Mobile phones see phenomenal growth: report

Myanmar’s mobile subscription count grew 87 percent year-on-year, to 10.7 million at end-September 2014, pushing mobile penetration to 19.9 percent, up from 12.5 percent at end-2013, according to global analyst firm Ovum in a press release on March 12.

According to the latest forecast report, mobile subscriptions will grow at a 21 percent CAGR, to reach 38.5 million at end-2019, up from 14.8 million at end-2014, as operators expand their networks to new cities and rural areas.

According to Mr Vivek Roy, Ovum Research Analyst and author of the report: “The major factors driving mobile subscriptions have been the availability of SIM cards, and the massive decline in SIM prices and call rates. Ooredoo and Telenor have priced SIM cards at K1,500 [US$1.50], with local voice calls costing K25 per minute and SMS costing K15 per message. Stepping into the post-liberalization era, Myanmar’s mobile market has started witnessing a new growth phase beginning in the third quarter of 2014 with the entry of two private players – Ooredoo and Telenor.”

In August last year, Ooredoo launched 3G networks in three of Myanmar’s key cities – Mandalay, Nay Pyi Taw, and Yangon – and was quick to expand, with mobile services reaching 78 cities and towns by the end of September, providing coverage to 14 million people. In the same month, Telenor launched 2G and 3G mobile services using 900MHz and 2100MHz spectrum, respectively, in Mandalay and moved toward the metropolitan hubs of Nay Pyi Taw and Yangon in October.

Before liberalization, availability of SIM cards was limited by government control, and SIM prices were incredibly high – beyond the reach of average citizens. Both new operators offer SIM cards via own-branded outlets-points of sale, virtually eliminating the need for a black market. The arrival of new players has also forced incumbent operator MPT to slash calling rates to remain competitive. MPT has cut rates from K50 per minute to K25 per minute, with SMS rates cut from K25 to K15 per message.

Evidently, the rationalization of mobile service pricing was expected as Myanmar opened up its market to new competition, but operators should refrain from price wars and look to improve profitability in the short-to-medium term by differentiating their services via adding more value and features,” said Mr Roy.

About five months into mobile business in Myanmar, the two private players have adopted a three-pronged approach to building their mobile customer base. First, they offer freebies in the form of voice minutes and data to attract new users. Second, on the device front, Telenor is offering own-branded low-cost handsets to increase device affordability. Similarly, Ooredoo offers bonus credits with the purchase of selected handsets and smartphones. Third, operators are looking to upgrade voice users to data by offering zero-rated content.

Although the entry of Telenor and Ooredoo has been promising so far, both face the task of educating users and expanding their habits beyond voice and messaging, as well as expanding outside urban cities into Myanmar’s rural landscape, which lacks basic infrastructure such as quality roads and full-time power supplies.

Over the next five years, Telenor and Ooredoo have committed to providing mobile connectivity to 90 percent and 97 percent of Myanmar’s population, respectively, and with around 70 percent of the population currently residing outside of urban areas, heavy investments will need to continue.
“Subscription growth will be healthy, as we see CAGR of 21 percent through 2019,” said Mr Roy. “However, boosting data usage and figuring out the right rural strategy will be key in driving profitability through the long term.”

Source: Mizzima

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