The document discusses VNPT's plan to merge its two subsidiaries, MobiFone and VinaPhone. MobiFone has lost a third of its market share over the last year, bringing it below 50% when combined with VinaPhone. This merger would allow VNPT to retain both companies while meeting the legal market share limit. However, economists oppose the plan, arguing it will not benefit customers. If approved, the merger would create a large new entity controlling 90% of the market along with Viettel, reducing competition.

1. Market share change gives more reason to merge VinaPhone and MobiFone
22 October, 2012
MobiFone, one of the three biggest mobile networks in Vietnam, has lost 1/3 of its market share over
the last year, from 29.11 percent to 17.9 percent. This gives VNPT one more reason to persuade the
government to approve its plan to merge VinaPhone and MobiFone.
Exhibition from MIC releases the 2012 ICT White Book
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.

2. 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: NCDT)