MobiFone sees covetous eyes from investors

While the Vietnam Post and Telecommunication Group (VNPT) has not made any decisions about what it will do with two mobile networks MobiFone and VinaPhone, many investors have sent words, intimating that they want to buy MobiFone.

The information that VNPT will not be allowed to possess two mobile networks at the same time, and that it will have to equitize one of the two networks, or merge the two networks into one, due to the new regulations, turns out to be the good news for many investors. A lot of investors are drawing up the plans to purchase MobiFone’s stakes as the big mobile network plans to make IPO (initial public offering) this year.

A senior executive of a big enterprise in Hanoi said he is very interested in purchasing a big proportion of MobiFone’s stakes. However, he well understands that it will be not easy to be able to purchase MobiFone’s stakes. “I know a lot of other investors are also eyeing the big mobile network. Meanwhile, VNPT’s leaders will also have to consider thoroughly when selling MobiFone’s stakes,” he said.

Currently, VNPT is holding the two biggest mobile networks in Vietnam, MobiFone and VinaPhone, while MobiFone is called the “bread winner” of the group.

When asked if it may happen that VNPT will try to retain its ownership at MobiFone by ordering VNPT’s subsidiaries to buy MobiFone’s stakes, the senior executive said that most of the subsidiaries are operating as depending accounting units, except MobiFone. Meanwhile, MobiFone is really very expensive (Credit Suisse said it is worth two billion dollars), therefore, no VNPT’s subsidiaries will have enough money to hold the volume of stakes big enough to keep the management right.

“We are interested in the opportunity of making investment in MobiFone, especially when the decision that VNPT has to reduce the ownership ratio to less than 20 percent is announced,” Director of a foreign telecom group which has representative office in Hanoi said. “However, state management agencies need to show guidelines so that possible investors can see clearly what they need to do”.

The Decree No 25 that guides the implementation of the telecommunication law stipulates that an institution or individual, who owns more than 20 percent of the chartered capital or stakes of a company, will not be allowed to own more than 20 percent of the chartered capital or stakes of another telecom company which operates in the same telecom market.

With the new law, VNPT will have to restructure its ownership ratios at VinaPhone and MobiFone.

In the talk with VnExpress, Bui Quoc Viet, Director of the Public Relations Center under VNPT said as a state owned enterprise, VNPT will surely have to obey the current regulations, even though if it does not want to. However, to date, VinaPhone and MobiFone still have not been equitized, therefore, VNPT still represents the state to control the state’s capital in the enterprises.

“Only when the two enterprises get equitized, will the capital transfer or merger and acquisition deals be considered,” Viet said.

According to him, there are still controversial problems in the equitization of big mobile networks. MobiFone, for example, has been discussing the equitization for the last four years, but it still has not completed the equitization.

“Therefore, we still await guidelines from the state management agencies in order to draw up our plans,” he said.

Meanwhile, managers of MobiFone have declined to give comments about the possibility of VNPT withdrawing capital from MobiFone. “Such big issues prove to be beyond our jurisdiction of MobiFone’s leadership,” an executive said.

Analysts believe that it would be easier for VNPT to withdraw capital from MobiFone than from VinaPhone, because MobiFone has planned for the equitization for a long time already. Minister of Information and Communication Le Doan Hop has also affirmed in the meeting with the local press recently that MobiFone will be equitized in 2011.

Meanwhile, VinaPhone remains a depending accounting unit and it has not planned for the equitization.

Tags: Mobifone