MobiFone sale to ignite telecoms

The equitisation of MobiFone could change the telecoms industry

At a recent seminar, it was proposed that MobiFone, one of Vietnam’s three largest mobile network operators, be separated from its parent  (VNPT), which is also the operator of Vinaphone, one of MobiFone’s main rivals.

Pham Hong Hai, head of the Ministry of Information and Communications’ (MoIC) Telecommunications Department believes that the proposal could see the local telecommunications market reach new heights.

Currently, Vietnam has three national telecom providers - Vinaphone, MobiFone and Viettel. According to the MoIC’s White Book on information and communications technology for 2013, Viettel holds the largest mobile market share of 40.05 per cent, then MobiFone 21.4 per cent and VinaPhone 19.88 per cent.

Former Deputy Minister of Post and Communications, now MoIC, Mai Liem Truc claimed that with all three major players being state owned, they were inherently inefficient.

“In the long term, they will not develop strongly. The domestic telecommunications market developed strongly first, but development has slowed compared to the global telecommunications market,” Truc said.

The Central Institute for Economic Management’s vice head Vo Tri Thanh said the restructuring of the telecommunications market, including the separation of MobiFone, would enable the market to develop and promote more healthy competition.

“An equitised MobiFone joined by private investors with modern technology and management experience will pressurise VinaPhone and Viettel,” Thanh stressed.

At present, MobiFone largely focuses on mobile services. However, the firm’s chairman Le Ngoc Minh stated that if MobiFone became an independent firm, it would diversify into more competitive services.

Outside of the three large-scale telecommunications groups, there is also a collection of small-scale players. Also according to the White Book, MobiFone, VinaPhone and Viettel hold 81 per cent of the mobile market, the remaining part of the cake belonging to more obscure operators such as Vietnamobile (10.74 per cent), Gmobile (3.93 per cent) and SFone (0.01 per cent).

Of them, only Vietnamobile, with more than 10 million subscribers, is considered to be viable, while Gmobile, with nearly 5 million subscribers faces difficulties and SFone is on the brink of collapse. These operators receive almost no incentives from the state.

If the equitisation of MobiFone is realised, and the market becomes more competitive, these small-scale operators would find it increasingly difficult to survive.

However, the MoIC’s Pham Hong Hai clarified that the Law on Telecommunications allowed private firms unlimited participation in the market.

“In the telecommunications sector, firms can shift to other business sectors if they fail to operate well in mobile services. After EVN Telecom was merged into Viettel, its customers were still able to use Viettel’s services.