In a major deal collapse in Vietnam, MobiFone has called off the acquisition of Audio Visual Global (AVG), the operator of An Vien pay-TV service, in the wake of a long-drawn inspection by the government.
The deal involved MobiFone acquiring 95 per cent stake in AVG. At a meeting on March 12, both the parties agreed to cancel the transfer of 344.66 million shares and to refund each other what was received under the earlier agreement. The total value of the transaction is VND8.9 trillion ($356 million), local newspapers reported.
A representative from AVG said the key reason behind the deal collapse was MobiFone not operating AVG as planned. Furthermore, MobiFone did not complete the remaining 5 per cent of the transfer contract although AVG repeatedly urged for the same, he said.
The state-owned telecom operator, meanwhile, insisted that long-time government inspection delayed payment to AVG. Moreover, it reasoned that it needed more time to work out a development plan for AVG due to the latter’s weak busines performance.
In 2016, several months after the AVG acquisition, the local government decided to scrutinize the deal as the telecom major had not revealed deal details even as it began working on its listing. MobiFone’s upcoming IPO at that time was among the most anticipated listings in the country.
Valuation differences of AVG emerged after the local government decided to review the acquisition transaction.
The government has said that MobiFone had hired several agencies to conduct its corporate valuation over several months in 2015. Several companies, including Vietcombank Securities, AASC Auditing, Hanoi – Ho Chi Minh City Valuation Co Ltd and another finance ministry-licensed firm, were involved in the valuation process.
These agencies valued AVG at VND16.6 trillion ($744.4 million), much lower than the VND33.3 trillion (almost $1.5 billion) that it claimed to be worth before the evaluation.
MobiFone, which commenced 4G data services in July 2016, said that purchasing AVG was part of its efforts to increase its valuation. The tentative offering, long delayed for several years, has spurred bidding interest from a spate of major telecom players around the world, including Singtel, Telstra, Telenor, Comviq and Axiata.
AVG currently has eight channels and more than 700,000 subscribers. It develops and operates a nationwide digital terrestrial broadcasting network in combination with digital satellite transmissions and provides multi-channel DTT and DTH services.
The AVG deal was among the top five M&As in Vietnam in value terms at that time. Other big-ticket deals include Thai beer firm Singha’s $1.1 billion share purchase of Masan Group’s consumer units; Masan Group’s consolidation in Masan Consumer by investing nearly VND17.5 trillion to up stake in the subsidiary, in which global private equity firm KKR exited; and Siam City Cement acquiring 65 per cent of LafargeHolcim Vietnam for $580 million.