Uncertainty about Swedish telecom operator’s future in Vietnam

A negative first quarter report from Millicom International Cellular and a secretive meeting in Hanoi between Kinnevik’s boss Vigo Carlund and the President of Vietnam, Tran Duc Luong, made investors jittery about the Stenbeck family controlled group’s operation in Vietnam and Millicom’s shares fell 11 percent.
     On 21 April Millicom announced a first quarter loss of SEK 79 million and attributed a SEK 133 million write-down of assets from the Vietnam operation because of the expiration of its business cooperation contract, BCC, in Vietnam 18 May 2005.
     “In Vietnam the negotiations on the continuation of the cooperation have not yet led to an agreement between the parties. The negotiations on the creation of a joint stock company, as agreed between the parties by signing the MOU last November, are continuing. The Government of Vietnam has agreed to equitize VMS, our partner under the current BCC. This is the first equizitation of a major telecommunications company in Vietnam which explains why at present, no information is available as to the process of this equizitation. For Millicom’s subsidiary Comvik International Vietnam to form a joint venture with VMS changes in legislation will be needed in the future. It is unlikely that this process will have started by the end of the BCC on May 18 and without agreement between the parties at that date, Millicom will no longer be able to consolidate the Vietnam numbers. Millicom will communicate the progress during the second quarter,” states Millicom’s President Marc Beuls.
     Simultaneously it was announced that the head of Swedish finance family Stenbeck’s holding company Kinnevik, Mr Vigo Carlund, met with Vietnam’s President Tran Duc Luong in Hanoi on 21 April. No details about the agenda of that meeting have been released.
     Millicom, which is controlled by the Stenbeck family, manages a range of cellular companies, one of them is Comvik International Vietnam which still represents the largest Swedish investment ever in Vietnam. As the bad news came out on Thursday, Millicom’s shares fell 11 percent on the Stockholm stock exchange.

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