The quest for mobile licenses in Burma is heating up, with
international companies submitting their final bids for contracts that
would give them access to a largely untapped telecom market.
Twelve companies submitted bids in April, and the winners of the two licenses up for grabs will be announced June 27.
Burma has an extremely low mobile penetration rate: less than 10
percent of the population of 62 million currently use mobile phone and
other telecom services. This means the market could be quite profitable
for foreign telecoms that have the opportunity to develop the
infrastructure in Burma and begin putting out affordable products on the
market.
Indian telecom leader Bharti Airtel
submitted its final bid for a license on earlier this week, and is one
of 11 other companies still in the running. Bharti Airtel currently has
operations in India, Bangladesh, Sri Lanka and parts of Africa.
Irish company Digicel is also among those vying for one of the
coveted licenses, and submitted a final bid on June 3 as part of a
consortium with Burma-based Yoma Strategic Holdings and the investor and
philanthropist George Soros’ Quantum Strategic Partners group. The Irish Independent
reported that Digicel is so confident in their chances of being awarded
a license, they have already launched a marketing campaign within
Burma.
The Norwegian Telenor Group is another contender for a license, and
has vowed to give 99 percent of jobs created through their plans to
locals, give out free SIM cards and offer low rates on calls, according
to Eleven Myanmar.
The news outlet quoted Telenor Executive Vice President and Head of
Asia Operations Sigve Brekke as saying, “Myanmar telecommunication
industry has been interested by the international firms and job
opportunities will be abundant.”
While the telecom landscape in Burma appears to be ripe for
investment, there are risks associated with setting up business in the
country. The low penetration rate presents both opportunities and
obstacles, as there may be desire for greater mobile access but even low
costs can be prohibitive for the extremely poor in the country.
The government began distributing low-cost SIM cards (about USD $2)
through a lottery system in April, which signals greater access for
common citizens. The cost of a SIM card was once several hundred USD,
which far exceeds the cost of SIMS and even mobile phones themselves in
places such as neighboring Thailand.
However, some have said that even if they can afford the SIM cards,
they may not be able to afford a phone, making the lottery distribution
somewhat less relevant than it seems. If the companies that are granted
licenses can overcome this and get phones into the hands of large
portions of the population, there is great opportunity for turning a
profit and helping Burma become a more connected country.
Nonetheless, the risks were deemed too great by Vodafone and China
Mobile, who had partnered on an application for a license. They withdrew
their bid at the end of May, however, because the arrangement would not
meet “strict internal investment criteria.”
The opening up of the telecom industry and the interest shown by
foreign companies is part of a larger trend of foreign investment in
Burma. The country has increasingly opened its doors and markets since
democratic reforms began a couple of years ago, and the fact that so
many sectors are undeveloped makes Burma ripe for investment. Indeed,
Coca-Cola recently began production in Burma for the first time in 60 years and announced a five-year, $200 million investment.
Foreign companies setting up in Burma could create many jobs for
locals, improving quality of life and stimulating the economy. But human
rights groups have cautioned that the shiny veneer of investment could
mask the ongoing brutalities being committed against ethnic minorities
and other disenfranchised groups. The government has come under
criticism for resource extraction project deals made with China, which
seem to go ahead heedless of the environmental or humanitarian impact.
Nonetheless, the telecom license process will go ahead, with a
hopefully satisfying and productive result for all parties involved.
Burma has opened to the world a great deal in recent years, but greater
connectedness within the country and outside via improved Internet
connections could be a game-changer for businesses, entrepreneurs and
activists seeking to work with outside companies and organizations.
source: Asia Correspondent
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