The Myanmar telecom industry has rapidly evolved seeing the entrance of two more operators, Telenor and Ooredoo. The two newcomers joined the once-monopoly state-owned operator, Myanmar Posts and Telecommunications, to compete in one of Myanmar’s fastest growing industries.

With a population of around 62 million, Myanmar remains one of the last undeveloped markets in Asia with fixed line penetration and mobile penetration rates at around 1% and 4% respectively as of 2012. The government has set ambitious targets of 75-80% penetration by the end of this year and has been steadily working towards that goal, which seems more and more realistic as each day passes.

The competition created by operators is a key driving force in achieving the government’s targeted mobile penetration rate. However, there are many daunting challenges which Myanmar’s telecom industry faces.

 

Challenges in the Myanmar Telecom Sector

Firstly, there is issue case of a low mobile penetration rate. The rate was extremely low until recently due to the high costs of purchasing a mobile phone SIM card.

It’s improved recently because the government lowered the costs of purchasing a SIM card from what was once about US$1500 to about US$2. However, there is still quite a large part of the population that has yet to own a mobile phone.

Secondly, expansion of base stations to enlarge the network coverage area has been met with some unexpected difficulties. The key problem standing in the way of rapid construction of base stations is that the land owner is very hard to contact most of the time.

In Myanmar, it can be very difficult to find out the legitimate owner of some plots of land. There are a multitude of cases in which a plot of land is sold, yet the current owner has not bothered to actually change the plot owner’s name in the official government books. This leads to an extremely difficult process of finding the land owner, after which the operators would have to ask for permission to build the base stations.

 

Competition Heats Up

There are challenges that the Myanmar telecom sector faces as a whole, yet there are also problems that the individual operators face – mainly their competition.

It seems like ex-monopoly operator MPT is struggling against the newcomers. It had to join forces with Japan’s KDDI and Sumitomo to form the MPT-KDDI-Sumitomo Joint Operations to stay competitive.

The CEO of the new partnership said that no matter what changes the new entrants will bring, MPT’s core strategy will stay the same. They will continue to improve their network, services, and quality to really satisfy their customer’s needs.

Petter Furberg, CEO of Telenor Myanmar, said that network expansion is the key to winning the competition. Another one of the key focus of Telenor’s strategy is to ensure very good data connections at affordable rates. He revealed that they were exploring 4G coverage as a potential option due to expectations that Myanmar would be seeing very rapid growth in terms of development.

There has already been a small price war between the three players. Price cuts are seen across all operators, especially from Ooredoo, which just started offering a 50% bonus for any top-ups and recently launched Myanmar’s least expensive internet package. One of the lowest minimum wages in Asia has led Myanmar to compete on price not only within the country, but also with its neighbors in ASEAN.

The abundance of opportunities in Myanmar has resulted in a highly competitive environment. With more than 17 local companies joining the auction for the fourth license, the current operators are looking to improve their service while customers are awaiting better quality.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's experienced with trading stocks and buying property in Thailand, Cambodia, and elsewhere. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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