SCIC dials in telco changes

The State Capital  Investment Corporation (SCIC), a state-owned investment fund, just wrapped up its divestiture plan from CMC Telecom Infrastructure (CMC TI).

Accordingly, the SCIC held 51 per cent stake in CMC TI. The corporation sold part of its CMC TI stake to staff members and the remainder to the public through auction.

Over one million shares were sold to the public tantamount to 15.3 per cent of CMC TI’s chartered capital. Two investors - one corporate and one individual - jumped onboard. More than VND15.6 billion ($740,000) was raised from the auction equal to VND15,000 per share. However, the name of these two investors was withheld by the CMC representative.

CMC, though having a 48.98 per cent stake in CMC TI, did not decide to take part in the auction, which could help turn the latter into a CMC subsidiary.

With SCIC going out, CMC TI will become the first private equity firm having telecom infrastructure in Vietnam.

Ministry of Information and Communications’ Telecom Department head Pham Hong Hai said forming privately held telcos with network infrastructure was the way the market should go.

Based on the company’s financial reports in three consecutive years from 2009-2011after its coming into existence, as of December 31, 2011 the company incurred accrued losses amounting to VND73.9 billion ($3.5 million) tantamount to 108 per cent of owner’s capital amount.

Most of the losses reportedly came from high financial and management costs in the company’s early development stage.

According to professional consultant Bao Viet Securities, CMC TI’s business plans were feasible and the company could be profitable business if its operations were not hurt by unexpected occurrences.

The firm aims to achieve VND13.6 billion ($647,000) in after-tax profits in 2012.
Besides CMC TI, SCIC plans to divest from FPT Telecom in which it seizes a 50.7 per cent stake.

Unlike CMC, FPT unveiled its commitment  to acquire the entire SCIC stake in FPT Telecom to merge it into parent company FPT right in 2012.

According to FPT’s  first quarter financial reports FPT Telecom brought 29 per cent or VND186 billion ($8.8 million) in FPT’s total profits. In 2011 fiscal year, this figure was VND801 billion ($38 million), tantamount to 31 per cent of FPT total profits.