VNPT submits capital divesting plan

Vietnam Post and Communication Group (VNPT) has submitted to the government three plans of dealing with an organization that is disallowed to own over 20% in two mobile networks according to Decree 25 taking effect from Jun 1.

Three plans VNPT proposed the government include: merging VinaPhone and MobiFone; equitizing one of above two networks; or restructuring the whole group.

Phan Hoang Duc, Deputy General Director of VNPT said his firm is waiting for the higher authority’s order. Ministry of Information and Communication is drafting a guidance circular so VNPT has not been able to determine a suitable capital withdrawal plan.

New regulation on the government’s capital ownership is setting the group in difficult situation. If equitizing MobiFone and then divesting capital in this company to 20% according to Decree 25, it will mean that VNPT’s strength will go down was a result because MobiFone is contributing 50% of VNPT’s profits, a VNPT official shared said.

Capital divesting plan at MobiFone to 20% is the direction VNPT is not willing to conduct although MobiFone has been in the equitization plan since 2005. Over 6 years, the telecommunication firm just finished selection of foreign consultant and corporate value appraisal. Time for selling MobiFone on the stock market has not been fixed.

The second plan is that VNPT recommended to merge MobiFone and VinaPhone, which made specialists worried about the potential of re-monopoly. A specialist commented: It took over 10 years to “rescue” the telecommunication market from “monopoly”.  If the government approves VNPT to merge two networks, both of them and other firms will then be affected.

Talking to VnExpress.net recently, Pham Hong Hai-Head of Department of Telecommunication under Ministry of Information and Communication said that in line with right process, the ministry will host the building and reporting of VNPT’s capital withdrawal in one of firms including VinaPhone or MobiFone to the government. Prime Minister will make final decision based on proposals and recommendations. As gaining Prime Minister’s approval, VNPT will have to implement.

Hai said that Decision 25 is one of initial measures to control cross-ownership between two units operating in the same service business in order to create a healthy competition and avoid the case that one holding group creates two member companies in the competitive service.

VNPT previously had submitted many equitisation plans to Ministry of Information and Communication and all plans were returned to be re-built according to reality. – Vietbiz24

Posted by VBN on Jun 3 2011. Filed under Technology, Telecommunication. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry