Telcom price cut requests rejected

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Vietnam's telecommunications authorities has banned local mobile phone networks from cutting their rates by more than 15 percent, preventing them from selling below cost to compete against each other.

Vinaphone and MobiFone, both managed by state-owned Vietnam Posts and Telecommunications, and military-run Viettel early this month asked for government's consent to cut rates by up to 20 percent. The proposals have been rejected. 

The Ministry of Information and Telecommunications said it is working on a formula to calculate cost prices of phone services and until the task is finished, network operators are not allowed to lower their rates by more than 15 percent, Pham Hong Hai, director at the ministry's Telecommunication Department, told Thanh Nien. Cost prices are currently calculated and reported to the authorities by the companies themselves.

Viettel, Vinaphone and MobiFone are the three largest wireless carriers in Vietnam. They had requested permission to cut rates at the beginning of this year, but the Ministry of Information and Telecommunications rejected them, saying price cuts could hurt smaller companies in the market.

Vu Tien Duong, a senior official at Vietnam Posts and Telecommunications, said his company doesn't want to lower rates as they are already too close to cost prices. But if other networks cut their prices, the company has to follow suit to keep its market share, he said, noting there was "competition pressure" from Viettel.

Elizabeth Fong, CEO of Vietnamobile, said the authorities should take measures to encourage mobile phone networks to compete on service quality, not on prices.

Vietnam has 152 million phone subscribers and 80 percent of them mobile phone, official statistics show.

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