Vietnam - Vietnam to allow M & A in telecom sector under market mechanism

As per the draft of the national telecommunications development plan by 2020, ineffective and small-scaled telecom firms will be allowed to apply mergers and acquisitions (M & A) under the market mechanism.

On the other hand, the state will strictly control dominant telecommunication enterprises to conduct economic concentration, transfer the telecommunication resource use right following the monopolization trend and decrease the competition in the telecommunication market.

The draft plan also refers to the equitization and capital divestment from the telecommunications companies that the state does not need to hold controlling stakes to create conditions for economic sectors to participate in telecommunications development, at the same time, restructuring the telecommunications in Vietnam Post and Telecommunications Group.

According to the Ministry of Information and Communications, there are nine companies being allowed to set up telecom network infrastructure namely VNPT, Viettel, Indochina Telecom, GTel, Vishipel, FPT Telecom, EVN Telecom, Hanoi Telecom and SPT, of which the state will hold controlling stakes in five companies, including VNPT, Viettel, Indochina Telecom, GTel and Vishipel.

In addition, according to the draft plan, the state will not limit the number of enterprises engaged in the telecommunications market but will also take measures to avoid having too many companies involved in this market, especially the situation that state-owned enterprises (SOEs) invest in non-core business lines in the telecommunications sector.

Specifically, for some important telecommunication service markets (domestic fixed long distance, international, mobile and broadband internet), the draft will ensure that there will be at least three participants but avoid having too many, especially SOEs’ non-core investments in the telecommunications sector.

VietBiz24

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