Comvik ignores AVG scandal and still wants strategic piece in MobiFone

15:47 | 14/05/2018
Sweden-based Comvik Group has for the third time showed interest in becoming MobiFone’s strategic partner as the Vietnamese telecom company is in the process of equitisation. However, with the long-term difficulties of MobiFone’s value assessment as well as its controversial acquisition of AVG Group, it remains questionable whether Comvik could close the deal.
comvik ignores avg scandal and still wants strategic piece in mobifone
MobiFone's headquarters in Cau Giay district, Hanoi. Photo: thanhnien.vn

At the May 11 afternoon meeting with Deputy Prime Minister Vuong Dinh Hue at the Government Office, chairman of Comvik expressed interest in Vietnam Mobile Telecom Services One Member Ltd. (MobiFone)’s equitisation and a hope to co-operate with the firm.

Accordingly, with the strong technological foundations, including 90 per cent of Sweden’s non-cash transactions and Comvik’s research to develop a 6G network programme and non-cash transaction applications, Comvik believes the firm could successfully support the Vietnamese government to equitise MobiFone.

This is the third time Comvik offered to participate in the equitisation. At the meeting with the Ministry of Information and Communications (MoIC) in August 2014, a representative of Comvik Group expressed the desire to become MobiFone’s strategic partner through the equitisation.

The representative also added that Comvik was particularly interested in investing in MobiFone and affirmed that with the long-term co-operation with VNPT (MobiFone was under VNPT Group until late 2014), Comvik has much better odds of success than other investors.

Newswire ScandAsia stated that since the government’s policy to equitise MobiFone in 2006, Marc Beuls, managing director of Millicom International Cellular SA Group—the parent company of Comvik—talked about potentially buying into MobiFone on the stock market.

Not only Comvik, but many other foreign investors, including Singapore-based Singapore Telecommunications Ltd. (Singtel), Norway-based Telenor Group, and Australia-based Telstra Co., Ltd. expressed interests in buying MobiFone’s stocks. Even VNPT itself wants to own 20 per cent of the shares, according to vietnamnet.vn.

What are Comvik’s chances of success?

MobiFone has found itself in the midst of a scandal after using state-owned capital to buy 95 per cent of AVG’s shares. Accordingly, MobiFone forked out VND16.565 trillion ($729.7 million), while AVG’s real valuation was VND1.983 trillion ($87.3 million).

With long-term difficulties in MobiFone’s value assessment as well as its controversial acquisition of 95 per cent of Audio Visual Global JSC (AVG)’s shares, Comvik Group may once again be thwarted in becoming MobiFone’s strategic partner.

In 2008, Credit Suisse was chosen as an equitisation consultant for MobiFone and set the telecom network’s valuation at $2 billion in 2009. However, the equitisation process was delayed to 2011 because MobiFone was forced to separate from its parent company VNPT Group in accordance with Decree No.25/2011/ND-CP.

In June 2014, Ho Chi Minh City Securities Corporation (HSC) estimated MobiFone’s value at about $3.4 billion, which could increase to even $4 billion if its revenue and profit continued to increase after the initial publicly offering in 2016-2017.

According to the Vnexpress, AVG has been running accumulated losses since its initial establishment. However, MobiFone used AVG’s valuation result ($729.7 million) of AMAX Valuation & Investment Consultancy Co., Ltd. as a basis to buy its shares. The Government Inspectorate stated this figure was off by a great deal.

Currently, despite terminating the acquisition, MobiFone’s violations may hugely affect its equitisation in the future.

By Van Anh

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