MobiFone ordered to complete equitisation in 2018

It is planned that before August 31, 2017, MIC will assess and consider approving the restructuring plans of MobiFone, VTC, and Corporation of Vietnam Post Office (VNPost). Also, during this period, the telecom provider VNPT’s restructuring plan will be submitted to the prime minster.

Previously, on August 8, MIC established a Steering Committee for Enterprise Innovation and Development, with the aim of supporting enterprises under MIC’s management during the period of 2016-2020. Meanwhile, MIC published the equitisation routes for MobiFone, VNPT, and VTC.

MIC’s Department of Enterprise Management said MIC had revised and reported to the PM about the equitisation routes of enterprises under MIC management. Based on this report, the PM has approved an enterprise portfolio specifying deadlines for the equitisation plans of each enterprise in the period of 2017-2020. In particular, MobiFone and VTC will be equitised in 2018, VNPT in 2019, and VNPost will not have to be equitised.

In the first meeting of the MIC Steering Committee for Enterprise Innovation and Development, Minister Truong Minh Tuan, head of the Committee, required enterprises to stick to their restructuring schedules.

“Two noticeable things that enterprises carrying out restructuring plans should pay attention to is the procedures of restructuring and equitisation plans, in which procedures should be strict enough to avoid the loss of state assets,” Tuan said.

Earlier, in May 2017, at the meeting with BNP Paribas—a French bank and financial services company—MIC Deputy Minister Pham Hong Hai emphasised that the Vietnamese government would not consider revenue the top priority, instead, allowing enterprises to develop stronger. Besides, selling stakes for a few strategic shareholders or for many different investors will be specified in each case.

Timely VNPT equitisation

In early August 2017, PM Nguyen Xuan Phuc set the equitisation target for VNPT. In particular, the PM required VNPT to review and create an equitisation plan in the period of 2016 to 2020, with the aim of attracting talented human resources, renewing corporate governance, enhancing business, and keeping the position as a leading telecom provider in Vietnam.

Tran Manh Hung, VNPT’s chairman, said that the corporation is creating and deploying the equitisation plan for the period of 2016-2020 to ensure staying on schedule.

In 2014, VNPT was restructured in accordance with Decision No.888/QD-TTg. In particular, MobiFone was separated from VNPT, and VNPT’s restructuring plan was divided into three phases. VNPT has changed its business models, which are now clearly sorted into three categories, including infrastructure, services, and sales. In addition, more than 36,000 staff were retrained to become more specialised in their sectors, more different, and efficient.

Along with the changes in business models, VNPT has established three subsidiaries, namely Telecommunications Service Corporation (VNPT-VinaPhone), Communications Corporation (VNPT–Media), and Network Infrastructure Corporation (VNPT-Net).

At present, VNPT is finishing its third phase of restructuring. In this phase, VNPT’s executive apparatus of functional departments will be assigned to each specific subsidiary.

There are some concerns over VNPT’s divestment from some enterprises. Due to some obstacles, VNPT has not successfully divested these firms, so some shareholders worry that this may influence VNPT’s equitisation.

According to a source of VIR, VNPT is drawing up its equitisation plan and one or two other subsidiaries may be established. Currently, plenty of international investors are eyeing VNPT’s equitisation.

Reappraisal before equitisation

MobiFone has launched its equitisation plan in 2005. At the time, the government also required MobiFone to be equitised, and the Ministry of Finance even spent VND20 billion ($880,000) on this plan.

After being separated from VNPT in August 2014, MobiFone started to implement its equitisation plan. In September 2015, MobiFone selected Viet Capital Securities JSC to act as an appraisal counsellor and support MobiFone’s initial public offering (IPO).

In 2009, Credit Suisse Group, a leading financial services company from Switzerland, valued MobiFone at around $2 billion. Later in June 2014, Ho Chi Minh City Corporation (HSC) estimated that MobiFone’s value might be about $3.4 billion, and it might rise to more than $4 billion had revenue and profit kept increasing.

At the end of 2015, MobiFone completed the evaluation and created its equitisation plan to submit to MIC and report to the PM for approval.

Many international investors have been paying attention to MobiFone or showed interest in becoming strategic shareholders, including Singtel Group (Singapore), Telenor ASA (Norway), Comvik (Sweden), and Telstra (Australia). Even competitor VNPT wants to own 20 per cent.

However, currently, MobiFone’s value is questioned as its last valuation was in 2015, while the appraisal is valid for 18 months only. Thus, to be equitised, MobiFone must be reappraised which may take six months.

Besides, earlier in September 2016, MobiFone’s acquisition of a 95 per cent stake in Audio Visual Global JSC (AVG) was inspected because neither MobiFone nor AVG released information about this deal and there have been some suspicions of violations.

However, up till now, there has been no conclusion on the inspection yet and people have raised concerns that the inspection may influence MobiFone’s equitisation in the coming period.