Digicel consortium fails to win Myanmar mobile licence
DIGICEL has failed to win the contract to provide telecommunications services in Myanmar.
The consortium headed up by Digicel, which owned by billionaire businessman Denis O’Brien, lost out to Norway’s Telenor and Qatar’s Ooredoo.
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.
In a statement, Digicel said the consortium was disappointed in not securing one of the two nationwide telecommunications licences on offer in Myanmar.
"Digicel remains committed to exploring commercial opportunities in Myanmar and will be evaluating these on an ongoing basis," it said.
Mr. Denis O'Brien, representing the consortium which also included - YSH Finance Limited (a joint venture between First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd. 'FMI/Yoma'), Quantum Strategic Partners Ltd. and Digicel Group Limited, thanked the Union Government of Myanmar for the opportunity to be involved in the bidding process.
He also congratulated the successful applicants and wished them well as they prepare to enter the Myanmar market.
A statement posted on the Ministry of Communications' website 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 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 9pc at most have a mobile phone.
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.
"We have established leading mobile operations in five dynamic Asian markets and today's announcement underscores the continued success of Telenor's strategy of delivering accessible and affordable mobile communications services," Sigve Brekke, head of Telenor Asia, said in a statement.
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.
There was a last-minute hiccup when the lower house of parliament voted on Wednesday to delay the award of the two licences until a new telecommunications law was enacted. The government body overseeing the tender said parliament had no authority to delay the process.
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.
The absence of legislation setting out the regulation of the sector had raised concern in the run-up to the announcement and parliament's move on Wednesday added to the uncertainty.
"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.
He added that "investors will likely commend the government for adhering to the announced timetable and process for selecting the winning bidders", but said the timing of the parliamentary motion "does give rise to concerns as to what may really have been behind the decision".
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. "Some of the local businessmen, they are worrying about the future."
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.
Myanmar is one of the world's last telecoms frontiers and companies have been lobbying hard for the chance to get into a potentially huge market. But faced with big investment and uncertain returns, some bidders dropped out of the auction.
Vodafone Group Plc and China Mobile Ltd abandoned their joint bid, saying it did not meet their "internal investment criteria".
Besides Digicel, the other short-listed contenders were: Singapore Telecommunications, KDDI Corp, Axiata, Bharti Airtel, MTN, Vietnam's Viettel, and Millicom International Cellular.