VNPT continues push for merger of MobiFone and VinaPhone

VNPT stands behind their merger plan for MobiFone and VinaPhone

>> Jury out on telco merger deal

>> MobiFone and VinaPhone set for a merger

Under the restructuring plan that has been submitted to the Ministry of Information and Communication (MIC) and the Government, VNPT said that, over the past five years, MobiFone has contributed 40 per cent to its revenues and 60 per cent to its profits. The group request to the Government was for gradual privatisation to ensure stable operations.

For a short term, VNPT wants to merge MobileFone with VinaPhone to establish Mobile Information Corporation or VNPT-Mobile.

The group proposed that restructuring would involve entire group as well as its major subsidiaries after 2015.

Its proposals, however, somewhat contradicts to the Government’s decree that guides the implementation of the Telecommunication Law.

The regulation stipulates that an individual and organisation that owns over 20 per cent of registered capital or stakes in a telecom firm is not allowed to hold over 20 per cent of registered capital or stakes in another telecom company in the same market.

This means that VNPT would not be allowed to entirely own both MobiFone and VinaPhone.

Rerecently, the ministry insisted that VNPT quickly privatise MobiFone and then VinaPhone.

In June 2011, company drew out three separate restructuring plans: the merger of VinaPhone and MobiFone, to privatise one of the providers, or the privitasition of VNPT itself.

The merger plans drew the greatest concern from the public. Several economists stated that it would not be in accordance with the Law on Competition.

Vu Ba Phu, Director of the Competition Management Department said, regulation bans the merger of enterprises that would result in over 50 per cent market share. If this merger goes through, VNPT would hold around a 60 per cent market share in the industry.

He said that, for VNPT to get approval for the merger it would need to seek an exception from this regulation. Currently, the regulation allows only two exceptions, one would be in a case where one or several enterprises involved are on the verge of bankruptcy and the other where such a merger would foster exports or facilitate socioeconomic or scientific and technological advancements for the country.

Under the restructuring plan, VNPT also proposed a merger of several of its subsidiaries, including Inter-provincial Telecommunications Company (VTN) with Vietnam Telecom International (VTI), and Vietnam Data Communication Company (VDC) with VASC Software & Communication Company.

The White Book on Vietnam's ICT 2011 showed that Viettel held a 36.72 per cent share in the country’s mobile market, MobiFone 29.11 per cent, VinaPhone 28.71 per cent while others shared the remaining 5 per cent.