Myanmar: Telecoms licences awarded

The announcement of the winners of Myanmar’s recent telecoms auction marks a further milestone in the country’s modernisation and integration into the global economy. The licensing process had attracted significant attention from some of the industry’s biggest players, as the market is largely untapped.

Operating licences were awarded to Ooredoo, the Qatari state-owned provider, and Telenor, the Norwegian telecoms giant. A third bidder, a consortium of France Telecom-Orange and Japan’s Marubeni Corporation was named the backup applicant, should one of the winners fail to meet the requirements in the coming months.

The successful bidders will be expected to push up mobile penetration from its current level of 9% to a promised 85% over the next five years, while introducing 3G and 4G data connections within a 48-month timeframe.

The official 15-year concessions will be awarded by the Ministry of Communications and Information Technology in the coming months, although the two service providers have already begun aggressive campaigns aimed at capturing market share.

Telenor intends to edge its rival on call charges. The firm has promised MYR25 ($0.03) per minute, compared to Ooredoo’s MYR35 ($0.04) per minute offer for in-network calls and MYR45 ($0.05) for calls made out of network.

The Qatari firm, however, is aiming higher on points of sale, pledging to roll out 240,000 SIM card sale points and 720,000 top-up locations. Telenor plans 70,000 SIM card sale points and 95,000 top-up locations.

Both firms have agreed to charge MYR1500 ($1.51) for GSM SIM cards, which is expected to help boost penetration. SIM cards are now available at a cost of around $200, making mobile telecoms services inaccessible to most citizens.

Importantly for Myanmar, which is keen to show the outside world that it can collaborate with international business partners and deliver on its promises, the telecoms auction went smoothly and to schedule.

The licensing process had been widely regarded as a litmus test for the government’s modernisation efforts. It was also viewed by some as a symbol of the sea change under way, marking the most public and open auction in Myanmar’s history.

Ooredoo said in early June that it planned to invest $15bn in Myanmar, including the construction of 10,000 base stations, as it looked to acquire a 35% market share. Telenor has yet to disclose a total investment figure.

Telco outfits are expected to face a number of major hurdles as they roll out their service, including a lack of infrastructure.

“The Myanmar government wanted to do within two years what our countries did in 15 years,” said Sigve Brekke, managing director of Telenor Asia. “In other words, they want to do data, 2G, 3G and 4G services in one go. They wanted to have data services from day one - not starting with voice and other services first. They wanted the best technology in the world and implemented the project quickly.”

The auction process has already caused controversy, with the lower house of the parliament voting in June to delay licensing until after the enactment of a new telecommunications law. Lawmakers have also called for a requirement that any winner should enter into a joint venture with a domestic partner. However, the government has said it will stick to its plans to grant licences in September, enabling operators to launch their services within the targeted nine months.

The telecoms auction signals a major milestone in Myanmar’s development, with the industry set to become a cornerstone of the country’s modernisation. By introducing a widespread, inexpensive and efficient telecoms system, the two firms will be filling a void, while playing a key part in steering Myanmar into a new era.