Will Large-Scale 5G Adoption Become a Reality for Vietnam in 2023?

In mid-September 2023, Vietnam’s Ministry of Information and Communications (MIC) formally announced that the country will hold a multi-band auction of 5G spectrum in late 2023, with frequencies in the 700 MHz, 2600 MHz, and 3700 MHz bands being put up for sale. This follows an earlier failed auction attempt of the 2300 MHz frequency band (divided into 30 MHz blocks—2300 – 2330 MHz; 2330 – 2360 MHz; and 2360 – 2390 MHz) in May/June 2023 when there were no bids submitted from existing operators for the auctioned airwaves.

While there were no official statements from the operators explaining why they chose not to participate in the earlier auction, ABI Research believes that there are some possible reasons behind the turn of events. First, spectrum prices were high at 12.88 billion Vietnamese Dong (~US$520,000) per MHz per annum for 15 years. Second, the 2300 MHz frequency put up for auction was only available in 30 MHz blocks and may not have been sufficient or useful to meet operators’ needs. In light of all this, it will be interesting to see how Vietnamese authorities will choose to conduct this round of auctions, particularly in terms of setting a suitable base price for the auctioned spectrum, to make these airwaves more attractive to operators.

The Vietnamese market had initially shown promising signs for 5G growth and development, with Communication Service Providers (CSPs) such as Viettel, Vinaphone, and MobiFone trialing 5G technologies since 2020. The country’s CSPs (Viettel, Vinaphone, MobiFone, and a fourth telco, GTel Mobile) have also established strong partnerships to turbo charge 5G rollouts through an agreement to share telecoms infrastructure to reduce costs and support faster 5G rollouts. Under this agreement, the four network operators would share about 1,200 base stations and jointly deploy towers in the future (see ABI Insight “Vietnam's Government-Backed 5G Race”). The country had also signaled its interest to be a leading player in the 5G market, with Viettel High Technology being one of the few companies in the world to be able to produce 5G equipment, joining Ericsson, Nokia, Huawei, Samsung Electronics, and ZTE.

However, despite the strong initial momentum, plans to commercialize 5G in 2022 stalled due to global supply chain issues, which affected the production of 5G equipment. While commercialization plans are now being targeted for 2023 instead, any further delays may see the country miss out on the expected economic benefits that 5G technology will bring about, with the Global System for Mobile Communications (GSMA) estimating that annual 5G contribution to the Asia-Pacific economy will grow from around US$25 billion in 2022 to more than US$130 billion in 2030.

Despite the rocky start to Vietnam’s goal of establishing a high-value 5G economy, ABI Research believes these are some of the key initiatives observed that help Vietnam prepare for the eventual onset and growth of 5G networks, and future industry development:

• Building a Highly Skilled Workforce: Training workers to have the necessary skills to make the most of 5G technology is a critical component of any country’s digitalization strategy. There have been promising developments observed in Vietnam on this front. For example, Ericsson and RMIT University have executed an agreement to establish an Artificial Intelligent (AI) Lab at the latter’s campus in Hanoi that aims not only to educate students on 5G and emerging technologies, but to also explore innovative ways to apply AI to Industry 4.0 initiatives enabled by the rollout of 5G in the country. More of such initiatives will be a critical component to equip the future workforce with the necessary skills to excel in a 5G environment, which will help drive economic growth.
• Leveraging International Experience: Vietnam has also leveraged the strong expertise that foreign entities can bring to the table with their accumulated experience from other 5G deployments globally. A case in point includes Vietnam’s support for opening a new Research and Development (R&D) center in the country by Samsung Electronics, which is planned to play a crucial role in developing software for smartphones and conducting research for 5G and future network technologies. Perhaps a more important point to note is that the R&D center will mainly employ local tech talent, which, in turn, will help train and develop the local workforce.
• Real-World Implementations: Most importantly, the development of 5G technology and services cannot be complete without real-world implementations and applications. In this regard, Viettel leads the way with the recent signing of an agreement with electronics manufacturer Pegatron to build the first smart factory in Vietnam, leveraging a 5G private network. Reports indicate that there will be 12 applications that will be supported by this project, including Augmented Reality (AR)/Virtual Reality (VR), code scanning, data processing, product testing, and live video streaming. Such real-world implementations are key for validating 5G use cases and will serve as the blueprint for future 5G private network projects.

While the delay in launching 5G commercial services is a setback for the government, ABI Research believes that other countries yet to launch their own 5G networks can still take away important lessons from Vietnam. Vietnamese authorities have continued to show strong commitment to developing the 5G ecosystem in the country, which is an important criterion should the country wish to harness the full potential that 5G can bring. It has also successfully brought together ingredients, both internationally and domestically, for economic growth, vibrant industry developments, and job opportunities.