Telenor, Ooredoo Win Burma’s Coveted Telcoms Licenses

By Simon Roughneen 27 June 2013

RANGOON — Norway’s Telenor and Qatar’s Ooredoo have been awarded two 15-year mobile network licenses in Burma, fending off challenges from nine rival bids that included some of the world’s biggest telecoms providers.

The long-anticipated announcement could see Burma’s mobile phone usage jump from less than 10 percent, according to current estimates, to covering around three-fourths of the population within three to four years, if government aspirations for the sector are realized.

Prior to Thursday’s announcement, Ooredoo—backed by the energy-rich pockets of the Qatari emirate—said it would provide 3G coverage to 90 percent of Burma’s population within two years, based on a proposed investment of US$15 billion, while Telenor, the world’s 14th biggest mobile company by subscriber numbers, said after Thursday’s announcement that it “plans to achieve nationwide coverage in Myanmar within five years.”

“The successful applicants must fulfill post-selection requirements. The Parliament will also try to adopt a telecommunications law very soon,” President’s Office spokesman Ye Htut told The Irrawaddy, shortly after posting the announcement of the license winners on his Facebook page at 5pm Thursday.

The government listed the French-Japanese Orange-Marubeni consortium as the back-up candidate “in the event that one of the two successful applicants does not fulfill the post-selection requirements contained in the invitation to tender.”

Dr Aung Thura, CEO of Thura Swiss, a Rangoon consultancy, told The Irrawaddy that while Telenor’s win was not a bombshell, given that the company had been touted as a leading contender in the weeks leading up to the announcement, “Ooredoo had not been mentioned as a likely winner, so that is a real surprise.”

The news comes as the culmination of a drawn-out tender process followed by will-they-won’t-they last minute drama in which Burma’s Parliament voted on Wednesday to delay the scheduled June 27 announcement, citing the need to first pass the still-in-progress telecoms bill, but prompting whispers that the gambit was an attempt to buy time on behalf of the Army-run Myanmar Economic Corporation (MEC), allowing the company to sell more of its new $1.50 SIM cards before well-heeled and aggressive foreign competitors entered the fray.

In the end, however, the government overruled the legislature’s objections, saying afterwards that the announcement would go ahead as scheduled. The news marked a double-blow for the attempted postponement, given that in MP Myo Swe’s proposal to Parliament on Wednesday, lawmakers suggested that only foreign companies with a local joint-venture partner should get the telecommunications licenses.

Aung Thura said that the last-minute run by MPs to postpone the announcement came across as amateurish. “If they had concerns about the process, they could have raised these weeks ago, rather than the day before the licenses are to be awarded.”

The two winners—one European, one Gulf-based—are notable for not having a local partner, unlike several of the other bids in the running, which featured the likes of Burmese businessman Serge Pun, and local companies such as Kanbawza Bank and A1 Construction.

Asian multinational telecoms companies such as India’s Airtel, the world’s third biggest mobile operator, and Singapore’s Singtel, the fourth biggest, failed to win one of the two licenses, after speculation that at least one Asian winner would emerge. Ninety companies had initially expressed an interest in setting-up a mobile network in Burma, where over 90 percent of the estimated 60 million population do not own phones or sim cards—offering a possible goldmine for the eventual winners. That list was narrowed down to 12, then 11, when a joint bid by the world’s two biggest mobile operators—Vodafone and China Mobile—was dropped in still-murky circumstances.

The licenses will be ready by September, the Burmese government says, despite the absence of some relevant legislation, though the government’s statement on Thursday said it expects the new telecoms law to be adopted during the current sitting of Burma’s Parliament in the administrative capital Naypyidaw.

Reacting to the announcement of the license winners, Kyaw Zaw Maung, head of the Directorate of Investments and Company Administration (DICA), part of the Ministry of National Planning and Economic Development, told The Irrawaddy that “we are late compared with our neighboring countries to develop the telecoms sector, so the foreign companies will help and be welcome for this.”

Telenor, which works in five Asian countries, said on Thursday afternoon after hearing of its license win, that “a full range of mobile services, both voice and data, will be commercially launched as the initial offering, anticipated to happen in 2014.”

The past year has seen bouts of deadly anti-Muslim violence in Burma and the rise of an anti-Muslim boycott campaign fronted by U Wirathu, an outspoken Buddhist monk, meaning the Qatari company Ooredoo could encounter commercial difficulties if faced with the same boycott affecting some of Burma’s Muslim-run businesses. Ye Htut’s Facebook announcement of the license winners prompted a number of comments decrying the awarding of a license to Ooredoo, which “is owned by Qatar and they are Islamic. So,don’t like ……..” went one remark.