What’s behind the affair of FPT purchasing EVNT?

The purchase of EVNT, the telecom company belonging to the Electricity of Vietnam, by FPT (the Corporation for Financing and Promoting Technology), may be the perfect agreement between the two giants that in turn may lead to a new and bigger giant (Ftel?). However, some experts have warned that it would be not easy for the new giant to earn money.

The perfect cooperation?

To date, although EVNT owns a good infrastructure system (EVNT is one of the three largest enterprises in terms of transmission networks and it has a license for 3G services) it has not been successful in business, and it has never been considered a redoubtable rival for telecom companies. Moreover, the difficulties of EVN also presented difficulties for its subsidiary.

However, the weaknesses of EVNT can be offset by the advantages of FPT, an enterprise that has been very successful in the market. Therefore, people believe that the cooperation between an enterprise with powerful infrastructure and an enterprise with a smart business strategy is a sound decision

In principle, by “shaking hands” with FPT, EVNT will be able to settle its financial problems and improve its business capabilities. Meanwhile, by holding the majority of stakes at EVNT, FPT will have a passport to join the wireless telecom market.

In fact, FPT is not the partner that EVNT first targeted when it decided to sell stakes. At first, EVNT planned to sell shares to foreign investors. It intended to sell 30 percent of stakes to outside investors and a minimum of 20 percent of stakes to foreign investors. If allowed, EVNT would sell stakes to foreign strategic shareholders at negotiable prices, and foreign investors will have to satisfy criteria such as having experience in telecommunications and experience in 3G networks.

However, EVNT finally decided to choose FPT. In fact, there is no partner more suitable than FPT, an enterprise with high capability and experience in doing business in Vietnam’s telecom market.

At the same time it seems that the model of domestic telecom enterprises cooperating with partners is not a .successful one.

Hanoi Telecom and Hutchison still cannot help Vietnamobile overcome its difficulties after it decided to shift from CDMA technology to GSM technology. S-Fone fell into trouble after the South Korean SK Telecom decided to withdraw from the joint venture.

Meanwhile, VinaPhone, MobiFone and Viettel, 100 percent domestic owned enterprises, hold the biggest market shares. Therefore, FPT is clearly to be the most appropriate for EVNT. Hoang Ngoc Diep, a telecom expert, once told Doanh Nhan newspaper that Vietnam’s telecom market has its own special characteristics that only Vietnamese people can understand well.

What is the fate of the new giant?

When asked if EVNT will become a powerful company after the affair, Diep said that in order to become powerful, FPT needs to have three factors. First, it needs to obtain the full right to manage EVNT. Second, it needs to take full advantage of technologies in order to create significant differences. Third, it needs to be financially capable enough to compete with other big service providers for a long time.

However, it would be a revolution if FPT wants to change the business system of EVNT. To date, EVNT has not been doing business with its own apparatus. EVNT has been much relying on the instructions from the “parent” group EVN, which to date, remains the exclusive electricity provider.

Tags: EVN Telecom, FPT