July 26, 2016 10:00 am JST

Mobile revolution lifts Myanmar out of telecom time warp

MOTOKAZU MATSUI, Nikkei staff writer

Ooredoo promotes its 4G service in Myanmar.

YANGON -- Telecommunications in Myanmar has gone mobile at a phenomenal pace, driving down voice and data rates, with new entrants expected to heat up competition further.

The Southeast Asian nation's mobile penetration rate has soared from 10% just two years ago to above 80%, or 43 million users, as of April. Virtually the entire population is expected to have coverage by the end of the year. The rapid rise stands out even among its Southeast Asian peers. Thailand and Indonesia took seven to eight years to go from 10% to 100%, while Vietnam made the jump in four years.

Net mobile subscriber growth in the first quarter of 2016 totaled roughly 5 million. That equals roughly 10% of the population and the second-largest increase in the world, after India.

Myanmar's mobile market is growing by leaps and bounds and has seen the most dramatic rise in data usage across Southeast Asia, according to Telenor Myanmar CEO Petter Furberg -- and this despite one of Asia's lowest per-capita nominal gross domestic products: $1,300 in 2015.

A translator here carries around a smartphone and two SIM cards -- one card with state-run Myanma Posts and Telecommunications, or MPT, for calls, and the other with Norway-based Telenor for cheaper internet. The 21-year-old is on the phone as much as several hours a day but pays just about 10,000 kyat ($8.46) for mobile service out of a monthly salary of 300,000 kyat.

Shock therapy

Before Myanmar began to democratize in 2011, MPT monopolized a market with a penetration rate tied with North Korea's for the lowest in Asia. But opening up to foreign investment triggered a wave of change. Japan's KDDI and Sumitomo Corp. formed partnerships with MPT in July 2014. Qatar-based Ooredoo entered the country that August, and Telenor followed suit in September.

Thanks to competition among the three providers, voice rates essentially fell by half over a year to between 20 kyat and 30 kyat a minute. Smartphone prices are sliding as well. Ooredoo has begun selling its own Chinese-made device for 30,000 kyat. Coolpad and other budget Chinese smartphone brands priced under 100,000 kyat are selling like wild in Yangon.

Mobile carriers are trying to come up with unique offerings, particularly in high-speed data service, as they prepare to fight over a more saturated market. Telenor recently launched 4G in Naypyitaw, Myanmar's capital, with plans to expand the high-speed service to Yangon and other cities. Ooredoo started offering 4G in Yangon and two other cities this May.

MPT partnered with Facebook in June to let customers use some features of the popular social network without any data charges. Facebook users in Myanmar doubled over the year through May to 10 million. MPT has also enlisted Japanese messaging software provider Line as a partner in app development and is working to improve customer support at roughly 120 service locations nationwide.

"Our success will depend on how much we can differentiate ourselves in data plans and customer service," said Koichi Kawase, chief commercial officer of MPT's joint operations with Sumitomo and KDDI.

Still-shifting landscape

There is still more change to come. The Myanmar government announced Monday that it will auction 2,600MHz spectrum in October. The three existing carriers now use the 900MHz and 2,100MHz bands and are considering bidding on the newly available spectrum to strengthen service.

The companies are also building up infrastructure and are expected to double the number of base stations from 8,000 at the end of 2015 to 17,000 sometime in 2017.

A joint venture between Vietnam's military-run Viettel and Myanmar partners was awarded a telecom license in March. The Vietnamese carrier is making inroads in Asian and African emerging markets on its cheap rates and intends to invest $1.5 billion to launch 4G service in Myanmar.

Sumitomo Corp.

Japan

Market(Ticker): TKS(8053)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 17,500.09M
Shares: 1,250.60M

KDDI Corp.

Japan

Market(Ticker): TKS(9433)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 69,748.03M
Shares: 2,587.21M

LINE Corp.

Japan

Market(Ticker): TKS(3938)
Sector:
Industry:
Technology Services
Packaged Software
Market cap(USD): 7,724.39M
Shares: 220.44M

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