Telecom new comers promise greater connectivity

The days when a SIM card can cost as much as US$200 are totally gone following the liberalisation of the telecom industry, which welcomed two new players – Ooredoo and Telenor- into the country.

Three weeks after its service launch on August 15, 2014, Ooredoo Myanmar, based in Qatar, sold one million SIM cards. Unveiling its services on September 27, Telenor Myanmar, a Norwegian company, sold two million SIM cards, priced as low as Ks 1,500 (US$1.5), in five weeks. Following the emergence of these two foreign telecom providers, Myanma Posts and Telecommunications (MPT) – the state-owned and only service provider until 2014 – recently lowered its service fees.

Aside from cheaper service fees, the new telecom players have opened up new communication possibilities within Myanmar and internationally.

While MPT’s network is now the most extensive, Ooredoo and Telenor are expanding quickly.

As of January 15, 2015, the Qatari firm has covered six regions and three states – Yangon Region, Bago Region, Mandalay Region, Magway Region, Sagaing Region, Ayeyarwady Region, Mon State, Shan State, and Kayin State. Telenor’s coverage areas this year will cover Mandalay, Yangon, Nay Pyi Taw, Magway and Bago.

“At the time of our launch, we covered 15 per cent of the overall population. By the end of last year, we managed to expand our network coverage to 40 per cent. By the end of 2015, we expect to cover 80 per cent of the population. Within five years, we expect to cover 97 per cent of the population,” said Ooredoo Myanmar’s CEO Ross Cormack.

Growth drivers

“Myanmar is not different from any part of the world in terms of need for communication. Today, the need is significantly higher, and this comes at a lower price. Moreover, prices will be going down,” said PetterFurberg, CEO of Telenor Myanmar.

Voice data now accounts for a significant revenue stream for Telenor, but over time, internet usage is expected to rise, thanks to the growing number of smartphones, Furberg said.

Cormack added that at the start, telecommunications connects job-seekers with new opportunities and links families who are separated by geography. Mobile communications enables teachers to access learning resources while enabling farmers to track market demand, and entrepreneurs to connect with new suppliers. Meanwhile, young talent are eager to deploy mobile technology to develop new businesses and kick-start social development.

Ooredoo recently hosted a connecting women conference with the GSM Association in Yangon that focused on using technology to empower women and spur female participation in Myanmar’s tech scene.

“We are passionate about inclusive development, ensuring that this is not centred in urban areas, where talent already exists. We understand the government’s vision and are just as passionate as they are about bringing the benefits of mobile technology to Myanmar. We are committed to enabling human growth through affordable and easy access to mobile technology. We are more than just a telco. Through creative and innovative solutions, developed in partnership with local people, government and businesses, we offer underserved communities the opportunity to access vital information and services, such as banking, healthcare and education via their mobile phones,” Cormack noted.

“Better networks help people do business, get in touch with friends and family. In time, this will drive economic growth,” Furberg added.

Hiccups at the start

Optimism is high despite challenges that the newcomers have yet to overcome.

Telenor’s major challenge lies in the process or acquiring permits.

“It’s a bit difficult in Myanmar to get permits as it’s completely new to them,” Furberg said. He estimated that over 100 applications are needed to get permits for the construction of telecom towers, posing an obstacle for the new players, who were obligated to start service within eight months after the licenses were awarded in February 2014.

He experienced progress in this area, though. The permit-granting process is getting faster and more professional. Moreover, about 100 local companies involved in the construction are becoming familiar with the process and more capable of carrying out their tasks in the speedy way.

In 2014, 250 towers were constructed. Telenor aims to construct 250-300 monthly in 2015, but that depends on weather and geographical conditions.

“I’m not saying it’s easy. But mostly, things go as planned,” Furberg said.

At Ooredoo, in the first couple weeks of construction, the companyfaced a shortage of steel. It became necessary to import steel along with other components that were not available in the country, such as connectors.

“The country’s existing infrastructure has required some innovative solutions. Seventy per cent of the population does not have access to electric power, so a large percentage of our towers will need generators,” Cormack added. “There are brown-outs even in the cities, and there isn’t any power at all in most of the rural areas, so you need a mix of green power and diesel.You then need a small army of people to maintain the generators.”

The sheer size of the country is another challenge to the new telecom providers. Myanmar is twice the size of the Phillippines, but road connectionsare poor. Off-road tracks are waterlogged during rainy season, and the rain itself slows down construction work.

“But all of this is known to the people living in the country, and our great people have been, and continue to be, the biggest asset in helping us navigate ourselves through this,” Cormack noted.

MPT’s response

Khin MaungTun, general manager of MPT and deputy chief executive officer of MPT-KDDI-Sumitomo joint operations, said MPT has avoided fuelling competition, as this may lead all to failure.

“We want to create a win-win situation. As we really want market stability, we remain and retain our dialing price at 35 Ks per minute [while other operators charge 25 Ks per minute],” he said.

Yet, MPT does not stand idle.

Khin MuangTun added that MPT has executed a series of reforms. For example, the data activation fee, levied on internet access, of Ks 10,000 was waived. In cooperation with SweThahar, since January 12, customers can enjoy better call and SMS rates plus faster internet speed.

“We are expanding our network coverage to cover the whole country, and we aim to provide the best service quality through our largest network. At the same time, we are increasing capacity and quality for the benefit of the users,” he said, adding that the telecom industry is just in its infant stage here.

Last July, MPT also signed a joint operation agreement with Japanese mobile carrier KDDI Corp and trading house Sumitomo Corp. The joint operations started on September 12.

According to Takashi Nagashima, CEO of MPT-KDDI-Sumitomo joint operations, the network improvement plan kicked off on November 6. The capacity of congested 3G sites in Yangon and Nay Pyi Taw was expanded. Capacity of those sites is now about 50 per cent higher than before November 6.

He added that the capacity and coverage will be boosted nationwide. By the end of March 2015, the number of 3G sites will double. In the Yangon area, the total 3G network capacity will almost triple. MPT is also testing the 3G network technology to allow better data service.

“We have planned to accelerate geographic coverage and reach more than 70 per cent by 2016.By mid-2015, almost 100 per cent of MPT networks will be covered with 3G,” said Nagashima.

“We currently stand as the number-one telecom operator in Myanmar. We are more than willing to maintain our standing in the future. We will try our best to satisfy customers by expansion of coverage and capacity. We cannot say how much we have invested for the joint operations so far,but we are committed to investing US$2 billion over ten years,” he added.

Black market

Since September, MPT,whose network covers 70 per cent of the country’s area, has sold 5 million SIM cards. Its SIM cards and top-up cards are now available in tens of thousands of points of sales.

Ooredoo plans to keep selling more than 1 million SIM cards per month, while Telenor is pumping out 1.5 million SIM cards on a monthly basis, which are available at 17,000 vendors. Demand is huge. Telenor sold 521,000 SIM cards on the day of its debut in Yangon.

Both Cormack and Furberg are confident that they have enough capacity to satisfy demand, but their SIM cards are still sold at a premium in some parts of the country.

Furberg noted that this would soon be over. It took only three years for SIM card prices to fall from $200 to $1.50.

“It will take a while to reach out to all who are not used to buying their own SIM cards. Before, due to the high prices, they had to win a lottery to get a SIM card. Meanwhile, the entire area of Myanmar is not yet covered by mobile phone networks. In the uncovered areas, SIM cards are still sold at a premium, as some people still want to be the first,” he said.

Looking ahead

Noting that competition is always good for customers who have more choices of mobile technology and internet service, Cormack sees immense opportunity. Ooredoo’s 3G network is ready to deliver 4G when the time comes.

Ooredoohas set itssightson bridging Myanmar’s gender gap in technology and promoting the female digital economy through a variety of initiatives, including the Connected Women’s Conference in October &Ideabox’s Geek Girls community, which spurs female development in Myanmar’s tech revolution. Looking beyond Myanmar’s towns and cities, this is also about educating people, particularly low income and rural communities, about the benefits of technology, of being connected and of digital inclusion.

“We saw a great opportunity to break down the barriers that were preventing people from accessing these services, and getting online,” Cormack said, adding that Ooredoo is materialising the government’s aim to leapfrog their country technologically, socially and economically.

“Over a year ago, around 10 per cent of the country’s population was estimated to have mobile phone access.Ooredoo has committed to making this 97 per cent in five years’ time.”

Source: Eleven Myanmar

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