The Prime Minister has directed that in the restructuring of the Vietnam Posts and Communications Group (VNPT), it is essential to keep the two brands VinaPhone and MobiFone and at the same time to equitise MobiFone, said Deputy Minister of Information and Communications (MIC) Le Nam Thang.
The decision to equitise MobiFone and let this corporation operate independently is placed on the planning of the telecommunications market approved earlier by the government. Under this plan, the market for such key service as mobile phone must have at least three players, established from three to four large telecommunication groups, with equal market shares to create competitiveness.
Deputy Minister Le Nam Thang shared that in the restructuring scheme, VNPT will have to build a plan for MobiFone's equitisation and divest from this company. VNPT will have to make its own proposals on the equitisation of MobiFone under a suitable route. Under Decree 25/2011/ND-CP, VNPT cannot have cross-ownership of more than 20 percent in MobiFone. However, the subsidiaries of VNPT will be able to buy the shares. The subsidiaries which can buy the shares of MobiFone must be financially independent.
Earlier MIC shared that Decree 25/2011/ND-CP is to guide the implementation of the Telecommunications Law regulating that an organisation or individual that owns more than 20 percent of charter capital or shares in a business cannot own more than 20 percent of the charter capital or shares of other companies in the telecommunications market. The reason for making the limit of "over 20 percent of the charter capital or shares" is to avoid unhealthy competition between businesses.
Speaking at the 20th anniversary of MobiFone’s establishment on April 16, 2013, Deputy Prime Minister Nguyen Xuan Phuc proposed MIC and VNPT create conditions to facilitate MobiFone to mobilise enough capital to develop its capacity to compete successfully in domestic and international markets.
At the recent working session with the MIC, Mr Le Ngoc Minh, Chairman of MobiFone said that MobiFone had to be side by side with VNPT in difficult times by transferring profit for the parent company. However, Mr Minh said that during recent time, MobiFone network has been invested only by its “depreciation” money, thus its network is limited compared to that of other businesses. Therefore, in order to help MobiFone develop stronger, it is important to increase its charter capital, focus on investment, strengthen infrastructure and promote its position to become a strong brand in the telecom market.
Mr Le Ngoc Minh also suggested that the restructuring plan not dissolve MobiFone, but let it operate financially independently towards equitising the company under the direction of the Government. The restructuring of VNPT and MobiFone has to ensure market elements and efficiency among the units within the Group. Economic theories show that when a company develops to a large scale, it is necessary to separate it into independent units. Maintaining the financial dependence model is no longer appropriate. Therefore, with such a current scale, MobiFone wants to be independent for separate and transparent accounting and to enhance innovation of the business.
Earlier, former Deputy Minister of Posts and Telecommunications Mai Liem Truc said, “Efficiency of management and investment in telecommunications is now facing certain restrictions when most enterprises are state-owned, and more than 90 percent of the assets of Vietnam's telecommunications networks is of the State. The current market might be like a family where the father lets his kids eat separately and then compete with one another. It is not real competition.”
To address this problem, according to Mr Truc, the State must firmly re-arrange telecommunications businesses or even revoke some licenses, and maintain only about four large businesses.
Agreeing with the above point, MIC Deputy Minister Nguyen Thanh Hung said Vietnam's telecom market competition is not real because the leading force is still state-owned enterprises. In the coming time there will still be the trend of merging or dissolving in telecommunications industry. The merging and reforming process will have distinctive features of the State. For example, the recent merger of EVN Telecom and Viettel is the decision and will of the State. When market competition has yet to be real, it is hard to make decision of the State consistent with the market mechanism.
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