The merger of two large mobile service providers Vinaphone and Mobifone became a hot topic at a conference held on September 12 in Hanoi.
The fate of Mobifone and Vinaphone will be decided by 2013
Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM) stated that the merger is adverse to competition and may even violate regulations, adding that the merger goes against current restructuring policy.
A representative of the Competition Administration Department, under the Ministry of Industry and Trade, said they are unsure of the exact market share each provider holds. Market share, under the competition Law, is calculated based on a company's income, not solely on the number of subscribers, and this information has not yet been fully compiled. However, the law prohibits a merger if the result is a total market share that exceeds 50%.
The head of the Ministry of Information and Communication's Telecom Department Phan Hong Hai said they received the proposal from VNPT and it is under review.
The Government has approved the list of major State-owned enterprises that will be kept. The other enterprises are encouraged to equitise and the government will withdraw its capital.
"I think we need at least three equal competitors in the market. We will make decision on the issue by the end of the year." Hai said.
Tran Manh Hung, director of a law firm, said that it is dangerous to allow the market to be run by just a few major players, as it would effectively eliminate competition from smaller firms. "Vietnam now has three major mobile providers: Viettel, VinaPhone - MobiFone (VNPT) and Vietnam Mobile. However, the gap between these providers will rapidly widen if the Government doesn't support an equal playing field for smaller providers such as Vietnam Mobile." he said.
Thanh, deputy head of CIEM, said the way the market is currently structured will cause difficult for its development, citing the withdrawal of investors such as Beeline from the Vietnamese telecom industry.
"The three biggest mobile providers are State-owned enterprises. Is there really competition if all of these companies belong to the Government? Competition is the cornerstone of a market-oriented economy," Thanh said.
Thanh went on to say that once a company established its network, the possibility of competitors joining is next to nothing because the number of players in the industry is so small. Equitisation is needed to create fair competition and improve service, he said.
Though the Consumer Protection Law was approved in 2010, enforcement remains weak.
