Vietnam scrutinizes headline-grabbing acquisition by telecom giant MobiFone

By Vo Van Thanh   August 2, 2016 | 03:18 pm PT
The value of the acquisition remains a mystery.

The Vietnamese government has ordered an across-the-board inspection into the acquisition of a private operator by state-run MobiFone earlier this year.

Last January, MobiFone Telecommunications Corporation (MobiFone), now Vietnam's third largest telecom company, broke into the pay TV market with the acquisition of a 95 percent stake in Audio Visual Global JSC, better known as AVG.

In a directive released on Monday, Deputy Prime Minister Truong Hoa Binh directed the Government Inspectorate and relevant agencies to launch an investigation into the acquisition, saying any sign of violations would be subject to further criminal probes.

"The acquisition is a big investment to the company [MobiFone], therefore, it should be considered carefully," Mai Tien Dung, chairman of the Government Office said in a press conference on Tuesday, without providing the rationale for the inspection.

There is no exception in dealing with violations found during the inspection. Any organization or individual who unlawfully takes advantage of their position and authority while on duty for personal gain will be strictly punished according to law and this will be publicized, Dung added.

MobiFone was hoping the acquisition would help it to rival other giants Viettel and VNPT, both already present in the pay TV market.

Severing ties with state-run VNPT in 2014 and now operating under the Ministry of Information and Communications, MobiFone posted revenue of around VND36.9 trillion ($1.62 billion) in 2015, up 8.29 percent year-on-year.

The teleco has not revealed the value of the acquisition.

According to some television experts, the value of AVG is estimated at VND1.6 trillion ($72 million)-VND2 trillion ($90 million) based on its assets.

Some finance experts said it might be acceptable for MobiFone to buy the stake at a price that is 20 percent higher than the actual price. However, there are rumors in the market which say MobiFone had paid a "huge" price, much higher than the estimated figures.

The consultant for the deal was also not disclosed.

AVG, which entered the pay TV market at the end of 2011, was expecting the share sale to help it solve financial difficulties. At the end of 2014, it had a 6.4 percent market share.

AVG was established in 2008 and rolled out its television services in 2011. Its subscribers in 2014 were around 450,000, accounting for some 4.5 percent of Vietnam’s 9.9 million subscribers at that time. 

It was founded by Pham Nhat Vu, the younger brother of Vietnam’s first billionaire Pham Nhat Vuong.

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