Gov't gives the go-ahead for telco giant split ahead of IPO

The Government has approved a proposal from the Ministry of Information and Communications (MIC) to separate service providers under the Vietnam Post and Telecommunication Group (VNPT) in preparation for their equitisation.
The Government has approved a proposal from the Ministry of Informationand Communications (MIC) to separate service providers under the VietnamPost and Telecommunication Group (VNPT) in preparation for theirequitisation.

According to the ministry, MobiFone would be detachedfrom VNPT while Vinaphone and MobiFone would become two separate mobiletelecom service providers.

MobiFone's split from VNPT is part ofthe group's latest restructuring plans, the country's oldest and largesttelecoms service provider.

The Prime Minister has already chairedseveral meetings to determine whether MobiFone or Vinaphone should beseperated from VNPT. The final solution reached was that MobiFone wouldbe separated and privatised to become the Mobile Telecom Corporation.

According to Pham Hong Hai, head of the MIC's Telecoms Department,splitting MobiFone from VNPT would be the best choice because MobiFonewas a strong telco brand both at home and abroad with a lot ofexperience in the telecoms business.

Following equitisation, MobiFone would become more appealing to investors.

Advocating the restructuring proposal, former Deputy Minister of Postand Communications, now the Ministry of Information and Communications,Mai Liem Truc said that the separation of MobiFone from VNPT would begood for the telecoms market and facilitate healthy competition, ascurrently, the three biggest mobile service providers, Viettel, MobiFoneand VinaPhone, were all State-owned.

"The separation of MobiFonefrom VNPT will initially cause some difficulties for VNPT, but theprocess would bring about long-term benefits," said Truc.

After thesplit, MobiFone will also take over liabilities worth 1.6 trillion VND(75.47 million USD) from VNPT, which Chairman Le Ngoc Minh confirmedthat the company was totally capable of handling.

Afterequitisation, the State will hold a 75 percent stake in MobifoneCommunications Corporation while the balance of 25 percent will be holdby investors, including foreigners.

Founded in 1993 as a GSMlauncher, MobiFone was the first mobile carrier in Vietnam, followedby Vinaphone in 1996 and Viettel in 2003.

MobiFone had a marketshare (estimated based on revenues) of 17.9 percent in 2012. Its maincompetitors are Viettel with a 40.67 percent market share and Vinaphonewith 30 percent.

Together, the big three control almost 90 percentof the market, with the rest controlled by Vietnamobile with 8 percent,and Gmobile (formerly Beeline) with 3.2 percent.

In recent years,new mobile subscriptions in Vietnam have skyrocketed, reaching 19million in 2006, 25 million in 2007, 74 million in 2008, and 98 millionin 2009. By the end of 2013, there were 134 million recordedsubscribers.-VNA

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