Technology, telecommunications businesses benefit from digital economy

Technical processing at VNPT Centre Hanoi Transmission Room. (Photo: VNA)

Even under the attraction of the field of telecommunications technology, mergers and acquisitions activities in this industry have been promoted.

Analyst Chu Duc Toan from VNDirect Securities Joint Stock Company said the digital transformation revenue growth rate is expected to be up 18 percent this year compared to last year and could double that of traditional IT services, showing great potential in the market.

Like the rest of the world, the Vietnamese economy is also undergoing digital transformation.

According to the National Digital Transformation Program to 2025, with a longer-term vision to 2030, Vietnam’s digital economy will account for 20 percent of GDP by 2025.

Vietnam has launched the "Make in Vietnam 4.0" Programme to prepare for the Fourth Industrial Revolution.

This programme will facilitate the development of new industries and encourage new policies, thinking and technologies in line with Industry 4.0 and ambitions towards the digital economy.

In the context of strong digital transformation, the Government, organisations and businesses in Vietnam have actively received and participated in activities to catch up with the trend of the Fourth Industrial Revolution.

The government is promoting the development of the digital economy through a series of mechanisms and policies. These policies have recently been reinforced by the Prime Minister's Directive No 16/CT-TTg on strengthening the accessibility to the Fourth Industrial Revolution.

According to the e-Conomy SEA 2021 report by Google, Temasek and Bain, Vietnam’s digital economy is predicted to reach a value of 52 billion USD by 2025, with a compound growth rate of 24 percent and ranking third in Southeast Asia.

Vietnam is also a pioneer in 5G technology. 5G network opens a new era for a series of technologies in Vietnam, which is among the countries with the fastest internet growth globally.

According to Internet World Stats, internet subscribers have increased 343 times from 2000 to 2021.

The growth potential for fixed broadband internet in Vietnam is still outstanding, with the coverage rate at about 21 subscribers/100 people, which is relatively low compared to the Southeast Asia average of 38 subscribers/100 people.

Vietnam has become one of the pioneer countries to successfully set up phone calls on the 5G technology platform.

Cisco forecast that the number of 5G subscribers in Vietnam will reach 6.3 million by 2025.

Moreover, the early deployment of 5G services could help Vietnamese mobile carriers increase revenue by US$300 million annually starting in 2025.

Vietnam may soon become one of the first Southeast Asian countries to launch a 5G network, with domestic telecommunications companies racing to develop the first national network (Viettel, Vinaphone, Mobifone).

With the advent of breakthrough 5G technology, technology firms face many opportunities to develop modern applications to diversify their products and services.

There is also a high demand in the data centre market in Vietnam. The Vietnamese government's digitalisation trend has facilitated increased demand for data centres nationwide.

Moreover, converting enterprise data to the cloud platform drives the Vietnamese data market.

This has led to an increase in the application of data storage solutions, which will positively affect the market's growth.

In addition, the rising adoption of big data, the Internet of Things (IoT) and cloud-based technology solutions, among others, are expected to accelerate and drive market growth until 2026.

According to research and reporting firm Research And Markets (Ireland), Vietnam’s data centre market is forecast to grow at a compound rate of over 14.6 percent until 2026.

With political and social stability, and few natural disasters like earthquakes, experts from VNDirect said that Vietnam has the necessary characteristics to become a big data centre market in the region.

Toan said that mergers and acquisitions (M&A) activities are promoted under the attraction of the technology sector.

In recent years in Vietnam, the M&A market in the technology sector has been growing rapidly, especially in enterprises that own or invest in advanced technology and have a large customer database.

The difficult global economy opens up opportunities for businesses with large amounts of cash; despite widespread uncertainty, technology M&A activities are continued and fueled by strong private capital flows.

Although conditions in capital markets have tightened in the first half of last year, many businesses still have large amounts of cash ready to be disbursed.

Among the listed technology companies in Vietnam, for example, FPT Joint Stock Company is an enterprise with abundant cash, and has actively carried out many M&A deals in the past two years.