A new regulation aiming to make the local tele-communication market more competitive will require state group VNPT to divest from one of Vietnam’s leading mobile phone operators, Vinaphone or MobiFone.

Easier said than done, market analysts say.

The regulation, effective June 1, stipulates that an investor holding more than a 20 percent stake in one telecom firm cannot own more than a 20 percent stake in another.

VNPT, as Vietnam Posts and Telecommunications Group is known, is now the sole owner of both Vinaphone and MobiFone.

Pham Hong Hai, director of the Telecommunications Department under the Ministry of Information and Communications, said the new regulation was created to ensure healthy competition in the market.

The fact that both Vinaphone and MobiFone are owned by VNPT means there is no real competition between them, Hai said.

Market analysts said the regulation is giving the group heart burn since both Vinaphone and MobiFone are too lucrative to be given up.

MobiFone posted revenues of VND36 trillion last year, while Vinaphone netted a gross income of more than VND28.1 trillion. Nearly half of VNPT’s tax payment last year was from MobiFone.

Of the country’s eight mobile phone operators, military-run Viettel is the only one that can be ranked in the same league as Vinaphone and MobiFone at this point.

Economist Nguyen Quang A, however, doubted that the new regulation could actually force VNPT to change.

The rule does not give a deadline for companies to complete their transformation, which means they can delay restructuring their business for years, he said.

Hai admitted that even if the authorities were to push VNPT to reorganize its structure, it would take a long time for the group to do so. After June 1, the Ministry of Information and Communications will order VNPT to submit its plan for the future of Vinaphone and MobiFone, he said.

Jacques Fulcrant, country manager of Orange France Telecom in Vietnam, told Thanh Nien that apart from the share sale option, the government may also consider merging the two firms.

Fulcrant said he favored the first option because a merger would create an even a bigger company that could eventually hurt competition. He also said the government should not delay plans to sell shares for too long or else investors would lose interest.

Vietnam has been trying to complete restructuring of its state sector since 1992. The worldwide recession prompted the government to delay plans to sell stakes in major state-owned companies over the last two years, including the Bank for Investment & Development and Vietnam Airlines.

The sale of shares in MobiFone had been scheduled for the second quarter of 2009, but has been delayed since.

As of the end of 2010, VNPT owned half of the mobile phone market share with 77.2 million subscribers. The group also had 11.7 million landline users out of the country’s total of 16.4 million.