* Keen international interest in fledgling market
* Some have abandoned bids on big investments, uncertainty
* Telecoms a test case for reform as Myanmar opens up
By Aung HlaTun and Jared Ferrie
YANGON, June 27 (Reuters) - Norway's Telenor andQatar's Ooredoo won licences on Thursday to providetelecommunications services in Myanmar, bringing foreigncompanies across one of the world's last telecoms frontiers.
Companies have been lobbying hard to get into the market,despite the risks of rolling out costly networks in a countrythat has yet to pass a law to govern the sector.
Ooredoo plans to spend $15 billion over the 15-year licenceperiod, including operational and capital expenditure, licencefees and taxes, Jeremy Sell, Ooredoo chief strategy officer,told Reuters in a telephone interview.
"The licence is actually a small part of it," said Sell.
He said Myanmar's relative lack of mobile communicationsinfrastructure was advantageous in that his company would notneed to upgrade old networks, but could create a purpose-builtdata network with voice capabilities.
"It's not a mobile phone business we are building, it's abroadband network," he said, adding Ooredoo's Myanmar operationswere likely to break even after four years.
The Ministry of Communications said that if one of the twolicence winners failed to meet post-selection requirements, theback-up candidate would be France's Orange inpartnership with Marubeni Corp of Japan.
The winners had "committed to offer a wide range of servicesto the public at affordable prices in both urban and ruralareas", it said.
The lower house of parliament voted on Wednesday to delaythe award of the two licences until a new telecommunications lawwas enacted, but the government body overseeing the tender saidparliament had no authority to delay the process.
"In the telecom sector, there is geopolitical risk andregulatory risk and it (Myanmar) has them both," said Ooredoo'sSell.
"It's a very young democracy and the organs of state are intheir infancy and don't have much experience, but we were verypleased the process was so intelligently planned and executedand with transparency. So if they continue as they have startedwe would be very happy."
The winners were selected from a shortlist of 11 bidders,whittled down from more than 90 companies and consortia that hadexpressed interest in working in a fledgling market of 60million people, where 9 percent at most have a mobile phone.
State-owned Posts and Telecommunications (MPT) is the soleprovider of telecom services, according to its website.
The bidding in Myanmar's first telecoms auction had beenseen as a test case for economic and political change initiatedby the quasi-civilian government that came to power in 2011after 49 years of military rule.
State-controlled Telenor, which has 150 million customersworldwide and operates in neighbouring Thailand and Bangladesh,said it would launch its network next year and achievenationwide coverage within five years.
The government has said it will finalise the 15-yearlicences by September and the chosen operators would need tolaunch services within nine months. They have to provide voiceservices across three-quarters of the country within five yearsand data services across half of it.
POLITICAL RISK
The telecommunications bill is still making its way throughparliament, but the government statement said it was expected tobe passed in the current session.
"These issues could have been raised and addressed with thegovernment much earlier in the process," said Marae Ciantar, alawyer with the Singapore-based firm Allens, which has advisedinternational telecoms companies seeking to invest in Myanmar.
The motion passed by Myanmar's lower house on Wednesday alsostipulated that licences should go only to bidders that haddomestic companies as partners in a joint venture.
"The attempt to impose such a requirement does give rise toreal concern for investors," said Ciantar.
He noted that the foreign investment law passed last yeardid not include such restrictions on the telecoms sector, whilethe government "made it very clear during the tender processthat joint ventures with local partners were not required".
Soe Yin, a parliamentarian with the pro-government UnionSolidarity and Development Party, which is made up largely ofretired military officers, said the motion called for furtherdiscussion on the issue, but did not entirely reject the notionof full foreign ownership.
"Some people are not happy we are giving all these tendersto the private foreign companies," he told reporters inNaypyitaw, the capital.
Ooredoo's Sell said there was no obligation under thelicence terms to take its Myanmar unit public, but did not ruledoing so in the future.
"We quite like IPOs - it contributes back to the society weare making money from, helps to develop capital markets and it'sgood for customer loyalty too," said Sell.
Building telecommunications networks is expected to bring aleap forward in digital technology that could speed up economicdevelopment in Asia's poorest country after Afghanistan.
But Vodafone Group Plc and China Mobile Ltd abandoned their joint bid, saying it did not meettheir "internal investment criteria".
The remaining short-listed contenders, some of whom hadlocal or foreign partners, were: Singapore Telecommunications,KDDI Corp, Digicel, Axiata, BhartiAirtel, MTN, Vietnam's Viettel, and MillicomInternational Cellular.
MTN said it "still considers Myanmar an attractive market.To this end, we will review other options as they becomeavailable."
Vodafone (VOD)
