Viettel set to take 70% stake in Teleco

8 Jan 2010

Vietnamese military-owned fixed, mobile and broadband operator Viettel Corporation has placed the sole qualifying bid for a majority stake in Haitian state-run fixed line provider Telecommunications d’Haiti (Teleco). Viettel has offered USD59 million for 70% of equity in the struggling telco, although a potential stumbling block to completing the deal is that the Central Bank of Haiti (Banque de la Republique d’Haiti or BRH) only offered 60% of Teleco for sale as part of a Public-Private-Partnership (PPP). Haiti’s Council of Modernisation of Public Enterprises (CMEP) deemed the Vietnamese technical bid to be the most suitable, whilst rejecting two shortlisted bids from Haitian GSM network operators Digicel Haiti, backed by Jamaica-based Digicel Group, and Comcel (Voila), owned by US-based Trilogy International Partners, which also operates in neighbouring Dominican Republic under the Viva brand. Although full reasons for the decision were not announced, a major factor is sure to have been Viettel’s experience in operating fixed line and broadband networks in addition to its GSM services. Viettel’s investment proposals for Haiti include installing a 2,000km fibre-optic network to extend broadband internet access to provincial towns. Director of CMEP, Yves Bastien, said that the ownership transaction should be completed in April 2010, creating a new company including 2G/3G mobile assets, which is expected to become profitable within three years. Viettel has already expanded its operations to Cambodia and Laos, and it was recently revealed that it may place a bid for Bangladeshi cellco Teletalk.

A special bid evaluation committee of CMEP announced Viettel as the sole qualified bidder on 30 December 2009 following a process which began in June. 32 companies based in around twenty countries expressed an initial interest, with a shortlist of three emerging from six potential bidders, according to Haitian newspaper Le Nouvelliste. However, the committee pointed out that for the World Bank-assisted PPP project to be successful, the BRH, CMEP and Viettel must now negotiate a mutually acceptable deal, especially regarding the discrepancy between Viettel’s 70% offer and the 60% earmarked for privatisation. Viettel would also inherit Teleco’s outstanding debts to the BRH, estimated at over USD30 million; currently the national PTO is only remaining operational via a monthly injection of around USD1.5 million from the national bank. Teleco recently shed approximately two-thirds of its workforce to increase efficiency in preparation for privatisation; local reports suggest that some former employees have experienced problems in receiving redundancy payments.