Telecoms giants jostle ahead of licence tender

Telecoms giants jostle ahead of licence tender

By Victoria Bruce   |   Monday, 17 September 2012 

The Myanmar Times

Digicel founder Denis O’Brien (left) at the Myanmar Global Investment Forum in Nay Pyi Taw on September 12. Booethee / The Myanmar Times
The government is close to selecting an international consultant to oversee an upcoming tender for telecommunications licences, having shortlisted five companies from a pool of 64 applicants, sources said last week.
Indian network services company GTL Limited, China’s Huawei and Thailand’s Symphony Communications are in the running alongside consultants from Japan, Australia, Germany and the United States.
“We have been participating for this particular tender for the consultancy,” GTL’s head of business development, Sanjay Hirpara, said last week.
“There are definitely good opportunities here for investment and for business,” he said.
But the major prize for foreign firms is the four telecommunications licences that the consultant will eventually recommend the government award. Russian heavyweight VimpelCom, the sixth largest mobile network operator in the world in terms of subscribers, Norwegian firm Telenor, one of VimpelCom’s major shareholders, Vietnam’s VNPT-Fujitsu and Digicel, the largest mobile operator in the Caribbean, are among the companies seeking a piece of Myanmar’s untapped telecoms market.
U Tin Win, the chief executive officer of Yatanarpon Teleport, told The Myamar Times in a recent interview that two operating licences could be given to state-owned Myanmar Posts and Telecommunications (MPT), while another would go to his company.
But MPT indicated at a telecommunications and ICT investment forum in Nay Pyi Taw on September 14 that there could be several avenues for international companies to enter the telecommunications sector.
Foreign companies can bid to establish a joint venture with MPT or Yatanarpon in an upcoming tender, which will be overseen by the consultant firm, said U Than Tun Aung, deputy director of the ministry’s Posts and Telecommunications Department.
But up to two more licenses could be awarded to other foreign firms, which can then choose to start a new firm with a local partner or go it alone, U Than Tun Aung told a roomful of industry players.
The option for 100-percent foreign ownership would depend on planned amendments to the foreign investment law, which have been passed by both houses of parliament and are being reviewed by the President’s Office, U Than Tun Aung said.
As part of the government’s “roadmap” to telecommunications sector reforms, a regulatory body with about 700 staff will also be formed to oversee aspects of telecommunications services, such as network sharing and equipment standards, he said.
Irish entrepreneur and Digicel founder Denis O’Brien told The Myanmar Times his company had set its sights on a joint venture with MPT and was prepared to invest up to US$1 billion into developing the telecommunications network.
“We think we could work really well with them,” Mr O’Brien said in an exclusive interview at the Myanmar Global Investment Forum in Nay Pyi Taw last week.
“In order to build a world-class, future proofed mobile telecommunications infrastructure in Myanmar, which will make affordable telecommunications accessible to the people of Myanmar, an initial investment in the region of $1.2 billion needs to be made,” Mr O’Brien said, adding “as telecommunications penetration and usage increase, the investment will also increase”.
Digicel holds operating licenses in 31 countries and has over 13 million subscribers throughout the Caribbean, Central and South America region, and the Asia Pacific region.
The group has already made one investment in Myanmar – an online recruitment site that has attracted more than 30,000 page views in the past three weeks, said vice chairman Leslie Buckley.
“We operate as local as we can,” Mr Buckley said, highlighting the group’s strategy to integrate itself in host investment countries through strong community engagement, such as its football sponsorship deals in Myanmar.
While the country’s low mobile phone penetration rates and population of about 60 million make Myanmar an attractive prospect for foreign telecoms firms, not all are starry eyed over their options.
“Is this just an exercise to glean as much technology from international companies by saying ‘we will partner with you,’?” questioned one potential foreign investor, a supplier of international handsets, at the September 12-13 forum in Nay Pyi Taw.
“The local firms will want a 50-50 joint venture arrangement or to be the majority shareholder but they won’t match you buck for buck – they’ll match you by allowing you to partner with them and access that operating concession,” he said, asking not to be named.
Mr O’Brien said a functioning and accessible telecommunications network was essential for economic growth.
“Everyone is talking about a hyper-growth economy here but they’re forgetting one thing: that without a telecommunications infrastructure, that just won’t happen,” Mr O’Brien said.
Because it is developing its telecoms industry relatively late, Myanmar has the advantage of learning from the lessons of other countries and pick the most advanced technology available to go straight to 4G, or fourth generation, services, Mr O’Brien said.
“All neighboring countries have 2G or 3G but what Myanmar can do now is just go all the way to [long-term evolution (LTE)] and bring broadband to every part of the country to 60 million people and bring them voice and other data services,” he said.
“It could be a quantum leap – Myanmar could jump 50 years all in one move.”
Johan Adler, country manager for Swedish telecommunications heavyweight Ericsson, said the fourth-generation LTE technology offered about three times faster data speed than the latest version of WCDMA/3G.
“In a Myanmar context, with relatively slow data access connections, LTE can be a substitute to the fixed data line and offer superior bandwidth to residential users and small offices. It’s fast to deploy and faster than any other service available today,” Mr Adler said.
However, some non-government groups, including US-based Conflict Risk Network, have raised concerns that investment in the telecommunications sector could fuel repressive tactics of internet control and surveillance, which were common during the previous military government.
“The ICT sector is also high risk, as its potential positive and negative roles are heightened in conflict-affected areas,” said Kathy Mulvey, Conflict Risk Network director.
But if managed well, the development of Myanmar’s telecommunications industry will be an important driver of economic growth, said Jared Bissinger, a PhD student at Australia’s Macquarie University who is studying Myanmar’s economy.
“As in many other developing countries, investment in Myanmar’s telecommunications industry can decrease the costs of doing business, improve access to information, and facilitate inexpensive and convenient transactions, all of which will help improve the business environment.” Mr Bissinger said.

This article first appeared in the Myanmar Times print and online editions on 16 September, 2012:
http://www.mmtimes.com/index.php/home-national-news/136-national-news/1438-telecoms-giants-jostle-ahead-of-licence-tender.html