EXCLUSIVE: Myanmar regulator reveals who will benefit first from new Telecom law

Author: | Published: 21 Mar 2012
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Myanmar’s telecommunications regulator expects special orders allowing domestic companies to provide telecom services to be issued before a proposed new telecommunications law is enacted.

Myanmar’s Post & Telecommunications Department (PTD) this week revealed the country’s outdated telecommunications market was set to open up to foreign investment through a new lawwhich will see four new telecom licenses awarded to both domestic and foreign operators. Foreign companies were previously prohibited from holding such licenses in the country.

PTD deputy director Than Htun Aung told IFLR he did not expect the law to come into effect for up to six months to one year as it first required approval from the country’s attorney general, as well the Myanmar cabinet and parliament.

But he said the government could allow local entrants into the market before the law became effective by way of notification and special orders to provide telecom services in Myanmar.

“It is difficult to say when and how this will happen, but it could be as soon as tomorrow,” he said.

The new law would treat domestic and foreign operators the same, he said. But the license approval process will differ with domestic operator licenses subject to ministerial approval and foreign operator licenses subject to both ministerial and government approval.

The license selection criteria would be based on the availability of resources, such as mobile frequency, amount of investment capital and the effect an operator will have on the country and people, he said. He stressed no region would be given preferential status.

A number of well-known global operators had already expressed interest in applying for a license in the country, he said.

“We’re not really concerned that our legal system or lack of infrastructure will deter foreign operators,” he said. “We have already seen a lot of interest from global players as well as ASEAN and Asian operators.”

“We try to have a strong legal system to protect the operators as well as consumers,” he added.

The plans to issue a new telecoms law was first highlighted in a research report published by Nomura Securities last week. The note, the first Myanmar research note to be issued by a major investment bank, said the telecom sector in Myanmar was likely to be on the radar of most Telcos for incremental investment.

“With around 60 million people and only 4% wireless penetration and 3% fixed, Myanmar is one of the last untapped telco markets in the region,” it read.

The note’s author, Nomura Securities’ managing director and Asian telecoms research head Sachin Gupta told IFLR the domestic appetite for investment in Myanmar’s telecom was uncertain. But Middle East and Asian operators had been keen to invest in the country from some time.

Singapore Telecommunications and Axiata were listed in the report as stocks to watch.

“SingTel already has a strong presence in many countries in the region and would therefore be well placed to connect Myanmar with its regional market infrastructure quickly,” he said.

“Both SingTel and Axiata’s management teams and board strategies favour investment in low-penetration, high-growth markets,” he said. “Myanmar ticks that box.”

He warned, however, that entrants might have to be willing to quickly invest in the country’s infrastructure. But he expected first-movers to be well rewarded.

“It is very hard to justify more than two or three telecom operators being able to build a viable business over the long term in Myanmar,” he said. “GDP per capita is quite low in the country which lowers the potential customer basis. Those first in will be able to tap into Myanmar’s high-end customers.”

Reform of the sector should go hand-in-hand with the country’s economic reforms, he said, and should create tremendous opportunities. But timing was currently the biggest uncertainty.

Than Htun Aung said the new law will introduce competition to the sector which would be beneficial for both the nation and its people.