How Mytel is Set to Shake Up Myanmar’s Telecoms Sector

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The entrance of a new operator to Myan­mar’s telecoms sec­tor has brought a wave of new investment and heightened competition to an already crowded mar­ket, promising expanded service options and lower pricing for consumers.

In mid-January the telecoms regulator, the Ministry of Transport and Communications, for­mally issued the country’s fourth nationwide tel­ecommunications licence (NTL) to the consortium Myanmar National Tele & Communications.

Ownership is split among Viettel, operated by Vietnam’s military, with a 49% stake; a lo­cal consortium of 11 local companies called Myan­mar National Telecom Holding Public, with 23%; and domestic firm Star High, with 28%.

A $2bn spree

The new provider – which has been allocated the 900-MHz and 2100- MHz bands – will oper­ate under the name Mytel and begin services some time in 2018, after mak­ing investments of more than $2 billion in equip­ment, services and infra­structure.

Among Myanmar’s four mobile service providers with NTLs, the leader by number of subscribers is Myanma Posts and Tel­ecommunications (MPT) with 21 million, followed by Norway’s Telenor (18 million) and Qatar’s Ooredoo (9 million), ac­cording to figures released by international media in November. A shadow op­erator backed by the mili­tary, MecTel, also oper­ates in the market under a special, non-NTL licence, and had roughly 3.8 mil­lion subscribers as of mid- 2015.

The conditions for My­tel according to the agree­ment approved by the government – a 15-year licence with the option for a 10-year extension – are broadly similar to those granted to the two other private operators, Telenor and Ooredoo.

One notable difference was the price: the licens­ing fee levied was report­edly $300 million, well below the $500 million charged to Telenor and less than a third of the $1 billion paid by Ooredoo.

Analysts interpreted the lower fee as a reflection of the maturity of Myan­mar’s busy telecoms mar­ket; however, it could also be acting as a discount of sorts, reflecting the high level of investment Mytel will need to be competitive.

Tapping rural areas

Despite having three es­tablished service provid­ers, Myanmar’s telecoms market still offers oppor­tunities for growth.

With mobile penetration rates approaching 70% of the population, the re­maining 30% are an obvi­ous target for Mytel, and the company has identified the rural slice of the market as a key part of its growth strategy, according to Zaw Min Oo, its chief external relations officer.

“About 70% of the pop­ulation is rural,” he told local press in January. “We are targeting them. We saw that people used the internet more than we expected. We are viewing it as an opportunity.”

Perhaps larger still is the opportunity present­ed by rising demand for data and internet services among both individual and corporate clients. Since 2014 internet us­age has swelled from just 2 million registered sub­scribers to nearly 40 mil­lion in 2016, according to estimates from the Posts and Telecommunications Department.

Such rapid growth has been driven by many fac­tors, including greater market competition, which has caused a steep drop in the price of in­ternet and mobile phone subscriptions, and a far stronger infrastructure backbone, which has ex­tended the reach of ser­vices to more people.

Indeed, SIM cards were once priced in excess of $1,500, but can now be bought at thousands of lo­cations for K1500 ($1.09).

One selling point for the new network will be its commitment to boosting internet speeds for mobile handset users to 3 Mbps – double the present rate. Officials have also sig­nalled plans to strengthen internet and voice con­nectivity for international services by linking into the Asia-Africa-Europe 1 submarine cable.

This commitment to boost the speed of data and communications ser­vices could enhance com­petition further, spurring the other operators to ramp up investment and lower subscription costs, or innovate tariffs and plans to maintain market share in a highly price-sensitive environment.

The entry of Mytel, and the exigency of investing heavily and rapidly in or­der to meet its 2018 ser­vice launch date, should create new opportunities for technical and infra­structure suppliers.

Mytel has said it intends to provide coverage to at least 95% of Myanmar’s population and attract 5m subscribers by 2020, a goal that will require extensive infrastructure investment, especially in the rural areas being targeted. As a result, de­mand for handsets that are 3G and 4G capable will also be strong, driv­ing increased sales for phone manufacturers and retailers alike.
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Source: Myanmar Business Today
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