VIETNAM 2005

Alcatel and Vietnam, a stable partnership in Asia Olivier BAUJARD (class X76) Chief Technology Officer, Alcatel

Alcatel has been established in Vietnam since the end of the war in 1975. Over the years, the company has built a partnership with the public operator, VNPT, which, in 1993, led to the creation of a joint venture with a transfer of technologies. Today, Alcatel is in a leading position in the telecommunications market in Vietnam and is continuing its modernization by launching an innovative next generation network (NGN). The Vietnamese telecommunications market The telecommunications market in Vietnam has grown steadily in recent years and was ranked second worldwide in terms of growth (+28%) in 2004. The mobile communications market grew by almost 50% last year. This market has a strong potential in development: out of nearly 83 million Vietnamese, only 12% have access to telephone services, equally divided between landlines and mobiles. Broadband access, in particular ADSL, is so far not widespread, and due to a real craze that has evolved for information technology devices among the most favored classes of Vietnamese, its development potential is estimated to be more than 100, 000 lines annually for many years to come. Admittedly, the low level of the average income and the high proportion of rural population (75%) are still curbing the development of telecommunications services by operators. But all indicators are forecasting that Vietnam's economy will take off in the future, as has happened in some neighboring countries. As a result, competition is already fierce in all marMARKET / ENTERPRISES

mining competitive advantage on the local market. Today, ANSV employs 136 employees and generates indirectly about one hundred jobs. Its turnover in the country was about 14 million USD in 2004, and has been constantly growing for 5 years.

ket sectors. The main stages in the establishment of Alcatel in Vietnam Alcatel was established in Vietnam 30 years ago to help with the reconstruction of the country, which had been devastated by decades of war. Among other achievements, the company installed a transmission cable between Hanoi and Haiphong until 1978. Alcatel also obtained an important switching contract in Hanoi and Hô Chi Minh City in 1988. In 1992, while the country was moving towards a market economy, Alcatel inaugurated its first representative office. As part of this opening to foreign investments, Alcatel consolidated its partnership with the public operator VNPT (Vietnam Posts & Telecommunications Corporation) by creating in 1994 a joint venture called Alcatel Network Systems Vietnam (ANSV), in which Alcatel has 52.8% ownership. In November 2000, the company concluded with its subsidiary an agreement on technology transfer, which introduced into the joint venture the switching multimedia central, thus giving it a deter-

This joint venture strategy and adaptation to local requirements and to transferring of competencies has always paid off for Alcatel, as the Alcatel Shanghai Bell example in China demonstrates. Alcatel's position in the Vietnamese market We are in a leading position in the telecommunications market in Vietnam. Our joint venture has equipped more than 2 million landlines. In addition, the company offers installation and maintenance services for the company’s entire portfolio. Nearly 40% of the VNPT lines have thus been equipped by Alcatel. Similarly, our market share in broadband (ADSL) is around 40%. The company is also in a good position for mobile networks, since it supplies the three GSM operators in Vietnam (Vinaphone, Mobiphone, Viettel). Lastly, we have penetrated in depth the large company market (Viettel, Vietnam Railways, Electricity of Vietnam…) as well as institutions, equipping in particular the Ministry of Defense.

ENGLISH SUPPLEMENT - LA JAUNE ET LA ROUGE • NOVEMBER 2005

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Alcatel and the future of telecommunications in Vietnam Our strategy for the future is to continue contributing to the development of telecommunications in Vietnam, in particular in the transition phase of the Vietnamese network towards NGN and 3G technologies, which precede the future migration of landlines or mobile networks towards the all-IP. Alcatel is very well positioned to undertake this transition: we are, for example, number two worldwide in switching systems for NGN. In October 2004, we signed a contract to provide next generation networks to VNPT, thus enabling it to increase the number of users of quality landline telephony services to nearly 2 million. The situation is similar in the mobile market: the last contract signed with Vietnam Mobile Telecom Services Co, the mobile affiliate of VNPT, was for a complete GSM/GPRS/EDGE network infrastructure solution. Thanks to this infrastructure, the operator will be able to increase the capacity of its network in Hanoi and Ho Chi Minh City and give access to its customers to new services with added value, thus preparing the advent of high rate technology for mobiles. Lastly, Alcatel is following with great interest Vietnam's project to acquire a telecommunications satellite. In short, reinforced by the links developed over many years with VNPT through its joint venture and its very broad technological portfolio, Alcatel wishes to continue strengthening its presence in all telecommunications activities. Furthermore, Alcatel enforces its committed action with the various national players in order to participate even more efficiently in the development of all telecommunications and information technology sectors, seen as essential levers to Vietnam’s development.

A 3347 km long cable connects Thailand (Sri Lancha), Vietnam (Vung Tau) and Hong Kong (Deepwater Bay). The cable was a product of Alcatel Submarine Networks. The laying was completed by Septembre 1995.

6 NOVEMBER 2005 • LA JAUNE ET LA ROUGE - ENGLISH SUPPLEMENT

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