Network expansion improves telecoms and IT services, and attracts investment in Myanmar

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The expansion of Myanmar’s telecoms market continues to live up to its early promise, with industry reform viewed as the most significant economic success since the military ceded power in 2011. In the relatively short period of time following this, the sector has become an important enabler of socio-economic development by attracting billions of dollars in investment, fostering the emergence of tech start-ups and connecting rural communities to the outside world for the first time. While the majority of the country is now served by existing operators and the rate of subscription growth is slowing, investor interest continues to build.

Fourth Player

Since the entrance of international telecoms operators, sizeable investments have been channelled into technology development. In 2014 the awarding of two national telecommunications licences out of 91 competing firms to Norwegian firm Telenor and Qatar-headquartered Ooredoo served as the primary catalyst for mobile network expansion. Prior to liberalisation, the market was essentially monopolised by two companies: the state-run Myanma Posts and Telecommunications (MPT) and on a smaller scale since 2013 the military-backed operator MEC tel, owned by the Myanmar Economic Cooperation (MEC). Due to increased competition and in efforts to bridge the financial and technological gap between MPT and their international counterparts, the public operator entered into a $2bn joint venture with KDDI Summit Global Myanmar (KSGM) – a collaboration between Japanese giants KDDI and Sumitomo – to form the MPT-KSGM joint operation.

After months of negotiations, the sector is once again heading towards transformation. In January 2017 the Ministry of Transport and Communication formally awarded a fourth mobile operator licence to Myanmar National Tele & Communications under the brand name MyTel. The consortium is headed by the Vietnamese military-backed Viettel, and includes 11 local firms as well as the Star High Public Company, which is a subsidiary of the MEC. Through Star High, MyTel will have access to approximately 1000 towers and over 13,000 km of fibre, as well as other telecoms assets (see analysis).

However, stakeholders’ opinions are divided about the impact that a fourth operator will have on the marketplace, with some expressing concern about the potential for negative effects following the introduction of an additional player, while others think the deal will have a positive outcome. “The arrival of an additional telecoms operator will be beneficial to the telecoms market,” Liman Zhang, managing director of Huawei Technologies Yangon, told OBG. “The end user will benefit from increased competition, and will keep experiencing good network quality, coverage and service packages.”


While the industry has done relatively well to surmount structural obstacles during the different phases of the network rollout, some hurdles nonetheless remain. As it stands, unclear land rights continue to hinder development of a number of new sites. In some cases, tower construction has taken place amid ethnic and communal unrest, while a variety of sites located in isolated areas have been rejected due to the complexity of construction or limited revenue potential resulting from co-location restrictions.

The lack of infrastructure sharing at key tower locations and limited access to fibre connections have hindered progress. “It will be challenging to build towers in this country, as the main populated areas are already covered, and coverage has to reach the last remote zones,” Philippe Luxcey, CEO of Apollo Towers Myanmar, told OBG. “Ultimately, network coverage is extremely dynamic. Given the increasing need for sites and growing demand for data, it will take time to stabilise the market.”

Other hindrances include bouts of inclement weather conditions, with monsoon rains, which can result in severe flooding lasting four months at a time, thus restricting access to work sites. Furthermore, the majority of rural sites have higher operational costs due to a relative lack of basic infrastructure, necessitating reliance on mobile generators. “Many areas in Myanmar don’t have electricity, so they are using generators or solar power,” Daw Phyu Phyu Win, CEO of ABC Telecomm, told OBG. “It’s very difficult to transport a generator in mountainous areas. Using solar power is easier, but only a local firm can provide this logistical service.”

With a somewhat wide range of logistical issues to mitigate, operators often have to resolve breaks in connection, while site contractors have to work particularly hard to maintain service-level agreements. “While mobile phone operators can provide coverage to around 80% of the country, the final 20% of the market is proving difficult to penetrate, mainly due to internal conflict issues, poor road accessibility and electricity supply,” Daw Phyu Phyu Win added. “The lack of access to power hinders the expansion of telecoms infrastructure and increases the costs of tower maintenance.”

While the industry has some options to deal with power shortages, perhaps the most pressing concern is that demand for qualified IT professionals far outweighs supply, as those educated locally often fail to meet the minimum requirements set by international operators. However, to the industry’s advantage, a number of international institutions and technical training centres have invested in bridging the skills gap (see Education chapter).


Despite the variety of obstacles, the telecoms industry continues to expand and is considered one of the nation’s greatest economic successes since the transition towards civilian rule began. Evidence of growth is clearly visible, with telecoms towers now spread across the majority of the country. According to official statistics from the Ministry of Transport and Communication, Myanmar had 14,872 telecoms towers as of April 2017, with an additional 1623 towers under repair and a further 441 new ones under construction.

On the back of increasing numbers of data subscribers, the overall revenue generated by telecoms services was estimated at $3.1bn in 2016, up from $2.4bn in 2015. In the first half of 2017 the transport and communications sector accounted for 13% of existing foreign investment, with 43 entities providing a total of $8.1bn, $3.08bn of which was committed in FY 2016/17. As a result of this increased funding, Myanmar rose five places between 2015 and 2016 versions of the UN’s E-Government Development Index (see IT overview).

Benefitting from the sector’s robust performance, the government continues to profit from telecoms tax receipts – a major contributor to public revenue over the last few years. Tax revenue from the industry for FY 2016/17 exceeded forecasts, totalling MMK349.5bn ($267m) between October 2016 and March 2017: MMK258.6bn ($197.5m) more than expected. The boost in funds was attributed to tariffs on new spectrum allocations, fees from the fourth operator and spectrum management fees from MPT, Telenor and Ooredoo. Commercial tax on mobile phone top-ups also bolstered the government’s yearly income.

Growing Numbers

The arrival of international operators has increased the affordability of mobile accessibility, as well as fostering better service levels and network coverage. A single MPT SIM card cost upward of $3000 in the early 2000s. During this time the cost prohibitiveness of mobile phones meant it was common practice for some landline owners to run extensions from their homes into the streets for passers-by to use at a few cents per minute.

In 2017 a SIM card cost around $1, with smartphones available for less than $20. Better affordability has seen the mobile subscriber base skyrocket. In the second quarter of 2017 Myanmar had the world’s fastest-growing mobile subscription rate, expanding by 68.5% between 2014 and 2017, more than four times that of Niger – the market with the second-fastest rate. With the majority of the nation covered, the rate of subscription growth is expected to increase by 4.9% over the five-year period from 2017 to 2022, according to industry media.

In terms of volume, Myanmar recorded 48m new subscriptions between 2013 and 2017, behind only India with 300m, China (123m), the US (85m) and Indonesia (72m). As of June 2017, 50.1m SIM cards had been registered out of a total of 50.8m sold nationwide, leaving an estimated 730,000 cards unregistered, according to official statistics from the Directorate of Telecommunications.

Market Leaders

By the first half of 2017 MPT led the market by size with 25m users, followed by Telenor in second place with a registered 19m. The fastest-growing provider, Ooredoo, surpassed 9m subscribers in May 2017, a 35% year-on-year expansion in the first quarter of 2017, driven mostly by its decision to launch a 4G network before its competitors with additional 3G site rollouts.

In terms of average daily data consumption, Telenor’s utilisation rate grew from 70 TB in the third quarter of 2015 to 350 TB in the same quarter of 2016. Over the same one-year period, Ooredoo increased consumption from 45 TB to 180 TB, while MPT grew from 110 TB to 250 TB.

Earnings & Coverage

Providers’ average revenue per user has fallen as coverage has expanded into rural areas. Telenor’s average revenue per user went from $3.81 in the fourth quarter of 2016 to $3.27 in the same quarter of 2017. Over the same period, Ooredoo’s average revenue per user increased from $3.36 to $4.28.

By the fourth quarter of 2016 Telenor had achieved 85% population coverage with 18m active customers, 39% of which had a GSM-enabled SIM card bought from one of 87,000 points of sale around the country. The number of subscribers increased to 19.5m by the fourth quarter of 2017. According to official Telenor data, the firm earned MMK1.1trn ($840.2m) in the 12 months leading up to the third quarter of 2016, from an initial investment of $1.5bn. In the fourth quarter of 2017 Telenor’s earnings before interest, taxes, depreciation and amortisation was $75.3m, down from $85.6m one year earlier. Zero dividends were paid out; rather, all profits from the year were reinvested in Myanmar.

In the past Ooredoo has struggled to keep pace with its competitors in terms of subscription numbers. However, the firm delivered a solid set of results in the first quarter of 2017 and returned to a positive margin for earnings before interest, taxes, depreciation and amortisation, of 6%. These greater margins were reportedly a result of cost-reduction efforts. These proved effective, contributing to 2017 earnings before interest, taxes, depreciation and amortisation increasing to $41.7m, up substantially from a $2.47m loss in 2016.

Spectrum Roadmap

While the mobile segment continues to grow, operators are rolling out 4G services to boost internet speeds. According to the Huawei Global Connectivity Index 2017, Myanmar’s average mobile internet speed stood at 5 Mbps, well below the ASEAN average of 18 Mbps.

In May 2017 the Posts and Telecommunications Department, the regulating body for telecoms and radio frequencies under the Ministry of Transport and Communication, granted permission to existing mobile operators to use 2x10 MHz of the 1800-MHz spectrum band under a 12-year agreement for a fee of $80m. While Ooredoo and Telenor had already launched 4G LTE services in the second half of 2016, the new band allocation has allowed for faster downloads and greater consumption. MPT announced that its customers could exchange their 2G and 3G SIM cards for 4G-ready cards free of charge and keep the same phone numbers.

Ooredoo accounted for 19% of the total domestic market share in the second quarter of 2017, with approximately 54% of its base using 4G services, equalling 5m active 4G customers. Meanwhile, Telenor had a market share of around 37%, with 500,000 4G users, according to industry media. Telenor’s figures show that 2.4m of its subscribers were accessing the internet through 4G-capable handsets as of November 2016, indicating that the firm is likely to experience an increase in 4G users once various new LTE sites go live.

Prior to the May spectrum allocation, both Ooredoo and Telenor had a total of 40 MHz of spectrum with 20 MHz access in each of the 900-MHz and 2100-MHz bands, with the latter being used for 4G services, albeit at a limited capacity. At the same time, MPT had a total of 70 MHz. From a technical standpoint, lower frequencies offer stronger signals, which helps explain the reasoning behind the operators’ decision to wait for the 1800-MHz spectrum before launching their full 4G offerings.

Spectrum allocation also provides a major revenue source for the government. At the end of 2016, three 15-year licences for lots of 2x20 MHz within the 2600-MHz spectrum band were auctioned for $244.2m. These spanned across three regions and were sold to four different local internet service providers: Fortune International, Global Technology, Amara Communications and Yatanarpon Teleport. While the auctioning of spectrum has generated a significant amount of investment, a number of industry analysts have expressed concern over the order of the provision, as lower spectra are generally sold off first in advanced markets.


With the expansion of 4G technology and smartphone adoption, the average mobile user has quickly become a data-centric consumer. As of mid-2017 mobile penetration had reached 104.6%, up dramatically from 86.2% the previous year and 10% in 2013. Of all mobile phones registered in the country, an estimated 80% are smartphones. According to a survey conducted by LIRNE asia and the Myanmar ICT for Development Organisation, 93% of citizens aged between 15 and 24 have smartphones. With this in mind, the price and quality of video streaming has been a key factor determining customer satisfaction levels. To accommodate the demands of a growing subscriber base while increasing data-use-fee revenue, operators have been engaged in back-and-forth data price battles, leading to lower costs for consumers.

In March 2017 Ooredoo partnered with Malaysian video streaming company iflix, allowing users to have free access to streamed videos for six months, after which a flat monthly rate of MMK3000 ($2.30) was applied. Within a few months MPT began offering discounted data plans for YouTube and local TV channels through the Pyone Play app. Under this arrangement, MPT charges customers a daily rate of MMK399 ($0.30) for 150 MB, with a further 200 MB of data allocated to mobile users to use Facebook, Viber, YouTube and Pyone Play.

These additional benefits and services for customers serve as proof that price battles have provided a healthy amount of competition to the market. “All prices have come down. You started off paying per megabyte and now you have a situation where we give Facebook for free,” Lars Erik Tellmann, CEO of Telenor Myanmar, told local media.

Digital Economy

With smartphones being widely adopted since the fall of SIM prices and the entrance of low-cost phones manufactured in China, internet penetration has grown from 1% to 89% in less than four years. However, laptops and computers are still rarely used. The market is saturated with affordable smartphones, although higher-end brands, such as the latest iPhone and Samsung models, can only be found in shops spread across the commercial centres of Yangon and Mandalay. Accordingly, the majority of the population have skipped fixed-line telephones and gone straight to mobile devices, which are often their first gateway to the internet. Likewise, after a significant string of investments in technology and communications, opportunities have opened up in e-commerce (see IT overview).

Given the rise in smartphone usage, various local banks have teamed up with solutions providers to offer digital wallet services, while mobile money providers have joined up with telecoms operators in the hope of capturing a portion of the existing unbanked population – estimated at 94% in 2016.

The introduction of digital money is gradually affecting day-to-day transactions, though various issues must be addressed before rural communities can fully reap the rewards of e-money. Only around 30% of the population have the valid identification required for digital financial transactions. Another obstacle is low consumer trust in digital products. Legislative gaps and capacity constraints at the Central Bank of Myanmar (CBM) also somewhat hinder the development of the domestic digital economy.

While some banks have successfully launched digital wallets, as of August 2017 only two mobile money operators had received a mobile financial services licence. The first was Wave Money – a joint venture between Telenor and Yoma Bank – in October 2016. As of August 2017 Wave Money had extended its reach through agents into 255 out of 330 townships, obtaining 400,000 customers in the process. The second was granted in July 2017 to M-Pitesan, a partnership between Ooredoo and the Co-operative Bank. MPT announced it would enter the mobile money market before the end of 2017, but there were no further updates by early 2018.

While the country legally mandates obtaining a mobile financial services licence, the CBM does not strictly enforce it. This has allowed unregulated entities to enter, such as OK Dollar, which reportedly provided financial services to more than 100,000 customers between June 2016 and early 2018.


In a bid to strengthen procedures, the Ministry of Transport and Communication invited feedback from industry experts on a draft telecoms law issued in early 2017. One of the more talked-about features is the establishment of the Myanmar Communications Regulatory Commission (MCRC), an independent, autonomous and impartial regulatory body to govern the telecoms industry.

According to the draft legislation, the commission would be in charge of issuing telecoms licences and future spectrum allocation, essentially combining the roles of the Ministry of Transport and Communication and the Posts and Telecommunications Department. In addition, the MCRC will act as an advisory body to the government on all matters relating to telecoms, as well as promote a fair market by protecting the industry from anti-competitive practices. This should ensure services are accessible to the wider population. At the same time, the MCRC will be responsible for the monitoring and enforcement of laws stipulated under operating licences. Broadly speaking, the law will also cover the transition of authority from the Posts and Telecommunications Department to the new MCRC.

Some industry experts believe that it will be an uphill battle to adopt new policies. “The behaviour and mindset of the local community are still linked to a monopolised structure,” U Nyan Win, CEO and vice-chairman of Horizon Telecom International, told OBG. “Most of the senior government officials are used to a top-down instruction style and are not accustomed to thinking outside of the box. Cooperation and coordination [between the government and private actors] is essential, because the ICT sector is the lifeblood of the economy.”


Greater mobile phone penetration has improved access to communications technology. Extending coverage to unconnected rural communities remains both a priority for the government and a challenge for internet providers. For the foreseeable future, increasing accessibility in areas with a history of communal conflict will be difficult. At the same time, existing operators are gearing up for a more competitive environment, with the imminent arrival of MyTel set to shake up the market. To this end, the establishment of a new regulatory body and its ability to balance competing forces would be welcome. Despite leaps in technology, Myanmar remains an expensive destination for businesses in ICT-related services. Cost reductions and more competition can be achieved by sharing resources and infrastructure. With this in mind, infrastructure-sharing initiatives are likely to increase in future.

The outlook of the sector is generally encouraging. With 3G and 4G coverage on the rise and ongoing efforts to improve the network, Myanmar’s ICT capacity is receiving a significant push forward.


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The Report: Myanmar 2018

Telecoms & IT chapter from The Report: Myanmar 2018

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