myanmar mobile
A man talks on his mobile phone by the street side of Yangon, June 21, 2013. Reuters

Major Japanese mobile carrier KDDI Corp. (TYO:9433) is partnering with Japanese trading company Sumitomo Corp. (TYO:8053) to invest about $2 billion in Myanmar’s state-owned telecommunication business over the next decade, when the country’s telecommunications sector is expected to grow rapidly, the companies said Wednesday.

The two companies signed a deal Wednesday with state-owned Myanmar Post & Telecommunications to jointly operate a mobile phone network in the country, which is opening up to investment after decades of military rule.

About 10 percent of 65 million Myanmar residents use mobile phones, KDDI said, but demand is expected to greatly increase. KDDI and Sumitomo already operate the largest share of a growing mobile market in Mongolia.

The companies plan to spend most of the $2 billion building base stations and other facilities needed for quality mobile services in Myanmar’s largest cities.

KDDI and Sumitomo began eyeing Myanmar’s wireless market in 2010 and bid for a license last summer but did not win it, according to Nikkei. Then MPT invited companies to partner with the state-owned business and compete with the license winners, Ooredoo of Qatar and Telenor ASA of Norway (OSE:TEL). Under the deal, KDDI must share profits with MPT and can't use its own brand.