[HO CHI MINH CITY] Vietnam’s Ministry of Information and Communications has announced bidding documents for the usage of three blocks of frequency radio wave bands for 5G commercial deployment.  

Auctions are scheduled in March with up to three telecommunications operators being licensed to provide the fifth-generation mobile network services nationwide. So far, 5G services have been tested on a large scale at 55 out of 63 provinces and cities across Vietnam. Globally, 97 markets have adopted the technology for commercial use as of June 2023, according to S&P Global.

At least two national operators – MobiFone and Vietnam Posts and Telecommunications Group (VNPT) – are preparing to join the auctions and commercialise their 5G services this year, the Tuoi Tre newspaper reported recently. 

Information and Communications Minister Nguyen Manh Hung was quoted as saying at a January conference that it is financially feasible to extend 5G coverage to the entire country in 2024 as the cost of deploying 5G equipment has been cut down significantly over the past few years.

Vietnam has also set out a roadmap to entirely phase out the 2G network by September this year. New phones that only support 2G will not be able to connect to the country’s mobile network from March.

According to government statistics, Vietnam as of last December had around 15 million 2G mobile users, accounting for around 13 per cent of the total subscriptions.

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The 4G mobile broadband coverage has reached 99.8 per cent in the country, higher than the average 99.4 per cent achieved in higher-income countries.

As per the ministry’s strategy, locally-produced devices will be prioritised for the commercialisation of 5G, reducing dependence on foreign equipment manufacturers as well as strengthening national security.

“It is increasingly challenging (for network operators and equipment manufacturers) to achieve a balance between factors such as high capacity, low latency and reasonable costs,” Nguyen Vu Ha, the chief executive of Viettel High Tech said last November, following the deployment of its homemade 5G base transceiver stations co-developed with Qualcomm Technologies in Hanoi.

Viettel High Tech, the research and development arm of Viettel Group, is one of few global developers and suppliers of 5G equipment and solutions – including wireless transceivers, access devices, core networks, charging systems and chips. Among the other big players are Ericsson, Nokia, Samsung and Huawei. 

Viettel has said that it wants to leverage its collaboration with Qualcomm to produce 5G products that address infrastructure challenges and meet requirements for mass commercialisation, not only in Vietnam but around the world.

With the advent of 5G, industry players said that businesses can expect to see enhanced operational efficiencies, greater flexibility in production techniques, enhanced customer satisfaction, and the emergence of new revenue streams and business models.

The National Institute of Information and Communications Strategy estimated that 5G services are projected to contribute around 7.34 per cent to Vietnam’s GDP growth in 2025. 

Digital infrastructure push

Earlier this year, the Vietnamese government issued a digital infrastructure plan until 2030, with the aim of having 99 per cent of the population be able to access 5G mobile broadband networks by the end of this decade.

It also plans to deploy two to four additional international subsea fibre-optic cables by 2025, with up to six in total by 2030, alongside one or two regional data centres to provide services domestically and internationally. 

These facilities will ensure ample bandwidth, high speed connection, and information security of cross-border data transmission to and from Vietnam, especially to serve inter-regional and inter-Asia connectivity on the East-West economic corridors.

BMI, a research unit of Fitch Solutions, forecast the number of 5G subscriptions in Vietnam to hit 78.8 million by 2033, representing a penetration rate of 80 per cent.

“New submarine cable developments will greatly support, and sustain, the number of 5G subscribers over our forecast period,” BMI noted in a Feb 6 report. “The expansion of high-capacity subsea cables will likely enhance the quality of internet services, reduce latency and support the widespread use of data-intensive applications, thereby driving up data consumption and revenue for operators.”

However, the firm expressed concerns over the rollout of new cables within expected deadlines due to supply chain issues in procuring materials, geopolitical risks regarding cable routes, and environmental considerations.

In the short term, BMI analysts believed that the tightened regulatory landscape in Vietnam – particularly pertaining to digital applications and over-the-top (OTT) services – could potentially dampen data consumption patterns. Therefore, it may pose more challenges for digital infrastructure owners to obtain the desired return on investment, they noted.

According to a government decree on the management, provision and use of radio and television services, which came into force in 2023, foreign TV and movie streaming service providers such as Netflix and Apple must obtain licences to operate in Vietnam. They are required to establish a local company or enter a joint venture with a licensed Vietnamese partner to be eligible for the approval process.

Under the new Telecommunications Law passed last December, Vietnam also regulates the provision of data centre services, cloud computing services, and OTT messaging services. 

The light-touch management approach was applied, including no restrictions upon direct foreign investments in such businesses. However, those service providers need to bear various obligations including going through a registration or notification and post-check mechanism, with details to be provided in a guiding decree.

Aside from safeguarding user interests, analysts say that these measures are expected to create a level playing field between domestic and international players. For example, Vietnam encourages the greater adoption of local cloud computing services, with a target of 100 per cent of state agencies and state-owned enterprises, and 70 per cent of Vietnamese firms to utilise services provided by domestic firms by the end of 2025.