Last week, the Ministry of Information and Communications (MIC) sent a document urging Vietnam Post and Telecommunications Group (VNPT) to ramp up efforts to complete its business shake-up plan before June 30, 2013 for submission to the MIC.

The MIC guided the telco to retain and bring forth the brand value of its members VinaPhone and VMS-MobiFone, which have built a solid reputation in the telecom market both at home and abroad. This means the rumoured merger between VMS and VinaPhone would be unlikely.

According to MIC Deputy Minister Le Nam Thang, VNPT needed to map out VMS-MobiFone’s equitisation plan and divest from this company following a suitable roadmap getting the prime minister approval, in the meantime compliant to current regulations on ownership in telecom field regulated in the Telecommunications Law and the governmental Decree 25/2011/ND-CP guiding the implementation of the law.

Under the Decree 25 enacted in April 2011, a business entity or individual which owns over 20 per cent stake in a telco, could not possess over 20 per cent stake at another telco operating in the same service market. Therefore, VNPT could not own over 20 per cent stake of VMS-MobiFone, but VNPT subsidiaries are eligible to buy stake in equitised VMS-MobiFone if they are financially independent units.

VMS-MobiFone chairman Le Ngoc Minh reportedly proposed not dissolving VMS-MobiFone, but allowing it to operate an independent accounting system before equitisation as instructed by the Vietnamese government. VinaPhone will also work on reshuffle plan striving to become a financially independent unit to boost business efficiency, according to a VNPT source.

Earlier, in mid-2011, VNPT developed a group restructuring plan that envisioned three scenarios: merging VinaPhone and MobiFone, equitising one of these two telcos and equitising the whole VNPT group.

In April 2012, VNPT turned to the Vietnamese government with the proposal of merging VinaPhone and VMS-MobiFone into a single unit called VNPT-Mobile.

The proposal faced opposition from economists since it impinges on the Competition Law’s regulations and would disrupt telecom market development planning. Under the Clause 18 of this, economic concentration is forbidden in case the combined market share of businesses partaking in economic concentration surpasses 50 per cent of relevant market share.

Source: VIR.