Decree proposes up to 30% foreign investment in telecoms firms

30 Jun 2010

A draft decree allowing foreign investors to hold up to 30% of the chartered capital of local telecoms companies will be submitted to the Vietnamese government in August by the Ministry of Information and Communications (MIC), local news source VietNamNet Bridge reports. At present, foreign companies are only allowed to enter the telecoms market via business cooperation contracts (BCCs), which sanction overseas operators to invest in a state-run enterprise and receive a share of its profits for between five and 15 years, but which leaves control with the state. However, as a precursor to Vietnam’s accession to the World Trade Organisation (WTO) in January 2007, a commitment that the sector would be opened up to overseas investment was given. Under the agreement, Vietnam has until 2012 to fully open up its telecoms market. Under the draft decree, foreign-invested projects with telecoms network infrastructure valued at over VND2 trillion (USD103 million) will have to be approved by the prime minister, while those with investment capital of between VND1 trillion and VND2 trillion will require approval by the MIC.

In a separate but related story, Vietnam Mobile Telecom Services (VMS), the division of state-owned telco Vietnam Post and Telecommunication Corporation (VNPT) which runs mobile operator MobiFone, will be restructured as a one-member limited liability company under a recent decision approved by Deputy Prime Minister Nguyen Sinh Hung. Under the Business Law which will come into effect on 1 July, state enterprises that have not yet issued shares must become ‘one-member limited liability companies.’ The state declared its intention to equitise MobiFone in 2005 and in January 2009 Credit Suisse valued the company at around USD2 billion, though further moves to launch an initial public offering (IPO) have since been delayed.