Myanmar Telecoms - Ready, Set... Go?

Myanmar's burgeoning telecoms market has been the hottest domestic investment story for 2013, as 2 new foreign companies were selected to compete with 2 existing local providers. For a country with under 10% mobile penetration in a region that averages 80%, Myanmar is due for a communications technology revolution that will offer an extraordinary opportunity for related companies to flourish in 2014.

The new participants have landed on Myanmar soil and eagerly build their teams for the coming months investment frenzy. Ooredoo, the USD 10.8Bn Qatari state-owned provider, and Telenor, the USD 32Bn Norwegian telecoms behemoth, have promised a total of USD 17Bn investment between them to develop infrastructure and customer services for the country.

Both new entrants have exceeded their requirements in promising more than 80% penetration within 5 years. From both the state and private sector, optimism abounds.

Snags

However the foreign companies' licenses have yet to be officially issued, and murmurs from parliament suggest all may not be as smooth as once thought. When the winners of the license tender were to be announced, the lower house in parliament voted for a delay given the new Telecoms Law that would govern the new entrants had not yet been finalised. This decision was overruled by the license tender committee head, U Set Aung, as Telenor and Ooredoo celebrated their success.

Today, 1 month after the Telecoms Law was passed, the licenses have still yet to be received. Meanwhile the local competitors, MPT and YTP, continue to reach out to international partners to add some weight to their competitive stance. The longer the license issuance delay, the stronger the local companies' positions grow.

Itching to go

Some analysts believe the local providers could have a hand in delaying the license issuances, especially as one of the domestic players is a direct subsidiary of the Ministry of Telecoms and Communications. Others believe the disagreement over when to announce the license tender winners is having its repercussions, as different parliament representatives fight for their interests.

Originally the tender and selection process for these licenses was hailed by many as a perfect example of the new transparent and fair governance promised by the country's reformist movement. The government must capitalise on this impression and use the momentum to bring in a fresh wave of investors already eager to participate in the new market.

Expectations for the new Myanmar are immense, and in the 2.5 years since the regime changed tack, the telecoms license tender has been the most impressive example of private sector reform. The government cannot afford to let the issue slip into uncertainty at the last hurdle.