“Competition, watch out’ says Telenor Myanmar CEO, as subs over 10 million

Telenor Myanmar’s second quarter (Q2) results have exceeded expectations once again. By July, the Norwegian operator had secured more than 10 million subscriptions, with much higher numbers of data users than anticipated, said Petter Furberg, the company’s Myanmar CEO, at a press conference in Yangon yesterday.

“The biggest surprise for Telenor is that 55 percent of our customers are data users on a monthly basis – most on smartphones,” he said. “Yes, Myanmar people like to talk – they are talking more and more. But more interesting is that the growth of data is much quicker than the growth of voice. Voice traffic grew 93pc from January to June, but data usage grew 196pc over the same period.”

Because of this, Telenor’s strategy over the past six months has changed, and now 100pc of its towers will have 3G, he said. Breaking down the data, 43pc is used for browsing, 24pc for Facebook, 14pc for streaming, 8pc for gaming and 11pc for other uses, he said.

In Myanmar, Telenor added 3.1 million new subscriptions during Q2, compared with almost 3 million in Q1. By the end of Q2 a total of 9.5 million subscriptions were recorded, according to the company results, published yesterday. This has risen to more than 10 million at the time of going to press.

But the work is not yet done, said Mr Furberg.

Telenor started out with the most aggressive prices in the market – K25 per minute for a call, K5 per megabyte (MB) for My Internet and K6 per MB for Smart Internet. The calling price has since been undercut by Ooredoo, which began charging customers K20 per minute in April. At the time, Ooredoo denied initiating a price war.

Mr Furberg said, “Stay tuned – there is much more to come from Telenor, the competition is not over. And to the competition I just say one thing – watch out.”

For now, there are two main challenges. “The speed of our network expansion is the key challenge in a nation where approximately 70pc of the population lives in rural areas,’’ said Jon Fredrik Baksaas, Telenor’s president and CEO, in the company’s Q2 report.

The other challenge is to continue to improve capacity and data speed in the cities, said Mr Furberg. “I travel a lot and I have three phones – one MPT, one Ooredoo and one Telenor. I’m always checking the network and comparing the three. We improve every day but we are still not good enough,” he said.

Telenor is also working closely with its vendors – Ericsson from Sweden and Huawei from China – to come up with new solutions based on those used in heavy traffic cities around the world, said Mr Furberg. “These include small-cell solutions that can be put on lampposts, on walls and in buildings, to improve the quality,” he said.

The company is also in the process of exercising an option in its contract to buy 5 megahertz of spectrum in the 2.1 gigahertz band, to be used for 3G, at an additional cost of US$75 million, said Mr Furberg.

“This will allow us to improve capacity while keeping the same number of towers,” he said.

By the end of June, Telenor had 2308 tower sites and 50pc population coverage, in 12 out of the 14 states, regions and territories of Myanmar, according to Mr Furberg.

“The next 50pc of the population will be more challenging as they live in rural areas,” he said. Telenor is targeting 3500 to 4000 sites by the end of 2015, and 8500 sites in the coming years.

“We have 38,000 shops, 96 distributors, 68 branded shops, and this will grow as we expand the network. When we’re done we expect to have 70,000 to 100,000 shops selling SIM cards and top up credit,” he said.

Average revenue per user (ARPU) for the second quarter was US$5.7, down from $6.7 the previous quarter. However, revenues in local currency increased by 48pc from Q1, due to strong subscription growth, said Mr Baksaas in the Q2 report.

According to analysts, Telenor’s Myanmar performance was a bright spot for the company globally, offsetting weakness in Thailand, Sweden and Pakistan.

“Myanmar had another stellar quarter. We had the highest estimate on the street for Myanmar profitability and our EBITDA estimate was still 38pc below the actual result; consensus was beaten by 120pc,” said Roman Arbuzov, telecoms analyst at UBS Investment Bank.

EBITDA stands for earnings before interest, taxes, depreciation and amortisation.

Telenor’s normalised EBITDA margin for the quarter was 36pc, according to the Q2 report. Daniel Johansson, equity analyst at Norwegian investment bank Fondsfinans agreed that expectations had been trumped.

“Myanmar was significantly better than our forecast. We are pleased to see that the subscriber numbers has already closed in on the 10 million mark and [Telenor has] gained a 30pc market share – for me that is one quarter ahead of expectations,” he said.

Source: Myanmar Times

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