Analysts say a recent rate cut by mobile phone network Beeline will trigger a new price war among local telecom service providers in Vietnam looking to hold on to their share in market nearing saturation.
Beeline, operated by a joint venture between Global Telecommunication Corporation and Russia-based VimpelCom, last Monday launched a new cell phone plan offering phone calls to any network at only VND900 per minute, compared with its previous lowest rate of VND1,199 per minute.
General Director Alexey Blyumin said his network does not try to compete with other firms and only wants to offer effective services.
But analysts said the move will start a fierce competition as the new rate offered by Beeline is much lower than prices of other wireless carriers.
Three local telecom giants Viettel, MobiFone and Vinaphone have in fact planned to cut rates by around 15 percent or more since early this year.
The Ministry of Information and Telecommunications had prohibited such a move before the Tet Lunar New Year holiday, saying it could hurt small players in the market. The ministry said the wireless giants should focus instead on improving their service quality.
Military-run Viettel had 16 million new subscribers last year, statistics from the Ministry of Information and Telecommunications show. MobiFone and Vinaphone, both managed by state-owned Vietnam Posts and Telecommunications, each attracted more than 10 million new customers.
Vietnam's other four mobile phone service providers, Sfone, EVN Telecom, Beeline and Vietnamobile, only have a total of 4 million subscribers.
With the Tet holiday now over and the price-cut proposals under consideration by the ministry again, phone companies will soon lower their rates to make sure they can have a share of the market's untapped segment, analysts said.
The problem is while local wireless carriers focus on fighting each other, they often forget about their service quality.
Hoang Ngoc Diep, senior consultant of US-based telecom firm Qualcomm, said all mobile phone networks in Vietnam have quality problems although they are all somehow certified as having good quality.