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Vietnam’s biggest telecoms company will launch commercial 5G services this year, bypassing China’s Huawei and using technology it has developed itself, underscoring tensions between the two countries.

State-owned Viettel, which is operated by the country’s ministry of defence, will begin deploying the next generation mobile network technology from June and complete nationwide deployment a year later.

The company announced the plan on Friday after conducting its first trial video call using a connection on equipment produced internally. Viettel said it took six months for its research and development arm, Viettel High Technology, to develop the hardware and software needed to make the call.

Few companies have successfully developed commercial 5G technology. Viettel said it would be the sixth producer of 5G equipment after Ericsson, Nokia, Huawei, Samsung Electronics and ZTE. Viettel has more than 110m customers in 11 countries, including Cambodia, Haiti and Peru.

Vietnam’s communist leadership is speaking out more assertively against China’s activities in the South China Sea, while cautiously drawing closer to the US. Washington has lobbied countries not to work with Huawei based on national security grounds.

Carl Thayer, professor emeritus at the University of New South Wales Canberra, said: “5G technology is the new frontier and Viettel wants to stay abreast of that and for its own sake develop the new technology. On the security side, Vietnam has its own concerns because there have been hacking attacks, and there’s US pressure as well.”

Vietnamese and Chinese ships faced off at sea for more than three months last year. The hostilities came after Beijing sent a seismic survey vessel and coast guard ships to Vanguard Bank, an area of Vietnam’s territorial waters near a gas project operated by a unit of Russia’s Rosneft.

China claims most of the South China Sea as its own, but Vietnam has been more forthright than most other south-east Asian countries in criticising China for its activities at sea.

Viettel’s 5G push also arrives as Vietnam’s government tries to promote local industrial champions. Many of the country’s biggest manufacturers and exporters, led by South Korea’s Samsung, are foreign.

“5G is the defining factor of the success of a digital society,” said Le Dang Dung, Viettel Group’s chief executive, in a statement. “All countries are racing to deploy 5G to demonstrate their technological advancement. It’s why Viettel considers 5G to be the most strategic project of the group.”

Vietnam’s biggest private company Vingroup, which began in resorts and property, has in recent years pushed into heavy industry and technology by making cars, electric scooters and mobile phones.

By John Reed - The Financial Times - January 20, 2020