VietNamNet Bridge – Viet Nam's largest telecom services provider VNPT said it has incurred large losses due to the decreasing demand of its fixed line telephone services.

The state-owned giant said the number of its fixed line telephone subscribers has reduced from 13 million to five million due to the increasing popularity of mobile phones.

"Each year VNPT lost about 25 per cent of its fixed-line subscribers and most of our subscribers now just use the service as a backup connection" said deputy head of VNPT's Business Department Vu Tien Duong.

"In addition, turnover from each subscriber was decreased from VND40,000 (US$2) in 2011 to VND33,000 in 2012, which included a VND20,000 of monthly subscription fee."

Duong said with such a rate of decline, he could not predict the fate of the decayed service.

Meanwhile, according to VNPT's calculation, while the cost price of fixed-line telephone calling charge is VND650, it charges its subscribers just VND400, meaning the company loses VND250 for every minute.

"We have not calculated the total losses yet, but it would be thousands of billions of dong per year" Duong said.

Duong added that subscribers in both urban and rural areas were withdrawing from this orthodox form of communication.

The Ministry of Information and Communication (MIC) had earlier raised the calling charge from mobile phones to fixed-line phones in an attempt to stimulate use of fixed lines.

"But this effort seem to be not working as most people have shifted to using mobile phones" Duong said.

Surpassed

VNPT on Monday, Jan 14, adjusted its profit in 2012 to VND8.66 trillion ($412.38 million) from the previously reported VND8.5 trillion ($404.76 million).

However, the adjustment was unable to help the country's oldest telecom service provider regain its crown as the company remained behind its rival Viettel in earnings for the first time.

Viettel's earnings through December totalled an estimated VND140 trillion (US$6.6 billion), compared to VNPT's projected total for the year of VND130 trillion ($6.1 billion).

Viettel expects to post a profit for the year of VND27 trillion ($1.3 billion), up from VND20 trillion ($953 million) in 2011 and triple the anticipated profits of VNPT.

Attempting to explain the cause for his company's failure to keep up with Viettel, VNPT chairman Pham Long Tran earlier this month said the economic recession had severely impacted VNPT's operations.

"The decline in fixed-line telephone use in recent years has also eaten into our profits, with most of our revenue now coming from mobile users," Tran said.

Tran also admitted that VNPT, as a State-owned company, continued to have a cumbersome business structure and lacked a customer-oriented strategy.

"The growth in VNPT's revenue has stood at just 10 per cent last year," he said. "This is a low growth rate with a low profit compared to the average level of other providers of telecoms service."

Source: VNS