Telecom sector expected to continue M&A trend
At the seminar concerning the Vietnamese telecom sector outlook in 2012, industry insiders said the government this year will also strengthen the privatization process to create a real competitive telecom market.
Last year saw the first ever acquisition in the telecom industry, with debt-stricken EVN Telecom, an affiliate of the country’s power monopoly Electricity Group of Vietnam, acquired by the military-run Viettel Telecom.
This has raised an alarm bell for other telecom companies regarding the challenges facing them in the domestic market, Saigon Tiep Thi newspaper reported.
Besides EVN Telecom, other telecom companies are also facing difficulties in attracting investment or finding customers, while some others are still unable to launch their services despite having the necessary licenses.
This has shown signs of “a problematic telecom market,” the seminar deputies said.
Speaking at the seminar, Doctor Mai Liem Truc, former deputy minister of the erstwhile Ministry of Post and Telecommunication, which is now the Ministry of Information and Communications, stated that the domestic telecom industry has made strong breakthroughs during the last 10 years.
“Vietnam is among the countries that have the lowest telecom fees, and the public can enjoy the services without obstacles,” Truc said.
However, he added, the Vietnamese telecom industry has begun to falter over the last two years, with many services losing their quality, and many new businesses falling into trouble.
On the brink of bankruptcy, many businesses that hold low market shares have issued low-cost packages, creating unhealthy competition in the industry, he said.
Truc added that most of the operational telecom companies are state-owned enterprises, which means the current telecom market is not actually competitive.
“90 percent of the telecom network and assets belong to the government,” he said, adding that only a small proportion of this has been privatized in the last ten years.
Truc said that during this hard time for the market, if the government still holds 100 percent stakes in the state-run telecom companies, there will be only one or two businesses able to survive.
“In the next ten years, the government and the Ministry of Information and Communications should restructure the industry; we only need four major businesses,” Truc advised.
This opinion was shared by Nguyen Thanh Hung, Deputy Minister of Information and Communications, who said the telecom market will continue to follow the merger and acquisition trend in the years to come.
“The telecommunication ministry will also consult the government to privatize the state-run telecom enterprises to create a more competitive market,” Hung added.
