By Stuart Deed and Htoo Aung | Friday, 01 March 2013
Two national telecommunications licences will be awarded to companies that meet strict prequalification requirements, the government body charged with overseeing the process said on February 21.
Telecoms companies have until April 4 to file detailed bids to pass prequalification requirements for the two national telecommunications licences. (Boothee/The Myanmar Times)
The Telecommunications Operator Tender Evaluation and Selection Committee announced that more than 90 telecoms companies from around the world had submitted expressions of interest for the tender, showing the huge interest in nation’s market. The expressions of interest included some of the world’s best known telcos, the committee’s press release said.
The committee also released a set of prequalification requirements on February 21, with the deadline for submissions set for April 4, giving interested parties little time to put together their applications. The committee will then announce which consortia passed prequalification on April 11.
The pre-qualification guidelines for prequalification were posted on theMinistry of Communications and Information Technology and Myanma Posts and Telecommunications’ (MPT) website.
VDB Loi, a specialised law and tax advisory firm that has more than 60 transactional lawyers and tax advisors working in offices across Southeast Asia and including Myanmar, released an analysis of the prequalification rules to clients last week.
VDB Loi’s analysis says companies are required to have four million subscribers in one country and generate annual gross revenues of at least US$400 million, or hold a 50.1 percent stake, including management control for four years, in a firm that meets these requirements.
“Then, you must have activity in a second country since 31 December 2009 where you [or a subsidiary in which you own at least 30pc and where you have ‘significant management responsibility’] have one million mobile subscribers,” the analysis says.
It adds that according to the prequalification rules in and of themselves, consortia may – but are not specifically required – to take on a domestic partner.
“Conversely, in view of the experience requirements of the operator, it seems that local partners will have to work with a foreign operator in order to prequalify,” the analysis adds.
Applicants must also detail in their bids what the proposed equity interests and voting rights that each member of the consortium will hold in the Myanmar-registered entity, as well as a list of decisions for which super-majority voting will be required, plus biographical information concerning participating members – especially relevant telecoms experience – in the Myanmar-registered entity.
Additionally, “the applicant must provide a copy of ‘any memorandum of understanding, joint venture agreement, or other similar agreement relating to the Myanmar-registered entity’. This means, in practice, that nearly the entire deal needs to have been worked out in quite some detail between the members including capital and contributions in kind, financing and governance, plus the texts need to be available at the time of lodging the prequalification application. This will likely pose some problems for consortia that are not up to speed yet,” VDB Loi’s analysis states.
A final but critical piece of the analysis concerns cross ownership, presumably to encourage competition. Effectively, successful bidders will not be able to hold share ownership, either directly or indirectly, of more than 10pc in the second licence.
Companies that pass the prequalification stage will see their bids scrutinised by comparative evaluation; and after this is completed the licences will be granted.
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