Economy

Questions Surround 4th Telecom License, After Military Firm Name Emerges

By Kyaw Hsu Mon & San Yamin Aung 28 November 2014

RANGOON — A Ministry of Communications and Information Technology official has denied a report that a military-owned conglomerate has been selected to become Burma’s fourth telecom operator, after a state-owned newspaper this week announced that the conglomerate was awarded a mobile phone license.

The Mirror, a Burmese-language government mouthpiece, mentioned in an article on Thursday that in the telecom sector “there will be four operators; with Ooredoo, Telenor and MPT currently operating, and the Myanmar Economic Corporation (MEC) soon becoming the fourth operator.”

The paper ran a correction the next day denying that MEC had been awarded a telecom license.

Myo Swe, chief engineer of Myanmar Post and Telecommunications (MPT), a majority state-owned firm under the ministry, told The Irrawaddy that the paper had make a mistake. “The minister has not said it will be MEC; we asked the newspaper to correct it,” he said, adding, “The fourth operator has not yet been chosen.

“The only sure thing is that we will not invite foreign companies again, since there are already two foreign operators. So we are going to choose a local operator,” he said.

The government has previously said it would open up Burma’s underdeveloped telecom sector to two foreign and two local firms. It remains unclear which local company will become the fourth telecom operator.

Minister of Communications and Information Technology Myat Hein was quoted in state media on Wednesday as saying, “The next local operator will soon be made public.”

Burma’s telecom sector is rapidly growing and according to government figures, the number of mobile phone users jumped from 1.6 million in March 2011 to 11.6 million in September this year, with MPT dominating the market.

In the past months, Myawaddy TV, which is owned by the military, ran advertisements saying MEC would soon sell SIM cards for mobile phones.

MEC is one of two sprawling business conglomerates owned by the Burma Army, which also owns the Union of Myanmar Economic Holdings (UMEHL). The military, which ruled Burma with an iron fist for decades, has historically dominated lucrative and strategic industries in order to strengthen its capacity, finances and hold on the country.

According to some telecom sector experts, either MEC or Yatanarpon Teleport will be awarded the fourth telecom license.

“I heard that MEC and Yatanarpon Teleport are potential winners for local telecom operator license, but we still don’t know exactly who will be the winner,” said Lwin Naing Oo, the managing director of Shwe Pyi Takon, Telecommunication Company, a local private telecom firm in Rangoon.

“We can’t compete with them [for the license] as they are giants,” said Lwin Naing Oo, whose firm gained public attention when it announced two years ago that it planned to launch 5,000 kyat ($5) SIM cards by 2013.

Ye Myat Thu, an IT technician and an executive member of the Mandalay Computer Federation, said he had heard that Yatanarpon Teleport was awarded the fourth telecom license. “As far as I know Yatanarpon Teleport already got license, but now they are still [only] working as an internet service provider,” he said.

Myo Swe, of MPT, said Yatanarpon Teleport planned to become a public company and launch mobile services, adding, “But they have still not launched as a public company so it’s unclear whether they will become a local telecom operator, or not.”

Yatanarpon Teleport and MEC could not be reached for comment.

Burma’s telecom sector was exclusively controlled by MPT until August when Qatar’s Ooredoo and Norway’s Telenor launched the first foreign-owned mobile services. MPT is a local operator and has announced it will be working with Japan’s KDDI Corporation and Sumitomo Corporation to improve its service and compete with foreign firms. KDDI and Sumitomo said they would invest $2 billion in their cooperation with MPT.

Yatanarpon Teleport, another majority state-owned telecom firm, currently provides internet services, but no mobile phone services. In April, local media reported that it was in discussions with four foreign companies to set up a joint venture that would provide mobile services. Thailand’s True Move and Malaysia’s Aexiata were said to be among the foreign firms interested in the project.

MEC’s business activities are largely focused on securing access to products that are of strategic importance to the military, such as cement and rubber for army vehicles, according to some Burma experts. They have said MEC could be eyeing the creation of a military-owned telecom firm, a formula that has been successful in for example Vietnam, where army-owned Viettel is one of the largest telecom firms.

In the months before foreign operators launched their services, MEC, which had no prior experience in mobile services, suddenly launched 1,500 kyat (US$1.50) SIM cards; distribution of the cards has since stopped.

In 2013, MEC also announced it would be working with MPT to provide mobile services, but it’s unclear if the conglomerate is doing so. Previously, it had been reported that MEC owns a stake in MPT, while there are also unconfirmed reports that it owns part of Yatanarpon Teleport.

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