The plan to sell 49 percent of EVN Telecom’s stakes to the Corporation for Financing and Promoting Technologies FPT has received a nod of approval from the Prime Minister. Meanwhile, the head of the Electricity of Vietnam (EVN), the holding group of EVN Telecom has said it does not want to hold controlling stakes in the telecom company, because it needs to gather strength on developing power projects.
With the approval, EVN will still hold controlling stakes in EVN Telecom, even though it will sell stakes to FPT.
Prior to that, in November 2010, the Prime Minister agreed in principle to the plan under which EVN Telecom chooses FPT and FPT Telecom as strategic shareholders when EVN Telecom goes equitized. After becoming the strategic partner at EVN Telecom, FPT and FPT Telecom will have to hold more than 50 percent of the chartered capital of the company in the whole of its operation duration.
"EVN Telecom needs to speed up the equitization as the firm is facing some financial problems," said a senior official of the company some days ago. "We are seeking investors - strategic partners with leadership in technology and the ability to rescue EVN Telecom with GSM technology".
With the sale of stakes to FPT and FPT Telecom, EVN Telecom has pioneered the tendency of mergers and acquisitions in the mobile service market. Buu Dien Vietnam has quoted its sources as saying that EVN had a meeting with the representatives from a big mobile network in Vietnam to discuss the “ownership transfer” of EVN Telecom, but no agreement was reached at the meeting.
At a recent meeting with the Ministry of Information and Communications (MOIC), Dao Van Hung, Chair of EVN’s Board of Members, said that EVN does not want to hold the controlling stakes in the telecom company.
“The government has instructed EVN to gather strength on developing power production and business. Therefore, EVN thinks that it needs to report this to MOIC,” Hung said.
Addressing the issue, MOIC Minister Le Doan Hop said that EVN needs to clearly define its strategy in EVN Telecom’s equitization. If EVN thinks that it is strong enough, it can hold the controlling stakes when equitizing EVN Telecom. But if EVN thinks that it is not strong enough, it should not hold the controlling stakes.
Hop said that EVN can learn from Viettel which purchased the mobile network Teleco in Haiti. As Viettel wants to hold the control over the network’s operation, it tried to hold controlling stakes.
Pham Hong Hai, Director of the Telecom Department of MOIC said that in the first quarter of 2011, MOIC will issue regulations stipulating for which kinds of telecom businesses the State needs to hold controlling stakes.
“These will be the telecom companies which play a specially important role in the national information infrastructure. I do not think that EVN Telecom will be listed among the group of enterprises,” Hai said.
EVN Telecom will negotiate the price directly with FPT and FPT Telecom. To date there is no further information about the prices of the stakes or about share sales.
Some months ago, the then General Director of FPT Nguyen Thanh Nam told the press that the purchase of EVN Telecom is a “gamble” for FPT, because the telecom market is very stiff. However, many people believe that the deal of purchasing EVN Telecom’s stakes will be reconsidered under “Truong Dinh Anh’s administration”. Truong Dinh Anh, the newly appointed General Director of FPT has been well known as a cautious person who always thoroughly considers investment efficiency, and he will give up the projects which cannot bring profit.