FPT Corporation and FPT Telecom: A strategic split to unlock higher valuation?

The deconsolidation of FPT Telecom will significantly reduce the reported revenue of Vietnamese tech giant FPT Corporation but not materially affect its underlying profits, highlighting a strategic shift toward a more focused, AI-driven business model aimed at achieving a higher market valuation.

Starting from fiscal year 2026, FPT Corporation (HoSE: FPT) will no longer fully consolidate the revenue and expenses of FPT Telecom (UPCoM: FOX) as a subsidiary in its consolidated financial statements.

Instead, FPT Corporation will recognize only its share of profits corresponding to its ownership stake under the equity method, reducing consolidated revenue by approximately VND1 trillion ($37.94 million) per year.

In mid-2025, the Ministry of Public Security took over the role of representing the state ownership in FPT Telecom from the State Capital Investment Corporation (SCIC). Before the transfer, FPT Telecom had two major shareholders: SCIC with a 50.17% stake and FPT Corporation with 45.66%.

Market reaction: Diverging fortunes

In the stock market, FPT had yet to find a bottom, hitting around VND72,000 ($2.73) per share on Friday, amid continued net foreign selling. Notably, following news of the change in consolidation method, foreign investors offloaded more than 12 million shares in just two trading sessions.

In contrast, FOX has rallied, climbing from VND73,400 on March 13 to VND80,500 ($3.06) on March 20. The sharpest gain came on March 19, when FPT Telecom officially ceased to be a subsidiary of FPT Corp.

FPT emphasized that the move is purely an accounting adjustment, with no impact on net profit attributable to shareholders or earnings per share (EPS). Under Vietnamese accounting standards, once FPT Telecom is no longer a subsidiary, its revenue and expenses are excluded from FPT’s consolidated financial statements. This mechanically improves FPT’s profit margins, as profits remain stable while reported revenue declines.

Yet the real implications go beyond accounting to touching on governance, thus affecting long-term growth orientations.

From “conglomerate discount” to “higher valuation”?

In 2025, FPT’s technology segment generated VND44.5 trillion ($1.69 billion) in revenue and VND5.9 trillion ($234 million) in profit, accounting for 63.4% and 45% of the corporation’s totals, respectively. By 2026, after excluding the telecom segment, technology is expected to contribute roughly 90% of revenue and over 60% of profit.

With education and other segments projected to grow modestly, technology is effectively becoming FPT’s sole growth engine.

However, this transition comes with trade-offs. Despite targeting nearly 25% profit growth in its tech segment, double the previous year’s pace, FPT’s overall profit growth target is set at just 15%, lower than the 20% expansion last year.

Maintaining lower-growth businesses such as telecom, retail, and distribution could dilute the performance of the high-growth tech segment. By spinning off or distancing these units, FPT aims to eliminate the “conglomerate discount” often applied to diversified groups and reposition itself closer to pure-play technology firms that command higher valuation multiples.

FPT Telecom looks toward building an independent ecosystem

With nearly VND20 trillion ($759.27 million) in revenue in 2025, FPT Telecom accounted for about one-third of FPT’s total revenue. The company also controls six subsidiaries across telecommunications, television, online gaming, and internet services.

As a state-affiliated entity, it is expected to benefit from advantages similar to industry peers such as Viettel and VNPT.

Recent regulatory efforts to clean up the digital content landscape, particularly crackdowns on copyright violations, could further benefit legitimate platforms like FPT Play.

FPT Telecom is also investing heavily in infrastructure, with fixed assets exceeding VND13 trillion ($493.53 million) and an additional VND1.5 trillion planned in 2025. Key projects include the ALC submarine cable, the Q9 data center, and a North-South backbone network.

Operating independently offers FPT Telecom greater strategic flexibility but also requires it to develop new growth drivers without relying on the broader FPT ecosystem.

Restructuring to focus: Trends of technology corporations

FPT’s move mirrors a broader global trend among technology conglomerates shifting toward focus and specialization.

IBM, once spread across hardware, infrastructure services, and software, sold its x86 server business to Lenovo in 2014 and spun off its infrastructure services arm into Kyndryl in 2021. After restructuring, it has focused on cloud computing and AI – areas with higher added value.

Similarly, Hitachi has aggressively divested legacy businesses, including multi-billion-dollar sales of Hitachi Chemical and Hitachi Metals, while exiting consumer electronics entirely to concentrate on digital platforms and AI.

Domestically, FPT Retail offers a parallel case. After being listed separately in 2018, it evolved beyond electronics retail into pharmaceuticals, with its Long Chau pharmacy chain emerging as a key growth driver.

These examples suggest that separation from a parent company does not necessarily weaken a business but it can instead create space for new growth models.

Can FPT truly transform?

FPT’s “AI First” strategy and push toward digital transformation align well with global trends. However, a narrower operational focus also increases reliance on a single growth engine: technology.

Industry experts noted that AI will not replace human developers entirely but is reshaping the software industry. For FPT, the critical challenge is not just sustaining growth but upgrading its business model from outsourcing to higher value-added products and services.

This will ultimately determine whether FPT is valued as a true technology innovator or remains categorized as a traditional IT services provider.

For now, investor sentiment reflects this uncertainty. While FPT continues to decline, FOX is gaining momentum, highlighting a market in the midst of revaluing both companies.

Whether these diverging trajectories converge over the long term will depend on how effectively each executes its strategy in the years ahead.