Opportunities for Vietnamese Telecom Firms Amid Digital Transformation

Enterprises within the telecommunications sector are undergoing a paradigm shift in their business strategies to align with emerging trends. A notable evolution is witnessed in the introduction of innovative telecommunications products and services, leveraging the integration of digital technologies to gradually supersede traditional offerings.

VNPT demonstrates leadership in national digital transformation initiatives

Opportunities and challenges

In the current industrial era dominated by Industry 4.0, Vietnamese telecommunications enterprises can unlock new opportunities by embracing innovation and flexibility. Dr. Ha Thi Ngoc Ha from the Vietnam Association of Certified Public Accountants (VACPA) emphasized the significance of these attributes, highlighting their role in harnessing the potential of connectivity infrastructure. The ownership of interoperable mobile networks forms the groundwork for building adaptable networks aligned with prevailing trends, facilitating the swift adoption of technologies such as 5G, IoT, cloud computing, and edge computing.

As businesses across various sectors undergo digital transformation, Vietnamese telecommunications enterprises are assuming roles as infrastructure providers and purveyors of digital transformation solutions. This strategic shift presents an opportunity for telecom companies to diversify their product portfolios, augment revenue streams, and fortify their market standing.

Digital transformation not only allows telecommunications enterprises to capitalize on existing products and services through digital platforms but also enables the streamlining of service delivery processes, cost reduction, and enhanced profitability for each offering.

However, Dr. Ha Thi Ngoc Ha acknowledged the direct impact of Industry 4.0 technologies on telecommunication enterprises, with traditional services witnessing a decline and reaching saturation. The industry is further challenged by the proliferation of numerous operators, fostering intense competition and resulting in reduced rates that impact overall revenue. This competitive landscape compels operators to pivot towards digital services. Recent financial results from network operators underscore the diminishing revenue from traditional telecommunications services.

Moreover, Vietnamese telecommunications face challenges from digital content providers equipped with hyperscale cloud infrastructure, customer migration, and satellite services. This necessitates carriers to diversify their service offerings within the same customer base while sharing infrastructure.

A significant concern in Vietnam's telecommunications landscape is the acute shortage of human resources equipped for digital transformation, spanning from management to skilled employees. Educational institutions annually produce over 55,000 IT engineers and an equivalent number of electronics and telecommunications engineers. Despite this abundance, the Vietnam IT Market Report for Developers Recruitment in 2021 indicated that only around 30% of graduates possess the skills and expertise demanded by modern businesses. The remaining 70% require at least six months of retraining before becoming employable. This persistent gap in IT human resources continues despite the ample annual training capacity in Vietnam.

In navigating the evolving telecommunications landscape, Vietnamese enterprises must strategically position themselves to harness the opportunities presented by digital transformation while addressing the challenges that accompany this transformative journey.

Development plan to establish Vietnam as a regional connectivity hub

Directive 01/CT-BTTTT issued by the Ministry of Information and Communications on January 20, 2023 is set to propel Vietnam into a regional connection center. The telecommunications sector will witness auctions of frequency bands, including 2.3GHz, 2.6GHz, and 3.5GHz, fostering the advancement of IMT mobile information. Initiatives will be launched to facilitate the realization of the objective of providing one smartphone per individual, driving digital transformation. Concurrently, efforts will be made to support businesses in adhering to the planned discontinuation of 2G mobile technology, augment the quality of 4G coverage, and elevate the standards of 5G services. Additionally, endeavors will be directed at enhancing Vietnam's ICT Development Index (IDI) to secure a position among the Top 60 IDI globally by the end of 2023, as assessed by the International Telecommunication Union (ITU).

In the period 2024-2025, the focus will shift to elevating the quality of data center infrastructure and services, aiming for Vietnam's cloud computing infrastructure to claim a 70% share of the domestic market by 2025. The expansion of regional and international Internet connections is emphasized, positioning Vietnam as a pivotal regional connectivity hub. The ongoing transition from traditional to digital telecommunications infrastructure, spanning the years 2023-2025, is targeted to achieve an average annual revenue growth rate of 8% - 10%, ultimately reaching a revenue milestone of US$25 billion by 2025.

The preliminary report for the first half of 2023 underscored the industry's robust performance. The estimated revenue for the entire Information and Communications sector during this period is VND1,614,206 billion, contributing VND45,905 billion to the state budget and VND389,792 billion to the GDP.

The current rate of Internet users stands at 78.59%, surpassing the 2023 target of 76%. Notably, the utilization of IPv6 on the Vietnamese Internet has reached 57.6%, exhibiting a 7.6% increase compared to the corresponding period last year. Vietnam ranks among the top 10 globally, securing the 2nd position in ASEAN and the 3rd in Asia (following India and Malaysia) in IPv6 usage. The successful conversion to IPv6 for e-portals and public services has been notable, with 74 out of 85 (87%) ministries, branches, and localities accomplishing this transition, reflecting an 80.5% increase from the same period last year.

This strategic development plan positions Vietnam at the forefront of regional connectivity, aligning with global technological advancements and fostering sustainable growth in the Information and Communications sector.

Strategy for agile adaptation

In the dynamic landscape of technological evolution, the telecommunications industry stands at the forefront of transformative changes. Beyond its traditional role in communication, telecommunications now forms the bedrock of sustainable development and global competitiveness. The optimization and development of this industry present manifold benefits and substantial future growth potential.

Dr. Ha Thi Ngoc Ha emphasized that in seizing these opportunities, the telecommunications sector must formulate strategic approaches that enable swift adaptation to rapid changes. These strategies should not merely cater to market demands but also proactively shape them. A pivotal aspect is the relentless expansion of high-speed global connectivity, facilitating swift and efficient interactions and information exchange among individuals and devices. Furthermore, the industry must underscore its crucial role in executing the tenets of Industry 4.0, fostering the implementation of automation systems, Internet of Things (IoT), artificial intelligence (AI), and data analysis for smarter and more efficient operations. The sector must also diversify its services, delivering a spectrum of information and entertainment options that keep users abreast of evolving trends. It is imperative to develop innovative applications, such as 5G connectivity, to propel communication speeds, foster new applications, and elevate the overall user experience.

Moreover, Ms. Nguyen Dieu Linh from the Banking Academy underscored the critical need for Vietnam to strategically invest in telecommunications infrastructure. This investment should encompass the comprehensive upgrading of both mobile telecommunications and network infrastructure, ensuring unwavering connectivity and optimal performance. Simultaneously, there must be a concentrated effort to nurture and cultivate a workforce equipped with expertise in new telecommunications technology, artificial intelligence, data analysis, and cybersecurity. Addressing the escalating demand for telecommunications experts is paramount. Ms. Linh specifically highlighted the imperative of fortifying network security through robust measures to safeguard against data breaches and compromises.

By Anh Mai, Vietnam Business Forum