Network operators do not participate in 4G, 5G frequency auctions

The fact that network operators do not participate in the auction of 4G and 5G frequencies is not a surprising result.

According to a source from the Ministry of Information and Communications, on May 15, May 25 and June 2, 2023, the Ministry of Information and Communications organized an auction of the 2300MHz band, including 3 frequency blocks A1 (2300-2330 MHz), A2 (2330-2360 MHz), A3 (2360-2390 MHz). However, by the deadline for submitting registration documents to participate in the auction for each block A1, A2, A3, no enterprises had submitted documents and paid deposits to register to participate in the auction. Therefore, the auctions of frequency usage rights for the A1, A2, A3 frequency blocks were unsuccessful.

Previously, on February 24, 2023, the Ministry of Information and Communications issued and publicly announced the Plan for organizing the auction of frequency usage rights for the 2300MHz band. Four telecommunications enterprises submitted applications, namely VNPT, Viettel, MobiFone and Vietnamobile, and were granted certificates of eligibility to participate in the auction by the Ministry of Information and Communications. According to the provisions of Decree 88/2021/ND-CP, only enterprises certified by the Ministry of Information and Communications as eligible to participate in the auction can submit applications to participate in the auction round.

Previously, frequency licensing was approved by state agencies for businesses, followed by a competition to obtain frequencies. Simply put, frequency bands were licensed free of charge to businesses. Every year, network operators only had to pay frequency band fees according to regulations of the Ministry of Finance. At that time, the management agency even discussed the need to collect additional telecommunications franchise fees from network operators.

However, the game is different now, when the Radio Frequency Law comes into effect and network operators who want good frequency to provide services to customers will have to participate in public and transparent auctions.

According to the announcement of the Radio Frequency Department, the starting price for the 2300-2400 MHz frequency auction for the 3 frequency bands is 17,394 billion VND. Specifically, for frequency bands A1 (2300 - 2330 Mhz), A2 (2330 - 2360 Mhz), A3 (2360 - 2390 Mhz), the starting price is 5,798 billion VND and the usage period is 15 years.

With a starting price of VND5,798 billion and a usage period of 15 years, each network operator will theoretically pay a frequency fee of at least VND386 billion/year. This is not a small number for all mobile networks. In addition, to be able to provide services, the network operator will have to invest in infrastructure and build new business models for 5G. This also accounts for a huge investment for the network operators.

Analysts say that to build a nationwide mobile network, investors will have to spend several billion USD in initial investment. However, in the context of traditional telecommunications services such as voice and SMS are declining, and revenue from 5G is divided in the future, spending a large amount of money to invest is something to consider.

According to statistics from the Ministry of Information and Communications, Vietnam has 126 million mobile subscribers and the market is starting to reach saturation. Another statistic shows that each year, network operators are competing for about 800,000 new subscribers to enter the market.

If in the previous 3G competition, the network operators were preparing their application documents in a heated atmosphere, then this time with the 4G and 5G frequency auction, the atmosphere is quite quiet. Current conditions require network operators to carefully calculate when spending money on the auction and the business efficiency problem. In addition to the above reasons, the transition from free license to paid license is also not an easy step for network operators.

Network operators begin to compete in the "four-team" tournament to receive 4G and 5G frequency bands . There will be 4 network operators participating in the 4G and 5G frequency auction, namely Viettel, VNPT, MobiFone and Vietnamobile, to get 3 frequency licenses to provide 4G and 5G services.

Source