Ministry yet to approve VNPT’s merger plan: official

Mobifone - illustration photo

>> MobiFone and VinaPhone set for a merger

VNPT, as Vietnam Posts and Telecommunications Group is known, has recently announced that it will merge its two mobile phone subsidiaries, Vinaphone and Mobifone, as part of the group’s restructuring process.

“Any plans under the restructuring process must be carefully developed, and are subject to comprehensive consideration,” said Thang in what is the official stance from the ministry regarding the merger plan.

2 becomes 1

The merger plan was made following a new government regulation on telecom ownership, which took effect last June, stipulating that an investor with more than a 20 per cent stake in one telecom firm cannot own more than 20 per cent in another.

The new rule has placed VNPT, which owns 100 per cent of both VinaPhone and MobiFone, into a dilemma, as the state-run telecom giant is supposed to either divest from one of the two operators, or merge them.

“Our choice is to merge the two,” VNPT spokesman Bui Quoc Viet was quoted by Sai Gon Tiep Thi newspaper as saying.

“VNPT has submitted relevant files on the merger plan to authorities.”

Viet said that VNPT’s chiefs have developed a new operation scheme for the two network operators, in which they will have mutual administrative system, business strategies, and network infrastructures.

“It means there will be a new brand name for the scheme,” said Viet.

However, the spokesman refused to elaborate on the brand name, as well as the targets of the merged mobile operator, saying everything is just a tentative blueprint.

“What can be confirmed now is that there will be no changes in the interests of subscribers of both networks,” he stated.

If the merger plan receives a nod from the government, the Vina-Mobi scheme will account for around 60 per cent of the domestic telecom market, with a huge number of subscribers -- 75 million.

“Mobifone has effective business strategies and administrative policies, while Vinaphone has broad network coverage and strong infrastructure,” commented telecom expert Hoang Ngoc Diep.

“Merging the two is icing on the cake, since it will create a powerful telecom scheme with high economic effectiveness.”

Monopoly fear

Last April, when the new regulation on telecom ownership was issued, industry insiders posted opposite opinions on whether VNPT would choose to shed one of the mobile providers or merge them, according to Sai Gon Tiep Thi.

Although the government has ordered VNPT to equitize Mobifone, the plan has yet to be implemented, although business evaluation tasks on the operator have been completed.

Market analysts said VNPT has procrastinated since the company does not want to lose the lucrative Mobifone following the equitizing.

Mobifone currently contributes to half of VNPT’s total profits, leading to VNPT choosing the merger plan to secure profits, as well as create a new competitive advantage on the market.

“Can competitiveness be maintained in a market where a 60 per cent share is held by just one player?” Sai Gon Tiep Thi quoted a questioning telecom expert.

“Will subscribers still be able to benefit from promotional programs when the market becomes less competitive?”

The new mobile company will also affect other mobile networks, even the major Viettel telecom company, he added.

Meanwhile, Doctor Nguyen Quang A expressed his concern that the telecom market will be manipulated by Vina-Mobi and Viettel.

The doctor suggested selling 80 per cent stakes in either of the two operators to other investors through the equitization, or to the State Capital Investment Corporation.

“Equitization is the best choice, but has little feasibility since it is not simple to sell an 80 per cent stake of them,” he admitted.