Vietnam's Government-Backed 5G Race

Having started trialing 5G in May 2019, Vietnam has seen an acceleration in its efforts to launch its 5G commercial service. State-owned Viettel, Vietnam’s largest mobile network operator, was the first to receive 5G trial spectrum, with bandwidth in the 2.6 GHz, 3.6 GHz, and 26 GHz bands being awarded to it in January 2019.

Viettel had the country’s first 5G trial connection back in May 2019 and has now begun rolling out the first stage of the commercialization process for 5G microcell stations, aiming to complete nationwide deployment by June 2021. Recently, Vinaphone, Vietnam’s second largest network provider and a subsidiary of government-owned Vietnam Posts and Telecommunications Group (VNPT), has reported it has tested its 5G trial network in Hanoi and Ho Chi Minh City. The operator claims it achieved a download throughput of more than 2.2 Gbps, which it claims is 10 times faster than its 4G network. 5G competition is heating up as MobiFone, also owned by VNPT, had already completed tests of its pilot 5G network in four cities in March of this year—Hanoi, Ho Chi Minh City, Da Nang, and Hai Phong. MobiFone claims to be commercially ready to launch 5G after testing showed the network was capable of delivering download speeds of around 2 Gbps. Formal 5G licenses and spectrum have yet to be allocated, but the Ministry of Information and Communications (MIC) could convert 5G trial licenses and spectrum allocations, which were issued to the operators in 2019, into commercial licenses.

When it came to the deployment of 3G and 4G services, Vietnam was essentially a decade behind more advanced cellular markets in Asia. The Vietnamese government and the three operators, which make up more than 90% of the market sharing in Vietnam’s telecoms industry, are all very keen to put Vietnam at the vanguard of 5G deployment.

Eight months after Viettel made its first 5G call with imported equipment from Ericsson, the company managed to successfully carry out another 5G call on a gNodeB transceiver, researched and produced in-house, in January 2020. Its in-house equipment was developed by its Research and Development (R&D) arm, Viettel High Technology, over a period of six months. The company has since become the world’s sixth producer of 5G equipment, joining the likes of Ericsson, Nokia, Huawei, Samsung Electronics, and ZTE. Viettel has the unique distinction of being the only company that is both a telecommunication network operator and an equipment vendor. However, there are doubts as to whether Viettel will be able to keep its business profitable, as it will need to pay patent royalties to telecom equipment companies such as Huawei and Ericsson.

Despite this, the MIC has reported that Vietnam will be rolling out 5G network infrastructure in October 2020 using domestically designed and developed equipment. This is on the back of the country’s “Make in Vietnam” strategy, which encourages companies to create, design, and produce all equipment in Vietnam with the aim of helping the country escape the middle-income trap. In alignment with this vision, companies such as Vingroup partnered with Fujitsu and Qualcomm in June 2019 to develop and manufacture 5G-compatible mobile devices in Vietnam. These devices are targeted at cost-conscious consumers in the lower-income bracket who are keen to subscribe to 5G services but require a more affordable and price-competitive option compared to those provided by Chinese and Korean vendors. The abundance of low-cost 5G devices available to consumers in Vietnam will accelerate 5G adoption while simultaneously providing economic development, a key objective of the government’s goals.

ABI Research’s Network Technology and Market Tracker (MD-NWMT-104) forecasts the number of 5G subscriptions in the Asia-Pacific region will reach about 1.1 billion by 2025 (from 197 million in 2020), with a five-year Compound Annual Growth Rate (CAGR) of 41%. In terms of the Vietnamese market, the MIC expects Vietnam’s 5G subscriptions to reach 30 million by 2025. This shows there is strong potential for 5G to grow in the region, and especially in Vietnam, as the economy has been growing at an average CAGR of 6.3% over the past five years. As such, the mobile operators in Vietnam should establish and develop their 5G networks to be resilient and cope with the growing demand for 5G and its applications.

Recently, Viettel, Vinaphone, MobiFone, and a fourth telco, GTel Mobile, signed an agreement on sharing telecoms infrastructure and network resources to reduce costs and further improve 5G capabilities. The four network operators would share about 1,200 base stations and jointly deploy towers in the future. This partnership would be beneficial in bringing 5G coverage to all parts of Vietnam—including rural areas, which often lack in-network service. Additionally, COVID-19 has put pressure on the current networks, with the MIC recording a 40% increase in data usage. As such, 5G would be crucial in addressing the increase in traffic while transforming business applications such as industrial automation and robotics.

On the manufacturing front, strong use of 5G is expected. Despite contributing 16.5% to the country’s GDP in 2019, manufacturing in Vietnam centers around low-value manufacturing. The implementation of 5G could introduce the smart factory concept into the industry and help support a shift toward higher value production. Products of higher value such as automotive vehicles and electronics can be more efficiently produced with the utilization of automation, robotics, Artificial Intelligence (AI), and the Internet of Things (IoT).

Aside from being a part of the Vietnamese government’s digitization plans, 5G will be a tool that will allow Vietnam to achieve its economic objectives. Therefore, the government has and will continue to play an important role in facilitating the investment and research into 5G technology and equipment.

(Note: ABI Research’s Network Technology and Market Tracker (MD-NWMT-104) utilizes data from the top seven countries in the Asia-Pacific Region, not all countries, for our forecast of the number of 5G subscriptions.)