On the outskirts of Bago, a scruffy town in southern Myanmar, a tall, pale Scandinavian-looking man squints up at a four-legged telecoms mast that has recently sprouted next to a mud track. He is Petter Furberg, the boss of the Burmese operations of Telenor, a Norwegian mobile-telecoms operator. He concludes that more towers will be needed to provide the town with adequate coverage, and asks his contractors to put up some more. The job done, Telenor switched on its service in Bago on January 13th.
Myanmar, with a bigger population than Spain, is one of the last great “unphoned” countries. In 2013 its military-backed government invited bids for the right to build its first modern mobile networks. The services that Telenor and Ooredoo, a Qatari rival, began to roll out last year are a crucial step towards reanimating an economy anaesthetised by five decades of dictatorship. Studies by Ericsson, a network-equipment supplier and McKinsey, a consulting firm, suggest that Myanmar’s mobile roll-out could create more than 90,000 new jobs and help to sustain annual economic growth of 8%-plus.
Locals once paid $1,500 each for SIM cards raffled by the state network, and coverage was scant. Now a SIM costs just $1.50, and new towers are popping up everywhere. Myanmar Posts and Telecommunications, the state-run incumbent, is transforming itself in partnership with KDDI and Sumitomo, two Japanese firms. Yatanarpon, a domestic provider of fixed-line telephony, will soon join the brawl in partnership with Viettel, a mobile-service provider from Vietnam.
In contrast to India, where price wars among around a dozen operators have sapped their ability to invest in increasing penetration rates, Myanmar is betting that having four participants will provide just enough competition, while making it attractive enough for the operators to invest in the roll-out. The plan is that within five years the four operators will between them be reaching 90% of the population.
Since Telenor lost its domestic monopoly in the 1990s it has rediscovered the Viking spirit of adventure, launching into foreign markets ranging from Bulgaria to Bangladesh. It now has about 180m customers in 13 countries and, through a stake in VimpelCom, a Russian operator, a foothold in another 13 countries. But this is the first time it has gone up against Ooredoo, a brash outfit owned by the government of Qatar. Known for years as Qtel, Ooredoo did not venture abroad until 2005. It is now one of the world’s fastest-growing mobile firms, with 90m customers, mostly spread across north Africa and the Middle East, including Iraq and the Palestinian territories.
Ooredoo has started with gusto. Its noisy headquarters in Yangon, Myanmar’s commercial capital, already has more than 1,000 staff. The firm has rented billboards across the city and sponsored the national football league. It boasts that it is offering whizzy “3G” data services throughout its network, bringing fast internet to people who have never before owned a phone.
Telenor’s approach is leaner. Its share price dipped when its bid was accepted, as investors digested the risks. The firm has since promised to complete the roll-out with little more than $1 billion of capital, and pledged that the venture will break even in three years. It has hired only half as many people as Ooredoo, and in some places it will start by offering only slower “2G” services. Mr Furberg argues that many Burmese cannot yet afford 3G handsets. When they can, upgrading services will not cost much.
For now neither company is struggling to attract customers. Ooredoo signed up 1m people within three weeks of launching in Yangon; Telenor snagged half a million in one day. The promotional umbrellas they have been giving away—red for Ooredoo, blue for Telenor—now shelter hawkers and tea shops on every corner.
This invasion adds to the sense of a city facing enormous change. Women still staff the metal telephone kiosks which dot its pavements, guarding grubby wired handsets, but SIM sellers now outnumber them. A teenager peddling SIMs from behind a white plastic table says he is making around 20,000 kyat ($19) a day, more than many taxi drivers earn.
The roll-out will bring social upheaval. Ross Cormack, Ooredoo’s boss in Myanmar, reckons the number of Facebook users there has roughly doubled since his network launched. Ooredoo has promised to give free tools and training to 30,000 rural women to help them sell SIMs and airtime to their neighbours. Romain Caillaud of Vriens & Partners, a political and business consulting firm, says smartphones are already helping small farmers to improve productivity and outwit grasping middlemen by checking price information online.
For other foreign firms mulling an entry to Myanmar, the mobile roll-out illustrates some of the trials they may face. Ooredoo has weathered a boycott proposed by hardline Buddhists who fear the Qatari firm will somehow embolden Myanmar’s Muslim minority. Telenor has sometimes had to stop the contractors building its towers from using child labour. Exorbitant commercial rents in Yangon, on a par with those in Singapore and Manhattan, have forced some of the firms’ foreign suppliers to base themselves outside the city. The low capacity of fibre-optic cables in and out of the country inhibits the growth of data services of all types.
Getting permission to build telecoms towers is a persistent problem. Telenor and Ooredoo will probably each need about 8,000 base stations to cover the country, of which they have as yet built only a fraction. In some places the volume and complexity of applications has overwhelmed local planning authorities. In others officials have delayed approvals in the hope of receiving a bribe. Then again, the two firms have made things harder for themselves by failing to share their towers, as they had said they would.
However, the biggest challenge for Myanmar’s mobile firms is meeting the overwhelming demand from consumers starved of modern luxuries for the past half-century. On its launch day, Ooredoo received more than 800,000 calls to its customer-support centre, many times more than it could answer. Telenor’s Mr Furberg says he cannot go anywhere without hearing the same two demands: more network coverage and faster speeds.
Source: The Economist
To learn more about how Myanmar businesses are adapting to the internet go to http://consult-myanmar.com/2015/10/28/myanmar-businesses-slow-to-adapt-to-improvements-in-internet/