Myanmar’s telecoms industry to see new entrant

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Competition in Myanmar’s telecoms industry is on the rise, with a new player set to enter the market as early as next year.

The Ministry of Communications and Information Technology (MCIT), Myanmar’s telecommunications regulator, is expected to announce the results of its latest tender for a new nationwide telecommunications licence (NTL) before the end of the year, paving the way for a fourth provider to launch its services in early 2017.

Interest in the tender has been high, although the successful bidder will likely face stiff competition from the operators already serving Myanmar’s increasingly crowded mobile market.

Maturing market

The new operator will join Qatari-owned Ooredoo and Telenor of Norway, which were awarded NTLs in 2013, as well as the state-owned Myanmar Post and Telecommunications (MPT).

A second local player, MecTel – which is owned by the military-run Myanmar Economic Corporation – has also been active in the market since 2013, albeit under a mobile virtual network operator licence.

According to the terms of the latest tender, the winning foreign bidder will team up with both a government stakeholder and a local consortium, Myanmar National Telecom, comprising 11 local companies and structured as a special purpose vehicle.

Despite being more complicated than previous tender rounds, the new requirements have seemingly done little to dampen international interest.

Officials announced in February that seven foreign firms had applied to participate in the venture: Singapore’s Singtel; Vietnam-based Viettel; China Telecom; France’s Free; the South African operator MTN; Hong Kong’s 1COM; and Beijing Xinwei.

As with Telenor and Ooredoo, the new licence will be awarded for an initial term of 15 years, extendable for a further decade.

Competition on the rise

While Myanmar’s telecoms market remains relatively young, the newcomer nonetheless faces an increasingly competitive environment, with the two international service providers still striving to close the gap on MPT.

The state-owned entity’s subscriber base has remained largely static since mid-2015, when it counted around 18m subscribers. Telenor, however, looks to be gaining ground, having added 1.9m customers to its base in the last three months of 2015. This brings its total to almost 14m, up from 3.4m at year-end 2014.

Ooredoo is also building momentum, increasing its subscriber base by 1m in the fourth quarter of 2015. MecTel, meanwhile, had 3.8m customers on its books as of mid-2015. 

Mobile penetration reached 63% in early 2016, up from 54.6% in late March 2015, but still well below the levels found in many other markets in the region.

Sachin Gupta, head of telecommunications research for Asia-Pacific at Nomura Securities in Singapore, said that while Myanmar’s telecoms market was maturing, it still held potential.

“It isn’t a greenfield business anymore,” Gupta told media in late January. “There is still money to be made, but you are competing with three entrenched operators.”

For their part, existing mobile operators have expressed fears that a new player could be given some competitive advantages, such as lower licence fees or more relaxed terms for the rollout of services – which could grant the new entrant a bigger slice of the more lucrative urban market.

Officials have sought to allay concerns, with a reassurance that providing coverage across the country, including rural areas, remains its primary target.

Potential for growth

In the meantime, operators are continuing to invest in their networks in a bid to expand coverage and services, with improvements to data, in particular, being given priority.

In March Ooredoo announced plans to spend $350m in 2016 on boosting download speeds and network reach, having channelled a similar level of capital into improving its operations last year.

The eventual launch of 4G services should stimulate further expansion, with increased take-up of smartphones playing a pivotal role in heightening demand.

In a key move, the government pledged in November to release the necessary spectrum once service providers are ready to launch their next-generation networks. This was followed by an announcement in February that the MCIT plans to hold auctions for additional spectrum to accommodate greater data usage.

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