YANGON, June 27 – Myanmar’s contest for two telecommunications licences attracted bidders from around the globe seeking a foothold in one of the last remaining untapped markets, where only one in 10 people has a mobile phone.

The winners are scheduled to be announced today, ending a six-month race that drew 91 expressions of interest to operate in the country of 64 million people.

Norway’s Telenor ASA, Singapore Telecommunications Ltd., billionaire George Soros and France Telecom SA are among the 11 remaining bidding groups.

“It’s a tremendous growth opportunity, but it will require a fair bit of investment, and returns will be long dated too,” said Sachin Gupta, a Singapore-based analyst at Nomura Holdings Inc. “I don’t think it’s going to be an easy exercise for anyone, but having previous green-field experience and strong local partnership should help.”

The licences are among the biggest prizes for foreign companies since Myanmar President Thein Sein moved to allow greater political and economic freedom after taking power in 2011. The US and European Union have moved to ease sanctions, attracting companies such as Coca-Cola Co. and Ford Motor Co. to the former military-run state even as human rights groups warn of abuses against ethnic and religious minorities.

Authorities are completing plans to award the licences and will proceed on schedule, Set Aung, deputy minister of national planning and economic development who is overseeing the process, said yesterday by phone. The process was transparent and complied with international practices, Set Aung said, declining to elaborate on the factors that led to the final decision.

‘Calculated risk’

“I have never seen any investors who are not coming to a country before everything is perfect,” Set Aung said. “All the companies understand there are risks. Some companies probably think there is too much risk, and other companies think it’s a calculated risk.”

Myanmar plans to boost telecom coverage to as much as 80 per cent of the country by 2016. It has a mobile-phone penetration rate of 9 per cent, compared to 70 per cent in Cambodia, 87 per cent in Laos and more than 100 per cent in Thailand, the Communication Ministry said in January.

The government named 12 groups of companies as finalists for two licences that will allow carriers to build and operate a nationwide wireless network in the country for 15 years.

Bidders include Bharti Airtel Ltd., Telenor ASA, Singapore Telecommunications Ltd., Digicel Group Ltd., Axiata Group Bhd., France Telecom SA and Marubeni Corp., KDDI Corp. and Sumitomo Corp., Millicom International Cellular SA, MTN Group Ltd., Qatar Telecom QSC, and Vietnam’s Viettel Group. Four of the bidding groups include a local partner.

Vodafone withdraws

Vodafone Group Plc and China Mobile Ltd., the two biggest mobile-phone companies, withdrew their bid on May 31, saying the returns wouldn’t justify the investment required.

SingTel, which is bidding with KBZ Group and Myanmar Telephone Co., would build a mobile network covering 95 per cent of the country’s population within 36 months, according to a June 11 statement. SingTel has 468 million mobile-phone customers in countries including India, Indonesia, Thailand and the Philippines, according to the company. SingTel also offered to lend assistance to Myanmar’s efforts to launch a national satellite.

KDDI and Sumitomo are bidding along with Myanmar Information and Communication Technology Development Corp. and A1 Construction, while MTN’s group includes local company Amara Communications.

Digicel, Soros

The group led by Digicel, Soros and Myanmar property developer YSH Finance Ltd. pledged to invest US$9 billion. The companies would roll out a so-called fourth-generation mobile network across the country by Dec. 1, and its wireless service will reach 96 per cent of Myanmar’s population by 2016, the group said in a statement June 3.

Telenor on April 12 said it would leverage its experience in operating mobile networks in Thailand, Malaysia, India, Bangladesh and Pakistan “to provide rapid delivery of high- quality mobile network and services throughout Myanmar.” It didn’t disclose an investment value.

France Telecom strategy chief Elie Girard earlier this month described Myanmar as “the biggest telecom desert” with less telephone use than in North Korea or Cuba. The company, bidding with Japan’s Marubeni, is prepared to spend US$1 billion (RM3.2 billion) to build a network by 2019 and will cover more than 75 per cent of the country’s geography in five years, Girard said. Chief executive officer Stephane Richard said June 25 that the company had a “good chance” of winning a licence.

Human rights

Bharti Airtel Ltd., India’s largest mobile carrier, may spend about US$1 billion to set up a network, the Times of India reported on June 8, citing chairman Sunil Bharti Mittal.

Myanmar had 5.44 million mobile-phone subscribers as of December, equivalent to a 9 per cent penetration rate, the government said in January. About 1.3 per cent of the population has access to fixed-phone lines and 0.03 per cent has broadband Internet, according to the Asian Development Bank.

In May, New York-based Human Rights Watch warned that companies bidding for the licences risked being linked to human rights abuses if they invested before laws were in place to protect against illegal surveillance and censorship. – Bloomberg