Leading state telco VNPT’s restructuring plan is waiting on the starter’s gun.

Mobifone - illustration photo

The VNPT just submitted its shake-up plan to the Ministry of Information and Communications (MIC) to streamline operations.

Accordingly, it proposed founding VNPT Mobile through reorganising its leading member companies VinaPhone and MobiFone, which will operate as a financially dependent unit under the group and directly engage in rendering mobile services with two trademarks MobiFone and VinaPhone.

The move was to help the group fortify resources for infrastructure consolidation, according to VNPT.

The leading state telco said mobile services brought the largest share of its profits over the past five years. Besides, merging these two mobile networks will pave the way for its member companies to share infrastructure and drive down investment costs, while fostering cooperation efficiency between VNPT Mobile and VNPT’s other subsidiaries.

VNPT’s restructuring plan could take off right in 2012’s third quarter and by 2016-2020 VNPT Mobile would be operating independently as a one-member limited liability company under the Enterprise Law whose 100 per cent chartered capital managed by parent company VNPT.

Parallel to incorporating MobiFone and VinaPhone, the VNPT proposed the government not equitise its largest member company MobiFone as earlier projected.
VNPT argued not equitising MobiFone would help it retain stable operations to ensure success of reshuffle plan.

Industry insiders assumed once VNPT’s merger plan was wrapped up, the domestic telecom market would see two major operators holding a combined 94.54 per cent market share - VNPT Mobile with 57.82 per cent and military-run Viettel 36.72 per cent.

With the remaining 5.46 per cent market share it would be tough competition for survival between smaller networks including Vietnamobile, S-Fone and Beeline when the market seemingly reaches its saturation point in terms of subscribers.

Lawyer Tran Vu Hai, head of Hanoi Law Company said the two leading operators with a 90 per cent of market share could strangle small players and affect consumers.

General director Michael Sascha Cluzel at GTel Mobile, the operator of Beeline, assumed merging big telcos could present big challenges in respect to legal corridor and policies. The MIC should come up with measures to ensure impartial market competition and protect small players.

Industry insiders assumed VNPT’s proposal not to equitise MobiFone might disappoint foreign players wanting to step into Vietnam’s telecom market as under Decree 25/2011/ND-CP of April 6, 2011 detailing and guiding the implementation of a number of articles of the Telecommunications Law, VNPT could not own 100 per cent capital in two telcos VinaPhone and MobiFone.

“NTT Docomo hopes Decree 25 will make it easer for NTT Docomo to partner with Vietnamese players operating in telecom field but what happened in fact goes beyond our expectations,” said a representative from NTT Docomo, a Japan’s leading mobile communications operator.

VIR