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Mobifone Chairman removed

Released at: 15:49, 10/06/2017

Mobifone Chairman removed

Photo: Mobifone

Information and communications ministry removes Mr. Le Nam Tra from his position as telco Chairman.

by Quang Huy

The Ministry of Information and Communications has removed Mr. Le Nam Tra from his position as Chairman of the MobiFone Telecommunications Corporation (MobiFone), the second-largest mobile network carrier by subscribers in the country.

Mr. Tra will assume an undisclosed position at the ministry while Deputy Minister of Information and Communications Pham Hong Hai will take charge of MobiFone, the ministry said in an announcement earlier this week.

Mr. Le Nam Tra. Photo: Archives

Mr. Tra, 56, was appointed as CEO of MobiFone in August 2014 after the network was split from the State-run Vietnam Posts and Telecommunications Group (VNPT) and upgraded to a corporation. He was appointed Chairman in April 2015.

Under Mr. Tra’s leadership, the telco saw its revenue fall by 20 per cent from VND41.4 trillion ($1.82 billion) to VND33 trillion ($1.45 billion) during the 2012-2015 period, while pre-tax profit rose from VND6.7 trillion ($295.3 million) to VND7.1 trillion ($313 million), amid stiffer competition.

The group’s revenue rose nearly 16 per cent in 2016 against 2015, to VND38.2 trillion ($1.68 billion), but pre-tax profit fell 25 per cent, to VND5.35 trillion ($235.8 million).

Other than its business performance, perhaps the most the public may remember about Mr. Tra’s time at post is one questionable deal.

In January 2016, MobiFone broke into the Pay TV market with the acquisition of a 95 per cent stake in the Audio Visual Global JSC (AVG). In purchasing the subscription TV unit, in addition to deploying 4G data services, MobiFone said its efforts were aimed at increasing its valuation and making its upcoming initial public offering more attractive.

According to some TV experts, AVG’s value was estimated at VND1.6 trillion ($72 million) to VND2 trillion ($90 million), based on assets.

Some experts said it might be acceptable for MobiFone to buy the stake at a price that is 20 per cent higher than the actual price. However, its 2016 financial report revealed that the investment cost VND8.9 trillion ($400 million).

Mr. Nguyen Hoang Hai, Deputy Chairman of the Vietnam Association of Financial Investors (VAFI), told VET that the fact the deal was kept in the dark and made confidential triggered doubts within the investor community. “They [investors] worry about a lack of transparency during the merger and acquisition (M&A) process and worry this deal might just be another case of fraud,” he said.

AVG, which entered the Pay TV market at the end of 2011, was expecting the share sale to help it solve financial its difficulties. At the end of 2014 it had a market share of just 6.4 per cent.

AVG was established in 2008 and rolled out its TV services in 2011. Subscriber numbers in 2014 were around 450,000, accounting for some 4.5 per cent of Vietnam’s 9.9 million subscribers at that time. It was founded by Mr. Pham Nhat Vu, the younger brother of Vietnam’s first billionaire, Mr. Pham Nhat Vuong.

It posted VND54 billion ($2.38 million) in after-tax profit last year, for a return on assets ratio of 1.49 per cent.

The Government Inspectorate launched a comprehensive inspection in early September 2016 into the acquisition, but its results are still under wraps due to certain problems and the need to compare the results with other inspection units, Deputy Chief Inspector Mr. Ngo Van Khanh told the Government Inspectorate’s regular press conference in late April.

MobiFone hasn’t sold shares since announcing in 2007 that it planned to do so. The tentative offering, long delayed for several years, has spurred bidding interest from a spate of major telcos around the world, including Singtel, Telstra, Telenor, Comviq and Axiata. It is poised to undergo equitization this year.

MobiFone targets total revenue of VND44.2 trillion ($1.9 billion) this year and pre-tax and after-tax profit of VND5.6 trillion ($246 million) and VND4.5 trillion ($196.8 million), respectively.

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