UPDATE 1-Myanmar launches major graft probe at telecoms ministry
* 50 officials involved in rare probe at ministry - sources
* Probe follows president's vow to fight graft
* Reforms in telecoms sector long delayed (Recasts, new details throughout)
By Aung Hla Tun
YANGON, Jan 24 (Reuters) - Myanmar's former telecommunications minister and dozens of officials are under investigation for graft, a senior government official said on Thursday, in a landmark probe in the fast reforming country long ranked among the world's most corrupt.
The investigation by the Home Ministry and auditor general covers about 50 individuals and civil servants connected to the telecommunications ministry and comes a month after reformist President Thein Sein vowed to clean up a bureaucracy mired in corruption and inefficiency.
A senior government official, who asked not to be identified, told Reuters that current and former ministry staff were being questioned "in connection with malpractice in the nationwide telecommunications network".
One of those under investigation was former telecommunications minister, Thein Tun, who stepped down this month for unexplained reasons.
Presidential spokesman Ye Htut confirmed that an investigation was underway, but would not comment further.
Investigations into corruption are almost unheard of in Myanmar, which ended 49 years of military rule in March 2011.
Since then, a reformist government has freed hundreds of political prisoners, eased censorship controls and held free elections. Its rewards include a suspension in Western sanctions but its reputation for graft has lingered.
Thein Sein, a former general, announced this month the creation of an anti-corruption committee.
The probe comes as Myanmar begins to liberalise one of the world's most underdeveloped telecoms sectors to attract foreign firms in the greenfield market of 60 million people.
The government source said the Home Ministry was questioning eight people, including the general manager and deputy chief engineer. Other cases were being handled by the auditor-general's office.
It is unclear whether the investigation would accelerate telecoms sector reforms. Myanmar's mobile phone SIM cards are among the world's most expensive, costing around $250, compared to about $1.50 in neighbouring countries.
A new telecoms law is working its way through parliament and the government has invited expressions of interest from companies for two new licences.
The telecoms ministry, which runs the country's only operator, Myanmar Post and Telecommunications (MPT), has been criticised for delays in the drafting and implementation of new laws and regulations to expand and liberalise the sector.
It flummoxed potential investors in April 2011 when it announced plans to create 30 million GSM lines by 2016 even before a draft telecommunications law was completed.
International investors have also expressed unease over the ministry's opaque agreements with 23 companies to build communications towers and distribute SIM cards.
Sources reached by Reuters were able to confirm a report by U.S.-funded Radio Free Asia that the ex-telecoms minister, Thein Tun, was under house arrest.
Investors regard developments in Myanmar's telecoms sector as a litmus test for transparency and regulation.
Operators that have confirmed interest in Myanmar include Sweden's TeliaSonera AB, Malaysia's Axiata, Norway's Telenor and Digicel. (Reporting by Aung Hla Tun; Writing by Martin Petty; Editing by Jeremy Laurence)