MobiFone announces value of AVG investment

                                                               Photo: Duc Anh

Questions posed over investment, whose value was unknown until recent release of financial report.

MobiFone’s latest financial report reveals that the official value of its investment in the Audio Visual Global JSC (AVG) was VND8.9 trillion ($400 million) and was the only investment it made in the first half of this year. 

As at June 30, long-term financial investments, including investments in subsidiaries, associated companies, and other long-term financial investments, soared from VND642 billion ($28.9 million) at the beginning of the year to VND9.45 trillion ($425.2 million).

The AVG investment is equal to 55 per cent of the group’s equity capital of $729 million and nearly 40 per cent of total assets of $1.04 billion as at June 30. In addition to AVG, MobiFone also has investments in subsidiaries such as MobiFone Service, MobiFone Plus, and MobiFone Global.

MobiFone made the headlines in August when Deputy Prime Minister Truong Hoa Binh officially decided to conduct a comprehensive inspection into its purchase of 95 per cent of AVG.

He assigned the Government Inspectorate to work with relevant agencies to conduct the inspection, with sanctions available under law to be applied if any legal violations were uncovered.

No reason for the inspection was given but three questions were posed relating to the deal: its value, the transaction method (cash payment or share swap), and why MobiFone chose AVG, given its subscriber numbers are the lowest among the three satellite TV providers in Vietnam - VTC, VSTV and AVG.

Although the timeframe for the inspection has now lapsed the official results are still to be released.

Vietnam’s second-largest mobile network operator officially announced the purchase on January 1. Deputy CEO Nguyen Manh Hung said it would complete the deal with AVG, the owner of the An Vien Pay TV network, within three to six months and added that the two sides would cooperate for a year on the basis of maximizing resources to create a new product for the TV market and mobile telecommunications.

AVG owns a network with good transmission that MobiFone could take advantage of to deploy its 4G network in the future, while MobiFone, with its experienced customer care services, could combine TV and mobile telecommunications and earn substantial revenues in the future, Mr. Hung said.

In the first six months of 2016, MobiFone’s revenue reached VND16.2 trillion ($736.3 million), up 16.6 per cent year-on-year, while after-tax profit was VND2.51 trillion ($112.1 million), down 21 per cent.

It plans to earn VND33.1 trillion ($1.48 billion) in revenue and VND4.16 trillion ($186.5 million) in after-tax profit for the year as a whole and to contribute VND4.6 trillion ($206.2 million) to the State budget.

Revenue last year totaled VND31.4 trillion ($1.4 billion), or 105.4 per cent of its annual target, while after-tax profit was VND5.5 trillion ($246.6 million), or 101.5 per cent of the target. It also contributed VND7.3 trillion ($327.3 million) to the State budget.

Total capital stood at VND23.2 trillion ($1 billion) in the first six months, with debts at VND7 trillion ($313.9 million), including short-term debts of VND6.5 trillion ($291.5 million). Its long-term finance was VND9.4 trillion ($421.5 million) as at June 30, against VND641.9 million ($287.8 million) in 2015. Development investment for this year is estimated at VND8.5 trillion ($381.1 million), nearly four-fold higher than the VND2.4 trillion ($107.6 million) last year.

Singaporean telecommunications giant Singtel recently expressed an intention of securing a stake in MobiFone during its equitization process.

Mr. Oliver Foo, Vice President of Business Development and the Center of Excellence Program Office at Singtel, spoke of its intentions at a meeting with Deputy Minister of Information and Communication Pham Hong Hai on August 19, according to the Ministry of Information and Communications, and said it hopes to become MobiFone’s strategic partner.

by Quynh Nguyen / VET