VTVCab cancels IPO after few investors show interest

The Hanoi Stock Exchange (HNX) said on April 12 that according to regulations, VTVCab is eligible to cancel an IPO as scheduled.

At the end of March, the State-owned television company announced it would put more than 42.2 million shares or 47.84% of the firm’s capital up for sale in an IPO at the starting price of VND140,900 (US$6.26) per share.

If the IPO of VTVCab were successful, the Government could earn nearly VND6 trillion (US$264.2 million) from the sale and the value of the company would reach VND12.4 trillion.

Under its equitisation plan, which was approved by the Prime Minister in January 2016, VTV Cab will have charter capital of VND884 billion (US$39.3 million), with the Government reducing its ownership to 51%, or more than 45 million shares.

The total value of the company as of December 31, 2015, was more than VND7.9 trillion (US$351 million), with the Government holding a stake of more than 80%.

More than 1 million shares (1.16% of the capital) will be sold to the pay TV provider’s current employees at cheap prices.

According to local media, the IPO of VTVCab has proven unattractive to investors as the starting price level for the share auction was considered higher than the firm’s actual performance and business conditions merited.

During the 2014-16 period, VTVCab posted steady growth in its total revenue, but its post-tax profit showed some decline.

In addition, VTVCab has not become a dominant player in the local television market as its revenue and profit are being outpaced by the Saigon Cable Television (SCTV).

In addition, VTVCab has recently sparked a controversy in the pay TV market after it removed a number of “hot” channels from its package and replaced them with others considered less popular to Vietnamese viewers.

The incident is expected to reduce the number of VTVCab customers as a number of them have already switched to other pay-TV providers.