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Myanmar Awards Cellphone Licenses Myanmar Awards Cellphone Licenses
(about 3 hours later)
BANGKOK — Myanmar announced the winners of a landmark telecommunications auction Thursday, pressing ahead with plans for badly needed investment despite opposition from some members of Parliament and confusion stemming from the lack of a national law for the industry.BANGKOK — Myanmar announced the winners of a landmark telecommunications auction Thursday, pressing ahead with plans for badly needed investment despite opposition from some members of Parliament and confusion stemming from the lack of a national law for the industry.
Telenor Mobile Communications of Norway and Ooredoo of Qatar won the 15-year concessions for mobile phone networks. France Telecom and Marubeni Communications of Japan were selected as backups if the winners failed to meet “post-selection requirements,” a government statement said. Telenor Mobile Communications of Norway and Ooredoo of Qatar won the 15-year concessions for mobile phone networks. France Télécom and Marubeni Communications of Japan were selected as backups if the winners failed to meet “post-selection requirements,” a government statement said.
After decades of oppressive military rule, during which the government deliberately kept mobile phones in short supply, the network licenses are a potent symbol of Myanmar’s opening to the world and newfound freedoms for the country’s 55 million people. At a time of severe tension between the Buddhist majority in the country and the Muslim minority, the selection of a company from a Muslim country, Qatar, drew immediate criticism from a growing anti-Muslim movement that is openly calling for a boycott of all companies and products associated with Muslims. Buddhists posted angry comments on Facebook questioning why the government had selected a Muslim company.
Only 3 percent of the population had a mobile phone in 2011, the last year for which data were available, a startlingly low number at a time when mobile phones are ubiquitous even in the poorest corners of the world. In neighboring Laos, a country with similar levels of grinding poverty, mobile phone penetration is 87 percent. Three years ago, when Myanmar was still under military rule, a mobile phone SIM card cost the equivalent of about $2,500, making the phones a preserve of the rich.  Ashin Wimala, a Buddhist monk and one of the leaders of the 969 movement, the nationalist Buddhist group advocating the boycott, called for a boycott of Ooredoo. “Did the government have such little choice?” he said. “Why did they award this to a Muslim company?”
U Ye Htut, a government spokesman, said religion was not a factor in the selection. “We selected them for a license on the basis of their services — they have a good telecom service in Singapore,” he said, referring to Ooredoo.
After decades of oppressive military rule, during which the government deliberately kept mobile phones in short supply, the licenses are a potent symbol of Myanmar’s opening to the world and the newfound freedoms for the country’s 55 million people.
Only 3 percent of the population had a mobile phone in 2011, the last year for which data are available, a startlingly low number at a time when mobile phones are ubiquitous even in the poorest corners of the world. Three years ago, when Myanmar was still under military rule, a mobile phone SIM card cost the equivalent of about $2,500, making the phones a preserve of the rich. In neighboring Laos, a country with similar levels of grinding poverty, mobile phone penetration is 87 percent.
Although analysts in recent weeks said they had been generally impressed with the way the bidding process had been carried out, the hours before the announcement were cloaked in confusion. The lower house of Parliament, asserting itself in ways that are novel for a country still recovering from decades of rule by military fiat, voted Wednesday to delay the awarding of licenses until a telecommunications bill was passed into law.Although analysts in recent weeks said they had been generally impressed with the way the bidding process had been carried out, the hours before the announcement were cloaked in confusion. The lower house of Parliament, asserting itself in ways that are novel for a country still recovering from decades of rule by military fiat, voted Wednesday to delay the awarding of licenses until a telecommunications bill was passed into law.
The government ignored the resolution, and on Thursday a senior official appeared to persuade some members of Parliament to change their minds and allow the awarding of the contracts, according to local media accounts.The government ignored the resolution, and on Thursday a senior official appeared to persuade some members of Parliament to change their minds and allow the awarding of the contracts, according to local media accounts.
One looming question for Ooredoo, formerly known as Qatar Telecom, is how it will operate in a country that has a growing anti-Muslim movement that is openly calling for a boycott of all companies and products owned or made by Muslims. There was no immediate reaction Thursday to the selection of Ooredoo from the leaders of the 969 movement, the nationalist Buddhist group advocating the boycott.
The government’s eagerness to push ahead with the licenses may derive partly from President Thein Sein’s desire for voters to feel tangible results from the country’s economic liberalization and democratization before general elections scheduled for 2015. Mr. Thein Sein has repeatedly told foreign investors of the need for speed in implementing their projects.The government’s eagerness to push ahead with the licenses may derive partly from President Thein Sein’s desire for voters to feel tangible results from the country’s economic liberalization and democratization before general elections scheduled for 2015. Mr. Thein Sein has repeatedly told foreign investors of the need for speed in implementing their projects.
The conditions of the license call for a swift rollout of both voice and data networks: coverage must reach a quarter of the population within a year. Within five years, half of the population must have access to cellular data services, and three-quarters must be able to make voice calls. The conditions of the license call for a swift rollout of both voice and data networks: Coverage must reach a quarter of the population within a year. Within five years, half of the population must have access to cellular data services, and three-quarters must be able to make voice calls.
The mobile phone carrier contracts are seen as crucial for Myanmar’s economy as a whole because they will allow for things like banking or payment applications in an economy that is almost entirely based on cash. Smartphones will also potentially bring millions of consumers to the Internet.The mobile phone carrier contracts are seen as crucial for Myanmar’s economy as a whole because they will allow for things like banking or payment applications in an economy that is almost entirely based on cash. Smartphones will also potentially bring millions of consumers to the Internet.
But the task for the winners of the auction is gargantuan. Only 13 percent of the population has access to electricity in Myanmar, a logistical challenge for the placement of cellular transmission towers, which need steady access to power.But the task for the winners of the auction is gargantuan. Only 13 percent of the population has access to electricity in Myanmar, a logistical challenge for the placement of cellular transmission towers, which need steady access to power.
Security is also an issue in borderland areas where there is still sporadic fighting between armed ethnic militias and the Myanmar army.Security is also an issue in borderland areas where there is still sporadic fighting between armed ethnic militias and the Myanmar army.
Yet for the companies bidding for the contracts, the prize was too big to ignore. Myanmar is one of the world’s last undeveloped markets. “There’s not a lot of growth left, and a lot of global operators are finding conditions rather challenging, so Myanmar is an attractive market,” analysts at Counterpoint Research, which studies the telecommunications business, said in a statement. Yet for the companies bidding for the contracts, the prize was too big to ignore. Myanmar is one of the world’s last undeveloped markets, which explains the breadth of the interest in the competition to secure licenses. “There’s not a lot of growth left, and a lot of global operators are finding conditions rather challenging, so Myanmar is an attractive market,” analysts at Counterpoint Research, which studies the telecommunications business, said in a statement.
The government of Myanmar received interest from about 90 companies for the two licenses and whittled those down to a dozen finalists in April. The bidders included groups led by major telecommunications providers and other investors from across the world, including Bharti Airtel of India, SingTel of Singapore, KDDI of Japan, Millicom of Ghana, MTN of South Africa and Viettel of Vietnam.The government of Myanmar received interest from about 90 companies for the two licenses and whittled those down to a dozen finalists in April. The bidders included groups led by major telecommunications providers and other investors from across the world, including Bharti Airtel of India, SingTel of Singapore, KDDI of Japan, Millicom of Ghana, MTN of South Africa and Viettel of Vietnam.
Some of the groups included local partners. The billionaire investor George Soros, for example, joined with a Myanmar real estate developer, YSH Finance, as well as a Jamaica-based network provider, Digicel.Some of the groups included local partners. The billionaire investor George Soros, for example, joined with a Myanmar real estate developer, YSH Finance, as well as a Jamaica-based network provider, Digicel.
Installing the telecommunications networks will require billions of dollars of investment. But Myanmar can skip earlier generations of telecommunications technology. The group led by Mr. Soros, for example, said it planned to install so-called 4G, or fourth-generation, mobile technology. Installing the telecommunications networks will require billions of dollars of investment. But Myanmar can skip earlier generations of telecommunications technology. The group led by Mr. Soros, for example, has said it plans to install so-called 4G, or fourth-generation, mobile technology.
“There are some advantages to being a late bloomer,” Counterpoint said.“There are some advantages to being a late bloomer,” Counterpoint said.
While there has been a lot of talk about the potential of Myanmar for growth, some people who have been doing business there have words of caution.
Andreas Hipp, chief executive of Epsilon Telecommunications, a Singapore company that provides international connection services for one of the existing domestic telecommunications companies in Myanmar, Yatanarpon Teleport, said the legacy of state control and corruption would take a while to shake off. And unless the economy grows rapidly, few consumers will have the means to use the new networks.
“Everyone is talking about broadband, but a lot people can't afford $10 a month for basic line rental,” he said. “It’s certainly a country everyone has an eye on, but I’m not so sure it’s going to open up so quickly.”
Wai Moe contributed reporting from Yangon.