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| People crowd beneath a Metfone logo in the company’s Phnom Penh office in October. Heng Chivoan |
Viettel scraps roaming charges
Phnom Penh Post | 20 December 2016
The decision by Vietnamese telecom operator Viettel Group to
eliminate roaming charges on cross-border calls made between its
networks in Vietnam, Cambodia and Laos could cost the company over $1
million a day in lost revenue. However, it could also result in more
subscribers using roaming, generating additional revenue.
Viettel announced last Thursday that on January 1 subscribers of
Viettel-owned telecom networks in Vietnam, Cambodia and Laos will be
able to phone each other at domestic call rates.
“Users of Metfone in Cambodia, Unitel in Laos and Viettel in Vietnam
will be charged at the local mobile fee when they make cross-border
calls to each other,” Viettel managing director Nguyen Manh Hung said,
according to Vietnamese media sources.
Vietnamese daily newspaper Vietnam News cited Hung as saying
the decision to drop roaming charges, which run as high as $2 per
minute, could cost Viettel’s networks in the three countries about two
percent of turnover.
“At first, Viettel will suffer a loss of $1 million each day.
However, we hope our customers will increase their calling time and
internet access,” it said.
“Regardless, the policy will definitely promote trade and business among the three nations.”
Military-run Viettel operates in Vietnam and nine overseas markets
with a total subscriber base of 90 million customers. The company posted
revenue of $10.8 billion in 2015 with 20.8 percent year-on-year growth.
Metfone, Viettel’s Cambodian subsidiary launched in 2009, generated
$256 million in revenue last year and remains the company’s most
profitable overseas operation.
Im Vutha, spokesman of the Telecommunication Regulator of Cambodia
(TRC), said yesterday that Metfone did not require the TRC’s permission
to drop roaming fees, however, the strategy would likely result in lower
revenues for both the company and the government as Metfone pays an
annual licence fee as well as a tax on net profit.
Vutha suggested Viettel’s decision to drop roaming charges was likely
a response to fierce competition from over-the-top (OTT) communications
services such as Line and WhatsApp that bypass the traditional voice
and messaging business of telecom operators.
“It is a new strategy of the company to attract more customers and to
compete with OTT,” he said. “They could be facing a loss of revenue now
and are trying balance the quality and service with the aim of gaining
profit in the future.”
Marc Einstein, director of mobile and wireless communications Asia
Pacific at Frost & Sullivan, said the rise of OTT communications
platforms has been the “nail in the coffin” for international roaming.
As Viettel could not stop its subscribers from using these platforms, by
dropping roaming charges it could hope to encourage them to increase
their usage of its standard voice and data services while abroad.
“Roaming is going down to zero anyways, so it makes sense for Viettel to try to skim some revenue from it,” he said.
Einstein said while international roaming has never been a big
contributor to the revenue of mobile network operators, it is a highly
profitable service as the physical costs of roaming are “minute”.
He said in the case of Viettel, connecting a subscriber on its
network in one country with one of its networks in another has almost no
actual cost. It is only when a mobile operator does not have a network
partner in another country that it must pay charges.
Viettel stands to be among the first mobile network operators to scrap roaming fees for subscribers of its networks abroad.
In 2007, the European Union enacted legislation that forced European
mobile service providers to lower their roaming charges for across the
27-member bloc. After considerable debate, members of the European
parliament finally voted in October 2015 to eliminate mobile roaming
charges altogether effective mid-2017.
ASEAN information and telecommunications ministers have also
discussed abolishing roaming fees within the 10-member bloc. The issue
was raised last month at the Cambodia, Laos, Vietnam (CLV) regional
summit in Siem Reap, though no timeline was set.
Viettel and Metfone representatives did not respond to inquiries yesterday.
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