MobiFone, one of Viet Nam’s three largest mobile network operators, has reported a year-on-year decline of 42 per cent in post-tax profit in the second quarter of this year, falling to VND947 billion (US$41 million).

The company earned VND8.42 trillion in revenue in the second quarter, down 17 per cent compared to last year.

In the first six months of this year, MobiFone’s revenue also decreased by 8 per cent to VND17.2 trillion. The high cost of goods and expenses led to a post-tax profit of only VND1.95 trillion, down 26 per cent year-on-year.

As of June 30, cash and under-three-month deposits of MobiFone’s soared to nearly VND10.6 trillion compared to VND1.8 trillion at the beginning of the year, most of which was from shareholders of multimedia company Audio Visual Global (AVG).

At that point in time, MobiFone still owned 95 per cent of AVG, equivalent to VND8.9 trillion. But in March, the two sides decided to cancel the share transfer agreement.

According to Pham Nhat Vu, an AVG representative, there were a number of reasons for the contract to be cancelled. Since its acquisition, MobiFone had failed to develop the AVG brand as planned and missed opportunities to promote the firm’s potential.

Vu said that since the contract was signed, MobiFone had paid 95 per cent of the contract value, and MobiFone had failed to fulfil its obligations to pay the remaining 5 per cent despite repeated requests by AVG.

In early 2016, MobiFone formally announced the acquisition of 95 per cent of AVG’s shares to expand its television network, one of the company’s four main business areas. The details of the deal, however, were not disclosed.

At the beginning of August 2016, the Government asked the Government Inspectorate (GI) to investigate the acquisition. The GI found serious violations in the acquisition.

In an announcement issued on March 14, 2018, the GI said the case was extremely serious, as MobiFone, the Ministry of Information and Communications (MIC) and related agencies had committed multiple wrongdoings during the acquisition process.

The GI’s inspection found that MobiFone had broken a number of regulations during the acquisition, especially in the assessment of AVG’s financial situation, allegedly leading to State budget losses of VND7 trillion, and affecting MobiFone’s finance in the following years, resulting in difficulties in the equitisation of the company.

Regarding investments in other units, MobiFone had sold 33.4 million shares in SeaBank worth VND333 billion, but has failed to offload 5.55 million shares in Tien Phong Bank worth VND48.6 billion.

MobiFone’s other payables increased sharply to VND8.5 trillion. In terms of equity, the company has a charter capital of VND15 trillion and a development investment fund worth VND3.58 trillion.

General director replaced

Cao Duy Hai has been dismissed from his position as General Director of MobiFone this week. Former Deputy General Director of MobiFone Nguyen Dang Nguyen took over the role of General Director MobiFone on Wednesday, replacing Hai.

The MIC announced the decision to dismiss Hai due to violations related to the AVG deal.

Hai was born in 1961, graduated from Military Technical Academy and studied in Germany.

He then worked as director of MobiFone Centre 1 and deputy general director of MobiFone before being appointed as director of the Viet Nam Post and Telecommunications Group (VinaPhone) in July 2014, replacing Lam Hoang Vinh.

Less than a year later, the MIC appointed Hai as general director of MobiFone, replacing Le Nam Tra. He then also held the position of Chairman of MobiFone.

On August 21, 2017, Hai handed over the chairmanship of MobiFone to Nguyen Manh Thang and continued to keep the position as MobiFone’s general director.

Nguyen has served as Deputy General Director at MobiFone for many years, in charge of the technology section. — VNS