Global Insight Perspective | |
Significance | Vietnam's state-owned MobiFone is preparing for an initial public offering (IPO) by end-2008. |
Implications | The stake sale of the company will give foreign operators the opportunity to enter a strong growth market. |
Outlook | A number of leading international telecoms players will be bidding for a stake in the company. The government also plans to sell a stake in the other state-owned mobile operator, Vinaphone, after the completion of the MobiFone stake sale. |
Vietnam will follow the plans approved by the prime minister to sell a 30% stake in MobiFone later this year, Dow Jones reports, citing Deputy Minister Nguyen Nam Thang of the Ministry of Information and Communications. State-owned MobiFone plans to sell a 15% stake to foreign strategic shareholders and another 15% to domestic retail investors in the initial public offering (IPO). The company is currently in the midst of selecting a consultant for its share sale and will offer to sell shares to foreign investors after it receives a licence to operate 3G services, according to Thang. The government aims to reduce its MobiFone holding gradually to 51%.
The privatisation of the state-owned mobile companies is a key move by the Vietnamese government to restructure the country's telecoms market and further open up the sector to foreign investment. The government also plans to sell a stake in the other state-owned mobile operator, Vinaphone, after the completion of the MobiFone stake sale. Although the stake sale of MobiFone has been on the agenda for some time, the process so far had been slow. The Ministry of Information and Communications therefore recently urged the company to complete its stake sale this year.
Outlook and Implications
- Mobile Market Growth: The move to list the state-owned mobile firms comes at a time when the Vietnam mobile market is experiencing a growth surge. The entry of new players and bold initiatives by the likes of Viettel, the country's largest mobile operator, have boosted competition and stimulated mobile adoption. The country currently has 48 million mobile subscribers out of its population of 85 million, or a penetration rate of 56%, according to ministry statistics. The military-controlled Viettel leads the market with 19.4 million subscribers. It is followed by MobiFone with 13.4 million, Vinaphone with 12.1 million, and SK Telecom's local unit S-Fone with 3.1 million subscribers. Capital injection and strategic alliances with foreign operators will put MobiFone and Vinaphone in a better position to compete with rivals.
- Interests from Foreign Investors: With a booming economy and a large population, Vietnam is one of the few emerging markets that has yet to open up its telecoms sector to foreign investors. It is no surprise that a mixture of Asian and European telecoms companies are closely monitoring the progress of MobiFone's stake sale, as they seek growth engines outside their home markets. Vodafone, France Telecom, Comvik, SingTel, NTT DoCoMo and Telenor have shown interest in entering the Vietnamese market. Singapore Technologies Telemedia, a unit of the Singapore government's investment arm Temasek Holdings, is also likely to participate in the bidding after it agreed to sell its stake in Indonesia's PT Indosat to Qatar Telecom last week for US$1.8 billion, amid a legal dispute with the local regulators (see Indonesia: 9 June 2008: Qatar Telecom to Acquire Indosat Stake from Temasek Unit).