Vietnam - MobiFone and VinaPhone--both gold mines which VNPT wouldn’t cough out

VietNamNet Bridge – Retaining the current resources to regulate the infrastructure is the reason VNPT has cited when suggesting merging the two mobile networks MobiFone and VinaPhone. However, experts have said, this would not be the optimal solution for the telecom market.

The fates of MobiFone and VinaPhone, the current two biggest mobile networks in Vietnam, have once again become a hot topic after the Vietnam Post and Telecommunication Group (VNPT), the owner of the two brands, has suggested merging MobiFone and VinaPhone.

The draft plan on renovating the structure and operation of VNPT has been submitted by the group to the Ministry of Information and Communication (MIC). Under the plan, VNPT would carry out a “major surgery” inside the group by merging and turning its member units into companies to form up key businesses.

One of the most important suggestions by VNPT is reorganizing VinaPhone and MobiFone into VNPT Mobile Corporation. VNPT Mobile would become an independent company belonging to the economic group, which would develop mobile services with two brands MobiFone and VinaPhone.

According to VNPT, in the last five years, the main source of income of the group comes from mobile services. The merger of the two mobile networks would help the subsidiaries of VNPT better share the same telecommunication infrastructure system, which would allow cutting down investment costs.

VNPT has also affirmed that the new model, if approved, would allow the cooperation between VNPT Mobile and its subsidiaries, VNPT Mobile and local VNPT branches to be implemented more smoothly.

VNPT has stated that if the suggested plan is approved by the government, VNPT would kick off the restructuring process right in the third quarter of 2012. It is expected that by 2016-2020, VNPT would turn VNPT Mobile into a company operating under the mode of one-member limited company, in which the holding company holds 100 percent of capital and operates in accordance with the Enterprise Law.

VNPT has also proposed the government not to equitize MobiFone as previous planned in 2005, reasoning that the state ownership would facilitate the operation of the mobile network and help create sufficient necessary resources to ensure the success of the group’s renovation process.

However, the plan suggested by VNPT has not been welcomed by the public. Analysts have commented that the plan would bring benefits to VNPT rather than to the market.

Once the merger of MobiFone and VinaPhone is completed, there would be only two big mobile networks existing on the market, which hold 94.54 percent of the market share.

The two include VNPT Mobile with 57.82 percent of the market share, and Viettel 36.72 percent. If so, other smaller networks including Vietnamobile, S-Fone and Beeline with 5.46 percent of the market share would really meet big difficulties in the struggle for survival, especially when the market gets saturated in terms of the number of subscriptions.

Lawyer Tran Vu Hai has pointed out that if there are only two mobile networks on the market which hold 90 percent of the market share, it is likely that big networks would stifle smaller ones, thus affecting the interests of consumers.

Dau tu has quoted Michael Sascha Cluzel, GTel Mobile’s General Director, the owner of Beeline network, said that the merging of big telecom networks would create big challenges in policies the legal framework, and that MIC, as the watchdog agency, needs to apply necessary measures to ensure fair competition for small networks.

Especially, if Vietnam decides not to equitize MobiFone, this would discourage a lot of foreign investors, who have been waiting for years to jump into the Vietnamese telecom market.

Source: Buu dien

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