Myanmar snubs SingTel and Soros for telecoms licence award

Government officials in Myanmar have chosen Telenor and Qatar Telecom’s Ooredoo to be the first foreign telecoms operators in the country.

The winners of the 15-year concession, announced last night, came as a surprise and showed that Myanmar is willing to make its own decisions as it opens its economy to foreign investors. Many analysts had predicted a comfortable win for SingTel, which was bidding as part of a consortium with Myanmar’s biggest lender, Kanbawza Bank.

“Extensive expertise in large markets with the highest number of mobile customers, especially in low-income markets of Asia Pacific, backing by Singapore sovereign wealth fund Temasek and good government and business relations should make the SingTel-led consortium a top choice,” said a research note from Mandalay Capital ahead of the announcement.

The other favourite was a consortium led by Digicel, a Jamaica-based telecom company that first invested in Myanmar in 2009 and employs close to 900 people in the country, according to Mandalay. The consortium also included George Soros and Serge Pun, Myanmar’s leading businessman, which made the bid a shoo-in as far as most outside observers were concerned.

By contrast, Mandalay ranked Ooredoo’s chances as low, putting it ninth out of the 11 competing bids. However, Telenor was always a strong contender. It lacked the headline-grabbing power of Soros and Pun, but the state-owned Norwegian company has plenty of experience in low-income Asian markets, with spectrum licences in Bangladesh (Grameenphone), India (Uninor), Malaysia (DiGi), Pakistan and Thailand (DTac).

Telenor’s bid was also probably helped by the support of its parent. “The Norwegian government has been one of the most active European countries in Myanmar, supporting and funding various projects, and enjoys a strong relationship with the Myanmar government,” said Mandalay.

If it wins a final licence, Telenor has told shareholders that it will build a 4G-capable mobile network and aims to achieve nationwide coverage within five years. Mobile voice and data services will be commercially launched by 2014.

As with Telenor, Ooredoo enjoys strategic government backing — it is 67%-owned by the State of Qatar and other government-linked entities. It already provides fixed-line and mobile services in Indonesia and Singapore, and operates mobile-only businesses in Laos and the Philippines. The company claims around 60 million customers in Indonesia, which generates a quarter of its global revenues.

Despite its track record in Southeast Asia, Ooredoo is an unlikely winner given the recent wave of anti-Muslim violence in Myanmar, where more than 90% of the population is Buddhist.

However, it is still possible that another bidder could replace the Qatari firm. If Myanmar decides that either Ooredoo or Telenor do not meet the necessary “post-selection requirements”, a consortium comprising France Telecom-Orange and Marubeni Corporation will take their place.