Business

Digicel goes after Myanmar

BY CAMILO THAME Business Co-ordinator thamec@jamaicaobserver.com

Friday, February 01, 2013    

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DIGICEL Group has officially thrown its hat in the ring to be considered for a telecommunications licence in Myanmar, formerly known as Burma.

The company said that it submitted its expression of interest in a bidding process, which is expected to yield two new licensed operators within the next five months.

Already, at least four other telecommunications companies have officially expressed interest, according to several news reports, and the tender selection committee has pushed back the deadline for submissions by 10 working days to February 8.

Even while the deadline extension may allow even more suitors to show their interest, the companies that emerge the winner will have to have deep pockets to meet the Government's push for higher teledensity.

Myanmar's government aims to increase overall teledensity to 75 per cent to 80 per cent by 2016, even though the 5.4 million mobile phone subscribers and the 600,000 fixed-line users, as at the end of December, placed teledensity at less than 10 per cent of the population.

Digicel's founder Denis O'Brien has already said he is willing to lay down significant capital. He was quoted by the The Myanmar Times in September to say that he was prepared to invest up to US$1 billion into developing the telecommunications network.

But Singapore's SingTel, Norway's Telenor, Malaysia's Axiata Bharti, and India's Airtel are also named among the bidders so far.

Airtel already has over 240 million wireless subscribers and serves 20 markets in South Asia, compared to Digicel's 13 million customers across its 31 markets in the Caribbean, Central America and the Pacific.

Singtel boasts even more, with 426 million subscribers, and is a major investor in the SEA-ME-WE-3 submarine fibre-optic cable, which is part of the Myanmar's international telecommunications link.

Both Axiata, which is in neighbouring Bangladesh, and Telenor, which operates in Scandinavia, Eastern Europe and Asia has over 200 million subscribers, while all four are sitting on billions of dollars in capital more than Digicel.

What the selection committee will use to decide who gets the licences are still not clear, but the South-East Asian country will require the winners of the two nationwide telecommunications licences, which it intends to award by the end of the first half of 2013, to "meet or exceed specified population and geographic coverage targets".

"There will also be a requirement to commit to reasonable tariffs and low initial registration fees in order to facilitate the Union Government's accessibility and teledensity targets," said tender documents.

Digicel has had its eye on Myanmar for some time now.

"We have been looking at the opportunities in Myanmar for several years," said Digicel in response to Caribbean Business Report questions. It has even began spending on sport development there, having already gone through one year of a two-year sponsorship of Myanmar's Football Federation.

The company boasts having substantial success in driving mobile penetration in previously underserved markets.

"Most notably in Haiti where mobile penetration was just five per cent prior to Digicel's 2006 launch, now stands at approximately 50 per cent," said Digicel in a press statement issued on Wednesday.

Indeed, much like Haiti, Myanmar has low penetration against the background of limited infrastructure and low income.

Both countries' GDP per capita are below US$1,000, and almost half of the mobile subscribers in Myanmar are currently located in the country's two largest urban centres Yangon (with 1.8 million subscribers, or 25 per cent of the city's popluation) and Mandalay (860,000, or 12 per cent penetration).

On the other hand, Myanmar is more than 20 times the size of Haiti in terms of land area, and has more than six times the population size.

Myanmar's telecommunications sector reforms aim to "increase by tenfold access to quality telecommunication services; make services affordable for its citizens; and develop the required Information and Communication Technologies (ICT) infrastructure in the Republic of the Union of Myanmar that will facilitate inclusive growth and poverty reduction", according to the tender document.

"Wherever we do business, we ensure that the people of that country benefit from our presence and significant investments in infrastructure," said Colm Delves, Digicel Group's CEO. "There is so much potential in Myanmar and, by offering first class and first world communications services that enable the people of Myanmar to achieve extraordinary things in their day-to-day lives — and supporting individuals and communities — we can help them as they affect positive change."

To date, Digicel has invested US$4.5 billion worldwide.

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