Vietnam auctions 5G as phase-out of 2G services begins

Vietnam's Ministry of Information and Communications (MIC) has opened its much-anticipated 5G spectrum auction, with the 2,500-2,600 MHz band first one off the block at a starting price of 3.9 trillion Vietnamese dong (US$158 million).

According to the state-owned Vietnam News Agency (VNA), the MIC also expects to invite bids for the other two 5G bands – 3,700-3,800 MHz and 3,800-3,900 MHz – both at a starting price of VND1.89 trillion ($76.63 million) on March 14 and March 19, respectively.

The first round of the 5G auction began on Thursday, with participants vying for a 15-year license to develop and roll out 5G services across the country.

MIC Minister Nguyen Manh Hung said the 5G auction is open to "all eligible enterprises," not just existing mobile network operators.

Stiff barrier to entry

However, the VNA reported that new players have a remote chance to enter the country's competitive mobile market where existing operators are already battling dwindling profits as traditional sources of revenues – voice calls and text messages – continue to decline.

In addition, the report added that it would take up to $1 billion to build a 5G network, making the cost of entry beyond the reach of aspiring new players in the market.

For incumbent operators, there is no guarantee that getting a 5G license will deliver the revenue growth that they seek, particularly when only 17% to 20% of mobile devices in Vietnam support 5G connectivity, the VNA reported quoting Nguyen Van Son, director of Viettel Telecom's Mobile Centre.

He added that Viettel plans to deploy 5G in areas – including industrial zones, export processing zones and innovation centers – where there is high demand and a high percentage of 5G-compatible devices.

To date, 5G pilots have been conducted in 55 out of 63 provinces and cities across the country.

The MIC is determined for commercial 5G services to take off in Vietnam this year. It has set a target to provide 5G coverage to 99% of the population by 2025, at a minimum 100 Mbits/s data speed.

Sunsetting 2G services

Meanwhile, to encourage mobile subscribers to switch to newer technologies, the Vietnam Telecommunications Authority – an agency under the MIC – has started blocking mobile signals on 2G-only devices this month as well as directing mobile operators to stop accepting new subscribers that have 2G-only mobile phones.

The MIC is set to totally phase out 2G services in the country by September, when frequency licenses issued to carriers deploying 2G are set to expire.

Despite the four-year-old government ban on the importation of 2G phones, the devices have found their way into the country through unofficial channels. Latest figures from mobile operators showed that there are currently 15 million 2G subscribers in Vietnam, accounting for around 13% of total subscriptions.