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Business

Telecoms battle to unlock demand in emerging Asia

High-speed networks, new services sparking huge growth in mobile market

Smartphone users in Myanmar. (Photo by Yuichi Nitta)

TOKYO/YANGON -- In a tiny village in central Myanmar, about a two-hour drive from the nation's second largest city Mandalay, electricity does not arrive through power lines. It comes from home generators or solar panels.

But that does not stop the locals from charging their smartphones.

"How many of you have a mobile phone?" the Nikkei Asian Review asked a gathering of several dozen residents, and almost everyone's hand shot up.

The spread of mobile telecommunications across emerging Asia is being spearheaded by foreign players, which offer high-speed 4G networks, music, mobile payments and other new services. The result is enormous growth in the market, as well as a rapid shift in both marketing mindset and lifestyles in such countries.

For Myanmar, the change came in 2014 when Norway's Tenor and Ooredoo of Qatar entered the market which had been dominated by state-owned Myanmar Posts and Telecommunications. The scope of the dramatic change can be measured in SIM card prices. What used to cost several hundred dollars now go for a little over $1 apiece.

As a countermeasure, the MPT in 2014 partnered with Japanese wireless carrier KDDI and trading house Sumitomo Corp. to establish a joint venture.

The estimated market share in 2016 is 47% for MPT, the largest, followed by 37% for Telenor and 16% for Ooredoo.

The mobile penetration rate in Myanmar has jumped from 3% just five years ago to 89% in 2016.

Foreign companies' strength is not limited to their financial power and technologies.

By importing the sales know-how they have acquired over the years, they have spurred demand in the country.

According to Yoshiaki Benino, chief operating officer of joint venture among MPT, KDDI, and Sumitomo, their partnership has "drastically changed the local staff's attitudes."

Before they joined hands, MPT did not even have sales officials. In May this year, when the nationwide 4G mobile phone service launched, technical staff members and others who have moved to sales positions traveled from village to village by bike.

Benino said there has been a shift from their passive attitude that depends solely on the customer's willingness to buy.

Benino said they have started thinking seriously about the most effective ways to sell their products.

Markets beyond home country

Vietnam's military-run Viettel and Malaysia's Axiata are among the telecom companies that have directed their attention beyond their home country because of the limited potential for expansion due to small population size and other factors.

In early 2018, Viettel plans to advance into the Myanmar market. Other than Africa and Latin America, Viettel made a foray into East Timor under the Telemor brand in 2013. Telemor raced ahead of local player Timor Telecom to establish a dominant position with a 47% market share.

Viettel also enjoys the largest market share in neighboring Laos and Cambodia, harnessing sales capabilities that search step-by-step for new customers in remote villages. In Cambodia, they are expanding the service into areas yet to be covered by local peers, a Viettel official said.

Meanwhile, Axiata, the second-largest telecom provider in Cambodia, first began the 4G service in the country in 2014. Viettel followed suit two years later.

In terms of data communications, Axiata is believed to control the majority of market share.

Using its strength in music, payments and other services, the company is trying to catch up with Viettel on the back of smartphone demand.

Axiata boasts the largest market share in Sri Lanka, with about 40%. In Bangladesh, it has the second-biggest market share with 29% behind Telenor's Grameenphone, which has a 45% share.

Mitsui & Co. entered Cambodia's mobile communications market in June by obtaining 10% stake in Axiata's unit in the country for $66 million. The two companies will cooperate in areas such as the internet of things.

There is a vast smartphone-related business opportunity in least-developed countries plagued by poverty and lack of social infrastructure.

Axiata CEO Jamaludin Ibrahim said the partnership with Mitsui could help in that regard, through the development of digital services and IoT, in particular.

Vietnam, Myanmar, Cambodia and Sri Lanka together are home to over 180 million people. The battle for telecom customers, led by foreign players, has the potential to unlock the economic potential of these emerging Asian nations.

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