VNPT restructuring for sustainable telecommunications development

14:00 | 25/02/2014 Companies

(VEN) - The Ministry of Information and Communications is determined to restructure telecommunications businesses this year including splitting MobiFone from the Vietnam Posts and Telecommunications Group (VNPT) and establishing a mobile information corporation.

Monopoly risks

The Ministry of Information and Communications’ Telecommunications Department Head Pham Hong Hai said that the Vietnamese telecommunications sector had grown robustly for years becoming the world’s fastest growing telecommunications sector as a result of impressive growth of many businesses. However, telecommunications networks have problems in terms of quality and stability.

Three 100 percent state-owned giants – Viettel, VinaPhone and MobiFone - account for 95 percent of the Vietnamese telecommunications market, while other businesses share a modest five percent, making them unable to compete. “For this reason, the Vietnamese telecommunications market needs to be restructured to promote sustainable development,” said Pham Hong Hai.

Former Deputy Minister of Information and Communications Mai Liem Truc said that one owner should not have many subsidiaries, which compete with each other. He also said that the Vietnamese telecommunications market was not really competitive as it had been managed by state agencies via their administrative decisions.

CMC Group Joint Stock Company General Director Nguyen Trung Chinh said that a monopoly existed and that new brand names such as Gtel’s Beeline and Hutchison’s HTMobile had been defeated due to unfair competition and a state monopoly. Opportunities for small and non-state businesses remain insufficient.

Splitting MobiFone is a good option

Pham Hong Hai said that the Ministry of Information and Communications had submitted a telecommunications market restructuring scheme to Prime Minister Nguyen Tan Dung focusing on streamlining VNPT by splitting MobiFone and forming a new, independent business.

He also said that as MobiFone is strong and more independent than VinaPhone, splitting it from VNPT would facilitate the implementation of the government’s policy to equitize businesses (i.e. transform them into joint stock companies), while at the same time make VNPT grow in a more rapid and more dynamic manner in the near future. Following the scheme, a minimum of three strong businesses would be established providing sustainability for the competitive market.

VNPT General Director Tran Manh Hung said that his group submitted a VNPT restructuring scheme to Prime Minister Nguyen Tan Dung in May 2012. Following the scheme, VNPT would separate MobiFone so as not to concurrently manage two mobile networks and to make the group grow faster in the years to come.

MobiFone Chairman Le Ngoc Minh said that once MobiFone was separated, it would become an independent business and have opportunities to expand and persify its telecommunications and information technology services, rather than existing mobile services as its core business. “MobiFone is a well-established brand name with a strong and skilled workforce and is therefore able to compete in the Vietnamese telecommunications market,” said Le Ngoc Minh./.

By Quynh Nga