Disconnected for decades, Myanmar poised for telecoms boom

It's no surprise this country of 60 million people has the world's second-lowest cellphone penetration after North Korea; SIM cards are made prohibitively pricey to prevent its tiny network from becoming overloaded, while emailing and web-surfing on phones is so rare it's almost a bourgeois concept.

Even getting hooked up to the network is cumbersome. Visitors must rent SIM cards at the airport on arrival while many Burmese can only afford one-time SIMs with a number that expires after a few days when its USD 20 of credit runs out.

But as Myanmar races ahead with economic reforms, the telecoms sector, riven with graft and mismanagement and lagging behind even Asia's poorest countries, is on the verge of a major shake-up as part of a "reform plan" to liberalise one of the world's last remaining greenfield telcos markets.

Details of the plan are scant, but Myanmar appears to have finally got its act together and insiders say it could announce its plans this week.

Eager to attract foreign investors to one of Asia's poorest countries, the government could make telecoms the first sector to be liberalised. After a year of stumbling and opaque deals that favoured vested local interests, speed and transparency now appear to be the priority.

"We're going to finish it soon, we really cannot wait," Kyaw Soe, a senior official at the Ministry of Communications, Posts and Telegraphs, told Reuters. "It's closely related to economic growth of our nation, so this is a priority sector."

Last month, 11 companies from 10 countries, including Japan, Australia, Germany and the United States, were short-listed from 64 applicants to become consultants and prepare a telecoms license tender. The list is now down to three.

Kyaw Soe said a total of four operating licenses would be granted; two for Myanmar companies and two for foreign firms, with 4G services targeted as early as 2013.

A regulator would be formed and state-owned Myanmar Post and Telecommunication -- the country's sole operator -- would be privatised to form the Myanmar Telecoms Company (MTC), which would be awarded one of the cellphone licenses, he said. Another would go to Internet service provider Yataraporn Teleport.

MOUTHWATERING MARKET

A Myanmar telecoms source said it was unlikely the two local firms had the resources to operate alone and would likely form joint ventures, but it was unclear whether more than two foreign firms would be allowed to operate.

Myanmar's low penetration and the hunger for going mobile in a virtually untapped country are mouth-watering prospects for international telecoms firms.

Usage is extremely low, at just 1.24% of the population in 2010, compared with 64% in Laos, 57% in Cambodia and more than 100 percent in Thailand and Malaysia where individual ownership of multiple phones pushes usage above population levels, according to the Asian Development Bank. The Myanmar government says the current level is 5.6%, but experts doubt that.

"The potential is clear to see, but whether that is realised depends on regulation," said Ramakrishna Maruvada, regional head of telecom research at Daiwa Capital Markets. "The problem for foreign firms is there's very little detail in terms of timelines and structure, so very little to hang on to."

Among companies that have confirmed an interest in Myanmar are Sweden's TeliaSonera AB , and two specialists in emerging Asian markets, Malaysia's Axiata