Foreigners eager to MobiFone’s IPO

Foreign investors want to hold stake into network operators in Vietnam, but the equitization process is challenging the investors.

Currently, Vietnam Post and Telecommunication Group (VNPT) holds 100 percent stake into both two large mobile networks namely VinaPhone and MobiFone. Implementing the new regulations, VNPT will have to make the privatization for their one of two mobile networks or merge two into one.

At present, the merger plan for MobiFone and VinaFone has not been set yet. Meanwhile, the plan to make initial public offering (IPO) for MobiFone has been approved already and is gradually being implemented.

It has been nearly six years, the process of MobiFone’s IPO, the Vietnam’s first telecommunication firm to make IPO, has been constantly suspended. However, at the beginning of 2011, the directive information from government and ministries and apartments showed the possibility to make IPO for MobiFone within this year is very clear.

However, so far, there is no specific time frame at all. Even the allowable maximum percentage of shares that foreign investors are allowed to buy is also a matter of debate. Because following the commitments when joining the World Trade Organization (WTO) for Vietnam’s telecom sector, the foreign investor is allowed to own up to 49 percent stake of the enterprise having the network infrastructure and 65 percent stake into enterprises without network infrastructure.

More than a year ago, in a study on Vietnam’s telecommunications market, the UK-based Business Monitor International (BMI) said that although the equitization process is slower than expected, some foreign investors as Telenor (Belgium), Vodafone (UK), NTT DoCoMo (Japan) and OFT (France), are still waiting patiently for long term investment opportunity.

However, if this process occurs too slowly, the market is now approaching saturation and growth potential will shrink. And then, the attractiveness of Vietnam’s telecommunications businesses will become worse in the eyes of foreign investors. – VIR

Tags: MobiFone IPO