FPT cuts loose distribution and retail arms

October 01, 2016 | 15:13

(0) user say

Vietnamese software giant FPT plans to decrease its holdings in FPT Retail and FPT Trading due to the sectors’ decline in revenue.

The corporation has decided to focus on the telecommunications sector, according to newswire Saigondautu.com.vn.

In the first half of this year, FPT Trading saw a decreasing revenue because it lost the position of sole distributor of Iphone products. Accordingly, other large retail chains, including Thegioididong, FPT Shop, and Vienthong A, have been licensed to distribute Iphone products as of September 2015. In addition, the revenue from distributing Microsoft mobile phones decreased because Microsoft launched only a few new models. The bleak trading results are expected to last by the end of this year.

Regarding FPT Retail, which owns the FPT Shop chain, it has difficulties in competing with the Thegioididong chain. The rival is currently the largest technology product distributor, with a 35 per cent market share in mobile phones and related accessories, tablets, and laptops. As of late August 2016, FPT Shop owned 350 stores, up 100 units compared to the same period of last year, however, the figure is only one-third of the number of Thegioididong stores.

FPT’s divestment of both subsidiaries is expected to be completed by the end of this year. The money from the sales will be used to invest in the corporation’s key business sectors, software and telecommunications, through M&A deals in line with FPT’s long-term business strategy.

Notably, FPT will buy the entire state-owned stake which the State Capital Investment Corporation (SCIC) will divest from FPT Telecom where SCIC currently owns a 50.02 per cent stake.

In 2014, FPT spent VND280 billion ($12.59 million) on buying 4.33 per cent of FPT Telecom, increasing its holding to 45.55 per cent. The purchase, which may be closed in 2017, is expected to boost FPT’s revenue because, with a 45.55 per cent holding, the profit from FPT Telecom makes up 35 per cent of FPT’s profit.

Established in 1988, FPT operates in four key sectors, including technology, telecommunications, technology product distribution and retail, and education. The decrease in revenue in the distribution and retail sector brought bleak trading results in the first months of this year. Notably, in the first half of 2016, the corporation earned VND17.82 trillion ($801.4 million) in revenue and VND1.26 trillion ($56.7 million) in after-tax profit, signifying a respective decrease of 8 and 7 per cent in revenue and after-tax profit, respectively.