Home Insider Insider Analysis Heated Up Revolution in Myanmar: The Final Frontier for Asian Telecoms Growth

Heated Up Revolution in Myanmar: The Final Frontier for Asian Telecoms Growth

In Myanmar, a country which was large- ly forgotten by the rest of the world until a decade ago, mobile telephone

was a simple luxurious possession for the high class people. A single mobile SIM card price was up to $1600 in junta-ruled coun- try when the average price for one in other counties was almost free.

Very few people owned mobile phones in Myanmar years ago. Fewer people have ac- cess to the internet. The country’s telecom sector was controlled and organized only by government-backed Myanmar Post and Telecommunication (MPT), which services were poor comparing within the region ac- cording to the feedbacks from the local cus- tomers.

Now, the country’s telecoms are at breaking point. Owning a mobile phone in once-re- clusive Myanmar is now getting a lot easier and much cheaper along with the heat up competition between two foreign telecom giants from Norway and Qatar.

Now two foreign telecom giants have al- ready tapped into that hunger for Internet services, mobile phones and the other tech- nology advances that most of the world has enjoyed for years. Today, as Myanmar pries open its economy, mobile phone use is up to 10% of the population of more than 51 mil- lion, while fewer than 7% now have Internet access. But these rates are set to skyrocket at fiber-optic speed as Norway’s Telenor and Qatar’s Ooredoo start rolling out mod- ern equipment over the coming months. Ooredoo plans to invest $1 billion this year and bring service to 70% of the population by the end of next year–within five years 97%. Telenor, a veteran of tough Asian mar- kets, also is pledging $1 billion to start.

“We’ve never entered a market before where demand is so visible,” says Petter Furberg, Telenor Myanmar’s CEO.

Being referred as Asia final telecom frontier, many investors competed for the telecom li- cense by the ambitious and recently reform- ist ASEAN republic which has a population of 51.4 million people where mobile phone penetration is still estimated to be below 10%.

Even the companies and consortiums that were unsuccessful at the bid stage spoke promisingly about how transparent and fair the whole process had been. Clearly, it was a test that the Myanmar government passed. The two international operators, which have licensed to operate business in Myanmar for building mobile networks last year, entered into agreements with other investors to put money and know-how into developing the industry. These two telecom giants are now opening their frontiers to compete along with the reforming MPT which cooperating with Japan’s KDDI.

Though MPT has announced its SIM card’s price tag is only Ks 1,500, ( $1.5)demand pushed the black-market rate to between Ks 15,000 ($15) and Ks 20,000 ($20). De- spite the high number of SIM cards from Ooredoo, a customer in July also ended up paying Ks 7,000 ($7) for a Ks 1,500 ($1.5) card when sales agents in Mandalay began selling ahead of the planned debut. Earli- er this month, MPT launched new products and services through a partnership with Japanese telecommunication giants KDDI and Sumitomo.

The previously unknown competition be- tween the major players in Myanmar’s tele- com landscape has prompted some custom- ers to complain that the new rates are still too high and they would wait for cheaper packages offered by the market entrants. Both newcomers are now offering promo- tions with subsidized mobile phones and airtime or Internet bonus packages with un- believable low prices for the people.

Telenor, one of two telecom companies winning the 15-year licenses, is now initi- ating their mobile networks starting from Mandalay on September 27, Nay Pyi Daw and soon in Yangon. Qatar’s telecom giant

Ooredoo, which started services in Myan- mar in August, is now finally confronted with competition of Norway’s Telenor, the second foreign license holder on the highly undersupplied mobile phone market in the newly opened country.

Telenor’s CEO Petter Furberg said, “Every- thing is ready. Every SIM card comes with voice, SMS, Internet, etc. Also roaming is enabled from the start. It is important when you travel you can immediately use roam- ing if that country has signed an agreement with Telenor.”

The country’s Ministry of Telecommunica- tions and Information Technology expects the number of mobile phone users to reach up to 80% of the population as early as next year, while the number of Internet users is forecast to reach 50% in the same period.

Ooredoo Myanmar, which sold 1 million SIM cards in the first three weeks after its launch, said it has a target of 25 million cus- tomers by end of 2014. Telenor’s CEO Petter Furberg spoke of a target of 9 million cus- tomers in the same period.

There are some issues for Ooredoo and Telenor had to deal like sky-rocked land prices, human resource problem and a lack of infrastructure. Both operators have to complete a target to cover a majority of the population with network coverage by 2016. In Myanmar almost all mobile penetration is urban, and 65% of the population lives in rural areas. So, meeting such a penetration target will be a tall order when it comes to network rollout and investment. Add to that Myanmar’s mountainous terrain, and it is evident that delivering widespread connec-

tivity in a few years could be difficult.

As parts of the country, especially in the north and the west, continue to hit by eth- nic tension and violence, some experts said it remains to be seen whether the operators can spread their networks in the areas.