MTN into the lion’s den

2013-06-09 10:00

While consortiums involving the world’s largest telecoms groups compete for two new mobile licences in Myanmar this month, leading global human rights organisations have cautioned against the race to invest in the tentatively reforming east Asian country.

South Africa’s MTN, a member of one of the 10 consortiums still in the running, has gone large by launching a nationwide awareness campaign there.

A consortium lead by Digicel Group, billionaire George Soros and Myanmar property developer YSH Finance punted its bid this week, promising to invest $9?billion in Myanmar’s new cellphone network if it’s granted a licence, according to Bloomberg.

The world’s two largest mobile operators, China Mobile and Vodafone Group, both pulled out of the process, saying the returns do not justify the investment needed in the severely underconnected country.

MTN’s experience in Iran, where it beat rival Turkcell to win a mobile licence, illustrate the intensity of the competition for national mobile licences.

Turkcell has accused MTN of a wide array of corrupt actions, but its allegations are still to be tested in a court.

Three weeks ago, the influential international NGO, Human Rights Watch, published a detailed report cautioning against investments in Myanmar’s telecoms sector. In its report, it details abusive telecoms and other legislation in Myanmar.

The UN Global Compact, which promotes business practices sensitive to human rights, encourages corporations investing in Myanmar to conduct a thorough human rights due diligence prior to taking the plunge.

The Human Rights Watch report was a plea directed at the South African government and the governments of other multinational bidders.

“The (Myanmar) government has not yet created a legal framework for the ICT and telecommunications sectors that respects basic human rights. In this context, due diligence is a recognised responsibility for companies and essential so that companies can understand and address any human rights harm that they may cause,” the report reads.

According to Human Rights Watch, companies in Myanmar are often required to provide the military government with access to user data, assistance with real-time surveillance or antigovernment dissidents, and participate in improper restrictions on the freedom of expression.

The NGO also warns that the country has, in recent years, experienced large-scale forced removals of citizens from their land, and that any telecoms company that is required to set up base stations as part of creating the infrastructure for mobile phones in that country could find itself entangled in human rights and land rights disputes.

“Investment in Burma’s telecommunications sector will require investment in physical infrastructure such as cell tower sites and cable, including in rural areas. This raises concerns around land rights and human rights violations related to state security forces that have been enlisted to protect

other kinds of infrastructure projects,” the report reads.

Both Human Rights Watch as well as Transparency International have advocated that governments ensure that companies subject to their legal jurisdiction conduct due diligence on partners chosen in Myanmar.

According to Human Rights Watch, private individuals with close ties to the military tend to benefit from investments from abroad.

MTN’s partner in Myanmar is Amara Communication, a 100% subsidiary of the IGE Group. IGE is in turn owned by the sons of local politician, MP and billionaire, Aung Thaung.

Thaung is Myanmar’s former minister of industry.

Local pundits say MTN has a good chance of winning the licence as the IGE Group and its partners Petronas have won numerous previous government licences and concessions in Myanmar.

IGE, which is also involved in the timber industry, has been publicly associated with deforestation of large tracts of land in Myanmar as well as illegal land confiscations by the government and the military.

The Myanmar government will announce the winners at the end of this month, while the licences will be formally handed over a month or two later. The winning bidder must launch nine months thereafter. The bids will be determined on a technical score of 67% and a 33% financial score.

MTN’s Paul Norman said: “It’s one of MTN’s values to respect the human rights and privacy of citizens in all the markets where we operate, and should MTN’s application for a telecoms licence be successful, Myanmar will not be any different.”

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