Technology and telecommunications enterprises benefit from the potential of digital transformation

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Viettel Construction Corporation - Viettel Construction has many advantages in the strong digital transformation trend. Photo: Viettel Construction
Viettel Construction Corporation – Viettel Construction has many advantages in the strong digital transformation trend. Photo: Viettel Construction

Speed up during the pandemic

The Covid-19 pandemic has accelerated the process of digitization and increased technology application in Vietnam and this trend will continue in the near future.

According to a report by Google, Temasek and Bain, due to social distancing measures that restricted consumers from going to stores, the number of users turning to digital economic services such as shopping for goods and services, visiting online model houses, going to the market, studying online has increased sharply since the beginning of 2021. Also according to this report, more than 90% of surveyed consumers intend to continue using the digital economy. This reflects the level of attachment to technology as well as the shift in habits of Vietnamese consumers in the future. Therefore, Vietnam’s digital economy has strong development potential with an average growth of 29% per year in the period 2020 – 2025 to reach US$52 billion in 2025.

In addition, the Government is aiming to promote the role of the digital economy in the next five years, such as enhancing cashless payments, e-commerce and applying the Industrial Revolution 4.0 to the manufacturing sectors and services. The government approved the “National Digital Transformation Program to 2025, with a vision to 2030” in June 2020 and is aiming to expand the digital economy from the current 8.2% of GDP to 25% by 2025 and 30% by 2030. In the national industrial policy, the authorities also plan to increase high-tech production and apply smart technologies.

In that strong digital transformation trend, technology and telecommunications enterprises have achieved outstanding revenue and profit in 2021. For example, at FPT Joint Stock Company, revenue in 2021 recorded an increase of 20% compared to 2020, reaching VND35,657 billion; pre-tax profit increased by 20.4%, reaching VND6,335 billion.

Digital transformation continues to be a major global trend with increasing demand in every market. FPT’s revenue from digital transformation in 2021 reached VND5,522 billion, up 72% compared to 2020, focusing on digital technologies such as cloud computing, artificial intelligence. FPT’s technology division also recorded a growth rate of over 24% in pre-tax profit, reaching VND2,799 billion, contributing 44% of FPT’s pre-tax profit.

FPT also achieved great success in foreign markets, especially in the US and Europe. Thanks to constantly improving its technology and human capacity, FPT recorded 19 major projects in 2021 with a value of over US$5 million per project. As a result, FPT’s revenue from information technology services in foreign markets reached VND14,541 billion, up 21% and pre-tax profit reached VND2,423 billion, up 23%.

In the domestic market, information technology services recorded VND6,196 billion in revenue, up 29% and VND377 billion in pre-tax profit, up 34%. This is the result of focusing on developing solutions and platforms “made by FPT”, as well as perfecting the ability to provide comprehensive digital transformation products and services to serve the needs of the Government and the businesses community and people, in the context of the pandemic, further accelerate the shift to a digital environment.

Similar to FPT, Viettel Construction Corporation – Viettel Construction (CTR) also recorded revenue in 2021 of VND7,454 billion and profit after tax of nearly VND376 billion, up 17% and 37% respectively compared to the previous year, this is also the highest profit this business has achieved since its establishment. As an important member company of Viettel Group, CTR operates in the field of investment and leasing of technical infrastructure, construction and installation of telecommunications and civil networks, operation and exploitation of telecommunications networks.

The potential is still very high

The increasingly powerful wave of digital transformation continues to open up positive prospects for businesses in the information technology and telecommunications industries in 2022 and the following years. An analysis report of Viet Capital Securities Company (VCSC) assessed that FPT’s improved technology capacity and strong spending on global information technology will drive the software export segment to achieve double-digit growth in the coming years, up 24% on pre-tax profit for the 2021-2024 period.

According to a forecast by US technology consulting company Gartner, global IT services revenue will grow 9% in 2022 compared to 14% in 2021 and 2% in 2020. Accordingly, FPT’s software export segment is expected to take advantage of this opportunity thanks to its advantages in labor costs, improved technological capabilities in consulting and digital transformation, and new project overseas deployment centers will improve the quality of FPT’s customer service.

With the domestic information technology segment, VCSC forecasts a compound growth in pre-tax profit of 25% in the 2021-2024 period thanks to the increasing demand for digital transformation. Along with that, the telecommunications segment is also forecast to achieve a compound growth rate of 9% during this period; the data center segment posted a CAGR of 30% amid Vietnam’s strong demand for cloud computing and data localization.

Meanwhile, CTR is the leading telecommunications infrastructure leasing company in Vietnam. According to data from VCSC, by the end of October 2021, CTR owns over 2,200 telecommunications stations; double that of the end of 2020. VCSC forecasts that the number of stations of CTR will increase to 7,200 stations by the end of 2024 to serve Vietnam’s growing demand for mobile data consumption. Accordingly, EBITDA (earnings before interest, taxes, depreciation and amortization) of CTR will achieve a compound growth rate of 56% in the 2021-2023 period thanks to the expansion of telecommunications infrastructure assets.

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The telecommunications operation segment is also forecast to grow at a compound EBITDA growth rate of 11% in the 2021-2024 period thanks to the expansion of Viettel’s mobile telecommunications network and the growth of fixed broadband subscribers in the domestic and international markets. In addition, smart services such as smart cities will boost the system integration (SI) segment, helping EBITDA in this segment to grow by 17% in the 2021-2024 period.

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