say, whereas the country's infrastructure is not really ready yet.

They recommended that service providers should not be hasty and wait for consumers to use devices that are appropriate for 4G technology.

Property remains hot topic

Though there is no sign yet of the price "fever" that periodically marks the Vietnamese property market or a bubble, the market remains a hot topic for analysts and the media.

In discussions, most experts say the market has performed impressively in recent months, with figures showing that a strong recovery has set in after a long freeze. But they also warn there are distinct signs of risk, especially bank credit-related.

The Government seems to be in concurrence. In its Decision No.01/NQ-CP it seeks to severely curtail lending to high-risk sectors, in which it has included property.

State Bank of Viet Nam deputy governor Nguyen Phuoc Thanh told a recent meeting with HCM City authorities that the central bank would restrict property-related loans this year, revealing that though a majority of loans went into funding production and business activities last year, many banks had lent too much to the real estate sector.

The housing market started recovering in late 2014. Last year the recovery was clearly reflected in the rising number of successful transactions and new projects, plunging inventories and easier credit.

According to a report by property services provider CB Richard Ellis (CBRE) Vietnam last year, in Ha Noi, housing transactions hit a record 21,100, surpassing the 2009 number.

High-end apartments accounted for 28 per cent compared to 21 per cent in 2009.

The market also witnessed a rise in the number of long-delayed projects that was revived.

Last year also saw a firm recovery in HCM City with numerous launches, positive sales volumes and higher prices, especially for mid- to high-end properties.

More than 41,900 units in 78 apartment projects were launched, mostly in the east (47 per cent) and south (27 per cent) of the city, an increase of 122 per cent over the previous year.

Overall, market sentiments remained positive through the year as 2015 ended with record annual sales – an estimated 36,160 units or up 98 per cent year-on-year.

The strong recovery is attributed to several factors, including the 0.63 per cent inflation last year, the lowest rate since 2001 and way below the average of 5 per cent in recent years.

The low inflation supported a growth in consumption and investment, including in housing, which was also helped by the low mortgage rates.

But the decisive factor was probably banks' huge lending to both property developers and buyers.

In reality, the majority of property developers lack funds while the sector requires large medium- and long-term funds and there are few sources of funding for real estate firms.

Consequently, they rely completely on three main sources – owners' equity, buyers' money, and bank loans.

Besides, with most middle-class individual buyers dependent on bank loans to buy a house, lending by banks is always the key to the development of the property market.

As a result, credit to the housing sector grew 14.59 per cent last year and 80 per cent from three years ago to VND360 trillion, according to the State Bank of Viet Nam.

In fact, of the total outstanding credit, loans for property development and mortgages account for 20 percent, and many banks are still expanding lending programmes targeted at real estate.

Indeed, overall credit growth reached 18 per cent last year, higher than the rate in 2011-14.

The experts express fears that the rapid growth of the housing market and credit poses threats of a bubble and a rise in bad debts just like a few years ago. While the real estate market recovered rather strongly last year and might continue to grow this year, the recovery is not really on a firm footing yet, they warn.

They also warn that the luxury apartment segment is experiencing oversupply.

But the supply of social housing and small and medium-sized apartments, which is where the real demand is, is limited, they say.

In HCM City, for instance, dozens of high-end apartment projects are being marketed despite the modest demand. On the other hand, only 6,000 apartments are available for low-income earners.

It seems that developers are focusing on high-end products with an eye on the expected foreign investment wave following the country's accession to the TPP while ignoring low-income earners, who have huge demand for housing.

Many believe the TPP is not a magic wand that will change the market immediately.

Another big challenge facing the market is credit-related.

According to the HCMC Real Estate Association, secondary market investors now account for 15 per cent, up three-fold from 2014. They mainly focus on the high-end segment, buying in and selling quickly to profit from price differences.

The experts warn if the speculation is not checked, instability and a possible bubble loom.

But things are likely to remain stable this year if 50 per cent of the money flowing into the secondary market comes from speculators'own pocket, they say.

But 70-80 per cent of the money comes from banks and other sources of credit, often at very high interest rates, and this poses a big threat of bad debts.

Faced with this situation, the central bank has announced it will closely monitor property and long-term loans this year to safeguard the quality of credit growth.

The experts concur that it is important to tighten oversight to prevent overheating, which will cause a property bubble, especially by the banking sector over lending to the property sector. — VNS

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