MobiFone cut loose from VNPT

Leading mobile phone provider MobiFone will be separated from its parent company Photo: Le Toan

In a statement sent to the government, the ministry (MIC) upheld the plan to cut MobiFone loose from the group (VNPT).

The state owned stake in MobiFone would be transferred from VNPT to the MIC and MobiFone would embrace restructuring to become MobiFone Telecom Corporation.

Also under the draft plan, MobiFone will take over the management of Vietnam’s Vinasat 1 and 2 satellites and the Postal Finance Company which are VNPT’s three biggest loss makers currently.

Other businesses with VNPT shareholdings will also be transferred to MobiFone for divestment. These include Saigon Postal, VNPT Epay and PetroVietnam Nhon Trach 2 thermoelectric power plant.

According to VNPT’s deputy general director To Manh Cuong, VNPT’s shakeup plans were submitted by the MIC to the government in September 2013 and slated for government approval in the first quarter of this year.

 In its statement to the government, the MIC argued splitting MobiFone from VNPT would be the best choice since MobiFone was a strong telco brand both at home and abroad and it boasts a wealth of experiences in the telecom business.  Following equitisation, MobiFone would allegedly become more appealing to investors.

VinaPhone - VNPT’s other big mobile phone brand - would face difficulties in being equitised. It would be hard to fix the value of the enterprise since VinaPhone is a financially dependent unit which shares assets with VNPT in different localities.

VinaPhone also lacks experience as an independent business as its entire sales and service system mostly capitalised on VNPT’s human resources and infrastructure in localities.

Advocating the restructuring proposal, former Deputy Minister of Posts and Communications (now the MIC) Mai Liem Truc said it would be good for the telecommunications market if MobiFone was split from VNPT since the sector could hardly develop in a healthy manner when Viettel, MobiFone and VinaPhone were all state-owned.

Truc said for a healthy market performance there only needed to be one state telco. 

“If MobiFone was split, VNPT might face some hardships in the initial years compared to the scenario when VinaPhone was split but things will gradually settle down if they have a viable business plan,” Truc said.

At MobiFone’s recent conference to set its 2014 plans, MIC Deputy Minister Le Nam Thang said splitting MobiFone from VNPT was part of moves to create a bona fide telecommunications market and turn the prime minister’s commitment of equitising MobiFone into a reality. Once MobiFone was equitised, the state would still hold a 75 per cent stake, with the remainder to be sold to domestic and foreign investors.