FPT reported to have cold feet over EVN

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The two sides last week started negotiations nearly a month after a prime ministerial decision on an equitisation proposal of EVN Telecom, an arm of Electricity of Vietnam (EVN Group), allowed FPT to take a 49 per cent stake in EVN Telecom.

Under the decision, EVN Telecom’s parent group EVN will hold the majority stake in its affiliate with 50.6 per cent, while FPT and FPT Telecom, which are strategic partners of EVN Telecom, will hold 49 per cent and EVN Telecom staff will hold 0.4 per cent. EVN Telecom’s chartered capital was around VND2.9 trillion ($140 million).

The decision has decreased FPT’s enthusiasm as the group expected to hold the majority stake with 60 per cent, comprising 44 per cent held by FPT Group and the remaining 16 per cent held by FPT’s arm FPT Telecom.

Meanwhile, EVN Telecom holds only around a third of its infrastructure and hired the remaining assets from other affiliates of EVN. This means that production costs will be high due to high percentage of rentals in production costs. However, FPT deposited around VND700 billion ($33.8 million) to support EVN Telecom to deploy its projects and handle its financial difficulties.

Previously FPT deputy general director Phan Duc Trung was still eager for the deal: “Mobile business is what we want in our business portfolio and we are enthusiastic in our negotiations with partners.”

An FPT Management Board resolution released on October 30 last year read that the corporation would issue corporate bonds with a total value of less than VND2 trillion ($100 million) for the deal this year.

EVN Telecom plans to earn revenue of VND3 trillion ($149 million) this year, an increase of 10 per cent against the figure in 2010. EVN Telecom reportedly earned VND2.8 trillion ($135 million) in revenue in 2010, meeting only 61 per cent of its targeted revenue for the year.

Among telecom services, EVN Telecom earned only VND5.6 billion ($270,500) from 3G services in 2010, meeting only 1.1 per cent of its targeted revenue.

The revenue from international and domestic submarine channel circuit leasing, also lagged behind targets, meeting only 19.8 per cent for international circuit leasing target and 22.2 per cent for domestic leasing target.