Vietnam's Ministry of Information and Communications (MIC) is reportedly urging the country's telcos to seek new growth opportunities in the digital niche due to a slump in the sector's growth in 2023. Minister of Information and Communications, Nguyen Mạnh Hung, stated in an interview that the growth of telecom operators has not matched the country's GDP growth.
In 2023, Vietnam's GDP grew slightly above 5%, falling short of government targets and declining from the previous year's 8%. However, Hung noted that Viettel's domestic telecoms business grew by 2%, reaching a total of 5% in recent years. Meanwhile, VNPT experienced growth of 2%-3%, and MobiFone saw growth ranging from 4% to 10%. Hung expects telcos to grow their businesses at a rate of 5% to 10% annually.
The Result of Market Saturation and OTT Services
Hung attributed the sluggish growth to several factors within the telecoms industry. He pointed out that the market had become saturated, indicating that there was limited room for expansion due to the high level of competition and widespread availability of services. Additionally, he highlighted the impact of OTT services, which have progressively eroded traditional revenue streams such as voice calls and SMS messaging. As consumers increasingly turn to OTT platforms for communication and other services, telecom companies have faced challenges in retaining their market share and generating revenue from conventional offerings. This shift in consumer behavior has necessitated telecom providers to adapt their strategies, focusing on diversifying their service portfolios and enhancing the value proposition to remain competitive in an evolving market landscape.
While telcos have explored various avenues for growth, including diversification into areas such as digital services, IoT (Internet of Things), and enterprise solutions, they have yet to discover a business model capable of fully offsetting the decline in core revenues. This challenge is compounded by the rapid pace of technological innovation and evolving consumer preferences, which continuously reshape the competitive landscape and demand ongoing adaptation from telecom providers. As a result, telcos remain in search of a sustainable growth strategy that can effectively counteract the impact of OTT disruption and secure their long-term viability in the market.
The minister urged telecommunications and digital technology companies to focus their R&D efforts on developing digital applications for industries, which are eligible under the government's ‘Make-in-Vietnam’ policy.
