Mini-war breaks out among state groups

Facing the common opponent in the “electric pole war”, the two rivals in the telecommunication market – the Vietnam Post and Telecommunications Group (VNPT) and the Army Telecommunications Group (Viettel) – suddenly become friends and plan to build electric poles together.

The situation

EVN, VNPT and Viettel are state-owned groups and the money shifting from this pocket to that is all State money. Their quarrel over money that is not theirs may harm their image, especially when the Government is calling for unity among enterprises to compete in the world.

in this “war”, EVN monopolizes electricity and electric poles, while VNPT monopolizes post and telecom services. Meanwhile Viettel is being called a “hero against the monopolies.”

VNPT’s image has been one of a monopoly that impeded smaller companies in connections and infrastructure.

VNPT and Viettel have generally viewed each other as opponents, but are now willing to cooperate. This is a strange story.

The conflict

After exchanging many documents, the two big state-owned groups – Electricity of Vietnam (EVN) and VNPT – recently sat down together to set a reasonable leasing price for electric poles. Nevertheless, even with the presence of the Ministry of Trade and Industry officials, EVN insisted on raising lease prices by 4-8 times.

EVN claimed it had no grounds to reduce leasing prices of its electric poles. Meanwhile, VNPT complained that EVN’s prices are absurd and unacceptable.

Compared with newly built poles, EVN’s leasing prices are at monopoly levels, some 4-5 times higher.

VNPT raised their objections the most fiercely because it has the largest fixed phone network, the highest number of broadband Internet subscribers and is the largest leaser of electric poles.

The fixed phone network and broadband Internet service are not as lucrative as mobile services, so the sudden increase in electric pole leasing rates (hundreds of billions of dong a year) has hit VNPT hard.

Smaller players like FPT Telecom, and Saigon Postel are also in difficult situations, but they must quietly acquiesce. If EVN will not rent their electric poles, they would have even larger problems.

Meeting with MoIT representatives, EVN asserted that VNPT earns yearly revenues of nearly 80 trillion dong and its annual profit is dozens of thousands of billions of dong, so it should be no problem for this group to pay an additional several hundred billion of dong a year.

VNPT said that they are both state-owned groups, so it is absurd that if they make a high profit, it must to share it with EVN.

The real cost

The hike in electric pole leasing prices will not only strike telecom firms like VNPT, Viettel and FPT, but also telecom service users. Once the input cost increases, the price of services will also rise.

EVN has an absolute monopoly on building and leasing electric poles and EVN doesn’t have to ask permission from any agency to raise its prices. Only now when VNPT, Viettel, and others have called for help from state agencies has the Ministry of Industry and Trade intervened to find a solution.

The Finance Ministry is gathering opinions from related agencies to develop a price policy. It hoped that this document will settle the problem.

The Ministry of Information and Communications believed that in July 2010, when the Law on Telecommunications takes effect, the conflict between EVN and telecom firms will be solved based on its rules about sharing infrastructure.

While waiting for a resolution, VNPT and Viettel discussed building electric poles together even though they know it won’t be easy, plus it will be costly and harm urban views – all due to being hampered by EVN.

EVN’s unorganized electric poles already make cities ugly. Many question what will happen to the urban landscape if millions more cable poles for VNPT and Viettel spring up?

VietNamNet/VNE

Tags: Vietnam enterprises, Vietnam state groups