Myanmar Telecommunications at a Crossroads

Friday, 19 September 2014

GU_190914_websiteTimes have never been as interesting as now for the Myanmar telecommunications market. The critical telecom sector liberalisation of Myanmar continues at full swing with the government awarding Norway’s Telenor and Qatar’s Ooredoo with nationwide telecom licenses last year following a highly competitive tender process. 

Market players launch competitive offerings

Earlier in August, Ooredoo launched 3G mobile services in Greater Yangon, Mandalay and Naypyidaw. The initial network is expected to reach 7.8 million people, about 15% of the population. The discounted call rates by Ooredoo, compared to state-owned incumbent operator Myanmar Posts and Telecommunications (MPT), turned out to be a success by attracting over 1 million subscribers within three weeks of launch.

Telenor will start their commercial operations with similar coverage at the end of September. Although Ooredoo has the first-mover advantage with a successful launch, Telenor has a history of winning emerging markets while arriving late (especially in Bangladesh, a market which analysts believe offers the closest parallels to the Myanmar market).

As the race ensues, MPT has also announced a $2 billion overhaul to its own mobile network and has partnered with Japan’s KDDI Corporation to compete with the foreign entrants.

Boat & River_2_by Chris WooMPT has also responded to Ooredoo’s launch by slashing its local calling rates from 50 kyats ($0.05) per minute to 20 kyats or lower and SMS rates from 25 kyats to 10 kyats or below. MPT also launched SIMs at 1,500 kyats ($1.53) at a significant discount compared to the over-the-top prices of SIMs prior to market liberalisation (Two years ago a SIM card cost around $2,000. In April 2014, the SIM price is now near $140). However, MPT has had to stop selling its discounted SIM cards, citing concerns over black market trade.  Meanwhile, Telenor also plans to sell SIMs for 1,500 kyats and has announced plans to bring in millions of SIMs to support its launch.

Telecom operators will face challenges  

The telecom liberalisation is bringing both voice and internet services to many in Myanmar for the first time.  At this stage, mobile internet offerings by the operators can act as the key differentiator in terms of coverage, speed and pricing plans.  The prevailing practice by the incumbent is to charge data access based on time and not based on actual usage. Ooredoo's launch has already attracted some criticism from local consumers accustomed to the MPT model, and it is believed by industry analysts that MPT does not intend to change its time-based data access charging model.

As of now, challenges are formidable for the operators in order to expand their networks to cover the rest of the Myanmar population. Parts of the country are still troubled by ethnic turmoil. Thousands of mobile towers needed to provide network coverage may have to be built off the electricity grid; powered by diesel generators that will require re-fuelling and maintenance. This in turn is made difficult by a lack of roads infrastructure which has suffered from decades of neglect.

The permission for construction of new towers is slow due to excessive bureaucracy. For every tower, the contractor requires separate permissions from multiple stakeholders. In an indication of other regulatory challenges ahead, Telenor recently revealed that it had detected incidences of child labour at many of its Myanmar tower rollout sites. Above all, the telecom regulatory environment at large is still opaque since MPT, the incumbent operator, doubles as regulator for the telecom sector - the roadmap for operational separation of the regulatory function from the Operator’s role is still not clear.

Interesting days ahead as the Telecom market gains momentum

As millions within Myanmar get connected for the first time, electronic commerce and mobile banking seems to be a natural outcome following the infocomm trajectories of other major Southeast Asian countries like Vietnam and Indonesia.  The rapid diffusion of information and communication will have its social and political implications of increased access to information and social networks. The final frontier of telecom has reached a significant turning point, and this market will be one of the most interesting and exciting ones to watch.

Greg Unsworth | Asia Pacific Technology Industry Leader
Website | +65 6236 3738



That's awesome! Great blog!

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