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Microsoft’s Vietnam Partner FPT Aims to Consolidate Subsidiaries

FPT Corp., Vietnam’s biggest publicly traded telecommunications and software company, said it plans to combine its technology units and focus on restoring the annual earnings growth rate to more than 30 percent.

FPT will consolidate five subsidiaries -- FPT Information System, FPT Telecom Corp., FPT Software, FPT Online and FPT Trading Group -- with itself, Truong Dinh Anh, who will take over as chief executive officer of Hanoi-based FPT on March 25, said in a phone interview today. The parent may either buy out the units’ minority shareholders or issue its own shares and swap them as part of the transaction, Anh said.

The Vietnamese technology company, which in May announced a cloud-computing alliance with Microsoft Corp., is seeking to renew its focus on telecommunications and Internet services and software development after the pace of profit growth fell below 20 percent in the last three years, Anh said.

“We have reoriented our businesses to make it a technology, information and communications corporation instead of an economic group,” Anh said. “We are restructuring our holdings in subsidiaries to focus on core businesses in order to enhance growth.”

FPT fell 1 percent to 52,000 dong at the 11 a.m. close of trading in Ho Chi Minh City. The stock has declined 19 percent this year, while the benchmark VN Index has lost 5 percent.

Growth Pace

In 2010, pretax profit increased 19 percent to 2 trillion dong ($96 million), FPT said in a statement on its website. Revenue except internal sales of goods and services rose 9.5 percent to 20.5 trillion dong.

The slowing pace of profit growth “didn’t satisfy board members and shareholders,” Anh said.

FPT had created many joint stock companies as part of a business development model aimed at tapping opportunities in multiple sectors, Anh said.

“In recent years, especially in the crisis period, we’ve seen that the main strength of FPT is still in technology and telecommunications,” he said. “We want to focus all efforts on our strong points.”

The company has a “commitment” to boost revenue by up to 25-fold by 2020, CEO Nguyen Thanh Nam said in May. FPT expects both revenue and pretax profit to increase 20 percent this year to 24.5 trillion dong and 2.42 trillion dong respectively, it said.

The Southeast Asian nation’s economy expanded 6.8 percent last year, the fastest pace since 2007. Vietnam is targeting an average annual growth rate of as much as 8.5 percent between 2011 and 2015, and the government aims to derive 22 percent of gross domestic product from the technology industry by 2020.

FPT, whose customers include Microsoft, Panasonic Corp. and Hitachi Ltd., will also set up a wholly owned unit to hold and manage its investments in Tien Phong Commercial Bank, FPT Securities Joint-Stock Co., FPT Capital and FPT Land, Anh said.

The company will seek shareholders’ opinions on the consolidation plan at a meeting in April, he said.

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