* Keen international interest in fledgling market
* Some have abandoned bids on big investments, uncertainty
* Telecoms a test case for reform as Myanmar opens up
By Aung HlaTun and Jared Ferrie
YANGON, June 27 Norway's Telenor and
Qatar's Ooredoo won licences on Thursday to provide
telecommunications services in Myanmar, bringing foreign
companies across one of the world's last telecoms frontiers.
Companies have been lobbying hard to get into the market,
despite the risks of rolling out costly networks in a country
that has yet to pass a law to govern the sector.
Ooredoo plans to spend $15 billion over the 15-year licence
period, including operational and capital expenditure, licence
fees and taxes, Jeremy Sell, Ooredoo chief strategy officer,
told Reuters in a telephone interview.
"The licence is actually a small part of it," said Sell.
He said Myanmar's relative lack of mobile communications
infrastructure was advantageous in that his company would not
need to upgrade old networks, but could create a purpose-built
data network with voice capabilities.
"It's not a mobile phone business we are building, it's a
broadband network," he said, adding Ooredoo's Myanmar operations
were likely to break even after four years.
The Ministry of Communications said that if one of the two
licence winners failed to meet post-selection requirements, the
back-up candidate would be France's Orange in
partnership with Marubeni Corp of Japan.
The winners had "committed to offer a wide range of services
to the public at affordable prices in both urban and rural
areas", it said.
The lower house of parliament voted on Wednesday to delay
the award of the two licences until a new telecommunications law
was enacted, but the government body overseeing the tender said
parliament had no authority to delay the process.
"In the telecom sector, there is geopolitical risk and
regulatory risk and it (Myanmar) has them both," said Ooredoo's
"It's a very young democracy and the organs of state are in
their infancy and don't have much experience, but we were very
pleased the process was so intelligently planned and executed
and with transparency. So if they continue as they have started
we would be very happy."
The winners were selected from a shortlist of 11 bidders,
whittled down from more than 90 companies and consortia that had
expressed interest in working in a fledgling market of 60
million people, where 9 percent at most have a mobile phone.
State-owned Posts and Telecommunications (MPT) is the sole
provider of telecom services, according to its website.
The bidding in Myanmar's first telecoms auction had been
seen as a test case for economic and political change initiated
by the quasi-civilian government that came to power in 2011
after 49 years of military rule.
State-controlled Telenor, which has 150 million customers
worldwide and operates in neighbouring Thailand and Bangladesh,
said it would launch its network next year and achieve
nationwide coverage within five years.
The government has said it will finalise the 15-year
licences by September and the chosen operators would need to
launch services within nine months. They have to provide voice
services across three-quarters of the country within five years
and data services across half of it.
The telecommunications bill is still making its way through
parliament, but the government statement said it was expected to
be passed in the current session.
"These issues could have been raised and addressed with the
government much earlier in the process," said Marae Ciantar, a
lawyer with the Singapore-based firm Allens, which has advised
international telecoms companies seeking to invest in Myanmar.
The motion passed by Myanmar's lower house on Wednesday also
stipulated that licences should go only to bidders that had
domestic companies as partners in a joint venture.
"The attempt to impose such a requirement does give rise to
real concern for investors," said Ciantar.
He noted that the foreign investment law passed last year
did not include such restrictions on the telecoms sector, while
the government "made it very clear during the tender process
that joint ventures with local partners were not required".
Soe Yin, a parliamentarian with the pro-government Union
Solidarity and Development Party, which is made up largely of
retired military officers, said the motion called for further
discussion on the issue, but did not entirely reject the notion
of full foreign ownership.
"Some people are not happy we are giving all these tenders
to the private foreign companies," he told reporters in
Naypyitaw, the capital.
Ooredoo's Sell said there was no obligation under the
licence terms to take its Myanmar unit public, but did not rule
doing so in the future.
"We quite like IPOs - it contributes back to the society we
are making money from, helps to develop capital markets and it's
good for customer loyalty too," said Sell.
Building telecommunications networks is expected to bring a
leap forward in digital technology that could speed up economic
development in Asia's poorest country after Afghanistan.
But Vodafone Group Plc and China Mobile Ltd
abandoned their joint bid, saying it did not meet
their "internal investment criteria".
The remaining short-listed contenders, some of whom had
local or foreign partners, were: Singapore Telecommunications,
KDDI Corp, Digicel, Axiata, Bharti
Airtel, MTN, Vietnam's Viettel, and Millicom
MTN said it "still considers Myanmar an attractive market.
To this end, we will review other options as they become