VNPT disallowed to own both mobile networks

Pursuant to Decree No 25/2011/ND-CP, Vietnam Post and Telecommunication Group (VNPT), who owns whole capital of two large mobile networks of VinaPhone and MobiFone, may be forced to sell one of two networks or merge two into one.

Chapter 2 Clause 3 of the decree, which will be effective from June 1, 2011 to guide the implementation of Law on Telecommunication rules that an institution, an individual who owned over 20% of charter capital or stake in one firm, are not allowed to hold more than 20% charter capital or stake of other telecommunication firms operating in the same telecom service market.

VNPT will have to review operations

Under the decree, telecommunication companies are responsible for reporting sectoral management agencies in line with regulations of Ministry of Information and Communication if any change in list of institutions, individuals who own more than 20% charter capital or stake of a firm. This first will affect directly to the organizational mode of VNPT.

Currently, VNPT is keeping 100% equity of both telecom giants namely VinaPhone and MobiFone, thus, the group then will not be allowed to own over 20% of charter capital or stake in one of these two telecom providers. The decree will force VNPT to review which mode is suitable for them, first VNPT will have to equities one of two networks without keeping over 20% of charter capital or stake in an euiqtised network. Or, VNPT will be for forced to merge their networks into one.

Analysts said that this was really the difficult problem for VNPT managers at this time. VNPT now is starting to announce equitision of MobiFone. If MobieFone is privatized, VNPT also will be disallowed to own more than 20% capital or stake of MobiFone. This will likely impact seriously on VNPT’s health.

MobiFone only accounts for 4% of VNPT’s manpower but dominates 50% of the group’s profit. It is said that MobiFone is the main profit source of VNPT so VNPT may prefer the option of merging two networks.

Before issuing the decree, leaders of Ministry of Information and Communication worked with General Director and Chairman of VNPT about the future scenario. The ministry said, Chapter 2 Clause 3 of the decree aims to avoid the situation that enterprises collude each other or hamper other rivals, as well as prevent unhealthy competition on the market.

Minimum mobile telecom investment required

Under Decree 25/2011/ND-CP, enterprises who apply to ask permission on setting up landline mobile telecom network using wireless telegraphy frequency channel, must have an authorized capital of 20 billion dong and a minimum investment commitment of 60 billion dong in first 3 years to develop telecom networks with proposed scope.

If proposing license on landline mobile telecom network without using wireless telegraphy frequency channel (virtual mobile telecom network), enterprises must have an authorized capital of at least 300 billion dong.

As for the firms who want to gain license on setting up landline mobile telecom networks with wireless telegraphy frequency channel, they must qualify an authorized capital requirement of 500 billion dong, minimum investment commitment of 2.5 trillion dong in first 3 years and at least 7.5 trillion dong in 15 years to develop telecommunication network according to regulations in license certificates.

As for the enterprises in need of license on setting up fixed and mobile telecom network, they must meet an authorized capital of 30 billion dong and a pledged investment of at least 100 billion dong in first 3 years.

Foreign investors permitted in business cooperation

Clause 4 Decree 25/2011/ND-CP rules that foreign investors are permitted to invest in telecom business in form of direct or indirect investment under current rules.

Where direct investment aims to provide telecommunication services without network layer, foreign investors are allowed to join venture, cooperate on account of contract signed with enterprises formed in Vietnam.

Where direct investment in telecommunication services is related to network layer, foreign-related projects must qualify all following requirements: projects matched with national telecom development planning, telecom resource planning, passive telecom layer projection in investment locality, requirements on authorized capital and investment commitments.

Setting up fixed telecom network subject to minimum investment of 15 billion dong

Pursuant to Clause 19 Decree 25/2011/ND-CP, enterprises, that apply to set up fixed telecom network (without using radiotelegraphy frequency) in one province or one big city, must have an authorized capital of 5 billion dong and a minimum investment commitment of 15 billion dong in first 3 years as from being licensed.

If asking to set up fixed telecom network in 2-30 provinces and big cities, appliers must have an authorized capital of at least 30 billion dong and investment commitment of over 100 billion dong in first 3 years from receiving investment certificate. In more than 30 provinces and cities, minimum capital and investment required are 100 billion dong and 300 billion dong to develop telecom network. – Vietbiz24

Tags: VNPT