YANGON - Blackberrys and iPhones aren't much use in Myanmar, where its only network is frequently jammed, data services are scarce, prices extortionate, lines crackly and most phones don't roam. For decades, its telecoms industry has been a shambles.
It's no surprise this country of 60 million people has the world's second-lowest cellphone penetration after North Korea; SIM cards are made prohibitively pricey to prevent its tiny network from becoming overloaded, while emailing and web-surfing on phones is so rare it's almost a bourgeois concept.
|Thandar Tun waits for customers at a public call office (PCO) phone shop in Yangon May 27, 2012./ REUTERS
Even getting hooked up to the network is cumbersome. Visitors must rent SIM cards at the airport on arrival while many Burmese can only afford one-time SIMs with a number that expires after a few days when its $20 of credit runs out.
But as Myanmar races ahead with economic reforms, the telecoms sector, riven with graft and mismanagement and lagging behind even Asia's poorest countries, is on the verge of a major shake-up as part of a "reform plan" to liberalise one of the world's last remaining greenfield telcos markets.
Details of the plan are scant, but Myanmar appears to have finally got its act together and insiders say it could announce its plans this week.
Eager to attract foreign investors to one of Asia's poorest countries, the government could make telecoms the first sector to be liberalised. After a year of stumbling and opaque deals that favoured vested local interests, speed and transparency now appear to be the priority.
"We're going to finish it soon, we really cannot wait," Kyaw Soe, a senior official at the Ministry of Communications, Posts and Telegraphs, told Reuters. "It's closely related to economic growth of our nation, so this is a priority sector."
Last month, 11 companies from 10 countries, including Japan, Australia, Germany and the United States, were short-listed from 64 applicants to become consultants and prepare a telecoms license tender. The list is now down to three.
Kyaw Soe said a total of four operating licenses would be granted; two for Myanmar companies and two for foreign firms, with 4G services targeted as early as 2013.
A regulator would be formed and state-owned Myanmar Post and Telecommunication -- the country's sole operator -- would be privatised to form the Myanmar Telecoms Company (MTC), which would be awarded one of the cellphone licenses, he said. Another would go to Internet service provider Yataraporn Teleport.
A Myanmar telecoms source said it was unlikely the two local firms had the resources to operate alone and would likely form joint ventures, but it was unclear whether more than two foreign firms would be allowed to operate.
Myanmar's low penetration and the hunger for going mobile in a virtually untapped country are mouth-watering prospects for international telecoms firms.
Usage is extremely low, at just 1.24 percent of the population in 2010, compared with 64 percent in Laos, 57 percent in Cambodia and more than 100 percent in Thailand and Malaysia where individual ownership of multiple phones pushes usage above population levels, according to the Asian Development Bank. The Myanmar government says the current level is 5.6 percent, but experts doubt that.
"The potential is clear to see, but whether that is realised depends on regulation," said Ramakrishna Maruvada, regional head of telecom research at Daiwa Capital Markets. "The problem for foreign firms is there's very little detail in terms of timelines and structure, so very little to hang on to."
Among companies that have confirmed an interest in Myanmar are Sweden's TeliaSonera AB, and two specialists in emerging Asian markets, Malaysia's Axiata and Norway's Telenor, which both operate in Thailand, Malaysia, Pakistan and Bangladesh, among others.
"When this opens up, the potential is so big, so we'll expect a lot of interest. There's not many of these markets left in the world," said Telenor Group's Glenn Mandelid.
"If they get the framework in place and there's security for our investment and all the clarity we need... then we'll be interested."
One firm that may have an advantage is Digicel, which operates in 31 countries and has already presented a technical and commercial assessment to the government on how to expand the network to reach the majority of the population within two years.
"We've developed a strong track record on the ground and an excellent knowledge of the needs of the government, consumers and businesses," said Frank O'Carroll, Digicel's vice-president of business development for Asia-Pacific.
"If we get an opportunity to invest in the telecoms sector in Myanmar, we're ready to deploy very, very quickly."
Singapore's SingTel is reported to be interested but told Reuters it would not comment on rumours.
On the ground, things have already started to improve. In response to complaints, prepaid SIMs were reduced from as high as $1,000 a year ago to $250 in some states and made available in Yangon in April
That means people like Thandar Tun, who has three phones on a foldable table offering call services for 25 kyats (3 U.S. cents) a minute are seeing business slip away.
A year ago, about 100 people a day used her phones. She has about 30 today as SIM prices fall and GSM, CDMA 800 and 450 MHz handsets have become status symbols.
"We can see people are slowly changing the way they use phones," Thandar Tun said.
Demand is now soaring and phone shops are fast popping up in Yangon. Inundated with requests, banks have halted loans for prepaid SIMs, which dealers say are now being rationed because MPT's network can't cope.
"We get only 50 SIM cards a week, but people come in asking every day or calling to see when they'll be available," said Aye Myat Moe, sales manager at one branch of E-Lite Tech, a company owned by Tay Za, a Burmese billionaire blacklisted by Western governments because of his ties to the former military junta.
But the devil is in the detail, and those companies lining up to invest are playing a careful game, awaiting regulatory clarity, aware of the catalogue of errors that have taken place in the past 18 months, even as the quasi-civilian government embarked on astonishing political and economic reforms.
Its telecoms policy has been perplexing at best, with no clear plan on how to finance expansion of the network, even though a telecoms law 10 years in the making had already been drafted in cooperation with the International Telecoms Union.
The ministry took the bizarre decision to start expansion even before completing the draft of the new law. In April last year, it announced it would create 30 million new GSM lines by 2016, in cooperation with local firms, some with ties to the former military regime, starting with four million lines to reach 10 percent of the population within a year.
But there have been scant signs of progress, with 23 local companies installing towers and base stations, in return for SIM cards and licenses to sell handsets for use on a tiny network.
A Myanmar telecoms industry expert, who requested anonymity, described the government's approach until now as a "disaster" and said it was crucial the new regulation benefited investors, consumers and the government.
"FLAWED" LAW RECALLED
Two other sources with close knowledge said the government realised its mistakes this July, when a revised law sent to President Thein Sein was quietly recalled because it was "deeply flawed".
A senior government official said Thein Sein wants to implement reforms fast, aware of the proven links between telecoms expansion and GDP growth and the urgent need for transparency in a crucial sector.
Expansion and liberalisation would not only create thousands of jobs in a country with chronic unemployment, but it would also allow for mobile money services, like transferring cash that could be collected by a relative in rural areas by showing a simple text message.
"It's not just phones, it's other cross-cutting factors. It's also very important for financial and people-centred development," said the source, requesting anonymity because he was not authorised to speak to the media. "It's taken time because we want a healthy level of competition and we want to make sure we get this right."
Clarity on regulation and the tender process is imminent, according to ministry officials, but many questions remain, particularly those regarding financing.
Myanmar is understood to have been offered substantial foreign loans for telecoms development but has not said if it plans to fund any of the expansion -- estimated at $2 billion -- which allow the state to extract revenue from operators.
Experts warn that if private firms finance network expansion, urban centres would have priority over rural areas -- the government's key target -- and operators would be reluctant to share infrastructure.
The World Bank, which has given technical assistance to the telecoms ministry, urged the government to take a balanced approach and send the right message to foreign firms in what could be the first major sector to open up.
"It's important for the government to ensure a stable policy and regulatory framework is established so it encourages credible, world class investors to enter the market and provide citizens with affordable and high quality services," its office in Myanmar told Reuters.
"This is an important opportunity for Myanmar to demonstrate to the world that the country is open and ready for business."