VietNamNet Bridge – The fact that FPT (the Corporation for Financing Technologies) and FPT Telecom will buy more than 50 percent of stakes of EVN Telecom is understood as the start of the new wave of merging mobile phone networks in Vietnam.

The tripodal position on the telecom market

In 2004, the military telecom Viettel officially joined the mobile phone service market when the market was preparing to receive more newcomers. At that time, local newspapers foresaw that though there were new service providers, the market in the future would see the existence of the three most important networks which would stay in a tripodal position of power and compete with each other.

At that time, the merging and acquisition (M&A) of mobile phone networks were also taking place in many other regional countries. Therefore, experts believed that the M&A, sooner or later, would occur in Vietnam. However, they predicted that the process would go slowly because Vietnam opened its market after other countries.

However, the most outstanding characteristic of the mobile phone market in Vietnam is that most of the mobile networks belong to the state. Therefore, the M&A or bankruptcy of the networks still depends on the will of the state.

After a long period of competition, some mobile networks have been found “exhausted” the race, and there remain only three profitable networks, VinaPhone, MobiFone and Viettel. The mobile phone market turns out to be not as lucrative a market as people thought because many businesses have become bogged down with debt.

Some small mobile networks reportedly owe connection charges and frequency fees to other enterprises. VNPT (the Vietnam Post and Telecommunication Group) and Viettel have alluded to a lawsuit against the owing networks, while analysts warned that if the networks cannot pay debts, they would have to declare bankruptcy. However, to date, nothing like this has happened.

EVN Telecom will be the springboard for FPT Telecom

EVN Telecom seems to be the pioneer in the M&A process in Vietnam’s telecom market. Buu dien Vietnam newspaper has quoted its sources as saying that the Electricity of Vietnam, the holding company of EVN Telecom, had a meeting with representatives of a big mobile network company in Vietnam to discuss the transferring of EVN Telecom. However, the meeting did not bring the desired effects.
Months ago, rumor had it that EVN Telecom was looking for strategic foreign partners, and that EVN Telecom would sell 30 percent of stakes at maximum, and at least 20 percent to foreign investors. Not only EVN Telecom, S-Fone was also looking for strategic partners after SK Telecom announced the withdrawal.

However, everything has changed since the Prime Minister agreed in principle to allow EVN Telecom to choose FPT and FTP Telecom as the strategic partners when it becomes equitized. As instructed by the Prime Minister, FPT and FPT Telecom will hold more than 50 percent of chartered capital in EVN Telecom.

Questions have been raised that why will FPT Telecom buy 50 percent of EVN Telecom’s stakes and how will the telecom market perform after the affair.

In fact, FPT can choose another solution by providing virtual mobile services on EVN Telecom’s network. However, according to Buu dien Vietnam, FPT Telecom does not want to join the market this way. It is seeking permission to provide LTE-based Internet broadband services (long-term evolution) and is determined to enter the market with the license.

However, it understands that it would be very difficult and costly to build up infrastructure at this moment. So, there is another better way – purchasing a mobile network which is providing services. Meanwhile, as EVN Telecom is encountering difficulties, FPT Telecom believes it can buy stakes at good prices. 3G frequency band and infrastructure of EVN Telecom are really useful for FPT Telecom, not for VNPT or Viettel.

Thai Khang – Buu dien