Feb 14, 2013

Russia’s Vimpelcom to Enter Myanmar

Russia’s number 3 mobile operator Vimpelcom Ltd. is considering the possibility of starting work in Myanmar, Russian press reports, citing several sources.

Vimpelcom could bid at a tender for the sale of some of the state shares in Myanmar Post and Telecommunications, a source with knowledge of Vimpelcom’s plans told Interfax.

The news follows the recent announcement by the government of Myanmar that it will open up its telecoms sector to foreign investors via up to three public-private joint ventures with country monopoly operator Myanmar Post and Telecommunications and Yatanarpon Teleport.

State-owned operator Myanmar Post and Telecommunications controls the majority of subscribers on 2G and 3G networks, and Yatanarpon Teleport functions primarily as an Internet service provider.

The last date for submission of bids is August 1, 2012, according to the Ministry of Communications, Posts and Telegraph of Myanmar.

Commenting on the opening of the tender, Myanmar Post and Telecommunications Minister Thein Tun said in parliament: “We have started working on a reform plan to provide telecommunication services to the people at an international standard and at a cheap price.”

Under its draft liberalization framework, the government will retain 51 percent ownership in all telecoms joint ventures, while it intends to impose rollout conditions stipulating coverage of rural areas for all licensees.

The ministry is also planning to introduce a new communications law that will allow for private investment in the telecommunications sector while the government will set up a special privatization commission. This law is one of several reforms designed to make the country more attractive to foreign investors.

“Myanmar is one of the last untapped markets with a huge population and very low [mobile] penetration currently for foreign telcos [to aim for],” Sachin Gupta, regional head of telecommunication research at Nomura Securities, said to ZDNet.

Gupta, in a separate research report released this March, noted that despite having a population of about 60 million people, Myanmar only had around 2-3 million mobile phone subscribers. He also noted that the Internet penetration was below 1 percent, or about 110,000 people.

The artificially high handset costs – at around US$600 to US$1,800 – have been be an obstacle for adoption too, Gupta noted. However, he pointed out that the availability of imported handsets has increased with time, with some costing as low as US$50.
As Myanmar looks toward economic reforms, a huge untapped opportunity may be on the horizon for foreign companies.
In the Asia & Pacific region, Vimpelcom currently provides services in countries including Cambodia and Laos, although it sold its stake in the unprofitable GTel Mobile in Vietnam in April 2012.

Vimpelcom provides voice and data services through a range of landline and broadband mobile technologies in Italy, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Vietnam, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, the Central African Republic and Canada. According to its corporate website, the company’s global operations cover territory with a total population of approximately 864 million people.

Egypt’s Weather Investments II owns 29.6 percent of Vimpelcom’s voting shares. Other stockholders include Norway’s Telenor (25 percent), Russia’s Altimo (24.998 percent) and Cyprus’ Forrielite Ltd. (5.995 percent), with minority stockholders owning the remaining 14.4 percent.

Source: Russia Briefing