Fitch Solutions, the London-based financial analytics firm has just issued a report that commends Vietnam’s four state-owned mobile telecommunications companies for agreeing to share 1,200+ 5G base transceiver stations (BTS).
Fitch notes that the deal, which involved GMobile, MobiFone, Viettel and VNPT-Vinaphone will speed up 5G deployment in Vietnam and will save money for the national government and the four telecom companies. It also notes that GMobile, the smallest of the four telecom companies will receive the greatest benefit from the deal.
The four-way deal follows an earlier deal in May between MobiFone and VNPT, which agreed to share infrastructure for 700 new BTS.
Fitch said in their June 15th report, 15 that network sharing is a new business model for Vietnam's telecom market, but it expects that network-sharing agreements between Vietnam’s telecos will accelerate in the near future, as the government seeks to decrease capital spending while streamlining network deployment.
Fitch said in the report that, “Operators have largely pursued the synchronous deployment of their networks, which has led to a significant duplication of infrastructure.”
From both an environmental consideration and concerns for the safety of citizens, the trend of rapid construction of mobile masts has raised both local and national government concerns.
The Ministry of Information and Communications (MIC) issued a directive last November that highlighted the need for fixed and mobile operators to coordinate the construction of networks and develop plans to share infrastructure.
The MIC estimates the cost of a single BTS at $43,000 USD, so the sharing of 1,200 BTS by the operators will save more than $50 million USD in capital infrastructure costs.
According to Fitch, in the 5G era, where networks require a significantly higher number of BTS to operate effectively, network sharing can greatly reduce redundant investments and allow operators to repurpose funds to develop key differentiators in their 5G services.
Fitch say, “Operators have previously touted a mid-2020 launch of 5G services, and the network sharing deal, which we believe will involve BTS situated in major population centers, could boost launch prospects.”
Fitch also notes the advantage in the deal for GMobile, which despite receiving 4G spectrum licenses in 2016, continues to only operate a 2G network and has not made any substantial progress in deploying long-term evolution technology.
GMobile has relied on offering basic 2G services - calling, texting and data – at low prices and has focused on serving lower-income and rural subscribers to gain a market share, but this strategy has resulted in the company steadily losing ground to its larger rivals, which were able to leverage their scale and capital resources to increase their reach.
Fitch predicts the network sharing deal could allow GMobile to launch limited 4G or even 5G services, although it will need to achieve a more extensive network-sharing deal if it were to boost its long-term prospects.