Decree dials in telco changes

Foreign players will have an opportunity to hold up to 49 per cent stakes in local telecoms players with a new telecoms decree.

The government recently enacted Decree 25/2011/ND-CP dated April 6, 2011 guiding the implementation of several articles in the Telecommunications Law.

Under the new decree, if an organisation and individual having the ownership over 20 per cent of the chartered capital or stock value at a telecom enterprise, it will not be eligible to hold more than 20 per cent stake at another telecom firm.

State-owned telecom giant VNPT Group currently holds 100 per cent stake in local two key mobile phone networks VinaPhone and MobiFone.

Under the new decree which will come into force from June 1, 2011, VNPT will have to carefully consider its further steps.

There are three options for VNPT, according to analysts.

The first option involves the merging of VinaPhone and MobiFone. The second relates to MobiFone’s equitisation plan and the third suggests selling MobiFone to other partners.

“The new regulation aims to ensure a healthy competition in local telecom market,” said head of Ministry of Information and Communications’ Telecom Department Pham Hong Hai.

Under current World Trade Organization (WTO) regulations, foreign investors are eligible to hold up to 49 per cent of the legal capital at a local telecom firm with strong infrastructure as MobiFone.

According to a EuroCham Vietnam representative, when there are a plethora of businesses active in providing mobile phone services in Vietnam’s telecom market holding stakes at existing local telecom firms would be the most viable way for foreign players wanting to jump into Vietnam’s telecom market.

“Many telecom players in Europe wanted to clinch strategic partnership agreements with Vietnamese counterparts and willingly support them in financial and technical aspects,” he said.

An executive from a French telecoms firm based in Vietnam told VIR the firm would wait until Mobifone sold its stake under equitisation scheme and would buy not less than 20 per cent of the local giant’s stake.

However, according to industry insiders either equitising MobiFone or selling it entirely to some other partners were not easy decisions for VNPT. Statistics show that in 2010 MobiFone contributed VND5.860 trillion ($283 million) in pretax profits to VNPT, or 52.3 per cent of the latter’s profits. This year, MobiFone set to bring VND6.1 trillion ($294.6 million) in pretax profits, making up 51.7 per cent of VNPT’s total profits. – VIR

Tags: Vietnam Telecom, Vietnam telecom maket