VietNamNet Bridge – Vietnam Posts and Telecommunications Group (VNPT) could be split into three corporations to save on operating costs and improve corporate governance.

At the October meeting of the Ministry of Information and Communications (MIC), Tran Manh Hung, VNPT’s general director, said the company’s board members have submitted the plan to set up the three corporations and was waiting for the ministry to assess the proposal and pass it on to the prime minister.

The three entities would operate in separate fields, specifically infrastructure (VNPT - NET), business (VNPT - VinaPhone) and value-added services (VNPT - Media). They would operate independently and their performance would be separately evaluated.

“The new model will enable VNPT to leverage its resources, including financial resources, and prevent overlapping. Most importantly, it limits intermediate processes and increases transparency. Specialisation will also raise VNPT’s competitiveness and efficiency,” Hung said.

“Accounting at the subsidiary corporations is carried out independently,” Pham Duc Long, VNPT’s deputy general director, said. “The group takes charge of the service provided. The subsidiaries are in charge of different steps in the services and are assigned separate business targets.”

In its restructuring process, VNPT is also divesting from 63 firms in which it holds a partial stake as per decision 888/QD-TTg dated June 10, 2014 by the prime minister on approving VNPT’s 2014-2015 restructuring plan. The group’s divestment should be complete by the end of 2015. According to the State Audit Office, VNPT poured VND2.3 trillion ($109 million) into 63 firms, 13 of which are listed on the country’s stock markets.

“As of now VNPT has finished divesting from Sacom Development & Investment Corporation (SAM), earning VND400 billion ($19 million). It’s going to soon take back VND700 billion ($33 million) from divesting from Maritime Bank,” Hung said.

According to Hung, when divesting from SAM and Maritime Bank, in which VNPT poured half of its non-core investment, VNPT earned a profit. VNPT reported revenues of VND77 trillion ($3.7 billion) in the first nine months of 2014, meeting nearly 80 per cent of the year’s target. Regarding the business outlook after restructuring, VNPT admitted it had targeted a 25 per cent on-year increase in pre-tax profits for 2015.

“Because we have been busy restructuring, we only targeted a 10 per cent on-year increase in pre-tax profits this year but in 2015, when things fall into place, we are targeting a 25 per cent increase,” Hung said.

VIR/VNN