Roland Berger runs 2nd telco industry tender Myanmar

23 December 2015

Myanmar has hired Roland Berger to run another tender process for a telco licence to the country’s market. The deal will see the international tender winner take a 49% share with a consortium of 11 local market players. Competition will be fierce however, with two new players already well established, and the original state-owned incumbent now flush with money from an international investor.

Myanmar has sought to liberalise its economy and political climate after half a century of military rule. In 2011, the newly elected government set out to bring in a number of new policies and reforms aimed at opening up the country’s economy. These laws included anti-corruption laws, currency exchange rates, foreign investment laws and taxation. The effect of the laws has seen a significant increase in foreign capital investment and the Myanmar government participated in the opening of an economic hub, with the help of Roland Berger, to boost investment further.

One area of liberalisation, where the government has provided room for foreign investment, is the countries telco industry. Until 2013 the industry was a monopoly ruled by the state-owned Myanmar Posts and Telecommunications (MPT). In 2013 this changed when the country sought support from Roland Berger to implement a tender process for two further telco licenses. In total, 91 foreign companies and consortium’s submitted proposals, and Operators Telenor Myanmar and Ooredoo Myanmar launched their services last year. The two new operators have so far picked up 11.8 million subscribers.

Roland Berger runs 2nd telco industry tender Myanmar

The country also sought to bring in foreign support to the MPT and partnered the company with Japanese KDDI Corporation and Sumitomo Corporation, with a total of investments of $2 billion planned. The aim of the partnership is to improve the country’s telecom infrastructure, thereby increasing cell phone penetration from 15% last year to 80% by 2016.

Following a successful track record in the first round telco licence tender, the Myanmar government has again called in the strategy consulting firm Roland Berger for a further licence tender this year. The company has been hired to provide support to a local special purpose vehicle, or SPV, pick up an international partner. “Eleven Myanmar companies have formed an SPV,” said U Than Htun Aung, Director of the Ministry of Communications and Information Technology Posts and Telecommunications Department, to The Myanmar Times. “Roland Berger will be employed to help in the selection of the international partner. We have already combined with 11 groups. This company will form a joint venture with an international operator.”

As the market already has three players that are well established, conquering a market share might be hard, he adds: “It may be very hard, because we’re already late. It depends on our partner. If it has the capacity to compete … we can work together," U Than Htun Aung adds.

Prior research from Roland Berger highlights however, that by leveraging the blind spots of current providers, market share – even when relatively late to the party – may well be secured.