August 04, 2020 09:04

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Telecommunications enterprises under EVFTA pressure

07:37 | 22/11/2019

VCN - Telecommunications service enterprises have had strong growth in both market and competitiveness. However, in the Europe – Vietnam Free Trade Agreement (EVFTA), compared to many other sectors, telecommunications services have more limited market openings in terms of both scope of activities and level of participation of foreign investors.

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Domestic telecom enterprises are developing strongly. Source: Internet.

High prospects

According to a report of the Center for WTO and Integration (Vietnam Chamber of Commerce and Industry - VCCI), revenue from telecommunication activities in 2018 reached VND 395.8 trillion, up 7.3 percent compared to 2017. The country has 63 enterprises with licenses to establish public telecommunications networks and 75 enterprises with licenses to provide telecommunications services. According to the General Statistics Office, the estimated telecom revenue in the first nine months of 2019 reached VND 277.1 trillion, up 7.23 percent; the infrastructure of the telecommunications industry is constantly being improved to increase service quality. Up to now, telecommunication enterprises have seen the participation of many private enterprises, boosting competition, but the market is still concentrated mainly on large corporations such as Viettel, VNPT, FPT and Mobifone.

The telecoms industry overview report of ACBS Securities Company said many domestic telecommunication enterprises not only have strong growth in revenue but are expanding investment abroad. Specifically, Viettel has expanded its business into 12 countries; in 2019, this company aims to grow revenue by 8 percent; FPT Telecom Joint Stock Company recorded a 15 percent increase in revenue in 2018, a 19 percent increase in profit compared to the previous year, currently FPT has 12 branches in Cambodia and 1 branch in Myanmar. In addition, many small and medium-sized enterprises also had good growth, making the prospect of telecommunications industry very positive.

However, so far, Vietnam has only allowed foreign businesses to provide cross-border services or direct business investment in Vietnam in a few industries with strict conditions. But according to recommendations of the WTO and Integration Center, the European Union (EU) is a partner with strengths in financial services and telecommunications in the world, so the EVFTA is expected to have a significant impact for the future of these two industries as well as the Vietnamese economy.

Nguyen Thi Thu Trang, Director of the WTO Center for Integration and Evaluation, said telecommunication services have strongly developed both the market and the competitiveness of enterprises. Currently telecommunication services are considered one of the key economic and technical sectors. Therefore, the EVFTA opens up business and protection opportunities for EU service providers and investors in telecommunications services in Vietnam's potential market.

Parallel challenge

The Center for WTO and Integration said the EVFTA opened many opportunities but also had many challenges due to its many conditions. Telecommunication services are sensitive services due to their characteristics associated with information infrastructure, cybersecurity and cyberspace, so the commitment to market opening for this service is always conservative and cautious. The EVFTA puts domestic enterprises ahead of a more competitive and complex future from competitors from the EU. This is a challenge, but it may also be a pressure for Vietnam telecommunications industry and enterprises to continue reforming and enhancing their competitiveness and business efficiency.

Nguyen Thi Thu Trang said that for the telecommunications industry, the EVFTA did not open any new telecommunication fields. Moreover, in the first phase, EVFTA made almost no major impact on foreign investment in the telecommunications services market; after five years, the change is only significant in the value-added service segment without network infrastructure when establishing 100 percent foreign-owned enterprises. Moreover, in the EVFTA, Vietnam has only recently opened its telecommunication service under the conditions of cooperation and joint venture between EU and Vietnam service providers.

Agreeing, Vu The Binh, Vice Chairman and General Secretary of Vietnam Internet Association said in recent years, Vietnam's telecommunications and internet market has had a very high level of competition and reduced service prices. When the EVFTA comes into effect, EU investors will focus on digital content and digital transformation, providing high value-added services. This is a challenge for domestic enterprises. However, because of "open" cooperation conditions, it will attract more foreign businesses, causing domestic enterprises to pay more attention to quality, safety, security and confidentiality issues for foreign businesses with telecommunications services to attract and retain customers.

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Therefore, businesses said that to adapt when the EVFTA is implemented, businesses must professionalise and improve the quality of services, offer services in accordance with customer needs, enhance application of information technology to diversify products and services, ensure information security. Doing this will help telecom businesses turn challenges from the EVFTA into development opportunities.

By Huong Diu/ HuuTuc