Vietnam's telecom ministry has rejected a proposal by state-owned operator VNPT to merge its two mobile units, Vinaphone and MobiFone, citing competition concerns.
The Ministry of Information and Communications has ruled that VNPT's restructuring cannot result in the loss of one of Vietnam's three largest telecom brands, Saigon GP Daily reported.
Vinaphone, MobiFone and private operator Viettel are Vietnam's three largest telecom brands.
VNPT has been instructed to draw up a new restructure plan focused on its core business, and to submit this revised proposal to the telecom ministry.
VNPT announced the merger plan early last year, as part of a restructuring and to comply with new regulations stipulating that an investor with more than a 20% stake in one operator cannot own more than 20% of another. VNPT currently owns 100% of both Vinaphone and MobiFone.
At the time, Vietnamese media estimated that a combined Vinaphone-MobiFone would have more than 60% of the domestic market.
The proposal thus drew concerns that a merged company would have too great a market dominance for competition to be sustained.
But at the same time, the telecom ministry has long been concerned that there may be too much competition in the mobile market.