All aboard

Myanmar’s telecoms industry is set to explode following a landmark deal

June 4, 2014

Myanmar’s telecoms industry is set to explode following a landmark deal

By Philip Heijmans
The goal is certainly ambitious, but Myanmar’s newest telecommunications operators are adamant that more than 90% of the country’s population of 60 million will have access to affordable mobile phone coverage in the next five years.
The announcement from Norway’s Telenor and Qatar-based Ooredoo came following the historic signing of telecommunications licenses for each of the two firms in February, which followed an intensive two-year-long government campaign to tender the lucrative licenses and update the country’s colonial-era telecoms laws and regulations.

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Price slump: costs for SIM cards are predicted to fall drastically in Myanmar. Photo: Philip Heijmans for Focus Asean

With the licenses now signed and sealed, both firms have been hard at work developing their multi-billion dollar mobile-infrastructure plans – strategies that include rolling out services in major urban hubs such as Yangon within the next six months.
The signing of the new licenses has meanwhile been hailed by experts as a major step forward for developing Myanmar’s sorely lacking infrastructure, while at the same time being seen as a sign of real change in a country where telephone usage was once tightly controlled by the government, that feared telecommunications could be used as an antagonistic tool for political opposition to spread rhetoric.
“International experience shows that improved access to telecommunications opens up a wide range of opportunities, including to the poorer sections of the population,” said Matt Davies, deputy division chief at the Asia and Pacific department of the International Monetary Fund.
“Easy access to information on market prices and weather conditions can make a huge difference to farmers in remote communities. Similarly, mobile phones can be a portal for basic health and education services,” he said, adding that the investment and related financial flows, including license fees, will add to growth and improve budget revenues.
Indeed, while the economic benefits are numerous, the anticipated mobile network will also give Myanmar’s once-isolated population its first glimpse at modernisation. In February, Telenor pledged to make SIM cards affordable to every household, ensuring they would cost no more than $1.50, a drastic reduction from current prices of between $110 and $450 on the black market – well beyond the budget of the average citizen.
Previously, only a few phone lines existed in urban communities and calls could only be placed with outdoor phone vendors – generally run from a makeshift table consisting of one or two beat-up, old phones with poor line quality –
a method still used to this day.
In rural areas, the obstacles to telecommunication are even more extreme, as callers frequently wait hours to get a line connection, running up costs that surpass a day’s wage.
Currently, only about 7% of the population has access to mobile coverage, according to government data, and with one of Southeast Asia’s largest countries by population waiting virtually untapped, Myanmar’s newest mobile operators are hoping to launch services sooner rather than later.
But basic challenges still exist. The acquisition of land to construct thousands of towers across the country is causing legal issues, as ownership laws in most areas of the country are not clear, while other regions are still embroiled in conflict, experts said.
“How rapidly operators will build infrastructure will depend on the government and how helpful they are,” said U Than Lwin, an economist and deputy chairman of locally-owned KBZ Bank. “Currently, there are some 40 legal acts to be discussed by parliament, so everybody’s plates are full.”
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Plenty of room: only 7% of the population has access to mobile coverage at present. Photo: AP Photo

Ross Cormack, CEO of Ooredoo Myanmar, said during an event in March that the land issue has already slowed down progress just one month into construction. “Clearly delivering scale within tight timeframes is challenging. Obtaining the necessary permits to build our sites is taking longer than we would have hoped. Finding solutions to fast-track this process is in everyone’s interests,” he said.
Aside from logistical issues, the new operators will have to endure unusual competition as mobile subscribers near the Chinese and Thai borders tend to be within reach of networks in those countries. But, local firms are also making moves.
Internet provider Yatanarpon Teleport and Thai communication conglomerate True Corp are planning a joint partnership within two months, True CEO Suphachai Chearavanont said in March.
Myanmar Posts and Telecommunications, the existing government-run local operator which has had a monopoly on the sector for the past 15 years, has meanwhile been in talks with several foreign consortiums headed by global telecommunications firms, including France’s Orange Group, Singapore’s SingTel and KDDI of Japan – all of whom participated, but lost out on the international tender won by Telenor and Ooredoo in June last year.
“A conflict may rise in due course if there is no proper regulatory body in place,” said Alessio Polastri, managing partner at locally-based law firm Polastri Wint & Partners, adding that an independent body would disallow favouritism for government-owned entities while providing protection to firms and customers. “The law [by itself] has never been enough,” he said. So far, no such regulatory body has been formed.
Despite these issues, experts agree that increased interconnectivity for Myanmar will bring new alternatives of doing business to the tens of millions of rural inhabitants currently living near or under the poverty line.
“Today, Myanmar has one of the lowest rates of telecommunications and internet access in the world,” Ulrich Zachau, World Bank Country Director for Myanmar, said when the bank approved a $31.5 million loan to Myanmar to improve the Information, Communication and Technology (ICT) sector.
The loan, the first of its kind in Myanmar, will help the country to establish an online portal for government services and information as well as develop outreach strategies of oncoming new technologies to rural areas.
Connectivity is of utmost importance for the country’s development, Zachau stressed. “The reform of Myanmar’s telecommunications sector is an integral part of lifting millions of people out of poverty.”

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