Foreign companies wait to hear if Myanmar will delay licenses for mobile phone network

  • Article by: ROBIN MCDOWELL , Associated Press
  • Updated: June 26, 2013 - 11:24 AM

YANGON, Myanmar — Foreign companies hoping to tap into one of the world's final telecom frontiers grappled with lingering political uncertainties Wednesday after Myanmar's lower house of parliament ruled that licenses for two new cellphone networks should be delayed until a law governing the sector is passed.

The winners of the hotly contested bid were supposed to be announced Thursday, and officials were unable to say if that would change.

Currently fewer than 6 million of country's 60 million people have cellphones, putting it on par with North Korea when it comes to connectivity. The government hopes it will be able to push cellphone usage rates to 80 percent within three years by releasing its grip on the industry.

Those are the kinds of numbers that have left international telecom consortiums salivating.

Of the 90 that initially submitted bids, 11 have been shortlisted including Singapore Telecommunications, Bharti Airtel of India, KDDI Corp. of Japan, Telenor of Norway and Digicel of the Caribbean — some opening offices and even recruiting staff in gleeful anticipation of the announcement.

"It's a great first start," said Richard Dobbs, director of the McKinsey Global Institute. "My only hope is that the winners will move quickly to get broadband — either 2G, 3G or 4G — rolled out countrywide."

He said the government views the opening of telecommunications to foreign investment as an opportunity to spur the type of rapid economic growth that has raised living standards in other developing countries.

"This should not just be about profit maximizing," he said. "It should be about enabling other services."

By using mobile banking and e-commerce the country may be able to spread banking and other consumer services more widely and at a reduced cost. Mobile telecommunications could also extend health and education services to even the remotest villages.

Myanmar, located in the heart of one of the fastest growing regions in the world, became one of the most isolated and poorest nations during its half-century of iron-clad military rule.

After taking control of a quasi-civilian government in 2011, former general Thein Sein started implementing promised political and economic reforms.

But the country faces monumental development challenges. Some roads are almost unnavigable, with pot holes several meters (yards) wide. Electricity blackouts are routine. Real estate prices in the commercial capital, Yangon, rival New York City due to limited supply and a surge in demand brought on by the country's emergence from isolation.

The communications industry, long-neglected by the country's military rulers, is in need of a complete overhaul. That's in part because the original network was intended for only a tiny number of subscribers — mostly the rich. Up until a few years ago, the cost of SIM cards could reach $2,000.

Eric Schmidt, executive chairman of Google, says there are tremendous advantages to starting from scratch.

"You all will have an opportunity to skip all the previous ... generations of technology," he told a group of young business leaders during a visit to Yangon earlier this year.

"You'll have fiberoptic cable in your cities. You'll have 3G and 4G networks that will connect to smartphones. You will literally leapfrog 20 years of difficult to maintain infrastructure."

Experts are quick to point out, however, that while the potential returns for the winners of the bidding are staggering, so are the risks.

Investors preparing to invest billions of dollars are rightly nervous about how political reform will evolve, whether the government can maintain the fragile peace between ethnic groups, and how regulation and ownership rights will develop.

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

Advertisement
Golden Gavel by Star Tribune

Time left for great deals

Bid thru Sept. 29

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close