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.

According to the ministry, MobiFone would be detached from VNPT while Vinaphone and MobiFone would become two separate mobile telecom service providers.

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

The Prime Minister has already chaired several meetings to determine whether MobiFone or Vinaphone should be seperated from VNPT. The final solution reached was that MobiFone would be 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 MobiFone was a strong telco brand both at home and abroad with a lot of experience in the telecoms business.

Following equitisation, MobiFone would become more appealing to investors.

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

"The separation of MobiFone from VNPT will initially cause some difficulties for VNPT, but the process would bring about long-term benefits," said Truc.

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

After equitisation, the State will hold a 75 percent stake in Mobifone Communications Corporation while the balance of 25 percent will be hold by investors, including foreigners.

Founded in 1993 as a GSM launcher, MobiFone was the first mobile carrier in Vietnam, followed by Vinaphone in 1996 and Viettel in 2003.

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

Together, the big three control almost 90 percent of 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 19 million in 2006, 25 million in 2007, 74 million in 2008, and 98 million in 2009. By the end of 2013, there were 134 million recorded subscribers.-VNA