"Boosting the competitiveness (of state-owned firms) in the telecoms sector will be the country's priority in the 2006-2010 period," the official with the Ministry of Planning & Investment said.

Vinaphone and MobiFone – both state-owned and managed by Vietnam Post & Telecom (VNPT) – are the country's two largest mobile operators. Vinaphone has 3.1 million subscribers and MobiFone has 3 million.

Vietnam’s laws allow foreigners to buy up to 49% in privatised firms.

"Vinaphone and MobiFone will sell shares in steps and they will prefer selling stakes to foreign strategic investors, who can offer high technology for their further expansion," the official said.

Currently, Vietnam has more than 7.5 million mobile phone users, and the country expects the figure to reach 10 million before 2010, the official noted. The country has issued six licenses to mobile phone operators, including Viettel, which is a military-run company; Sfone, a joint venture between state-owned Saigon Postel and South Korea's SK Telecom; VP Telecom, a unit of the state- owned Electricity of Vietnam; and Hanoi Telecom, a joint venture between a local firm and Hong Kong's Hutchison Whampoa. VP Telecom and Hanoi Telecom have not rolled-out mobile services yet.

Vinaphone and MobiFone do not publish their business results, while VNPT has said it targets revenues of VND33.2 trillion (US$ 2.0 billion) this year, up 10.3% from 2004. According to development plans for the telecommunication and information technology sectors issued by the government last week, the country targets revenues of about US$ 6.0 – 7.0 billion for these sectors by 2010, or an annual growth from 20% to 25% from this year.

Source: Dow Jones -  WDR/Intelecon Regulatory News