As Myanmar makes its transformation from international pariah to the new darling of Southeast Asia, the international business community is keeping a keen eye on the country’s government. For five decades, the country was ruled by an oppressive military and, as the country makes tentative moves towards actual democracy, international observers want to ensure that the reforms that began taking place in 2011 are genuine.
One of the most high profile tests in 2013 came when the Ministry of Telecoms and Communications announced the two successful international companies were to be granted telecoms licenses alongside two local operators.
Almost 100 expressions of interest were submitted from companies all over the world, before that figure was cut to 22, then 12 in April. On June 27th, following an extensive vetting process, the two winners were announced as Norway’s Telenor and Ooredoo of Qatar, with a joint venture between Japan’s Marubeni and France Telecom selected as the reserve choice should one of the license grantees be unable to fulfill its commitments.
Even the companies and consortiums that were unsuccessful at the bid stage spoke promisingly about how free and fair the whole process had been. Clearly, it was a test that the government passed.
Telenor’s inclusion was generally expected. The company, partly-owned by the Norwegian government, already has a strong presence in Southeast Asia as a market leader in neighbouring Bangladesh and with operations in Malaysia and Thailand.
Ooredoo, however, was less expected and surprised even the most well informed analysts. Despite early promises of investing an incredible $15M in the country over the 15-year license period, many expected either Singtel or Digicel, the latter of which that had been on a particularly aggressive marketing campaign, to get the nod.
Of Myanmar’s estimated population of 60 million, less than 10 percent have access to a mobile phone. Compare that to other countries in the region – Indonesia has close to 100 percent and Thailand 110 percent – and it gives you some idea of the growth potential in the telecoms market in Myanmar.
Since the bid announcement, however, optimism has waned. While the new Telecommunications Law was passed in October, at the time of print the licenses had not yet been issued to the successful bidders – thought to be due to minor disagreements over certain aspects of the new bill – and the ministry has to ensure that it does not let the good reputation it has built for itself begin to slip as the wait for live telecommunications continues.
When the winners were announced, it was promised that operations would be live within nine months – meaning that by March both companies should be able to roll out their services – and while that target is still not impossible, with the licenses still not granted and little progress taking place on the surface, observers are skeptical as to whether that deadline will be met.
There are other issues for Ooredoo and Telenor to deal with besides the lack of clarity on laws and licenses. Land prices, human resource problems and a lack of infrastructure are issues for all international companies coming into the country to consider, but Ooredoo and Telenor must add the building of towers in hard to reach places to that list.
Part of the remit for successful companies was to ensure almost 100 percent (as well as truly nationwide) phone coverage within six years, but as parts of the country, particularly in the north and the west, continue to be hit by ethnic tension and violence, it remains to be seen whether the operators can construct their towers in these areas.
Ooredoo, too, has its own set of unique issues to contend with. In the past year and half, Buddhist-Muslim violence has spread across the country. While the bulk of the violence has taken place in western Rakhine State, it has been perceived by many as an attack on the Buddhist identity of the country, leading to a fairly widespread anti-Muslim sentiment.
Coming from and being backed by a Muslim country – particularly as part of the fear is of Muslims taking over the economy and driving out Buddhist businesses – some prominent members of society have called on people to boycott Ooredoo products. Additionally, the Myanmar Insider has spoken to some mobile phone shops in Yangon who are wary about stocking Ooredoo products due to their connections with the Qatari government.
While Ooredoo has not publicly addressed the issue, it is in the process of working hard to ensure that the brand is seen in a positive way. In recent months, Ooredoo has been on a charm offensive, sponsoring a number of civil society events in an attempt to win over the public’s trust, with many more announcements expected soon. It remains to be seen if they can do enough to turn public opinion enough so that it can compete on a level playing field with Telenor.
Telenor, however, might not be its only competitor. Recent reports have suggested that the two domestic telecommunication companies – state-run Myanmar Posts and Telecommunciations (MPT) and Yadanapon Teleport – are courting international companies to implement a joint venture to allow them to compete with the two new players in the market.
Until now, MPT has been the sole operator in Myanmar, but has shown that, on its own at least, it will struggle to compete with companies coming in with experience on the international stage. If, however, it can team up with international companies that have experience in building networks, then the sector could become more competitive than many expected. Companies thought to have expressed an interest in joining with MPT include Vodafone, Singtel and Orange.
Today, a SIM card in Myanmar fetches upwards of $150, even on the black market. That is a significant drop from years ago, when they could cost as much as $1,000.
New mobile phone network operators in the country should go a long way to greatly improving the country’s economic performance, as well as access to information for many of its citizens, but it remains to be seen how long it will take before this becomes truly nationwide as the government has promised.