KDDI and Sumitomo team up to invest $2 billion in Myanmar’s telecommunications network
July 18, 2014TOKYO—Japanese mobile carrier KDDI Corp. is teaming up
with trading house Sumitomo Corp. to invest about $2
billion in Myanmar’s telecommunication business over 10 years, as the
country’s telecommunications sector is expected to expand rapidly.
The two Japanese companies signed a deal Wednesday with state-owned
Myanma Posts & Telecommunications to jointly operate a mobile phone
network in the country.
The companies will build infrastructure, including base stations to
make 3G services available in large cities so customers can use
smartphones, and will focus on the 2G network in local areas, a KDDI
spokesman said.
Norway’s Telenor TEL.OS -0.91% and Qatar’s Ooredoo won a
telecommunication network licenses in Myanmar last year and are
preparing to start services in October-December. The Japanese joint
venture will aim to keep up with these rivals, a KDDI spokesman said,
without specifying the time frame for the project.
The number of cellphone users in Myanmar is still very small compared
with other countries in the region, but is expected to jump. The
mobile phone penetration rate is currently about 10% of the population
of around 65 million, as years of isolation and economic stagnation
left country outside the global mobile communications boom. The
government plans to increase the rate to 80% by 2016, which would
translate into nearly 48 million new contracts.
“Myanmar is experiencing a rapid move toward democracy and the market
for mobile phones and fixed-line communications is expected to grow
dramatically in the future,” said Takashi Tanaka, president of KDDI
Corp.
“KDDI will provide the same level of Japanese-quality services to
Myanmar and contribute to the country’s growth and development,” he
added.
KDDI has lagged behind rivals SoftBank Corp. and NTT DoCoMo Inc. in
finding growth overseas. Cash flow from mobile operations is strong in
Japan, but limited prospects in a saturated and ultracompetitive
market have prompted carriers to look for acquisitions or partnerships
elsewhere.
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