Vietnam’s Spectrum Auction for 5G: Telecom Firms Compete in Bidding for Spectrum Licenses

Vietnam has commenced its much-anticipated auction of the 5G spectrum, permitting all telecom companies to take part. The initial auction included the B1 2500-2600 MHz band on March 7, with additional auctions scheduled for other bands. This strategic move is intended to propel Vietnam's industries into a new era of enhanced productivity and efficiency through digital transformation.

After trialing 5G technologies across 55 provinces and cities for three years, Vietnam has chosen to fully adopt the global trend of 5G commercialization.

On March 7, the Ministry of Information and Communications (MIC) initiated the bidding process for the 5G spectrum. The MIC aimed to grant licenses for the development and exploitation of the 5G 2500-2600 MHz band for the next 15 years.

The commencement of this bidding race signifies a landmark moment for the Vietnamese telecom sector. The commercialization of 5G not only represents a new era of technological advancement but also a significant opportunity for network operators to capitalize. Furthermore, it plays a crucial role in realizing Vietnam's Digital Infrastructure Master Plan for the period 2021-2030.

Auction procedure overview

The 5G auctions will bring in a range of bands, covering low to high frequency, each unlocking various capabilities. The MIC has planned three bidding events to utilize these bands, each focusing on different 5G bands.

The first auction took place on March 7, 2024, and it began with offering the rights to use the B1 band block, which spans 2500-2600 MHz. The opening bid was VND 3.9 trillion (US$158 million), and participants competed for a 15-year license to develop and exploit 5G services across the country.

The B1 band is particularly important in the initial phase of 5G deployment as it would relieve the existing congestion on the 4G infrastructure.

According to the auction regulations set in October 2023, the winning bidder must deploy at least 3000 5G broadcasting stations using 2500-2600 MHz within two years of receiving the license. These structures are crucial for transmitting 5G signals to users' devices and ensuring widespread access to high-speed internet.

Additionally, a commitment to launch commercial 5G services within the first 12 months is also mandatory.

Following this significant event, two more auctions have been scheduled for the C2 and C3 band blocks, covering 3700-3800 MHz and 3800-3900 MHz, respectively. The first band was up for auction on March 14, while the second band will be up on March 19, 2024. The initial price for both bands is set at VND 1.89 trillion (around US$76 million).

This means that only three telecom companies will be able to obtain permits for the development and exploitation of the country's 5G frequency bands and thereby provide mobile communications services.

Who is eligible to take part in the auction for 5G licenses in Vietnam?

According to the MIC, 5G spectrum auctions are accessible to any "eligible enterprises" with no category limits.

Nonetheless, notwithstanding the lack of legislative impediments to participation, industry analysts emphasize the economic benefits of the 5G sector. With the cost of creating new 5G infrastructure estimated at roughly $1 billion, outside rivals cannot outbid incumbent providers.

Despite market saturation and declining earnings, Vietnam now has five cellular networks with the necessary infrastructure to enable 5G. These include Viettel, VNPT, Mobifone, Vietnamobile, and Gtel Mobile. The first three have the largest domestic market shares and are thus more likely to have the resources to obtain 5G exploitation rights in all three bidding contests.

Recent MIC updates confirm this forecast, with Viettel winning the license for the B1 band.

Investing Outlook

Strategic investments by telecom operators in obtaining 5G frequency bands are critical for ensuring stable national infrastructure and supporting the Vietnam government's objective of 99 percent 5G network accessibility by 2030. Telecom operators, spurred by success stories such as China Mobile, expect significant returns. With 5G predicted to fuel development and innovation, Vietnam intends to improve efficiency across industries and increase competitiveness for high-tech investments.

Despite the positive outlook for the 5G rollout, commercialization will not be without obstacles. A big challenge is the paucity of equipment compatible with 5G technology. Currently, only a tiny percentage of major carriers' subscribers have access to 5G services; Viettel leads with a share of 17 to 20 percent.

This implies that businesses may not now have clear revenue growth predictions, restricting their ability to participate.

Addressing these concerns will be critical to realizing the full potential of 5G in Vietnam. Following its successful bid, Viettel promised to overcome critical issues in rolling out 5G services nationally. It intends to prioritize 5G implementation in areas with strong demand and a large proportion of 5G-compatible devices, such as industrial zones, export processing zones, and research centers.

Conclusion

In conclusion, Vietnam's long-awaited 5G spectrum auctions mark a significant step towards nationwide 5G adoption. The auctions offer substantial opportunities for economic growth and technological advancement, but challenges remain. Telecom operators need to address the limited availability of 5G-compatible devices to ensure successful commercialization and achieve Vietnam's ambitious goal of 99% 5G network accessibility by 2030.