Based on the list of 12 pre-qualified firms or consortia all of them have a strong telecom operator that meets the stringent criteria of the pre-qualifcation. The pre-qualification criteria were designed in such a way that only firm or consortium with strong telecom operator experience will be shortlisted.
The criteria are:
- The Operator was commercially launched no later than December 31, 2008;
- The Operator uses internationally approved, standard-based digital technologies;
- The Operator had a minimum of 4,000,000 mobile subscribers as of December 31, 2012; and
- The Operator had annual Gross Revenues that exceed USD 400 million as of December 31, 2012.
Assuming that all the 12 pre-qualified firms have a strong telecom operator that is technically and operationally competent in running a GSM or CDMA network in a country like Myanmar, the next few questions we need to ask are:
- Will there be a preference for GSM or CDMA standard?
- Will the quality of the local Myanmar partner makes a difference in how a consortium will be evaluated?
Let’s look at the first question.
Will there be a preference for GSM or CDMA standard?
Given the fact that GSM is the dominant technology in Asean – in terms of interoperability, roaming, ease of getting cheap handsets (including used handset) and eased of hiring technical staff – it would look like GSM will be the most logical standard to adopt for Myanmar.
However from a political point of view – since CDMA is a technology owned by Qualcomm a US company – there could be a possibility that one of the telecom licence winner could be encouraged to launch a CDMA network in Myanmar – just to ensure that the US has a vested interest in the economic development of Myanmar. As KDDI has experience running CDMA network in Japan it could be a possibility. There is however the tricky question of whether KDDI’s Myanmar partners (MICTDC and A1 Construction) are on the US SDN list of individuals that are sanctioned i.e. US companies cannot do business with these individuals. So even if you have the money if you are on the US SDN list, the US company cannot have any business dealing with you – this is especially true for high tech products.
The second question.
Will the quality of the local Myanmar partners make a difference?
Only 3 of the 12 pre-qualified firms or consortia have local Myanmar partners.
The consortium under KDDI has Myanmar Information and Communication Technology Development Corporation (MICTDC) + A1 Construction. MICTDC is the company responsible for running the MICT high tech park in Yangon. A1 Construction is a major construction company in Myanmar.
The consortium under MTN Dubai has a local Myanmar partner – Amara Communication. The parent of Amara Communication – the IGE Group is a major conglomerate who owns construction company, hotel, bank and major timber concession in Myanmar.
The consortium under Singtel has 2 local Myanmar partners they are KBZ and Myanmar Telephone Company Limited (M-Tel). KBZ is owned by Burmese tycoon Aung Ko Win – who is one of the richest man in Myanmar. The KBZ Group controls 2 airlines, the country’s largest bank and lucrative jade and mining concessions. M-Tel is a local telephone company.
Myanmar is an emerging economy whereby infrastructure such as power, water and transportation are quite lacking once you leave major cities like Yangon, Naypyidaw or Mandalay. A strong local partner who is familiar with the lay of the land, understand local culture and dialects and knows how to work with government ministries in Naypyidaw and regional or state government will be important.
As an example to roll out a GSM mobile network in Myanmar – the operator need to acquire sites to build GSM towers. Based on the size of the city and the expected number of users in each section of the city – the network planner need to work out the number of GSM towers that need to be installed in each section of the city. Site acquisition and construction of the towers, getting access to stable power supply – the most time consuming part of building a network – all require good knowledge of the local cities and towns, good knowledge of local building law, power grid system as well as good planning, communication and negotiation skills. Once you go down to the street level and have to negotiate with the local town offices or building owners about putting GSM towers on their land or buildings; once you have to contend with getting access to stable power supply in every city and town across Myanmar in a country that is prone to blackout – all these skills count.
Based on the above reasons I would say that having good local Myanmar partner is an advantage for the 3 consortia mentioned above versus those consortia that do not have local partners, especially where speed of rolling out the network is essential. Bear in mind that President Thein Sein wants to grow mobile penetration from current 6% to 80% in 3 years that is a very aggressive goal for an emerging market with poor infrastructure in many areas.
[Caveat: The target of 80% mobile penetration has been revised down to 50% by Set Aung, the chairman of the telecom selection committee in May 2013]
If for political reason – one of the two telecom licence winners need to run a CDMA network – KDDI could be the most appropriate candidate. Although I must caution that CDMA does not have good track record of success in emerging markets.
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