Deputy Prime Minister Truong Hoa Binh signed a decision to inspect the recent state-owned mobile network operator MobiFone's acquisition of Audio Visual Global JSC following complaints by MobiFone's employees.
Inspection starts into MobiFone's acquisition of AVG
The Government Office also said the prime minister had approved of the inspection. The Government Inspectorate was asked to work with relevant agencies to carry out the inspection and issue any punishments if any violation is detected.
The Ministry of Information and Communication approved MobiFone's plan to invest into pay TV market last December. In January, MobiFone announced that it was buying a stake in Audio Visual Global JSC (AVG), the owner of An Vien pay TV.
MobiFone initially refused to disclose the size of stake, the cost of the deal or whether they would buy the stake with money or via a stock-for-stock merger. After several news outlets reported that MobiFone was planning to acquire a 95% stake, deputy general director of MobiFone Nguyen Manh Hung confirmed the rumour. MobiFone will continue using the same technology and running AVG for the first 3-6 months.
In the meantime, some newspapers received a number of letters from employees of MobiFone who claimed that the decision to buy AVG's stake was hasty and suspicious which might badly affect MobiFone's business.
Based on the assets, some experts have appraised AVG’s value at VND1.6trn to VND2trn (USD90.9m), excluded depreciation and debts. This means it would not be regarded as unacceptable if MobiFone bought AVG for 20% higher than the real value. However, it is rumoured that MobiFone spent nearly VND9trn in the acquisition.
AVG has not done good business. At the end of 2014, it had 450,000 subscriptions, mostly in rural areas where the services were offered at cheap prices. Comparing to Vietnam Satellite Digital Television Company Limited and VTC which saw the number of subscriptions increase at healthy rates, AVG almost had no new subscribers in the last two years.
MobiFone said they didn't want to build everything from scratch but to buy an existing property to enter the pay TV market. A MobiFone representative claimed they had different methods to other service providers, and new technology to compete in the market. It aims to become one of Vietnam’s top three providers.
Chairman of the Government Office Mai Tien Dung refused to comment on the cause for the government’s investigation.
