VietNamNet Bridge – The value of the MobiFone’s equitization deal would not be measured by the sum of money the buyers pay, but by its influences to the Vietnamese telecom market in the future.

It is easy to understand why the information about the equitization of VMS, the company that runs MobiFone mobile network, has caught such a special attention from the public.

MobiFone, together with VinaPhone and Viettel, are the strongest telecom brands in the Vietnamese market. Both MobiFone and VinaPhone are the members of the VNPT (Vietnam Post and Telecommunication Group) family, but MobiFone is believed to be a stronger brand thanks to its higher profits.

Being a state owned company, MobiFone has great advantages to do business and develop strongly. It is not by chance that all the three leading telecom groups in the market are the 100 percent state owned businesses which hold 95 percent of the market share.

The other telcos, domestic, 100 percent foreign owned or joint ventures, only have the remaining five percent of the market share. Some of them have left the market after realizing that there is no room for them here.

Hanoi Telecom, for example, reportedly has 10 million subscribers only. SPT nearly does not carry out any business activities. Meanwhile, Gtel has had four million subscribers after two years of buying 49 percent of stakes from VimpelCom, the Russian partner in the joint venture, when it left Vietnam.

Investors have every reason to believe that once equitized and operational as a joint stock company, MobiFone would be able to take full advantage of the assets and competitive edges to maintain its high growth.

Tran Manh Hung, CEO of VNPT, the holding company of MobiFone, also said that MobiFone, not VinaPhone, has been chosen to go equitized because this is a strong brand and more independent than VinaPhone. This allows to make sure that once becoming an independent business, not a subsidiary of VNPT, MobiFone would be able to continue developing with healthy finance situation.

The finance reports showed that MobiFone makes up 30 percent of VNPT’s total revenue and 80 percent of profits.

The MobiFone’s equitization would help it find the strategic investors who possess advanced technologies. This would put a hard pressure on the other two big telcos, forcing them to upgrade themselves to provide more competitive services.

It is obvious that the equitization of MobiFone would bring big benefits. The topic for discussion now is how much MobiFone is worth.

Though MobiFone is a big guy, it is still difficult to predict its business performance in the future. Meanwhile, the future of MobiFone will determine its value when going equitized.

One of the disadvantages for MobiFone is that it would take on some weak businesses and take the responsibility for the debt worth VND1.5 trillion. This is a reason that makes investors worried.

However, Le Ngoc Minh, President of MobiFone, affirmed that MobiFone would have bigger opportunities when it becomes an independent legal entity. “With what we have, we will be competitive in the market,” he said.

Credit Suisse in 2009 believed that MobiFone was worth $2 billion. Meanwhile, some analysts said MobiFone could be valued at $3 billion if considering the network in normal conditions.

MobiFone has revealed that it has found six strategic investors. One of them is France Telecom, which has affirmed it will buy MobiFone’s stakes.

DNSG