Client briefing note | 27 December 2016
Blocks of 2600 Mhz spectrum have been
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auctioned off successfully to 4 local players with
ambitions in the 4G/LTE space. But what are the
terms of a Myanmar spectrum license? Which
provisions of a license can be negotiated with
the PTD, and which ones are fixed? In this note,
we look into how to negotiate the terms of a
Myanmar spectrum license.
HOW TO NEGOTIATE A SPECTRUM LICENSE
IN MYANMAR?
The Myanmar Ministry of Transport and
Communications has on 18th October Highlights of this note
2016 successfully auctioned 40MHz of
spectrum in the 2600MHz band (2575- Is there something to negotiate?
2615 MHz), made up of two times
A license for 15 year. From when,
20MHz (2575-2595 MHz, 2595- 2615
MHz) divided into three regions. Each exactly?
successful bidder was able to acquire up
to two regional licenses, thus allowing Negotiating the roll-out commitments
for three to six regional licensees in
total. The spectrum license is for 15 Quality of service commitments in the
years. The 2600MHZ spectrum allows spectrum license
for the provisioning of broadband data
service such as 4G/LTE services. Renewal of a spectrum license
In this briefing note we dive deeper Information licensees need to provide
into what lies ahead for the winners, to the PTD
Yatanaporn Teleport, Fortune
International, Global Technology and How much are the spectrum
Amara Communications Services.
Now that they have won one or more management fees?
spectrum licenses, how to best finalize
the license negotiation with the PTD?
What other steps lie ahead?
Regional Lot No. Auction Winner Names Price USD (Mil)
Region 1 (Nay Pyi Taw, 1.1 Fortune International Ltd 6.09
Magway, Bago, Mon,
Kayin, Tanintharyi ) 1.2 Global Technology Co.,Ltd 7.03
2.1 Amara Communications Co.,Ltd 95.81
Region 2 (Yangon,
Ayeyawaddy, Rakhine)
2.2 Yatanarpon Teleport Public Co., Ltd 83.44
Region 3( Mandalay, 3.1 Yatanarpon Teleport Public Co., Ltd 27.24
Sagaing, Chin, Shan,
Kachin, Kayah) 3.2 Amara Communications Co.,Ltd 24.55
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Is there something to negotiate? available for co-locations.

The telecom sector is one of the more
comprehensively regulated ones in
Myanmar, and nearly all regulation is very
recent. Draft regulations were prepared
in 2013 with the help of international
consultants. These regulations were then
adjusted to Myanmar (with the help of
VDB Loi) and released bit by bit from 2014
to 2016. Among the regulation feature
the Licensing Rules and the Spectrum
Rules. That being the case, the regulatory
framework of all telecom licenses which
are issued after the regulations were
prepared, including spectrum licenses,
is fairly set. You would think that there is
not much to negotiate about, because
all important things must have already
be fixed by those regulations. The PTD
cannot deviate from its own regulations
in any particular license anyway, so there
is nothing to talk about, is there?
Wrong. There were various forces at work
in the 2012-2016 time period, which was
basically the birth period of liberalized
telecommunications in Myanmar. First
of all, you had the Ooredoo and Telenor
licenses. They pre-date the entry into
force of the telecom regulations and
therefore the text of these two are
entirely not aligned. Secondly, the
regulations themselves. Although drafts
were circulated, the final official versions
are not the same as the drafts. That is, the
official versions were made a bit shorter,
simpler. That also creates distortions for
the text of future licenses. Finally, and
most importantly, there are plenty of
important commercial and logistical
factors which are not addressed by
the Licensing or Spectrum Rules. For
example, the performance and coverage
commitments, the quality of service
commitments, and applicable penalties
and guarantees. How these need to be
agreed and written down may be crucial
for the licensees.
A license for 15 year. From when,
exactly?
The thing is, one cannot commence actually providing any telecommunications services
until close to a year into the investment. Or at least that is the case for most licensees,
those that do not yet own a network of their own to make use of the acquired spectrum
rights.
The Spectrum Rules do not prescribe the moment in time when the spectrum license is
deemed to commence. That will be left up to the license terms and thus up to negotiation
with the PTD.
Negotiating the roll-out commitments
As part of the auction, the PTD has sent out certain roll-out requirements. Depending on
the region of the licensee, the network must achieve between 30% to 50% completion
by year 5.
Roll out Requirements in Regions (by population)
Region 1 Region 2 Region 3
By Year 5 30% 50% 35%
These commitments are not really biddable terms, but parameters set out in the 2600
Mhz Auction Framework. The purpose of these roll-out commitments is first of all to make
sure the licensee is efficient enough to indeed monetize the asset for the Government.
An inept licensee would not make a good business partner. The roll-out commitments
have population and/or geographical targets to ensure that licensees do not just focus
on the lucrative, highly populated areas. They are obligated to also to spend money
developing a network in lesser lucrative areas.
The parameters mention that the parameters are set in terms of population. The
alternative would have been in terms of geography. A benchmark based on geography
is a serious problem for operators, because it virtually guarantees you need to spend
money in areas where there are not enough people to make money. A benchmark in
terms of population, less so.
To negotiate the license, with respect to the roll-out commitments one should focus on
two things:
i. when exactly does the licensee fail the standard; and
ii. what happens then.
Firstly, roll-out and coverage are not black and white issues. Radio rings reach many
people, but the power of the connection will decrease the farther you are away from
the source. In other words, how many Mbps is enough to include people as having been
covered in the roll-out?
Secondly, what happens if the licensee misses a target? From the licensees perspective it
will be important and reasonable to be given a chance to remedy the situation.

When you pay a considerable sum of

money for using spectrum for a limited
period of time, each day counts. However,
in Myanmar a licensee cannot just start
using spectrum from the first day the
license is signed. In most cases, a network
must be rolled out in a fairly similar
fashion as the mobile network operators
had to do, and are still doing. This requires
equipment being imported, import
licenses being granted, and depending
on the region, even deploying passive
network infrastructure if none is already
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Quality of service commitments in the spectrum license
S. 23 SPECTRUM RULES
The Auction Framework set forth two crucial quality of service (QoS) benchmarks in
terms of bandwidth throughput: e) The Licensee shall maintain, and
keep up-to-date, records of their
i. The Winning Bidders/licensees will be required to support a minimum bandwidth operations and equipment as
speed of 5 Mbps to each customer by the end of the 1st year of operation; determined by the Department
ii. In the subsequent years, PTD will reevaluate the appropriate minimum bandwidth from time to time, including but not
speeds taking into account the needs of Myanmar consumers and businesses in the limited to:
license areas as well as ASEANs broadband average speed.
i. The equipment specifications
There are a few things problematic with this approach. of all Radio Stations and other
Radio Apparatus operating
First of all, the QoS benchmark says that the minimum bandwidth speed of 5Mbps under its License;
must be reached by the end of the 1st year of operation. That is remarkable, since there ii. The coverage area
is not even a network roll-out commitment by the end of year 1. The network roll-out of the Licensees
commitments are for the end of year 5, as was discussed above. So, which network is Telecommunications Network
this quality test supposed to be applied to? This needs to be clarified in the negotiations and of each Radio Station;
finalizing the license. iii. The effective radiated power
of any Radio Station and its
The second benchmark is quite vague. Basically the Auction Framework says that the location and height;
licensee must be able to hit a certain bandwidth speed which the PTD will determine iv. The measures taken to ensure
at some stage in the future. Licensees would be reluctant to commit to a blank check. that each Radio Station is not
a source of harmful radiation
Renewal of a spectrum license to the public, and the Licensees
employees and contractors;
One of the likely points of controversy is the right of the licensee to renew his spectrum v. Any information necessary for
license. The basic rule is that if the licensee wants, he can renew the license and the the Department to develop
Government has to agree to give them the renewal. and keep updated the National
Table of Frequency Allocations
The Draft Spectrum Rules provided in this regard that the licensee has a right to renew, and National Frequency
except in certain cases, as is provided in s. 14 b) of the Draft Spectrum Rules: Assignment Register;
vi. The emission designation of
Upon receiving a request for renewal pursuant to provision a) in this Section, unless each Radio Station; and
the Department and the Licensee agree otherwise, the Department will renew the vii. The types of services
License, on the same or substantially similar terms, for no less than ten (10) years, if provided to the Licensees
the Licensee has substantially complied with: End Users using the Assigned
Frequencies.
i. all applicable Primary Legislation;
ii. theApplicable Regulatory Framework; and f) The Licensee, upon receiving a
iii. the Conditions contained in its License. writtenrequestfromtheDepartment
pursuant to Section40of the
However, these exceptions to the automatic right to renew are not found in the actual Telecommunications Law and the
Spectrum Rules which were issued. The exceptions were cut as part of the PTDs drive to Applicable Regulatory Framework,
simplify the regulation. shall within the reasonable period
specified by the Department:
If the PTD still wants these exception to apply, which we think is likely, their last chance
is to put them back on the table in actual licensing negotiations. Of course, it would be i. Make any officer or employee
in the licensees interest to stick to what the Spectrum Rules say at present, and have no available for examination by
exceptions whatsoever to license renewal. the Department;
ii. Provide the Department
Information licensees need to provide to the PTD with any information, data,
document, papers or other
The Spectrum Rules provide in an extensive duty upon licensees to inform the PTD in information required by the
s.23 e) an f) Spectrum Rules. Department concerning
the Licensees actual or
proposed use of the Assigned
Frequencies and other Radio
Spectrum resources;
iii. Provide the Department with
the equipment specifications
of all Radio Stations and other
Radio Apparatus operating
under its License.

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Some of these requirements are asking
for the licensees crown jewels. One
might ask whether such extensive duties
are really necessary. I guess we cannot
argue much with the regulations in force,
but it may be advisable to build in extra
safeguards and protection for licensees in
the license itself so that they do not incur
any risk unnecessarily.
How much are the spectrum
management fees?
The Spectrum Rules do not determine
what the fees are that licensees have to
pay. Remarkably, the Auction Framework
also did not specify what fees, besides the
initial fee which is the key biddable term.
The Spectrum Rules provide no answer
relevant authorization category; RELATED VDB LOI PUBLICATIONS
(d) Other Fees. The Licensee shall pay
any other reasonable fees that the Client Alert: MOTC announces
Department may establish under 2600 MHZ spectrum auction
Section15(c) and these rules. winners
Myanmar Opens Applications
This was already the case in the Draft for International Gateway
Spectrum Rules, although these did Licenses: Foreign Applicants
contain some more details on when the
Welcome
fee would be payable.
What Changes in Practice under
In other words, none of the bidders knew the New Investment Law?
how high the management fee, the
renewal fee and the other fees, if any,
were when they put in the bid. They could DOWNLOAD OUR EXPERIENCE
not know as these were not determined HERE
in the Spectrum Rules nor in the Auction
Framework. That is, of course, a recipe for
controversy between the licensees and
Get to the point.

either. S. 21 Spectrum Rules just lists the the PTD.

Telecommunications, Media and
fees, without naming a rate or a number. Technology

21. Licensees shall be subject to the Winning bidders will be required We have a particularly extensive TMT track record in our
markets, advising on the full range of telecom investments and
transactions. Our firm has a role in many of the regions high-

following fees: to remit their Spectrum Fee in 3 profile telecom deals and is recognized as a tier-one practice in
this field. Our advice is trusted by governments, multinational
operators and vendors, and international financial institutions.

payments: We provide the ultimate ground connectivity in the heavily

regulated TMT sphere. From market entry to licensing and

(a) Spectrum Fee. Licensees shall

acquisitions, our team is widely known to successfully navigate
government administrations in challenging environments.

pay Spectrum License Fee in the

Our job is to get to the point. Talk is cheap. Strengthened by

i. 50% on the effective date of years of experience on the ground assisting clients and working
with regulatory bodies, we prove it with results. And we dont
give up until we get the result we want.

prescribed manner; the spectrum assignment to

(b) Spectrum management fee. bidder.
Cambodia
Indonesia
Laos

Licensees shall pay spectrum

Myanmar

ii. 25% within 1 year after the Vietnam

management fee as part of Spectrum effective date of the spectrum

License Fee yearly; assignment to bidder. We gain trust with our partners and customers when using VDB
Loi for advice. They are very efficient, knowledgeable and are well

(c) Renewal Fees. If a License is renewed, iii. 25% within 2 years after the
informed especially on telecom. Asialaw

the Licensee shall pay a Renewal effective date of the spectrum

https://goo.gl/79J7Zn
Fee as specified in the terms and assignment to bidder.
conditions of the License, per the

CONTACT
SENIOR PARTNER TELECOMMUNICATIONS, MEDIA AND TECHNOLOGY TEAM (TMT)

Edwin Vanderbruggen Jon Linton

Senior Partner, VDB-Loi
edwin@vdb-loi.com
Edwin is a prominent foreign legal advisor living and working
in Myanmar since 2012. He frequently advises the Government
on privatizations and transactions in the energy, transport and
telecommunications areas. He and his team act for international
financial institutions, including on their largest ever Myanmar
financing in the telecom sphere. Edwin helped secure the licenses
for a multibillion dollar greenfield telecom project, converted a
communications SOE into a commercial company and he and his
team have obtained numerous telecom licenses in Myanmar.
YANGON
Level 8, Centrepoint Towers
No. 65 Sule Pagoda Road & Merchant Street, Kyauktada Township
T: +95 137 1902 / +95 137 1635
F: +95 124 1238
Team Leader
jonathan.linton@vdb-loi.com
VDB Loi has created a practice team to support the partners where
foreign and locally qualified lawyers and regulatory advisers work
exclusively on TMT matters. The TMT team is led by Jon Linton. Jon
is the manager of VDB Lois office in NayPyiTaw, where he resides.
He has over 3 year experience in Myanmar advising Government
departments and SOEs on privatizations and transactions,
particularly in the telecommunications and energy areas. Jon
was part of the team helping with the conversion of state-owned
MPT to a commercial company, and has advised e-money issuers,
satellite operators and network infrastructure owners on their
licensing and regulatory compliance.
NAY PYI TAW
No. S-204, Tha Pyay Kone Ward,
Zabu Thiri Township
T: +95 678 108 091
F: +95 678 108 092
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