Carriers soup up networks as new rivals come knocking

Myanmar’s wireless market is embarking on a new chapter, now that the bulk of the country’s population is connected.

Norwegian telecom company Telenor runs this cellphone shop in Yangon.
The Southeast Asian nation’s mobile penetration rate has shot up from 9% at the end of 2013 to an estimated 70% or so. Auctions for new mobile network licenses are scheduled for this month. Though stiff price competition could eat into profits at existing carriers, they are eager to continue investing in infrastructure to improve network quality. They are also looking to diversify their revenue sources, such as by offering better data communications services.

The country’s Ministry of Communications and Information Technology said the mobile penetration rate was over 65% in August. Swedish telecommunications company Ericsson estimates that the net increase in mobile subscriptions in Myanmar came to around 5 million in the July-September period. That would be the fourth-biggest increase worldwide, after India, China and the U.S.

In an attempt to boost wireless subscriptions further, Myanmar’s government this month began accepting bids from foreign companies for fourth-generation network licenses. It will select candidates after the bidding closes next year. The new licenses are likely to be granted on the condition that foreign players set up a joint venture with a consortium of 11 local companies keen to enter the mobile market, including Yatanarpon Teleport, an Internet service provider.

A Vietnamese telecommunications company is said to be among the contenders. The government has not disclosed the names of the bidders.

Profitability in doubt

When Myanmar was under military rule, the telecom market was controlled by state-run Myanma Posts and Telecommunications, or MPT. Only military officials and other privileged individuals were allowed to own cellphones. MPT’s dominance ended in 2014, with the entry of two foreign companies: Ooredoo of Qatar and Telenor of Norway.

The two racked up subscriptions by selling cut-price SIM cards and lowering phone charges. MPT followed suit, in partnership with Japanese telecom company KDDI and trading house Sumitomo.

The latest bidding is likely to stir up competition further, benefiting consumers. But the arrival of new entrants could also erode profitability. Phone charges are already less than half of what they were before the market opened up. One official at a foreign telecom company said the situation is already unsustainable.

In any case, carriers are targeting their investments at improving voice quality, hoping to reel in more subscribers. Ooredoo said in October that it will borrow up to $150 million from the International Finance Corp., a World Bank Group unit, to build high-speed mobile network infrastructure, including third-generation technology. The alliance of MPT, KDDI and Sumitomo is also thinking about investing around 200 billion yen ($1.62 billion).

Source: NIKKEI

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