Foreign firms eye new telecoms licence despite inexperienced partners

ben adhoc

January 25, 2016 1:20 PM

"It isn't a greenfield business anymore," said Sachin Gupta, the head of telecommunications research for Asia-Pacific at Nomura Securities in Singapore.

Foreign firms eye new Myanmar telecoms licence despite inexperienced partners

Seven foreign firms are interested in bidding for Myanmar's fourth telecoms license, a government official said on Monday, as the prospects of one of the region's least connected nations outweigh the challenges of a partnership involving obscure local firms with scant industry experience.

Chit Wai, deputy permanent secretary of the Ministry of Communications and Information Technology (MCIT), declined to give any details about the companies he said submitted expressions of interest earlier this month.

But unlike already established operators Telenor and Ooredoo, the foreign firm that wins this 15-year license will be a minority shareholder in a joint venture with a consortium of 11, little-known public companies which are mainly focused on agriculture, as well as a government shareholder.

The obscurity of the companies poses a potential problem in Myanmar, where some entities and businessmen are still targeted by U.S. sanctions, connections to the military are not uncommon and reputational risk remains high.

The companies' lack of experience in telecoms or IT, and the complex partnership structure stipulated by the government, is also likely to complicate matters: Ye Min Aung, the managing director of consortium-member Myanmar Agribusiness Public Corporation said the new operator should focus on providing information that is relevant to farmers.

"Decision making will be very difficult," said Shane Thu Aung, the chairman of internet provider Redlink Communications. He previously ran a firm tipped to partner with Vietnam's Viettel as the fourth operator before that deal fell apart.

Penetration rates, however, are around 63 percent according to the expression of interest documents issued by the MCIT, which his lower than several other Southeast Asian nations.

"There is still money to be made but you are competing with three entrenched operators."

Myanma Posts and Telecommunications (MPT), which operates in partnership with Japan's KDDI Corp. and Sumitomo Corp. , is the market leader with 18 million subscribers. Telenor has 12 million subscribers while Ooredoo has 5.8 million.

ben adhoc