Software giant FPT and its subsidiary FPT Telecom have received approval from the Government to buy a 49-per-cent stake in State-owned EVN Telecom, an affiliate of Electricity of Viet Nam, in what may be the beginning of a wave of mergers or consolidations among smaller mobile service providers.

EVN Telecom will negotiate the price directly with FPT and FPT Telecom.

After the deal is consumated, the State will continue to own a controlling interest of 50.6 percent of EVN Telecom. EVN Telecom executives will be able to purchase shares representing 0.4 percent of equity in the firm, at a price equal to 60 percent of the price paid by FPT Telecom.

EVN Telecom has a charter capital of 2.96 trillion VND (141 million USD) and offers internet and mobile phone services. However, it has failed to perform strongly in the nation's rather crowded telecommunications market. Last year, it earned less than 2.9 trillion VND (137.14 million USD), just 61 percent of its target of 4.73 trillion VND (225.23 million USD) for the year.

"EVN Telecom needs to hasten equitisation as the firm is facing some financial constraints," said a senior official of the company who asked to remain anonymous. "But we haven't only targeted investors but also strategic partners with leadership in technology and the ability to rescue EVN Telecom with GSM technology, the lack of which has kept the company from being a player in the market."

EVN Telecom had earlier planned to sell at least a 20-per-cent interest to a foreign strategic partner, but foreign-invested telecoms like Hong Kong-invested Vietnamobile, S-Fone of the Republic, and Russian-invested Beeline have struggled to make a dent in the market share of major domestic rivals Viettel, MobiFone and Vinaphone. These three State-owned giants consistently dominate the market.

"The telecom market has some unique behaviour and perhaps only the Vietnamese understand the most effective ways to exploit it," said Pham Thanh Trung, an industry observer in Hanoi. "If FPT can do anything at EVN Telecom, it will be a revolution." /.