Myanmar Phone Contest Pits Soros Against SingTel: Southeast Asia

Myanmar's contest for two
telecommunications licenses attracted bidders from around the
globe seeking a foothold in one of the last remaining untapped
markets, where only one in 10 people has a mobile phone.

The winners are scheduled to be announced today, ending a
six-month race that drew 91 expressions of interest to operate
in the country of 64 million people. Norway's Telenor ASA,
Singapore Telecommunications Ltd. (ST), billionaire George Soros and
France Telecom SA (FTE) are among the 11 remaining bidding groups.

"It's a tremendous growth opportunity, but it will require
a fair bit of investment, and returns will be long dated too,"
said Sachin Gupta, a Singapore-based analyst at Nomura Holdings
Inc. "I don't think it's going to be an easy exercise for
anyone, but having previous green-field experience and strong
local partnership should help."

The licenses are among the biggest prizes for foreign
companies since Myanmar President Thein Sein moved to allow
greater political and economic freedom after taking power in
2011. The U.S. and European Union have moved to ease sanctions,
attracting companies such as Coca-Cola Co. and Ford Motor Co. to
the former military-run state even as human rights groups warn
of abuses against ethnic and religious minorities.

Authorities are completing plans to award the licenses and
will proceed on schedule, Set Aung, deputy minister of national
planning and economic development who is overseeing the process,
said yesterday by phone. The process was transparent and
complied with international practices, Set Aung said, declining
to elaborate on the factors that led to the final decision.

'Calculated Risk'

"I have never seen any investors who are not coming to a
country before everything is perfect," Set Aung said. "All the
companies understand there are risks. Some companies probably
think there is too much risk, and other companies think it's a
calculated risk."

Myanmar plans to boost telecom coverage to as much as 80
percent of the country by 2016. It has a mobile-phone
penetration rate of 9 percent, compared to 70 percent in
Cambodia, 87 percent in Laos and more than 100 percent in
Thailand, the Communication Ministry said in January.

The government named 12 groups of companies as finalists
for two licenses that will allow carriers to build and operate a
nationwide wireless network in the country for 15 years.

Bidders include Bharti Airtel Ltd., Telenor ASA (TEL), Singapore
Telecommunications Ltd., Digicel Group Ltd., Axiata Group Bhd. (AXIATA),
France Telecom SA and Marubeni Corp. (8002), KDDI Corp. (9433) and Sumitomo
Corp., Millicom International Cellular SA (MIICF), MTN Group Ltd., Qatar
Telecom QSC, and Vietnam's Viettel Group. Four of the bidding
groups include a local partner.

Vodafone Withdraws

Vodafone Group Plc and China Mobile Ltd., the two biggest
mobile-phone companies, withdrew their bid on May 31, saying the
returns wouldn't justify the investment required.

SingTel, which is bidding with KBZ Group and Myanmar
Telephone Co., would build a mobile network covering 95 percent
of the country's population within 36 months, according to a
June 11 statement. SingTel has 468 million mobile-phone
customers in countries including India, Indonesia, Thailand and
the Philippines, according to the company. SingTel also offered
to lend assistance to Myanmar's efforts to launch a national
satellite.

KDDI and Sumitomo are bidding along with Myanmar
Information and Communication Technology Development Corp. and
A1 Construction, while MTN's group includes local company Amara
Communications.

Digicel, Soros

The group led by Digicel, Soros and Myanmar property
developer YSH Finance Ltd. pledged to invest $9 billion. The
companies would roll out a so-called fourth-generation mobile
network across the country by Dec. 1, and its wireless service
will reach 96 percent of Myanmar's population by 2016, the group
said in a statement June 3.

Telenor on April 12 said it would leverage its experience
in operating mobile networks in Thailand, Malaysia, India,
Bangladesh and Pakistan "to provide rapid delivery of high-quality mobile network and services throughout Myanmar." It
didn't disclose an investment value.

France Telecom strategy chief Elie Girard earlier this
month described Myanmar as "the biggest telecom desert" with
less telephone use than in North Korea or Cuba. The company,
bidding with Japan's Marubeni, is prepared to spend $1 billion
to build a network by 2019 and will cover more than 75 percent
of the country's geography in five years, Girard said. Chief
Executive Officer Stephane Richard said June 25 that the company
had a "good chance" of winning a license.

Human Rights

Bharti Airtel Ltd. (BHARTI), India's largest mobile carrier, may
spend about $1 billion to set up a network, the Times of India
reported on June 8, citing Chairman Sunil Bharti Mittal.

Myanmar had 5.44 million mobile-phone subscribers as of
December, equivalent to a 9 percent penetration rate, the
government said in January. About 1.3 percent of the population
has access to fixed-phone lines and 0.03 percent has broadband
Internet, according to the Asian Development Bank.

In May, New York-based Human Rights Watch warned that
companies bidding for the licenses risk being linked to human
rights abuses if they invest before laws are in place to protect
against illegal surveillance and censorship.

To contact the reporters on this story:
Daniel Ten Kate in Bangkok at
dtenkate@bloomberg.net;
Kyaw Thu in Bangkok at
kthu1@bloomberg.net

To contact the editor responsible for this story:
Lars Klemming at
lklemming@bloomberg.net

Enlarge image

Myanmar Phone Contest Pits Soros Against SingTel

Dario Pignatelli/Bloomberg

A man talks on a mobile phone as he looks towards the Sule Pagoda in downtown Yangon, Myanmar.

A man talks on a mobile phone as he looks towards the Sule Pagoda in downtown Yangon, Myanmar. Photographer: Dario Pignatelli/Bloomberg

Source: http://www.news.myanmaronlinecentre.com/2013/06/27/myanmar-phone-contest-pits-soros-against-singtel-southeast-asia/