The rollout of 4G services combined with rising incomes in a data-hungry nation is set to drive growth in Myanmar’s telecoms sector for the foreseeable future. After two years of international operators entering the market, data consumption has surpassed neighbouring countries and continues to accelerate, fuelled by affordable smartphones.
In May 2016 Ooredoo became the first of three operators to offer commercial 4G LTE services in selected areas. The rollout was assisted by Nokia using their Single RAN and core packet platforms. Within three months of launching the firm had half a million 4G customers across three areas, covering half of Yangon, all of Mandalay and about 90% of Naypyidaw, encompassing 4.6m people, according to an August 2016 report from The Myanmar Times. Furthermore, of Ooredoo’s 8.2m subscribers in August 2016, 80% were already data users, with an even split of customers across rural and urban areas. While the expansion into rural communities has led to a 35% decline in average revenue per user for Ooredoo, the launch of 4G services has broadened the company’s revenue stream and improved the quality of service.
Telenor quickly followed suit, offering 4G service in the administrative capital of Naypyidaw in June 2016. The decision to launch in the sparsely populated government capital was taken to avoid disrupting 3G services, although the Norwegian operator quickly began a testing phase in Yangon and Shan State’s Muse and Myawaddy shortly after the initial launch. Telenor has also been hard at work in strengthening its fibre backbone. It has built three international long-haul connections out of the country, ranging from 10 Gbps to 30 Gbps, with two connecting to Thailand and one to China. According to a February 2016 report by magazine Frontier Myanmar, Telenor officials have said a fourth connection to India is in the pipeline. Not to be undermined, the Myanma Posts and Telecoms-KDDI Summit Global Myanmar joint venture had a soft launch of 4G LTE services in the areas of Yangon and Naypyidaw in October 2016.
The biggest challenge to the expansion of 4G technology is the limited operating space that operators have as a result of partial spectrum allocation. To start with, 4G services will be for internet only, with voice calls supported by 3G – at least until new spectrum becomes available. As it stands, both foreign operators have access to 900-MHz and 2100-MHz bands, with the latter being used for LTE technology. With only 20-MHz, each within the 2100-MHz band, 4G capability is restricted.
Once the new government took office and reformed the Ministry of Communications and IT, it drew up a 100-day plan to guide the future development of the nation. Shortly after, an official announcement was made that three lots of 2×20 MHz across three regions within the 2600-MHz band would be auctioned. All three major telecoms operators withdrew their applications, instead deciding to wait for the allocation of spectrum within the 1800-MHz band. In terms of coverage, the 2600-MHz band has greater data capacity and is suitable for densely populated areas, but not for rural locations. The idea behind not competing for the 2600-MHz band is that lower frequencies are better equipped to penetrate walls, and therefore more suitable for greater coverage. Generally speaking, in developed markets lower spectrums are sold off first.
With the country officially being reclassified from a low-income to a lower-middle income country by the World Bank in 2015, data appetite is likely to increase with incomes, which bodes well for those investing in internet penetration. Once the 1800-MHz band is made available, 4G rollout is likely to be prioritised for urban populations. However, operators will track the expansion of 4G handsets with the intention of capturing new clientele in the growing middle class.