Teco merger rumours slapped down

Speculation of a possible merger between MobiFone, a member of leading state-own telecom group VNPT, and Gtel Mobile JSC first surfaced in late 2012.

In early 2013, Gtel Mobile made a  proposal and was approved by the government and VNPT to share network infrastructure with VNPT and handle roaming services in cooperation with the leading state telco.

Speculation arose that this may lay a premise for a future merger between the two telcos.

Meanwhile, VNPT’s Information and Public Relations Centre director Bui Quoc Viet said the VNPT already submitted its business shake-up plan to the Ministry of Information and Communications (MIC) and the government for approval—a plan that did not include the proposal about merger between MobiFone and Gtel Mobile.

 The document underscores the notion that a ‘marriage’ between MobiFone and Gtel Mobile was no more than a rumour as a merger between two telcos needed to have approval from the prime minister.

Gtel Mobile general director Nguyen Van Du said: “A merger between Gtel Mobile and MobiFone is not a fact of life. Gtel Mobile and VNPT sharing network infrastructure is based on commercial contract terms. VNPT’s reshuffle plan is its own business affairs.”

In fact, this is not the first time MobiFone has been subject to merger speculation. In its latest restructuring plan, VNPT continues proposing a merger between MobiFone and VinaPhone to form VNPT Mobile.
 
The proposal had triggered heated debate in 2012 as the proposed merger had reportedly impinged on regulations in the Competition Law and did not conform well to the national telecom sector development planning to 2020.

MobiFone is considered an attractive business because it has been very profitable under VNPT.  In 2012, MobiFone raked in VND40.8 trillion ($1.96 billion) revenue, tantamount to 31.2 per cent of VNPT total revenue of VND130.5 trillion ($6.27 billion) and earned VND6.6 trillion ($457 million) pretax profits, equal to 77.6 per cent of entire VNPT profits.

According to ICT White Book 2012, MobiFone ranked third in Vietnam’s telecom market owning 17.9 per cent market share with 35 million subscribers meanwhile Gtel Mobile (owning Gmobile brand) was in the firth place with merely three million subscribers, representing 3.21 per cent.

Local telecom market is mostly in the hands of three giant telcos (Viettel, VinaPhone and MobiFone) possessing almost 90 per cent market share while three smaller players including Vietnamoble, Gmobile and S-Fone secure about 11 per cent market share.