[VN Courier 4/7] Vinaphone enters cell phone market fast lane

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Telecoms

Vinaphone enters cell phone market fast lane

By Doan Ngoc Thu

It has been just over a year since Vinaphone, the second mobile phone
network of the Vietnam Post and Telecommunications Corporation (VNPT),
came into operation.
This first anniversary marks a milestone in VNPT’s efforts to compete
with its own mobile phone service in the fast growing cellular phone
market in Vietnam, including the nation’s first and more famous company
VMS, a joint venture with Comvik of Sweden.

Vinaphone is designed for nation-wide coverage and equipped with Siemens
technology at a cost of 15 million USD.

Early days of hardship

Vinaphone was born into tough competition. VMS was calling the shots on
the market, having had a subscription list of 30,000. It was seconded by
Calling of Ho Chi Minh City with 13,000 subscribers. Many experts had
strong doubts if Vinaphone could get a footing in a market which they
thought had been somewhat saturated in its third year.

VMS also had sharp marketing techniques and after-sale service. It was
already reaching 20 out of the then 53 provinces and cities in the
country.

Vinaphone’s first step was to offer 10 different kinds of service and a
50% discount rate for subscription in its opening month. But it was
handicapped by its capacity of accommodating only 35,000 subscribers at
most and reaching only 18 provinces and cities.

In addition, since it started out as a nation-wide network, its limited
investment was spread too widely to give it any strong competitive edge,
especially in Hanoi, Ho Chi Minh City and other urban areas. Complaints
about call disruptions and poor connections kept coming in.

As a result, at the end of the first six months, Vinaphone remained
virtually unknown. By the end of 1996, its market share in Ho Chi Minh
City was only 20% compared with 70% for VMS.

But, there were also hopeful signals. Vinaphone organised a nation-wide
network with bases in each of VNPT’s provincial post services. Although
these provincial services were then not familiar with mobile phone
service, they were strong in marketing with a strategy named ”Service
with a Smile“.

Vinaphone also made the best of its advantage in state-of-the-art
equipment to offer quality service. Indeed, telecom experts were quite
encouraged to see Vinaphone’s subscription go to 7,720 with 3,320,773
minutes of connection time in its first six months for which it grossed
over 40 million VND.

Expansion

As it entered 1997, Vinaphone set higher targets for itself in service
and coverage. Through VNPT, Vinaphone signed a 10-million-USD deal with
Motorola to obtain more technical equipment.

It has also opened many new services to give its subscribers a wider
choice. Said a Vinaphone official, ”Since we and VMS are part of VNPT,
there’s no difference in our service prices. So, our competition is
totally contingent on our service quality.“

Most provincial post service directors interviewed for this article also
said that they did not even mind the competition with VMS since they all
worked for VNPT, trying to promote VNPT’s profits.

”We were indeed having many problems in our first days, but we have by
now established a firm footing on the market,“ said a director.

Vinaphone’s launching into cellular phones has been a challenge to VMS’s
market domination and is giving subscribers more choice. Many former VMS
subscribers have shifted to Vinaphone just because it is offering them
services that they did not have with VMS. And this has forced VMS to
improve its service.
Today, Vinaphone has had more than 16,000 subscribers and its coverage
has reached 52 of the country’s 61 provinces.

Recently, by VNPT’s decision, Vinaphone has been elevated to the status
of an independent company in charge of managing the nation-wide mobile
phone network with each provincial post service becoming one of its
agents.

Experts said they believe the new status will give Vinaphone impetus to
become a major mobile phone business in Vietnam in the coming years.

VNC