Myanmar picks Vietnam's Viettel for fourth telecom license

 26 Mar 2016 - 17:30

Myanmar picks Vietnam's Viettel for fourth telecom license
Serge Pun of First Myanmar Investment (FMI) talks to reporters at Yangon Stock Exchange (YSX) in Yangon, Myanmar March 25, 2016. REUTERS/Soe Zeya Tun

 

Yangon: Myanmar is granting its fourth telecom licence to a consortium led by a Vietnamese mobile network operator and including a military-run company, as it looks to further open up its young but increasingly competitive telecoms market.

Hanoi-based Viettel will be the third foreign telco to enter the country, tying up with 11 local firms and an outfit owned by Myanmar's defence ministry, according to a government statement Friday.

The tender selection for the 15-year licence comes just days before an army-backed government is scheduled to cede power to the first civilian administration in decades, led by Aung San Suu Kyi's National League for Democracy (NLD).

The military's stake in the venture is likely to fuel running concern that the still-powerful institution is racing to secure its financial clout ahead of the presidential hand-off.

Though it is no longer ruling through an iron-fisted junta, Myanmar's military remains a mighty force in the impoverished country, with army-linked tycoons still pulling the purse strings in many lucrative industries.

Norway's Telenor and Qatar's Ooredoo were the first foreign firms to enter the telecoms market in 2014 after reformist ex-generals opened Myanmar's doors to outside competition.

Before that cell phones were a luxury few could afford, with a state-owned monopoly selling SIM cards for up to US$1,500.

Today the country is teeming with smart phones, cheap SIMs and a lively web culture also made possible by a loosening of junta-era censorship laws.

According to government data, Myanmar's mobile penetration rate sky-rocketed from 9.5 to 77.7 percent in just two years after the foreign firms joined, hailed as "a record speed in the history of mobile telecommunications".

The communications ministry said it hoped the latest competitor would bring more coverage to rural areas, where access remains a challenge due to long-running civil wars between minority ethnic rebels and the military.

The deal with Viettel -- which is run by the Vietnamese military and which will take a 49 percent stake in the joint venture -- is pending a final round of paperwork and negotiations. A licence is expected to be formally granted later this year.

Myanmar has emerged from nearly half a century of brutal junta rule with one of the fastest growing economies in the world, forecast to expand around 8 percent this year.

But the incoming government still faces significant hurdles, including endemic corruption, widespread poverty and decrepit infrastructure.

AFP