Myanmar has come a long way in the last few years in terms of telecom penetration. Before the country embarked on the liberalisation of the telecom sector in 2013, mobile penetration was around 7 percent. Within a short two year time-span, mobile penetration has now reached more than 50pc. This represents one of the fastest-ever mobile penetration spikes, according to analysis by Roland Berger. It is also much faster than comparable countries such as Thailand and the Philippines, which took four years to boost their penetration to similar rates.
The Myanmar government looks to be fully committed to further liberalise the market and aims to tackle the remaining obstacles progressively. By 2020, it targets to achieve that more than 90pc of the population will have telephone access, more than 85pc internet access and more than 50pc high-speed internet access.
The results of the telecom liberalisation are clear: Since the start of the operations by Ooredoo and Telenor, respectively in August and September 2014, subscribers have rolled in by the millions. By July 2015, Telenor boasted more than 10 million subscribers and Ooredoo more than 5 million. MPT, which has partnered with KDDI Corporation and Sumitomo Corporation to offer equally competitive services, remains the leading operator with more than 14 million subscribers.
To support this rapid uptake in demand, a variety of telecom players have invested significantly in the telecom infrastructure. Over 50 licences to a variety of telecom players have been awarded by the Posts and Telecommunications Department (PTD) since January 2015. In the last two years, foreign direct investment in the telecom industry has boomed, reaching more than US$2.8 billion, creating an estimated 250,000 jobs. As a result of the increased competition, telecom tariffs have dropped remarkably, with MPT lowering its voice call rates to 23 kyats per minute starting from July 2015.
Though these are very well-deserved and significant achievements, a successful telecom industry is not merely about job creation or connecting people. Mobile penetration is also one of the pillars to boost economic growth, which is why a penetration of 90pc by 2020 is crucial. Research by the GSMA showed that the long-term GDP growth rate of a developing country can increase by as much as 1.2 percentage points with every 10pc increase in mobile phone penetration. This is crucial for Myanmar, where average GDP per capita is barely $1200, according to the World Bank.
Moreover, mobile infrastructure and connectivity is particularly important in a country like Myanmar, where 66pc of the population lives in rural areas. Leapfrogging technologies will offer services vital for commerce and wellbeing, like mobile money, mobile agriculture applications and mobile health to remote areas.
But there are clear challenges. Despite already extensive investments, the ravage by recent floods is a clear indicator that additional thinking, scenario planning and investments in the telecom infrastructure are still required. For example, further investments in the fibre network could provide additional back-up across the country or small cells could be an additional way to cover dense urban areas.
From a regulatory perspective, further regulation on international connectivity and additional spectrum allocation still need to be finalised. Furthermore, the acquisition of land needed for the construction of towers is still cumbersome for the operators and tower companies.
That said, the Posts and Telecommunications Department is to become an independent commission later this year, which is important in maintaining a level playing field for all telecom providers.
The regulator will also play a key role in working with all industry players to ensure they fulfill their investment obligations for the country by 2020, especially regarding rural access to telecom services. To support this, the Ministry of Communications and Information Technology also intends to draft a universal service strategy that has a focus on connectivity in rural areas.
The regulator could also play a pivotal role in key developments in the fast-maturing telecom industry. As an example, operators in many countries, including Myanmar, have agreements to share infrastructure. In these instances, an independent regulator could mandate a reduction in mobile packages, spurring even faster consumer inclusion into telecommunications.
In summary, significant challenges lie ahead in the telecom landscape, which will require the market players to fulfill investment goals, but also determine whether investments need to be amplified, as circumstances change. At the same time, the government would do well by boosting its capacity to monitor and continuing its liberalisation efforts. When all these commitments come to fruition, Myanmar citizens will have access to world-class services and the 90pc penetration target by 2020 would become a rewarding reality.
Source: Myanmar Times