Value assessment

Deputy Minister of Information and Communications Nguyen Thanh Hung said the government’s equitisation plan for mobile phone networks is aimed at bolstering their competitiveness and capital to meet growing development requirements.

The ministry was determined to carry out an IPO for the MobiFone network in early 2007. However, the year is nearly over and investors are still waiting. According to internal information from MobiFone, this company’s IPO must wait until 2008.

Other big SOEs like the Bank for Foreign Trade of Vietnam (Vietcombank) and the Mekong Housing Development Bank also failed to keep their IPO promises. According to plans, they should have been listed in 2005.

The Financial Manager of Norway’s Telenor said that in 2000 the company faced several challenges with equitisation and asserted that Vietnamese telecom companies should more quickly list their shares on the bourse because investors will lose patience.

During the waiting period, Telenor directors and executives worried that they would lose control. Many also said that Telenor’s globally recognised brand name made it unnecessary to equitise and make its shares publicly available.

The Deputy Minister of Information and Communication confirmed the difficulty in valuing mobile information companies.

“We need to perform this task quickly but carefully,” Hung said.

“Like telecoms, nobody could imagine that this sector would develop as rapidly as it has. Equitisation is complicated and nobody can anticipate the time it may take. The most difficult issue is value appraisal. Investors want faster equitisation but effectively doing so requires time and preparation,” he said.

Capital await blue-chips

Foreign investors have bought into equitised companies at ceiling levels, now their ownership cannot further increase and there are few to no new blue-chips to invest in. This is why equitisation of big SOEs is currently so attractive to foreign investors.

A member of the European Chamber of Commerce (Eurocham) says Vietnam Post and Telecommunications Group (VNPT), MobiFone’s parent enterprise, is calling for foreign investments in MobiFone and other telecom businesses. Many big international telecom groups are eagerly awaiting the equitisation of Vietnamese phone companies. Foreign investors expect the Vietnamese government to soon announce a clear participation plan for foreign investors interested in the telecom industry.

The involvement of foreign investors in the Vietnamese market depends on two factors: Vietnam keeping its WTO commitments and the cooperation and readiness of Vietnamese enterprises.

Source: KT