Cantillon: Digicel still in Burma, Vodafone bows out

News that Vodafone and China Mobile have pulled their joint bid to secure one of the two mobile phone licences being offered by the government in Burma (or Myanmar as many know it) is potentially significant. For a start, it removes a key rival in the race for the licences for Denis O'Brien's Digicel, which has teamed up with George Soros for its bid.Twelve groups were shortlisted recently with bids due to be lodged on June 3rd.

In a statement yesterday, Vodafone and China Mobile said: “Following the publication of the final licence conditions on May 20th, the Vodafone-China Mobile consortium has reached the decision 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.”

They added they would continue to “watch Myanmar’s progress with interest” and “give due consideration to any future opportunities that would meet the companies’ investment criteria”.

Burma is transitioning away from a repressive military regime, with the new government seeking to open it up to outside investment. It has one of the lowest mobile phone penetration rates in the world.

In response to Vodafone and China Mobile’s move, Phil Robertson, deputy director of Human Rights Watch’s Asia division, said the rush to build mobile networks in Burma meant the “cart has come before the horse”.

“The story of the new Burma is the triumph of hope over reality at the moment. It’s a gold rush mentality. The biggest problem is that many of the repressive laws are still on the books,” Robertson told UK media.

Robertson acknowledged that greater access to telecoms services would have an important role to play in freedom of expression in Burma. Digicel declined to comment yesterday on the process in Burma or whether it had any reservations about doing business in the country. Its executives, including O’Brien, have spoken enthusiastically about the potential of the market for Digicel.