The Myanmar telecom sector 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 Asia’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 set ambitious targets of 75-80% penetration by the end of this year. They’ve steadily worked towards that goal, which seems 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. But 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 cost of purchasing a SIM card from a whopping US$1500 to about US$2. However, there’s still a large part of the population which has yet to own a mobile phone.

Secondly, the process of expanding the network coverage area is facing unexpected difficulties. A key problem standing in the way of base station construction are land owners being hard to contact.

In Myanmar, it can be very difficult to find out the legitimate owner of some plots of land. There are many cases where a plot of land is sold, yet the seller doesn’t change the plot owner’s name in the official government books. This means an extremely difficult process of finding the land owner, after which operators must ask for permission to build the base stations.

 

Competition Heats Up

There are challenges which the Myanmar telecom sector faces as a whole. But there are also issues which individual operators must overcome – mainly their competition.

It seems like ex-monopoly operator MPT is struggling against the newcomers. They 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.

Furburg revealed that Telenor is exploring 4G coverage as a potential option. This is because of expectations that Myanmar will see strong growth in terms of development.

There’s already been a price war between the three main players in Myanmar’s telecom sector. Price cuts are happening across all operators, especially Ooredoo. They recently launched Myanmar’s least expensive internet package.

One of the lowest minimum wages in Asia lets Myanmar compete on price not only within the country, but also with its neighbors in the region.

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, current operators want to improve their service while customers await better quality.

However, the Myanmar telecom sector isn’t the only one seeing rapid growth. You might be interested in our article about the nation’s beer industry.

 

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He’s an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. 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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