Vietnam - Inspection rings up queries over Viettel

Investigations into leading telco Viettel have raised a number of questions about the company’s operations.

The Government Inspectorate has just signed off of its inspection of capital investment and financial operations at leading military-runViettel Group with proposals stemming from the investigation including the possibility of taking back a large chunk of money from the telco.

Inspectors found that, in 2008 Viettel failed to include more than VND533 billion ($25.3 million) revenue raised from promotional activities in its annual financial reports, leading to a shortfall of VND53.5 billion ($2.5 million) in outgoing value added tax relevant to products and services promotion.

The telco was also found to have rendered preferential loan packages of several hundred billion dong (or tens of millions of US dollars) to its subsidiaries without conforming to regulations in the Law on Credit Institutions as Viettel did not have this function.

The government inspectors found the telco had poured more than VND252 billion ($12 million) into Viettel Engineering Joint Stock Company and VND283.3 ($13.4 million) billion into Viettel Trade Import Export Company Limited. The latter also benefited from a preferential loan package of VND370 billion ($17.6 million) from Viettel.

The telco was also required to put more than VND924 billion ($44 million) into Vietnam public utility telecommunications fund. Some VND922 billion was due to be paid into the fund in 2010. This amount was included into the group expenses but payment was yet to make.

The inspectors also proposed taking back VND2.18 billion ($100,000) from a Viettel subsidiary- the Viettel-CHT Company Limited which is a joint venture between Viettel and Taiwan-based Chunghwa Telecom. Viettel holds a 70 per cent stake in the $30 million investment.

The Government Inspectorate argued though the Viettel-CHL was not yet operational in high-tech sector, in fact it had made declarations allowing it to enjoy investment incentives here.

Construction of the Viettel-CHT joint venture database centre in Hanoi suburb’s Hoa Lac hi-tech zone kicked off in March 2009 and was scheduled to be completed after two years. However, the project is yet to be finalised though the zone’s Management Authority has urged the joint venture company to speed up the project progress.

It is still not known when the database centre will become operational.

With the Viettel inspection now completed, the Government Inspectorate plans to inspect capital and asset usage at leading state telco VNPT and its subsidiaries from 2006 to the end of 2011. Results will be available after 85 working days.

The inspection has grabbed particular public attention because in 2011 the telco group posted VND120.8 billion ($5.75 billion) revenue, a 20.4 per cent jump against 2010 but its profits amounted to just VND10 trillion ($476 million), or down VND1.2 trillion ($57 million) against 2010.

In 2012, VNPT is targeting set a 3 per cent hike in profits to VND10.3 trillion ($490 million) and a 12.4 per cent more in revenue to reach VND135.8 trillion ($6.4 billion).

In 2011, Viettel posted VND117 trillion ($5.57 billion) revenue, up 28 per cent and nearly VND20 trillion (around $1 billion) pre-tax profits, up 23 per cent against 2010. This year, the group aims a 20-25 per cent hike in its revenue and profit targets against 2011.

Duc Huy | vir.com.vn

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