Both VinaPhone and MobiFone are belonging to the Vietnam Post and Telecommunication Group (VNPT). However, under the new Competition Law, a legal entity must not hold more than 50 percent of the market share in order to ensure the healthy competition among service providers in the market.
This means that VNPT would have to “say goodbye” to one of the two networks, or merge the two subsidiaries into one legal entity which has the market share of less than 50 percent.
As for VNPT, the second solution is a “perfect choice,” because by doing so, it would be able to retain both MobiFone and VinaPhone, while both of them are the golden geese that lay golden eggs. Le Ngoc Minh, President of MobiFone, affirmed that MobiFone makes up 50 percent of the total revenue and profit to VNPT.
The tentative plan by VNPT has been facing the strong opposition from economists, who believe that the solution would not bring benefits to customers.
However, VNPT does not intend to give up the idea, despite the strong opposition.
MobiFone’s market share dropped sharply
In 2011, the ROE (return on equity) of MobiFone was 49.7 percent. It was also the mobile network operator which had the highest APRU (average revenue per user) index in the Vietnamese market. The mobile network has recently completed the installation of 7500 BTS (base transreceiver stations) all over the country.
Therefore, it is enigmatic to many people that the giant has lost a big market share proportion. There is an interesting piece of news that in the white book on the information technology development which has been published, VNPT has once again mentioned the possibility of merging VinaPhone and MobiFone.
With the market share proportion of MobiFone down to 17.9 percent, the total market share to be held by both MobiFone and VinaPhone would be 47.97 percent, lower than 50 percent. In this case, MobiFone and VinaPhone merger would be legal.
It is understandable why VNPT is determined to retain both MobiFone and VinaPhone.
Dang Quoc Tien, Deputy Head of the Enterprise Finance Agency, the merger would ensure the long term benefit for VNPT. Currently, MobiFone and VinaPhone are both the subsidiaries, but they have been following separated investment plans and using separated infrastructure systems, which is really a big waste.
Therefore, if merging VinaPhone and MobiFone, VNPT will not lose anything, while it would get benefit because the two can share the same investment system, which allows to save the investment costs and improve their competitiveness.
What will the market be like?
Pham Cam Tu, a senior executive of Gmobile, a telco, has admitted the possibility of the merger of VinaPhone and MobiFone. However, she said if VNPT could be contented would still depend on the state’s industry programming.
Meanwhile, Viettel has declined to make comments about this.
According to Tu, if MobiFone and VinaPhone merges to form up a new legal entity one, the market would have two “big guys” – Viettel and the new legal entity, which would hold 90 percent of the market share. Meanwhile, the other four enterprises would hold 10 percent of the market share. If so, this would not ensure a healthy competition in the market.
Source: Vietnamnet
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