April 19 (Bloomberg) -- The launch of Vietnam's first satellite may help telecommunications capacity in the Asian nation keep pace with surging demand and ease growing disparities between rural areas and the nation's booming cities.

The $250 million Vinasat-1 project, which includes a 2,637- kilogram (3-ton) satellite built by Lockheed Martin Corp. carried by a rocket from France's Arianespace, will provide telecommunications services including broadcasting, Internet and voice. The satellite was launched from French Guiana at about 7:15 p.m. local time yesterday (5:15 a.m. Vietnam time today).

Mobile-telephone demand has been rising by as much as 70 percent per year in Vietnam, according to Vietnam Posts and Telecommunications Group. Internet demand is also surging, with the number of users in the Asian nation having passed China, Indonesia and Thailand on a per-capita basis within the last six years, according to Mekong Economics Ltd. in Hanoi.

``Many remote areas of Vietnam have never been able to receive services such as telephone and television,'' said Lam Hoang Vinh, vice president of state-run Vietnam Posts, which will operate the satellite. ``Vinasat can cover all corners of Vietnam, and that will narrow the gap between the urban and rural areas.''

The poverty rate in rural areas in Vietnam as of 2006 was 20 percent, compared with 4 percent in urban areas, the World Bank said in a December 2007 report. About 73 percent of Vietnamese live in rural areas, according to figures from the General Statistics Office.

Internet Development

Vinasat-1 will remove dependence on ground networks and allow 100 percent of Vietnam's rural communities to be equipped with telephones and televisions, Lockheed Martin Commercial Space Systems said. Goldman Sachs Group, Inc. said in an April 17 report that it already rates Vietnam's Internet development as higher than the average for developing countries.

``This will help bring Internet to the masses in Vietnam,'' said Than Trong Phuc, Vietnam country manager for Intel Corp., which is building a $1 billion chip assembly and testing plant in Ho Chi Minh City and is also taking part in a trial project to bring wireless Internet access to areas in the northwestern province of Lao Cai.

The satellite will improve broadband Internet access in rural parts of Vietnam, according to Deputy Minister of Information and Communications Tran Duc Lai.

``The satellite will help small businesses in Vietnam,'' Phuc of Intel said, in a telephone interview yesterday from Ho Chi Minh City. ``Broadband access is a key tool to building the country's competitiveness, and right now in many rural areas you can't get broadband.''

15-Year Service Life

Maryland-based Lockheed-Martin, the world's largest defense company, was picked in 2006 over competitors including Japan's Sumitomo Corp. to supply the satellite and control-station equipment. Vinasat-1 has a minimum service life of 15 years, according to Lockheed Martin.

``With Vinasat, our telecommunications services will be higher-quality, cheaper, and more reliable,'' said Lam Quoc Cuong, deputy managing director of Vietnam Posts and Telecommunication's satellite control and operation station in Ha Tay province, just outside the Vietnamese capital city of Hanoi.

To contact the reporters on this story: Dang Khanh Van in Hanoi at vdang1@bloomberg.net and Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net

Last Updated: April 18, 2008 20:45 EDT