Myanmar mobile phone concessions: The bidders

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Myanmar mobileMyanmar will grant two concessions for mobile phone providers on June 27, with Qatar’s Ooredoo being the most generous bidder with an investment pledge of $15 billion.

Below a comparison of the bidders and their pros and cons as per Myanmar-based consultancy Thura Swiss.

France Telecom-Orange and Marubeni
France Telecom-Orange is a Paris- and NYSE-listed telecoms operator with sales of 43.5 billion euros in 2012 and a presence in 32 countries. Marubeni is a diversified Japanese conglomerate with operations in 65 countries and a total of 120 offices. The technical expertise of the consortium is a strength as both firms have broad experience in various telecoms markets as technical operators. However, the consortium’s lack of a local partner could weaken their chanc-es as they may have trouble understanding local preferences. To patch this weakness, Elie Girard, Executive Vice President of Group Strategy and Development at Orange stressed that Orange will partner either with non-telecoms oper-ators or smaller size operators if it wins the tender. The consortium has announced plans to invest $1 billion for the installation of communication towers, an amount significantly lower than other competitors, which would weaken its competency in terms of financial capability, a criteria prescribed by the Telecommunications Operator Tender Evaluation and Selection Committee. On the marketing front, the consortium hasn’t pursued the same wide scale marketing activities of some of its rivals, who have announced plans to help local people in various ways.

Airtel Consortium
Bharti Airtel is a global telecoms giant with a presence in 21 countries across Asia and Africa. Headquartered in India, Airtel is the world’s 4th largest telecom company. The company is listed on the National Stock Exchange of India and had revenues of over $7 billion in 2012. The strength of Airtel lies in its experience in markets such as India, Sri Lanka, Bangladesh and African countries where infrastructure is similar to Myanmar’s. Its expertise in operating in those countries would potentially be beneficial to the company in identifying Myanmar’s needs and filling the gaps. Like Orange, Airtel has decided not to work with a local partner, and it may have trouble understanding the mindset of Myanmar consumers. Sunil Mittal, Chairman of Bharti Airtel, has announced plans to invest $1 billion in Myanmar upon securing a license, which, similar to Orange’s figure, is lower than other competitors. Another of Airtel’s strengths may be its ability to raise money to finance infrastructure, as the Doha-based Qatar Foundation Endowment is a major shareholder.

Millicom International Cellular S.A.
Millicom International Cellular S.A., a Luxembourg-based telecommunications and mobile provider, is a prominent telecoms operator in Latin American and Africa where it has already reached tens of millions of people through its brand ‘Tigo’. Myanmar will become its first Asian market if the company wins the tender. Millicom has yet to announce how much it will invest in Myanmar if it wins. We think that Millicom has a lower chance of probability in winning compared to its competitors because the company has been behind to some extent in terms of public exposure, marketing/PR strategy and brand management in Myanmar which makes it rather difficult to stand out among competitors for the Myanmar public. One of its strengths is that it has broad experience in developing countries, but with other competitors in the tender also sharing this strength, Millicom is a long-shot.

MTN Consortium (MTN Dubai+ M1 Limited+ Amara Communications)
MTN is one of the world’s largest mobile operators, with nearly 200 million subscribers across Africa, Asia and the Middle East. Headquartered in South Africa, MTN has a market capitalisation of $36 billion, annual revenues of $18 billion, and is a market leader in 70 per cent of the 22 countries in which it operates. MTN Dubai Limited is a wholly-owned subsidiary of MTN Group. M1 Limited is Singapore’s second largest mobile operator after SingTel and it was established in 1997. The local telecoms company in the consortium, Amara Communications, is a subsidiary of IGE Company Limited which is owned by the family members of former Minister for Industry-1 U Aung Thaung, who has widespread business interests in the country. Amara Communications’ main projects have been in Rakhine State, where it has been constructing base transceiver stations. Unlike its major competitors such as Digicel and Singtel Consortium, MTN Consortium has been relatively weak in its marketing/PR strategy with very limited public exposure. There is no online/Facebook presence for MTN Group in Myanmar and no sponsorships of sporting events. On the other hand, the MTN Consortium has just launched the Y’ello Care Programme in Myanmar which is a corporate social responsibility initiative that aims to improve local human resources. One of MTN’s perceived weaknesses is its supposedly inferior telecommunications technology, however having an influential and strong local partner is an advantage.

Axiata
Axiata, headquartered in Kuala Lumpur, is Asia’s third largest mobile services group with mobile operations in 9 countries across Asia. The company is valued at close to $19 billion and with cash reserves of $2.8 billion. It recorded $5.7 billion in revenues during 2012. The company has not yet publicly disclosed the amount it will invest in Myanmar if it wins. Axiata’s expertise in expanding mobile network across developing countries in Asia would benefit its operations in Myanmar. The company has been doing well in terms of marketing through social networks which would help them attain customers’ loyalty. Simon Parkin, CEO of Axiata Group, has promised to sell 500 kyats prepaid cards if granted a license. If the selection committee weighs non-telecommunication elements, such as political ties and eco-nomic and historical relationships heavily, Axiata would not be favored as a frontrunner because the bilateral trade between Malaysia and Myanmar was about $455.45 million in fiscal year 2011-2012, which ranks Malaysia 7th among Myanmar’s major trade partners. The selection committee may also take into consideration the recent attacks on Myanmar workers in Malaysia and the Malaysian Government’s reluctance to take action against the perpetrators.

KDDI Consortium (KDDI+ Sumitomo + MICTDC+ A1 Construction)
KDDI is one of the few competitors in the tender who has chosen to work with a local partner. Alongside Japanese con-glomerate Sumitomo Corporation, KDDI has two Myanmar partners— Myanmar Information and Communication Technology Development Corporation (MICTDC) and A1 Construction Company Ltd. KDDI is Japan’s second largest tele-coms operator with revenues of $41.30 billion in 2012. Sumitomo Corporation has been active in Myanmar for some time, assisting in infrastructure development projects such as helping the Myanmar government in building a fiber-optic telecommunications network. Myanmar Information and Communication Technology Development Corpo-ration (MICTDC) is a public company which was formed in 2001 to help develop the IT sector in Myanmar. A1 Construc-tion Company is a major construction firm in Myanmar. With the variety of players in its consortium, KDDI is seen as a strong contender, being helped by the Japanese government’s decision to write off billions of dollars of Myanmar’s debt. There is also a possibility that one telecom license could be launched as a CDMA network. This would be a major advantage for the KDDI consortium as KDDI has experience running large scale CDMA networks in Japan. A1 Construc-tion adds construction expertise which would help in developing the network’s infrastructure, and MICTDC adds anoth-er local partner with local IT experience and a large network of connections. For these reasons we view the KDDI con-sortium as one of the top contenders for a license. One of its weaknesses is its local marketing strategy, which hasn’t been as prevalent as other competitors.

SingTel Consortium (SingTel + Kanbawza Bank + MTel)
Headquartered in Singapore, SingTel is one of Asia’s largest operators with a presence in Indonesia, the Philippines, Thailand and Bangladesh as well as Singapore and Australia. SingTel had revenues of over $14 billion in 2012. Kanbawza Bank (KBZ), which is owned by U Aung Ko Win, is Myanmar’s largest bank and is also involved in airlines, construction, mining and other industries. KBZ Bank paid the most taxes of any company in Myanmar in 2011 and the second most in 2012. Myanmar Telecom Company (MTel), a relatively small local company, is involved in telecoms infrastructure and construction. The SingTel consortium is one of the strongest contenders in the tender. The strong historical ties between Singapore and Myanmar, and the fact that Singapore offered assistance to Myanmar when it was shunned by other countries, bodes well for SingTel. SingTel has the technical experience, two local partners, and a decent brand in Myanmar, with many people knowing the name SingTel from having called relatives living in Singapore. One issue the consortium will face is the role of KBZ Bank. There are various opinions about KBZ in Myanmar, with some people feeling that it has had affiliations with the former military government that resulted in favourable treatment, while other saying that it provides vital banking services and is professionally run. It remains to be seen how KBZ’s reputation will affect SingTel’s bid.

Viettel
Viettel is Vietnam’s largest mobile operator. The company is owned and operated by the Vietnamese military and had revenues of $6.6 billion in 2012, 10.6 per cent of which was accounted for by the firm’s overseas operations. Viettel has a presence in seven countries including Cambodia and Laos. Economic and political relations between Vietnam and Myanmar have improved in recent years, with major Vietnamese investors looking at moving into Myanmar. This bodes well for Viettel, but the fact that it is owned by the military will surely be an issue in Myanmar. A foreign military having nominal control over one of a country’s major telecoms network is a red flag, and the fact that Vietnam remains ostensibly socialist, is likely to be a sticking point in the newly democratic Myanmar. Likewise, Viettel’s marketing push has been smaller than many of the other firms in the tender, and there are also questions about its technical capacity. With all of these factors working against it, we see Viettel as having a slim chance of winning.

Digicel Consortium (Digicel + Quantum Strategic Partners + YSH Finance)
Digicel is a private Jamaica-based telecoms company with operations in 31 countries, mostly in the Caribbean and Central America. Digicel is owned by Denis O’Brien, an Irish businessman, and has been active in Myanmar for years. Digicel’s consortium includes George Soros’ Quantum Strategic Partners and YSH Finance, a joint venture between Yoma Strategic Holdings and local company First Myanmar Investment (FMI). The consortium is seen as one of the strongest competitors in the tender because it combines an experienced telecoms firm with access to enormous capital and local knowledge. In our view, Digicel has produced the best marketing campaign of all the firms involved. It has sponsorships of local football teams, billboards, newspaper ads, pamphlets, and a strong online strategy. In short, Digicel is everywhere in Myanmar right now. The consortium has announced plans to invest about $9 billion if it wins the tender, a number which is much higher than those announced by other firms. Digicel already employs 893 people in Myanmar and has revealed that 7,000 more will be employed if its bid is accepted. We also see Digicel’s partnership with Serge Pun, Chairman of FMI and Yoma Strategic as a positive factor for the consortium, as Mr. Pun has a reputation for getting things done in Myanmar. One of the weaknesses of this consortium is George Soros, who funded the Burma Project, an anti-government group operating on the Thai-Myanmar border for many years. Will influential individuals on the selection committee view this activity as a catalyst in the democracy movement, or as anti-Myanmar?

Telenor
Telenor is a state-owned Norwegian company with operations in 11 markets. The company recorded revenues of $4.3 billion in 2012. Telenor has not revealed the amount of money it will spend, and has chosen not to work with a local company, probably because its State-owned status makes partnerships with local companies difficult. Aside from Digicel, Telenor has run one of the best marketing campaigns of any company, with constant mentions in news sources. Starting from almost nothing, the company has been able to build a recognisable brand quickly, and we see this a a key strength. One of the company’s weaknesses it that it lacks the strong government relations that will help SingTel and KDDI. Although Norway has forgiven Myanmar’s debt and was more pragmatic in recognising Myanmar’s new government than other European countries, it has also long been the home of the Democratic Voice of Burma, an anti-government media organisation. This is an issue that is similar to George Soros. Will Norway be seen as a promoter of democracy or a place that supported anti-government activity for many years?

Qatar Telecom (Ooredoo)
Ooredoo, Qatar’s national telecom company (formerly QTel) has operations in 17 markets across the Middle East, North Africa, and Asia. Ooredoo recorded $9.26 billion in revenues in 2012. The company has kept a much lower profile than most of the other companies in the tender, and its brand is virtually unknown in Myanmar. It did capture headlines when it announced that it would spend $15 billion in Myanmar if it is chosen for a license. The company also announced that its networks would reach 90 per cent of the population in Myanmar within 2 years, accomplished by constructing 10,000 base stations. Besides the fact that it has promised to spend the largest amount of money of any contender, the firm has not established a solid connection with local people, and it remains to be seen if financial considerations will outweigh other factors. With increasing violence between Muslims and Buddhists in Myanmar, granting the license to a nominally Islamic country could potentially stir negative political reactions from Myanmar Buddhists, which the committee will need to take into consideration.

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Reading Time: 8 minutes

Myanmar will grant two concessions for mobile phone providers on June 27, with Qatar’s Ooredoo being the most generous bidder with an investment pledge of $15 billion.

Reading Time: 8 minutes

Myanmar mobileMyanmar will grant two concessions for mobile phone providers on June 27, with Qatar’s Ooredoo being the most generous bidder with an investment pledge of $15 billion.

Below a comparison of the bidders and their pros and cons as per Myanmar-based consultancy Thura Swiss.

France Telecom-Orange and Marubeni
France Telecom-Orange is a Paris- and NYSE-listed telecoms operator with sales of 43.5 billion euros in 2012 and a presence in 32 countries. Marubeni is a diversified Japanese conglomerate with operations in 65 countries and a total of 120 offices. The technical expertise of the consortium is a strength as both firms have broad experience in various telecoms markets as technical operators. However, the consortium’s lack of a local partner could weaken their chanc-es as they may have trouble understanding local preferences. To patch this weakness, Elie Girard, Executive Vice President of Group Strategy and Development at Orange stressed that Orange will partner either with non-telecoms oper-ators or smaller size operators if it wins the tender. The consortium has announced plans to invest $1 billion for the installation of communication towers, an amount significantly lower than other competitors, which would weaken its competency in terms of financial capability, a criteria prescribed by the Telecommunications Operator Tender Evaluation and Selection Committee. On the marketing front, the consortium hasn’t pursued the same wide scale marketing activities of some of its rivals, who have announced plans to help local people in various ways.

Airtel Consortium
Bharti Airtel is a global telecoms giant with a presence in 21 countries across Asia and Africa. Headquartered in India, Airtel is the world’s 4th largest telecom company. The company is listed on the National Stock Exchange of India and had revenues of over $7 billion in 2012. The strength of Airtel lies in its experience in markets such as India, Sri Lanka, Bangladesh and African countries where infrastructure is similar to Myanmar’s. Its expertise in operating in those countries would potentially be beneficial to the company in identifying Myanmar’s needs and filling the gaps. Like Orange, Airtel has decided not to work with a local partner, and it may have trouble understanding the mindset of Myanmar consumers. Sunil Mittal, Chairman of Bharti Airtel, has announced plans to invest $1 billion in Myanmar upon securing a license, which, similar to Orange’s figure, is lower than other competitors. Another of Airtel’s strengths may be its ability to raise money to finance infrastructure, as the Doha-based Qatar Foundation Endowment is a major shareholder.

Millicom International Cellular S.A.
Millicom International Cellular S.A., a Luxembourg-based telecommunications and mobile provider, is a prominent telecoms operator in Latin American and Africa where it has already reached tens of millions of people through its brand ‘Tigo’. Myanmar will become its first Asian market if the company wins the tender. Millicom has yet to announce how much it will invest in Myanmar if it wins. We think that Millicom has a lower chance of probability in winning compared to its competitors because the company has been behind to some extent in terms of public exposure, marketing/PR strategy and brand management in Myanmar which makes it rather difficult to stand out among competitors for the Myanmar public. One of its strengths is that it has broad experience in developing countries, but with other competitors in the tender also sharing this strength, Millicom is a long-shot.

MTN Consortium (MTN Dubai+ M1 Limited+ Amara Communications)
MTN is one of the world’s largest mobile operators, with nearly 200 million subscribers across Africa, Asia and the Middle East. Headquartered in South Africa, MTN has a market capitalisation of $36 billion, annual revenues of $18 billion, and is a market leader in 70 per cent of the 22 countries in which it operates. MTN Dubai Limited is a wholly-owned subsidiary of MTN Group. M1 Limited is Singapore’s second largest mobile operator after SingTel and it was established in 1997. The local telecoms company in the consortium, Amara Communications, is a subsidiary of IGE Company Limited which is owned by the family members of former Minister for Industry-1 U Aung Thaung, who has widespread business interests in the country. Amara Communications’ main projects have been in Rakhine State, where it has been constructing base transceiver stations. Unlike its major competitors such as Digicel and Singtel Consortium, MTN Consortium has been relatively weak in its marketing/PR strategy with very limited public exposure. There is no online/Facebook presence for MTN Group in Myanmar and no sponsorships of sporting events. On the other hand, the MTN Consortium has just launched the Y’ello Care Programme in Myanmar which is a corporate social responsibility initiative that aims to improve local human resources. One of MTN’s perceived weaknesses is its supposedly inferior telecommunications technology, however having an influential and strong local partner is an advantage.

Axiata
Axiata, headquartered in Kuala Lumpur, is Asia’s third largest mobile services group with mobile operations in 9 countries across Asia. The company is valued at close to $19 billion and with cash reserves of $2.8 billion. It recorded $5.7 billion in revenues during 2012. The company has not yet publicly disclosed the amount it will invest in Myanmar if it wins. Axiata’s expertise in expanding mobile network across developing countries in Asia would benefit its operations in Myanmar. The company has been doing well in terms of marketing through social networks which would help them attain customers’ loyalty. Simon Parkin, CEO of Axiata Group, has promised to sell 500 kyats prepaid cards if granted a license. If the selection committee weighs non-telecommunication elements, such as political ties and eco-nomic and historical relationships heavily, Axiata would not be favored as a frontrunner because the bilateral trade between Malaysia and Myanmar was about $455.45 million in fiscal year 2011-2012, which ranks Malaysia 7th among Myanmar’s major trade partners. The selection committee may also take into consideration the recent attacks on Myanmar workers in Malaysia and the Malaysian Government’s reluctance to take action against the perpetrators.

KDDI Consortium (KDDI+ Sumitomo + MICTDC+ A1 Construction)
KDDI is one of the few competitors in the tender who has chosen to work with a local partner. Alongside Japanese con-glomerate Sumitomo Corporation, KDDI has two Myanmar partners— Myanmar Information and Communication Technology Development Corporation (MICTDC) and A1 Construction Company Ltd. KDDI is Japan’s second largest tele-coms operator with revenues of $41.30 billion in 2012. Sumitomo Corporation has been active in Myanmar for some time, assisting in infrastructure development projects such as helping the Myanmar government in building a fiber-optic telecommunications network. Myanmar Information and Communication Technology Development Corpo-ration (MICTDC) is a public company which was formed in 2001 to help develop the IT sector in Myanmar. A1 Construc-tion Company is a major construction firm in Myanmar. With the variety of players in its consortium, KDDI is seen as a strong contender, being helped by the Japanese government’s decision to write off billions of dollars of Myanmar’s debt. There is also a possibility that one telecom license could be launched as a CDMA network. This would be a major advantage for the KDDI consortium as KDDI has experience running large scale CDMA networks in Japan. A1 Construc-tion adds construction expertise which would help in developing the network’s infrastructure, and MICTDC adds anoth-er local partner with local IT experience and a large network of connections. For these reasons we view the KDDI con-sortium as one of the top contenders for a license. One of its weaknesses is its local marketing strategy, which hasn’t been as prevalent as other competitors.

SingTel Consortium (SingTel + Kanbawza Bank + MTel)
Headquartered in Singapore, SingTel is one of Asia’s largest operators with a presence in Indonesia, the Philippines, Thailand and Bangladesh as well as Singapore and Australia. SingTel had revenues of over $14 billion in 2012. Kanbawza Bank (KBZ), which is owned by U Aung Ko Win, is Myanmar’s largest bank and is also involved in airlines, construction, mining and other industries. KBZ Bank paid the most taxes of any company in Myanmar in 2011 and the second most in 2012. Myanmar Telecom Company (MTel), a relatively small local company, is involved in telecoms infrastructure and construction. The SingTel consortium is one of the strongest contenders in the tender. The strong historical ties between Singapore and Myanmar, and the fact that Singapore offered assistance to Myanmar when it was shunned by other countries, bodes well for SingTel. SingTel has the technical experience, two local partners, and a decent brand in Myanmar, with many people knowing the name SingTel from having called relatives living in Singapore. One issue the consortium will face is the role of KBZ Bank. There are various opinions about KBZ in Myanmar, with some people feeling that it has had affiliations with the former military government that resulted in favourable treatment, while other saying that it provides vital banking services and is professionally run. It remains to be seen how KBZ’s reputation will affect SingTel’s bid.

Viettel
Viettel is Vietnam’s largest mobile operator. The company is owned and operated by the Vietnamese military and had revenues of $6.6 billion in 2012, 10.6 per cent of which was accounted for by the firm’s overseas operations. Viettel has a presence in seven countries including Cambodia and Laos. Economic and political relations between Vietnam and Myanmar have improved in recent years, with major Vietnamese investors looking at moving into Myanmar. This bodes well for Viettel, but the fact that it is owned by the military will surely be an issue in Myanmar. A foreign military having nominal control over one of a country’s major telecoms network is a red flag, and the fact that Vietnam remains ostensibly socialist, is likely to be a sticking point in the newly democratic Myanmar. Likewise, Viettel’s marketing push has been smaller than many of the other firms in the tender, and there are also questions about its technical capacity. With all of these factors working against it, we see Viettel as having a slim chance of winning.

Digicel Consortium (Digicel + Quantum Strategic Partners + YSH Finance)
Digicel is a private Jamaica-based telecoms company with operations in 31 countries, mostly in the Caribbean and Central America. Digicel is owned by Denis O’Brien, an Irish businessman, and has been active in Myanmar for years. Digicel’s consortium includes George Soros’ Quantum Strategic Partners and YSH Finance, a joint venture between Yoma Strategic Holdings and local company First Myanmar Investment (FMI). The consortium is seen as one of the strongest competitors in the tender because it combines an experienced telecoms firm with access to enormous capital and local knowledge. In our view, Digicel has produced the best marketing campaign of all the firms involved. It has sponsorships of local football teams, billboards, newspaper ads, pamphlets, and a strong online strategy. In short, Digicel is everywhere in Myanmar right now. The consortium has announced plans to invest about $9 billion if it wins the tender, a number which is much higher than those announced by other firms. Digicel already employs 893 people in Myanmar and has revealed that 7,000 more will be employed if its bid is accepted. We also see Digicel’s partnership with Serge Pun, Chairman of FMI and Yoma Strategic as a positive factor for the consortium, as Mr. Pun has a reputation for getting things done in Myanmar. One of the weaknesses of this consortium is George Soros, who funded the Burma Project, an anti-government group operating on the Thai-Myanmar border for many years. Will influential individuals on the selection committee view this activity as a catalyst in the democracy movement, or as anti-Myanmar?

Telenor
Telenor is a state-owned Norwegian company with operations in 11 markets. The company recorded revenues of $4.3 billion in 2012. Telenor has not revealed the amount of money it will spend, and has chosen not to work with a local company, probably because its State-owned status makes partnerships with local companies difficult. Aside from Digicel, Telenor has run one of the best marketing campaigns of any company, with constant mentions in news sources. Starting from almost nothing, the company has been able to build a recognisable brand quickly, and we see this a a key strength. One of the company’s weaknesses it that it lacks the strong government relations that will help SingTel and KDDI. Although Norway has forgiven Myanmar’s debt and was more pragmatic in recognising Myanmar’s new government than other European countries, it has also long been the home of the Democratic Voice of Burma, an anti-government media organisation. This is an issue that is similar to George Soros. Will Norway be seen as a promoter of democracy or a place that supported anti-government activity for many years?

Qatar Telecom (Ooredoo)
Ooredoo, Qatar’s national telecom company (formerly QTel) has operations in 17 markets across the Middle East, North Africa, and Asia. Ooredoo recorded $9.26 billion in revenues in 2012. The company has kept a much lower profile than most of the other companies in the tender, and its brand is virtually unknown in Myanmar. It did capture headlines when it announced that it would spend $15 billion in Myanmar if it is chosen for a license. The company also announced that its networks would reach 90 per cent of the population in Myanmar within 2 years, accomplished by constructing 10,000 base stations. Besides the fact that it has promised to spend the largest amount of money of any contender, the firm has not established a solid connection with local people, and it remains to be seen if financial considerations will outweigh other factors. With increasing violence between Muslims and Buddhists in Myanmar, granting the license to a nominally Islamic country could potentially stir negative political reactions from Myanmar Buddhists, which the committee will need to take into consideration.

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