How Myanmar is set to become the world’s fastest-growing telecoms market

Myanmar, the world’s largest country with a mobile-operator monopoly, will this month launch its first privately-owned mobile network. The entry of private player Ooredoo will see a rapid growth in mobile subscriptions and revenue in the country.

According to Ovum’s latest research, Myanmar’s mobile subscriptions will grow at 29.3% CAGR to 32.3 million at end-2019. Mobile revenue will grow at a similarly rapid rate as a result of the new competition. Ovum forecasts that this will reach $1.2bn in 2019, up from $691m in 2013.

Ooredoo mobile SIM cards were soft-launched at retail shops this week, while the operator is expected to make an official announcement about the launch this weekend.  At launch, Ooredoo Myanmar will be offering 3G+ services, which include both voice and mobile broadband, in urban areas around Mandalay, Nay Pyi Taw, and Yangon.

Ovum expects that Ooredoo will be offering 3G (HSPA+) SIMs at a competitive price of MMK1500 ($1.50), which is same as committed to by the other licensee Telenor. In terms of pricing of voice services, Ooredoo is expected to charge on-net calls at less than MMK35 per minute, while off-net calls will cost below MMK45 per minute.

Decades of military dictatorship crippled Myanmar’s telecoms sector and mobile access was restricted to a handful of elite groups in power. The state-owned operator, MPT, monopolized the sector and the junta imposed extremely stringent controls on SIM cards, pushing prices as high as $4,500 in 2011.

Since April 2013, the quasi-civilian government via MPT has stopped selling SIMs in the open market and instead offers 350,000 SIMs per month across the country through a lottery system. The SIM cards are priced at ~$1.50 under the lottery. However, many of these SIM cards end up in the black market and cost anywhere between $80 and $130. As a result, Myanmar’s mobile penetration grew to just 12.3% at end-2013, which is still considerably low – given a 60 million strong population.

Now Ooredoo’s launch is set to change not just Myanmar’s telecoms market, but also the country. “A properly functioning telecoms network will spur innovation in other critical industries – such as education, healthcare and finance – and contribute to overall socioeconomic development,” says Vivek Roy, Research Analyst in Ovum’s Asia Pacific Research Practice.

Ooredoo plans to invest $15bn in the next 15 years and roll out almost 1,000 3G base stations to cover 30% to 40% of Myanmar’s population in 2014. In the next five years, Ooredoo aims to offer voice and data services to 97% of the population. NSN is the network partner of Ooredoo in Myanmar.

But the first phase of Ooredoo’s network launch is just the beginning for both Ooredoo and Myanmar. “Ooredoo will need to begin partnering with more tower companies and backhaul infrastructure providers as it tries to expand network in rural parts of Myanmar,” says Roy. “This will require more capex, planning, and patience. Interestingly, the biggest city has just over five million people and 75% of the population lives in rural areas,” he says.

Myanmar’s market is about to embark on a whole new phase of rapid development. For the rest of the year and into next, competition among the new entrants and the state-owned operator MPT will only reduce SIM prices further, making mobile communication within the reach of the low-income population. To make mobile devices affordable to the public will be the next task in hand for these operators.