Digicel consortium misses out on mobile phone licence for Burma
Analysts speculate that telecom firm may now pay special dividend to shareholders
A CONSORTIUM involving Digicel has missed out on a mobile phone licence for Burma, after the Asian country awarded licences to firms from Norway and Qatar.
Burma, also known as Myanmar, awarded two licences to expand its mobile telecoms infrastructure to Norwegian conglomerate Telenor and Ooredoo of Qatar.
The two firms beat several competitors, including a consortium involving Irish telecoms billionaire Denis O'Brien's Digicel and legendary financier George Soros.
There were 11 groups in the final round.
A group involving France Telecom was named as a backup in case one of the winners doesn't fulfil the tender requirements.
In a statement, the Digicel consortium said it was "disappointed" not to have been successful in its bid.
"Digicel remains committed to exploring commercial opportunities in Myanmar and will be evaluating these on an ongoing basis," the group said.
Mr O'Brien, Digicel chairman and founder, thanked the Burma government and "congratulated the successful applicants". His consortium was made up of YSH Finance Limited, Quantum Strategic Partners and Digicel.
Analysts speculated recently that missing out on the Burma licence may prompt the Caribbean-based company to return more funds to shareholders. JP Morgan suggested last week the company may pay a special dividend if the Burma deal turned sour.
"(Digicel) only paid $10m (€7.5m) of dividends in Q4 2013, similar to Q2 and Q3, after paying a special dividend of $300m Q1," said Jacob Steinfeld in a note to clients. "If the company is unsuccessful in its bid in Myanmar, we would expect the company to pay a special dividend, given its restricted payment capacity of approximately $950m at (its subsidiary) Digicel Limited and $1.4-1.5bn at Digicel Group Limited and its high cash balance," Mr Steinfeld added.
The licence announcements end a six-month race that drew 91 expressions of interest to operate in the country of 64 million people. The licenses are seen as among the biggest prizes for foreign companies since President Thein Sein allowed greater political and economic freedom after taking power in 2011.
The government proceeded with naming the winners even after parliamentarians moved yesterday to delay the announcement. Set Aung, deputy minister of national planning and economic development, who is overseeing the process, said the process would only stop on Thein Sein's orders.
"In the telecom sector, there is geopolitical risk and regulatory risk and it (Burma) has them both," said Jermey Sell from the winning Ooredoo consortium.
"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." (Additional reporting by Bloomberg and Reuters)