Viet Nam Mobile Telecom Services Corporation (MobiFone) and shareholders of multimedia company Audio Visual Global (AVG) on Monday decided to cancel the share transfer agreement between the two companies.

MobiFone and AVG cancelled their share transfer agreement after it was found serious violations. 

The decision was made several days after the Party Central Committee (PCC)’s Secretariat asked the Government to soon release the inspection results of a VNĐ8.89 trillion (US$395 million) acquisition by communications giant Mobifone

Accordingly, MobiFone and AVG agreed to cancel the transfer of 344.66 million shares and refund each other the amount received under the agreement.

AVG shareholders will refund the entire amount paid by MobiFone, while MobiFone will return to AVG the number of shares and assets transferred. At the same time, the two sides will try to not let the other party suffer more damages.

Phạm Nhật Vũ, representative of AVG in the negotiations with MobiFone, agreed not to impose a fine and claim compensation while cancelling the deal.

In addition to the amount paid to AVG, MobiFone said it had to pay some related expenses, such as hiring consultants. AVG has agreed to share this expense with MobiFone.

AVG has made a deposit of VNĐ450 billion to proceed the agreement cancelation, MobiFone said in a press release on Tuesday.

According to the AVG representative, there are many reasons for them to cancel the contract. First, since its acquisition, MobiFone has not operated and developed as planned the AVG brand and missed many opportunities and potential of AVG.

Second, Vũ said since the contract was in effect, MobiFone had paid 95 per cent of the contract value. The deadline was over but MobiFone had not yet fulfilled its obligations to pay the remaining five per cent despite repeated requests by AVG.

Since the inspection of the contract, the process of operating the AVG brand had caused many problems, damaging the reputation of both the parties. According to MobiFone and AVG, the cancellation of the contract is aimed at salvaging the damage.

At the meeting, a MobiFone leader said the inspection process had impacted the completion of payment to AVG. He also said due to problems faced by AVG, the market had changed and MobiFone was not able to concentrate on developing AVG.

In early 2016, Mobifone formally announced the acquisition of AVG to expand its television network, one of the company’s four main business areas. The details of the deal, however, were not disclosed.

At the beginning of August 2016, the Government promulgated Document No 1344/TTg, asking the Government Inspectorate to investigate the acquisition. The Inspectorate found serious violations in the acquisition.

Last Thursday, the Party Central Committee’s Office issued official letter No 6106-CV/VPTW on the handling of Mobifone’s acquisition of 95 per cent of AVG shares, which says that this is a serious, complicated and sensitive matter.

The Secretariat said that the Government and the Inspectorate must be responsible for reviewing and settling cases in an objective and accurate manner under the law to ensure that punishment is given to the right person and lost State assets are revoked. — VNS