YANGON (REUTERS) - Japan's KDDI Corp and Sumitomo Corp are likely to partner of Myanmar's state-backed telecommunications operator to expand services in one of the world's least-connected countries, a Sumitomo official said.
Sumitomo's deputy general manager in Myanmar, Mr Soe Kyu, told Reuters the companies were jointly invited into "exclusive" talks about becoming the international partner of Myanmar Post and Telecommunication (MPT), sharing its existing licence. No further details on the likely partnership were revealed.
MPT is currently the country's sole telecoms operator as well as the industry's regulator. The government plans to create a new regulator by 2015 and will divest a part of MPT but will retain a majority stake. That company, with a new name, will be one of four licensed operators.
State-backed Yatanarpon, primarily an Internet service provider until now, also holds a licence. Norway's Telenor and Qatar's Ooredoo won the hotly contested bidding for two new licences in June, but are still waiting for final approval before starting to roll out their networks.
Mr Soe Kyu noted that a partnership between Sumitomo and KDDI had been shortlisted for the two international licences awarded in June. He added that barring any unforeseen circumstances, the consortium would instead agree a partnership with MPT within a couple of months. "This time we are confident," he said.
A senior MPT official told Reuters the government was delaying the final approval of licences for Ooredoo and Telenor until regulations are drawn up following the passage of a telecommunications law in October that allowed foreign telecoms companies to operate for the first time.
Telecommunications were tightly controlled under decades of military dictatorship in Myanmar, with the government monopolising the sector and selling SIM cards for thousands of dollars when they were introduced a decade-and-a-half ago.
As a result, Myanmar had the lowest mobile penetration rate in the world, with Swedish telecoms giant Ericsson saying in 2012 that less than 4 per cent of the country's 60 million people were connected.
Since 2011, a quasi-civilian government has implemented sweeping political and economic reforms and has made telecommunications a key part of its plan to jump-start the economy.
The government has released more SIM cards into the market in recent months, although not nearly enough to satisfy demand and they still sell for about US$160 (S$203). Mobile phone penetration has jumped to 9 per cent, according to government figures.
Ooredoo's Myanmar CEO, Mr Ross Cormac, told Reuters on Oct 31 his company could roll out a network and provide mobile phone and data services in Myanmar's four biggest cities within six months of getting final approval. Ooredoo would reach 97 per cent of the population within five years, he said.
The operators will have their work cut out for them in a country with little infrastructure in rural areas, several ethnic armed groups controlling large swathes of territory, and where land ownership is a complicated and volatile issue.
Law firm VDB Loi, which represents Ooredoo, has urged the government to simplify the process of acquiring land to build towers necessary to extend service across the country.
Mr Cormac told Reuters that Ooredoo plans to share the building and use of infrastructure with Telenor and MPT, or one of the two. He said subcontractors would negotiate with ethnic armed groups to extend the network into territory under their control.