Myanmar's state-backed telcos seek backing to take on new rivals

By Jared Ferrie

YANGON, Sept 17 (Reuters) - Myanmar's two state-backed
telecommunications operators are seeking investors to put in
more than $1 billion as they prepare to compete with foreign
newcomers, Norway's Telenor (Other OTC: TELNF - news) and Qatar's Ooredoo
.

Telenor and Ooredoo won the bidding for two new licences in
June to provide telecoms services in the country but are still
waiting for final approval, expected this month, so they can
start building their networks.

Meanwhile two state-backed firms - Yatanarpon Teleport (YTP)
and Myanmar Post and Telecommunications (MPT) - already hold
active licences. YTP functions primarily as an internet service
provider while MPT, a department of the Communications Ministry,
acts as both a regulator and operator.

But Myanmar has the lowest mobile market penetration rate in
the world and of its population of about 60 million, 9 percent
at most have a mobile phone.

Tin Win, chief executive of YTP, said the formerly
state-owned enterprise had recently been privatised, with the
government's stake limited to 5 percent. He did not give details
about the privatisation process and declined to say who now owns
the rest of YTP.

He said he was waiting for the government to announce new
licensing and radio spectrum fees before determining the exact
amount of capital the company will need to develop its
operations.

"We estimate the investment is going to be a minimum $1
billion," he told Reuters. He declined to say how the company
planned to raise the capital.

MPT, which operates the only existing telecoms network, said
it was looking for investment but declined to say how much.

The government plans to hive off the regulatory side of MPT
and privatise the operator division within two years, with the
new company called Myanmar Telecommunications Corporation.

The state will own 12 percent of the new company, said a
senior MPT official who requested anonymity as he was not
authorised to speak to the media.

TEST CASE

He said MPT was discussing partnerships with companies from
France, Japan, Singapore and Thailand.

The winners of June auction were selected from a shortlist
of 11 bidders, whittled down from more than 90 companies and
consortia that had expressed interest.

A partnership between Japan's Marubeni Corp and
France's Orange (Other OTC: FNCTF - news) was chosen as the runner-up in June's
auction, ready to step in if Telenor or Ooredoo fell at the last
hurdle.

Japan's KDDI and Singapore Telecommunications
were among the companies shortlisted.

Tom Wright, a spokesman for Orange, said it had signed an
agreement with MPT to connect its customers to Orange's roaming
hub, which covers 150 countries. A spokeswoman for Singtel (SES: E1:Z74.SI - news) said
the company "continues to seek opportunities in Myanmar".

The country'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.

The huge investment needed and the uncertain returns caused
at least one contender, the shortlisted partnership between
China Mobile and Vodafone (LSE: VOD.L - news) , to pull out.

Telenor told Reuters it was finalising plans to share the
cost of rolling out a network shared with other companies, which
it declined to name until deals were signed.

Andreas Hipp, CEO of global communications company Epsilon,
said he was surprised when shown a map of Myanmar's fibre optic
network. "That kind of infrastructure a little village has in
the south of England," he said.

Epsilon has signed a deal with YTP that Hipp said would give
international companies higher quality connectivity to Myanmar.
As YTP expands its network throughout Myanmar, offering faster
Internet speeds, Epsilon will help it to connect businesses with
the rest of the world, he said.

http://www.information.myanmaronlinecentre.com/myanmars-state-backed-telcos-seek-backing-to-take-on-new-rivals/