The “telecom and securities hopes” dashed

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Hanoi Times English - 36 month(s) ago 5 readings

The Hanoitimes - The investment in the telecom sector has brought the biggest bitterness to EVN.

The Hanoitimes - The investment in the telecom sector has brought the biggest bitterness to EVN.

EVN Telecom, a subsidiary of EVN, is the owner of the sixth mobile network in Vietnam with the prefix number 096- and the 450 MHZ waveband – the low band with high interference. In 2005, EVN Telecom spent 3 trillion dong to develop CDMA-based network. At that time, sources said that the network operator would spend more than 600 million dollar, sourced from EVN, to make investment.

In the report reviewing the business performance in the five-year period of 2006-2010, EVN proudly said that the quality of EVN Telecom’s service had been improved, while the service fee was getting more reasonable with 4.6 million service users.

The Inter-Asia marine optical cable (IA) of EVN was recognized as o­ne of 10 top information technology and telecom events in Vietnam in 2009. EVN has also started investment in 3G network development.

However, in fact, the brand EVN Telecom remains unfamiliar to Vietnamese users. In 2010, the total revenue of EVN Telecom was 2 trillion dong o­nly, while the company incurred the los of 1 trillion dong. The company’s ratio of debts o­n stockholder equity reached 5.1, much higher than the safely ratio of 3. The accounts payable of EVN Telecom reportedly reached 7760 billion dong, while the stockholder equity was 1586 billion dong o­nly.

Securities investment has also caused a headache to EVN. In 2007, four subsidiaries of EVN contributed their capital to set up the Ha Thanh Securities Company HASC. EVN holds 5 percent of stakes (750,000 shares), the Khanh Hoa Electricity 5 percent, the Power Company No 3 holds 4.5 percent (675,000 shares) and the Da Nang Power Company 2.67 percent (400,000 shares).

The securities company reportedly has been o­n the verge of bankruptcy. In April 2011, HASC o­nce stunned the public with the information about the mysterious disappearance of the former chair of the company, who left the deficit of 100 billion dong o­n the account. HASC has been listed among the 10 worst securities companies o­n the stock market, which has been put by the State Securities Commission under the special control. Analysts comment that they can see high possibility of HASC leaving the market.

Other business fields don’t bring high profits

To date, the investments in commercial banks remain the best deals of EVN. In 2005, EVN became the strategic shareholder of An Binh Bank after purchasing 30 percent of the chartered capital of the bank. An Binh in May reported the loss of 189 billion dong.

However, o­n the bourse, the price of the bank’s shares has dropped dramatically to 7000 dong, which is even lower than the face value of 10,000 dong. Vietnam is carrying out a banking reform, under which it strives to cut down 10-15 percent of small banks. EVN, as requested by the Government, is trying to withdraw its investment capital from the bank. However, to date, the power group still has not found the partners who can take over the bank’s stakes

EVN is also a big shareholder, who holds 40 percent of stakes of EVN Finance, a finance company, established in 2009.

EVN has also injected money in EVN Land , a real estate firm, and has shares at an insurance company.

Like other state owned economic sectors, EVN has jumped into different business fields, cherishing the hope to become a multi-field economic group.

EVN is now ranking the third among state owned economic groups and general corporations in terms of making investment in non-core investment fields, staying above the other 18 economic groups and corporations.

VNN

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