Come Thursday, we’ll know whether O’Brien’s background impressed the Naypyitaw government more than the stolid, faceless managers of China Mobile.
A woman waits for customers at a “public call office” in Yangon on May 27, 2012. Just a few million out of Myanmar’s 50-plus million population have mobile phones and access to an as-yet extremely limited system
The biggest and most colorful collection of telecommunications companies assembled in years is waiting for the decision bell to ring in Naypyitaw this week on one of the world’s last untapped mobile phone markets.
Twelve international telecom businesses and consortia are on a government shortlist, out of which only two will be awarded contracts to build networks for potentially more than 50 million new telephone customers.
The decision on Thursday will pave the way to propelling Myanmar into the 21st century, at least in telecommunications terms.
Just a few million out of Myanmar’s 50-plus million population have mobile phones and access to an as-yet extremely limited system.
After years of tightly restricted mobile phone ownership through extortionate prices, the government of President U Thein Sein wants wireless telecommunications to be available to up to 80 percent of the population by 2016.
Some of the world’s biggest telephone network companies and some of the most obscure are on the short list, whittled down from about 90 firms.
They are China Mobile Limited and Vodafone Group in a partnership; Singapore Telecommunications; Bharti Airtel of India; MTN from Dubai; the Irish-owned Digicel Group; KDDI Corporation of Japan; Sumitomo Corporation, also from Japan; Malaysia’s Axiata Group; Telenor of Norway; Millicom International Cellular of Luxembourg; Qatar Telecom; and Vietnam’s Viettel Group.
The world’s two biggest mobile phone service operators, China Mobile and Vodafone, have 1.14 billion subscribers globally between them. They have teamed up to make the most powerful bid.
But probably the most colorful is the joint venture put together by the small Digicel, which operates mostly among the small Caribbean islands, although it is owned by an entrepreneur from Ireland.
Digicel’s joint venture partners in the license bid are Quantum Strategic Partners, owned by American billionaire speculator George Soros, and Myanmar’s Yoma Strategic Holdings, owned by noted Rangoon businessman U Serge Pun.
“The challenge for the winners will be recovering the cost of building and maintaining mobile phone networks in one of Asia’s very poorest countries,” said an industry executive with a large Bangkok-based phone company who spoke on condition of anonymity.
“Burmese are just about the lowest paid people in the region and so although the price of SIM cards and phones has become more universally affordable in recent months, the unanswered question is how will these people pay for phone services?”
SIM card prices have plummeted dramatically from US $250 just over a year ago to a mere $1.70 today. But they are not yet widely available. About 350,000 cards were issued in April, many on a lottery basis, and similar numbers will be issued in the coming months.
Can the chosen network franchise holders recoup their investment?
“The opportunity is tremendous, but not without risk,” Nomura Securities’ chief of Asian telecoms Sachin Gupta told Bloomberg. “There are 60 million users potentially, but that needs a lot of network investment.”
Other foreign telecommunications companies are waiting in the wings to offer ancillary services once the network licenses are issued.
Avaya of the US, which specializes in video conferencing and data networking, has teamed up with local firm First Myanmar, which is also in U Serge Pun’s business stable.
“We believe that we are uniquely positioned to offer affordable first-class communications to the people of Myanmar and are looking forward to having the opportunity to do so,” Digicel owner Denis O’Brien told the Irish Independent, which he also owns.
Unlike some of the other bidders which have kept a profile as they quietly lobby behind the scenes to promote their credentials to government ministers and officials, Digicel has pursued a high-profile public image in support of their bid.
The Jamaica-based firm, ranked only 65th in customer size in the global telecoms market, has been sponsoring Myanmar sport, promoting brand awareness among people who don’t yet even have a phone, and surveying sites for transmission aerials across the country.
“The low mobile penetration rate in [Myanmar] presents a significant opportunity for telecoms firms, but the Digicel consortium will face some stiff competition for licenses,” commented the Irish Independent newspaper, pointing out that O’Brien’s telecommunications forays into the Caribbean islands in the past 10 years have made his fortune.
Not bad for someone who started out on his business career selling horse medicines for his father.
The Digicel joint venture is up against the might of the world’s biggest mobile phone service operator, China Mobile, a state-owned enterprise with 97 percent of the colossal Chinese market and over 700 million customers. But perhaps the recent backlash against China’s strong business influence in Myanmar will influence bid decision-making.
Come Thursday, we’ll know whether O’Brien’s background impressed the Naypyitaw government more than the stolid, faceless managers of China Mobile.
Four major music firms have secured court orders requiring six internet service providers to block access by subscribers to various Pirate Bay websites within some 30 days.
The move is a bid to prevent illegal downloading of copyright music and other material.
About 200,000 Irish users, representing some 8% of all internet users here, access the Pirate Bay sites monthly.
Illegal file-sharing is devastating sales of music, film and TV here with serious consequences for artists, record companies, retailers and employment, it was claimed.
EMI, Sony, Warner Music and Universal had alleged the Pirate Bay activities were causing them some €20m losses annually and sought the orders against UPC, Imagine, Vodafone, Digiweb, Hutchison 3G Ltd and Telefonica O2 Ireland Ltd.
Eircom has already voluntarily blocked access by its subscribers to Pirate Bay and the companies claimed a new statutory instrument means other ISPs must do the same.
The defendants effectively adopted a neutral stance to the companies’ application but some raised issues including alleging overblocking could affect legitimate sites.
Mr Justice Brian McGovern said he was satisfied to make the order in circumstances including that new copyright laws here and in the EU permitted such orders to be made. He said he fully agreed with a previous High Court judge who had said he would make such blocking orders if the law permitted and noted the law now allowed for such orders.
The form of the orders means the music companies will not have to make fresh applications to court if Pirate Bay changes its location on the internet.
The judge noted the companies had accepted they should meet the costs of blocking the Pirate Bay sites. The only contentious issue in the case was about who was liable for the legal costs, he said.
While none of the defendant companies were wrongdoers in the case and had effectively adopted a neutral stance apart from engaging in some legitimate dialogue with the companies, the providers were the conduit through which the wrongful activity conducted by The Pirate Bay has been effected, he said.
“There is no doubt but that this activity has caused, and continues to cause, substantial financial damage to the plaintiffs.”
He considered a fair and proportionate order would mean all of the defendants, except Vodafone, should bear all of their own costs.
As Vodafone had had a substantial input into the terms of a protocol attached to an agreed draft order put before the court, which protocol had “watered down” the terms of that proposed by the companies, he considered the companies should pay Vodafone’s costs up to February 4 last after which Vodafone should pay its own costs.
The companies claimed the Pirate Bay sites hold a vast directory of copyright material being made available to millions around the world. About 25% of that material was music, 20% was film and 15% was TV. It was conservatively estimated about 78% of the music and 90% of the film and TV was copyright and his side’s experts also calculated up to $36m advertising revenue is generated annually for the Pirate Bay sites, they claimed.
EMI Chairman Willie Kavanagh, also chairman of the Irish Recorded Music Association (IRMA), said the companies application was supported by other bodies representing copyright holders, including the Irish Copyright Licensing Agency (book, magazine and journal publishers); the Motion Picture Association (the film industry); Games Ireland (the software games industry); and the Mechanical Copyright Protection Society (music composers and publishers).
Evidence gathered for the record companies indicated files relating to albums of which they hold copyright, including Bruce Springsteen’s Wrecking Ball (Sony Music); Green Day’s DOSI (Warner Music); The Killers Battle Born (Universal Music) and Mick Flannery’s Red to Blue (EMI Music) were all available for download on the Pirate Bay website, the court heard.
In an effort to improve its telecommunications coverage, Myanmar had announced its intention to grant two mobile licenses in January of this year, and received 22 application bids from 18 international mobile providers. Last month, Myanmar’s telecom ministry reduced the initial list of approved bidders to 12, which included the Vodafone and China Mobile consortium.
In advance of the June 3 deadline to submit formal proposals for one of the two 15-year licenses, the Vodafone-China Mobile consortium has decided “not to proceed with the process as the opportunity does not meet the strict internal investment criteria to which both Vodafone and China Mobile adhere,” the company said. The consortium’s decision to withdraw from the bidding process follows a review of Myanmar’s final license conditions released on May 20.
According to the announcement, Vodafone and China Mobile will, “continue to watch Myanmar’s progress with interest and will give due consideration to any future opportunities that would meet the companies’ investment criteria.”
Cellular operator Digicel Group Ltd jumped into Myanmar early and big, hiring staff, funding local sports, negotiating land deals for thousands of cell tower sites and signing up hundreds of partners for retail outlets.
The strategy helped propel it onto the shortlist for a mobile license in one of the world’s last mobile frontiers, putting an operator that ranks 65th globally in terms of customers up against giants such as Vodafone Group
Whether its strategy pays off or not, industry insiders say, Digicel, largely unknown outside the Caribbean and some Pacific islands, has shaken up a usually conservative industry.
“They have been a disruptive force,” said Roger Barlow, a Hong Kong-based telecommunications consultant who has worked in Asia for more than 25 years. “Some of the big guys tend to look down their noses at them but they shouldn’t because they’re becoming a credible player.”
Myanmar this month short-listed 12 consortia for two licenses it plans to grant foreign operators in late June. The government wants to expand mobile penetration from less than 4 percent to up to 80 percent by 2015-16.
While Digicel is up against behemoths such as Vodafone, China Mobile Ltd and Telenor ASA, several other big players failed to make the list – among them South Korea’s SK Telecom Co Ltd and Egypt’s Orascom Telecom Holding SAE.
It’s a vindication of sorts for Digicel’s long-term approach. Business development director Frank O’Carroll led the charge into Myanmar in 2009. In early 2012 he persuaded the company to commit funds to build a local brand and prepare the ground so that if it did get the go-ahead it could roll out a service in a matter of months.
That entailed deploying hundreds of workers across the country to negotiate thousands of leases for base station sites, months before the government had even begun the tender process.
“There’s not one square inch of the country we haven’t been in,” O’Carroll said in an interview in Singapore.
Its sponsorship of the national football federation has built brand awareness – of sorts. Lots of locals have heard of Digicel, O’Carroll said, though at least initially they were as likely to think it’s a brand of battery as a cellphone operator.
It’s a strategy, he said, that Digicel has been pursuing in much smaller markets for more than a decade.
“What we are doing in Myanmar is not unique to Myanmar,” said O’Carroll. “The first country that Digicel as a company looked to get a license was Trinidad and Tobago. We did very the same thing. We were there, we leased the land, we rented local offices, we started a local team, sponsored big sports.”
SMALL AND NIMBLE
Digicel has since set up shop in 31 markets, gaining 13 million customers. While none boasts a population above 10 million people, the company has taken on some major rivals, including America Movil SAB, Vodafone, Telefonica and Cable & Wireless.
“I don’t think there’s any fantastic science to it, but I do think it’s our ability to move fast because we’re small, we don’t have this complex machinery that takes months and months to make decisions,” said Vanessa Slowey, Singapore-based CEO of Digicel Asia Pacific, in an interview.
Making those decisions is Digicel owner Denis O’Brien, an Irish billionaire who first focused on small markets in the Caribbean after noticing that spectrum was being auctioned off in Jamaica. Eventually the Pacific beckoned.
Telecoms executive David Borrill recalls meeting O’Brien in his office after three years working for the incumbent operator in Samoa. “He went straight over to his library and opened the biggest atlas he had, turned to the Pacific and said, ‘Tell me about this, where would you put an office here?'”
A few weeks later Borrill was back in Samoa, this time working for Digicel. The company bought out Telecom New Zealand’s stake in the incumbent operator in 2006, and within six months had more than doubled its customer base.
Last financial year the company reported revenue of $2.5 billion, year-on-year growth of 14 percent and EBITDA of $1.08 billion, up 13 percent. It has 87 percent market share in Haiti, at least 75 percent in Jamaica and 92 percent of Papua New Guinea, according to Bank of America Merrill Lynch.
“Digicel is very astute in selecting the markets it enters,” said John Hibbard, an Australia-based telecoms consultant. “It has to be convinced it will win a reasonable market share.”
When it isn’t, it’s prepared to abort. In East Timor, for example, Digicel went so far as building cell towers, and assured the government that if granted a license it could cover more than 90 percent of the population within four months.
But, Digicel said, the government dragged its feet and ignored advice to issue only one license. So when it did eventually win one of the two on offer last year, Digicel turned it down. “Why would we invest $50 million to compete with two other operators, for the 40 percent that is left? It’s crazy. So we handed our license back,” said O’Carroll.
Digicel sold its assets to the other licensee Telin, a unit of Indonesia’s PT Telkom. The company broke even on its Timor investment, said Digicel’s Slowey, without giving details.
Such an approach is at odds with the industry’s more conservative approach, where investment decisions must be highly rational and based on certain outcomes.
“Digicel doesn’t have the institutional memory of other telcos,” said Rob Bratby, a Singapore-based telecoms lawyer with Olswang LLP. “It’s an example of a company with a different mental framework.”
Digicel, however, has not had a free ride in Myanmar. The government turned down its proposal in 2012 to set up a joint venture with the incumbent operator, Myanmar Posts and Telecommunications, in favor of an open tender.
That has meant facing the diplomatic and financial muscle of some of the world’s biggest and best-connected operators, prompting Digicel to take on its own partners: Yoma Strategic Holdings, owned by Serge Pun, a powerful businessman who, unlike many tycoons in Myanmar, isn’t entangled in Western sanctions. The other member of the consortium: Quantum Strategic Partners, owned by financier George Soros.
The Soros-funded Open Society Foundations have long worked with exiles, refugees and dissidents, according to its website. Last year Soros said he would set up an office in Yangon.
Digicel shrugs off criticism that it lacks the experience of working in big markets like Myanmar, arguing that it’s harder to work in lots of countries, whatever their size. Among the shortlistees, only France Telecom SA matches Digicel in the number of markets covered.
“Whether it’s the smallest country in the world you deploy in or the largest, it’s still the same building blocks, still the same issues that you must go through,” said O’Carroll. “A lot of those same things, whether it’s Nauru’s 9,000 people or Myanmar’s 60 million, we think are going to be identical.”
A legal action aimed at blocking access by Irish internet users to the free file-sharing website Pirate Bay and related websites has come before the Commercial Court. About 200,000 Irish users access the Pirate Bay site monthly, the court heard.
Four music companies have brought the case against five internet service providers (ISPs) aimed at requiring them block or disable access by their subscribers to the sites.
The aciton is by EMI, Sony, Warner Music and Universal against UPC, Imagine, Vodafone, Digiweb and Hutchison 3G Ltd and all the defendants consented today to the case being fast-tracked in the Commercial Court.
In an affidavit, EMI chairman Willie Kavanagh, who is also chairman of the Irish Recorded Music Association (IRMA), said the Pirate Bay website operates as “a vast directory of what is overwhelmingly copyright material” that internet users are making available for downloading, copying and onward distribution by other internet users.
That directory indicates what is available and who is making it available, he said. An expert for the plaintiffs had estimated the minimum advertising revenue of the Pirate Bay website at between US$20.5m to US$36m dollars.
Mr Justice Peter Kelly said it appeared the defendant companies were “innocent parties” seeking to achieve a constructive end to the litigation and he indicated the best approach may be to have experts for the sides get together to work out a way forward.
The case will involve the first court examination of issues arising from new copyright legislation introduced last February, he noted.
Jonathan Newman, for the music companies, said experts for the sides had met before but he had no difficulty with another meeting.
Counsel said that while another High Court judge, Mr Justice Peter Charleton, had previously ruled he could not make such a blocking order relating to Pirate Bay against Eircom, that company had voluntarily blocked access by subscribers to the site and the music companies also believed the legal situation had changed via a new statutory instrument of last February.
Cian Ferriter SC, for Vodafone, said his client does not condone copyright piracy and was not opposed in principle to what the plaintiffs were seeking but a lot of issues had to be “ironed out”.
Vodafone was concerned there should be an equitable application across the market of any final order made in this matter, counsel said. Vodafone was anxious not to be “singled out” and have its commercial interests affected if others were not and it was happy to have experts engage in seeing if some form of protocol could be agreed, he added.
Gerard Kelly of Matheson, solicitors, for UPC and Hutchison, said his clients favoured a meeting of the sides in an effort to narrow down the issues.
Mr Justice Kelly said he would transfer the case to the Commercial Court but would defer making further directions so as to allow the experts an opportunity to meet. If no agreement was reached, the areas of disagreement should be identified and the case would return to court late next month, he added.