Suspended online payments through scratch cards catalyses Mobifone’s plunge

At the end of April, Mobifone, Vinaphone and Viettel announced to temporarily suspend the use of scratch cards to make online payments from digital content and online game firms.

This move occurred after Vietnam’s multi-million-dollar gambling ring, which used scratch cards, had been discovered.

According to Police Investigation Agency, to organize such a large-scale gambling ring as Rikvip/Tip.club, online portals to channel money and scratch cards play an important role. Payment by scratch cards amounted to 97 per cent of the total money poured into online payment portals, and the cards of telecom companies like Viettel, Vinaphone, and MobiFone, which accounted for 15.5-16.3 per cent of the total.

This suspension has significantly affected telecom companies. Mobifone is the hardest hit of all three network operators, losing 10 per cent of revenue and 5 per cent of profit, according to a report recently announced by Ministry of Information and Communications (MIC).

This impact was reflected in the financial statement published by Mobifone. Accordingly, its second-quarter revenue only reached VND8.43 trillion ($362 million), down 17 per cent over the same period last year. 

In the first half of the year, Mobifone's revenue was over VND17.2 trillion ($741 million), an 8-per cent decrease year on year.

Although the company has tried to reduce its sales and administrative expenses, Mobifone's profit plunged 42 per cent in the second quarter to VND946 billion ($40.7 million). Since the beginning of this year, this network operator has obtained an after-tax profit of VND1.95 trillion ($83.9 million), down 26 per cent over the same period of 2017.

With this result, Mobifone is far behind its 2018 business targets of VND47.4 trillion ($2.04 billion) in revenue and VND6,084 billion ($262 million) in pre-tax profit. Earlier this year, Mobifone said the domestic telecom market is forecast to grow at a low rate between 3 and 5 per cent.

Mobifone has not disclosed the resume of online payments via scratch cards. However, MIC said it will find the solutions soon.

Remarkably, Mobifone's report also showed that its cash and cash equivalents increased by more than VND8.5 trillion ($365 million) contributed by AVG's shareholders and interest rate.

This is the amount Mobifone received after the parties terminated the contract in which Mobifone purchased a 95 per cent stake in AVG, MIC announced on March 13.

However, due to relevant procedures uncompleted, Mobifone still recognizes the investment and holds a 95-per cent in AVG and some related companies such as Mai Linh Silkworm Breeds Joint Stock Company, An Vien Production Corporation, An Vien Distribution Corporation.