Minister of Information and Communications (MoIC) Nguyen Bac Son said at last week’s government-led press conference that “Prime Minister Nguyen Tan Dung has approved a plan to equitise the state-run Vietnam Posts and Telecommunications Group (VNPT).
Under the plan, MobiFone will be separated from VNPT and become an independent operator, while the remainder of VNPT will also continue being strengthened.”
MobiFone, which currently accounts for more than half of VNPT’s profits, is one of Vietnam’s three largest mobile network operators including MobiFone, Viettel and Vinaphone the last of which is also managed by VNPT.
The prime minister’s approval followed a long and cautious discussion of MoIC’s proposal to separate MobiFone from VNPT, Son claimed.
VNPT submitted a restructuring scheme to the prime minister back in May 2012.
“A specific official announcement from the prime minister on approving the VNPT restructuring plan will soon be publicly announced,” Son said. “After MobiFone is detached from VNPT, it will be managed by MoIC, which will be the equity representative of both VNPT and MobiFone. MobiFone will be equitised under a roadmap in the coming period.”
Son said: “The detachment of MobiFone from VNPT and its equitisation would create a healthy telecommunications market. Local subscribers will benefit from the competition.”
Under the equitisation roadmap, MobiFone would be able to sell off 49 per cent of its stake in line with the country’s World Trade Organization commitments. Head of the MoIC’s Telecommunications Department Pham Hong Hai said “MobiFone’s equitisation will be completed by 2016.”
MobiFone is likely to attract foreign-investor interest due to its high profitability. Dragon Capital’s lead economist Le Anh Tuan said MobiFone was highly valued by many foreign investors due to its high growth.
MobiFone posted profits of VND6 trillion ($285.7 million) in 2013.
MobiFone’s equitisation consultant Credit Suisse previously valued the telco at $2 billion. Experts believe the valuation may have crept up to $3 billion.
At present, MobiFone largely focuses on mobile services. However, the firm’s chairman Le Ngoc Minh said when MobiFone was cut loose, it would become an independent business and have opportunities to expand and diversify its telecommunications and information technology services, rather than just focusing on its existing mobile services.
The Central Institute for Economic Management’s vice head Vo Tri Thanh said the restructuring of the telecommunications market would enable the market to develop and provide more healthy competition.
“An equitised MobiFone combined with private investors with modern technology and management experience will put the heat on VinaPhone and Viettel,” Thanh stressed.
According to the MoIC’s White Book on information and communications technology for 2013, 81 per cent of the mobile market share was held by just three national telecom brands including MobiFone (21.4 per cent), VinaPhone (19.88 per cent) and Viettel (40.05 per cent), with the remainder held by small-scale operators such as Vietnamobile (10.74 per cent), Gmobile (3.93 per cent) and SFone (0.01 per cent).
Son said VNPT and Viettel contributed more than VND25 trillion ($1.2 billion) last year to the state coffers, accounting for 14.8 per cent of total contributions by all state-owned enterprises to the state budget.
VNPT’s total revenue last year reached VND119 trillion ($5.66 billion), equal to 102.53 per cent the previous year. The group also raked in VND9.265 trillion ($411.2 million) in profit last year, up 79.1 per cent against 2012.
