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Government to inspect MobiFone purchase of AVG shares

Released at: 17:20, 02/08/2016

Government to inspect MobiFone purchase of AVG shares

Photos: Duc Anh

Government Inspectorate appointed to conduct inspection for as yet unspecified reasons.

by Quynh Nguyen

Deputy Prime Minister Truong Hoa Binh has officially decided to conduct a comprehensive inspection into the deal in which MobiFone purchased 95 per cent of the Audio Visual Global JSC (AVG).

He has assigned the Government Inspectorate to work with relevant agencies to conduct the inspection, with sanctions available under law to be applied if any legal violations are uncovered.

No reason for the inspection has been given at this stage but three questions have been posed relating to the deal: its value, the transaction method (cash payment or share swap), and why Mobifone chose AVG, given its subscriber numbers are the lowest among the three satellite TV providers in Vietnam - VTC, VSTV and AVG. 

Vietnam’s second largest mobile network operator officially announced the purchase of 95 per cent of AVG on January 1.

Deputy CEO Nguyen Manh Hung said the carrier would complete the deal with AVG, the owner of An Vien Pay TV network, within three to six months and added that the two sides would cooperate within a year, on the basis of maximizing resources to create a new product for the TV market and mobile telecommunications. He did not reveal the value of the deal.

AVG owns a network with good transmission that MobiFone could take advantage of to deploy its 4G network in the future, while MobiFone, with its experienced customer care services, could combine TV and mobile telecommunications and earn substantial revenues in the future, Mr. Hung said.

He added that MobiFone would differ from other competitors by taking advantage of the power of mobile telecommunications and TV with a high interaction of TV viewers and other MobiFone services.

AVG currently has eight channels and more than 700,000 subscribers. It develops and operates a nationwide digital terrestrial broadcasting network in combination with digital satellite transmissions and provides multi-channel DTT and DTH services.

In 2014, Vietnam Posts and Telecommunications (VNPT) officially transferred ownership of MobiFone to the Ministry of Information and Communication (MIC). MIC has said it would be equitized before the expected time of July 2016 but it is still to be completed.

MobiFone is now a one member limited liability company, with the State holding 100 per cent of its charter capital of over $703 million.

Revenue in 2015 reached VND36.9 trillion ($1.66 billion), for year-on-year growth of 8.29 per cent, while profits rose 1.1 per cent, to VND7.4 trillion ($333 million).

Vietnam’s largest mobile network operator, Viettel, recorded revenue of VND222.7 trillion ($10.1 billion) last year, up 13 per cent against 2014, with profit at VND45.8 trillion ($2.09 billion). As at the end of 2015 it had 72.6 million subscribers.

Vinaphone, the third largest, earned VND89.1 trillion ($4.06 billion) in revenue and profit of VND3.2 trillion ($146 million), up 20 per cent against 2014. Subscriber numbers totaled 29.7 million.

According to MIC, Vietnamobile, one of the two small telecom operators in the country, recorded revenue of VND9.9 trillion ($456.6 million) and had 11 million subscribers in 2015. Gmobile, the other small telecom operator, is to cease operations.

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