By Jared Ferrie
YANGON, Sept 17 (Reuters) - Myanmar's two state-backedtelecommunications operators are seeking investors to put inmore than $1 billion as they prepare to compete with foreignnewcomers, Norway's Telenor and Qatar's Ooredoo.
Telenor and Ooredoo won the bidding for two new licences inJune to provide telecoms services in the country but are stillwaiting for final approval, expected this month, so they canstart building their networks.
Meanwhile two state-backed firms - Yatanarpon Teleport (YTP)and Myanmar Post and Telecommunications (MPT) - already holdactive licences. YTP functions primarily as an internet serviceprovider while MPT, a department of the Communications Ministry,acts as both a regulator and operator.
But Myanmar has the lowest mobile market penetration rate inthe world and of its population of about 60 million, 9 percentat most have a mobile phone.
Tin Win, chief executive of YTP, said the formerlystate-owned enterprise had recently been privatised, with thegovernment's stake limited to 5 percent. He did not give detailsabout the privatisation process and declined to say who now ownsthe rest of YTP.
He said he was waiting for the government to announce newlicensing and radio spectrum fees before determining the exactamount of capital the company will need to develop itsoperations.
"We estimate the investment is going to be a minimum $1billion," he told Reuters. He declined to say how the companyplanned to raise the capital.
MPT, which operates the only existing telecoms network, saidit was looking for investment but declined to say how much.
The government plans to hive off the regulatory side of MPTand privatise the operator division within two years, with thenew company called Myanmar Telecommunications Corporation.
The state will own 12 percent of the new company, said asenior MPT official who requested anonymity as he was notauthorised to speak to the media.
TEST CASE
He said MPT was discussing partnerships with companies fromFrance, Japan, Singapore and Thailand.
The winners of June auction were selected from a shortlistof 11 bidders, whittled down from more than 90 companies andconsortia that had expressed interest.
A partnership between Japan's Marubeni Corp andFrance's Orange was chosen as the runner-up in June'sauction, ready to step in if Telenor or Ooredoo fell at the lasthurdle.
Japan's KDDI and Singapore Telecommunications were among the companies shortlisted.
Tom Wright, a spokesman for Orange, said it had signed anagreement with MPT to connect its customers to Orange's roaminghub, which covers 150 countries. A spokeswoman for Singtel saidthe company "continues to seek opportunities in Myanmar".
The country's first telecoms auction had been seen as a testcase for economic and political change initiated by thequasi-civilian government that came to power in 2011 after 49years of military rule.
The huge investment needed and the uncertain returns causedat least one contender, the shortlisted partnership betweenChina Mobile and Vodafone, to pull out.
Telenor told Reuters it was finalising plans to share thecost of rolling out a network shared with other companies, whichit declined to name until deals were signed.
Andreas Hipp, CEO of global communications company Epsilon,said he was surprised when shown a map of Myanmar's fibre opticnetwork. "That kind of infrastructure a little village has inthe south of England," he said.
Epsilon has signed a deal with YTP that Hipp said would giveinternational companies higher quality connectivity to Myanmar.As YTP expands its network throughout Myanmar, offering fasterInternet speeds, Epsilon will help it to connect businesses withthe rest of the world, he said.
Vodafone (VOD)