Myanmar’s fourth mobile operator should have applied for its licence by now, according to a proposed timeline released earlier this year by its joint-venture formation committee.
But the parties involved – preferred foreign partner Viettel, government shareholder Star High Public Company Limited and local consortium Myanmar National Telecom Holding Public Limited – are still at the negotiation table, according to the committee’s chief.
“The negotiations are going very fast, actually,” U Zaw Oo, chair of the joint-venture formation and tender selection work committee, said. “We are going into very detailed negotiations. The stakeholders think it is important to get everything on the table and try to get agreement rather than wait and see.”
“Once the joint venture is formed we should be able to apply for the licence.”
Meanwhile a source familiar with the situation said the negotiations are taking more time than anticipated – and that though there has been agreement on many items, a few significant sticking points remain, particularly around decision-making and the future CEO’s role.
It is still unclear how decisions will be split between the board and executive staff, the source said.
While the fourth operator will combine local and international partners, the government intends the fourth telco to be Myanmar-led.
The new joint venture’s board will be majority-Myanmar, but it is likely that the Viettel side will propose a CEO, subject to board approval. U Zaw Oo said the business model would take cues from what Viettel has done in other countries.
Another challenging item is financing, he said.
“That’s where we are really trying to make sure that there is … a sufficient line of credit and also that the financial sources are ready to kick in,” he said.
To join the local special purpose vehicle that would become Myanmar National Telecom Holding, applicants had to demonstrate they could contribute a minimum of US$3 million to the joint venture.
The source with knowledge of the situation said the three parties together had financial firepower, but that a question was whether they felt comfortable putting their money into a project that could be very challenging in a maturing market.
If a fourth nationwide licence is granted, the new mobile operator must do battle in a tough market against competitors state-owned incumbent Myanma Posts and Telecommunications (MPT) and foreign firms Ooredoo and Telenor.
It may not be starting from scratch, however.
Government shareholder Star High Public Company has access to 1000 towers and more than 13,000 kilometres of fibre, as previously reported by The Myanmar Times.
The firm’s parent company, Myanmar Economic Corporation (MEC), also owns the market’s current, unofficial fourth operator, MECTel.
“As a general principle, the idea is to leverage MECTel’s assets – at least those ones that can be commercially used – as well as the existing subscriber base, to make sure there [are] four operators, not five,” said the source.
“The idea is also that MECtel, through Star High, together with an international operator and the local consortium, becomes a full part of the licensed telecom landscape consisting of four telecom operators.”
U Zaw Oo said the fourth operator will have to move very quickly. It will face fierce competition in a market that has gone from almost zero connectivity to selling nearly enough SIM cards to match Myanmar’s population – with some operators already moving to fourth-generation (4G) services.
Though U Zaw Oo says Viettel is quite familiar with 4G operations, it will not necessarily launch the service in Myanmar. “3G is definitely there, but 2G or 4G is something we have to think carefully [about],” he said.
“We are quite prepared to take on the 4G challenge, but at the same time we should not lose sight of the call customer base we are targeting.”
A recent BMI Research note said that much of Myanmar’s rural population – which makes up the majority of the country – may be sensitive to pricing, and could be a hard sell on using more data.
U Zaw Oo earlier told The Myanmar Times it was suggested the fourth operator “focus more on rural areas as a way to narrow the digital divide”.
The telco will face the same network coverage requirements as Ooredoo and Telenor.
Its licence fee will come at a reduced price, though, as the landscape has changed from when Telenor and Ooredoo entered a greenfield telecoms market only two years ago.
A licence is not an absolute guarantee, as the March press release from the joint-venture committee mentioned the possibility that negotiations could fail.
Ideas on what to do in this case have been floated but not deeply discussed, according to the source.
Source: The Myanmar Times
