The MIC in a document submitted to the Prime Minister informed that it is expected to complete the equitization process of Vietnam Mobile Telecom Services Company (Mobifone) in 2019, VietnamFinance reported.
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On February 28, 2017, Deputy Prime Minister Vuong Dinh Hue requested the MIC to revaluate Mobifone after Prime Minister Nguyen Xuan Phuc had approved the Government Inspectorate (GI)'s inspection result to the telco's controversial acquisition of TV pay service provider Audio Visual Global (AVG).
"Currently, the MIC and Mobifone are following the inspection result with regard to the deal, including the cancellation of the contract. Mobifone, thus, will receive full refund from AVG's shareholders," informed the MIC.
After completing the process, the MIC will conduct the valuation process of Mobifone as part of the equitization later on.
Released on March 14, the Government Inspectorate's inspection conclusions stated that leaders of Mobifone were irresponsible and violated a series of regulations during the acquisition of AVG. Problems were uncovered especially in the assessment of AVG's financial situation, leading to a potential loss of VND7 trillion (US$307 million) to the state budget.
In a surprise move, Mobifone and AVG agreed to cancel the acquisition deal on March 12, two days before the GI announced its inspection results.
Under the agreement, AVG would refund the entire contracted amount of VND8.9 trillion (US$392 million) to Mobifone including interests.
Mobifone, in turn, will return the shares purchased along with AVG's assets included in the original deal.
The deal caused great controversy as its value was 2.58 times higher than AVG's charter capital of VND3.6 trillion (US$158 million) at the time of completing the transaction on January 2, 2016.
The investment in AVG was equivalent to 55% of Mobifone's charter capital (VND16.2 trillion or US$711 million) and 40% of its total assets (VND23.2 trillion or US$1.02 billion) as of June 30, 2016.
The deal later led to the downfall of both sitting and former ministers of Information and Communications, following the conclusion of the Politburo - the highest body of the Communist Party of Vietnam released on July 12.
On July 10, former Mobifone Chairman Le Nam Tra and Pham Dinh Trong, head of the Department of Enterprise Management (MIC), were arrested for their respective roles in the deal, with charges of "violating regulations on the management and use of public capital, causing serious consequences."
Main hurdle in equitization plan
The scandal involving AVG proved to be the main hurdle in Mobifone's equitization plan.
Mobifone was valued at US$3.4 billion by Ho Chi Minh Securities Corporation (HSC) in 2015 as part of its planned IPO in 2016. However, the move failed to materialize in spite of interest from foreign telecom service providers like Singtel (Singapore), Telenor (Norway), Comvik (Sweden) or Telstra (Australia).
As Mobifone's US$3.4 billion valuation was only valid for 18 months, the company will have to be revalued, which is expected to take six months before starting the equitization process.
In 2018, Mobifone aims to reach revenue of VND42.3 trillion (US$1.84 billion) and pre-tax profit of VND6 trillion (US$261.6 million), up 8% year-on-year.
