[Myanmar] End of the Drought

[News_Editor]

A man talks on his mobile phone in Yangon. (Photo: Reuters)

YANGON — Myanmar’s drought of SIM cards is nearly over. The tiny plastic chips have in recent years been limited in supply. Distribution has been only through lotteries, driving a lucrative black market where they are peddled for hundreds of dollars each.

Sometime in the middle of the 2014 rainy season, however, the country’s major cities, at least, can expect a flood of affordable SIM cards.

Making mobile services available across the country is a big task, but there has been no shortage of international firms keen to get involved in setting up decent telecommunications, a vital prerequisite to Myanmar’s development in other sectors.

“This is the biggest telecoms opportunity in the world today,†Ross Cormack, CEO of Ooredoo Myanmar, told The Irrawaddy in November. The Qatari firm, alongside Norway’s Telenor, was selected in July from dozens of firms that entered a competitive tender to be the first two private mobile phone operators licensed in Myanmar.

With the Myanmar Telecommunications Law enacted on Oct. 8, and licenses expected to be finalized before the end of 2013, both companies have promised to begin selling unlimited numbers of SIM cards, complete with 3G technology, for 1,500 kyat, or about US $1.50, in the middle of next year.

“We’re bringing the latest technology to this beautiful country to allow Myanmar to leapfrog back into its position as the jewel of Asia,†said Mr. Cormack.

There were many big firms among the losers in the tender, but the government is reportedly planning to issue more licenses before long.

Additionally, runners up Orange of France, along with SingTel of Singapore and Britain’s Vodafone, are in talks with Myanmar Post and Telecommunications (MPT) about helping the existing provider to compete with the newcomers, according to a recent report in the Financial Times. Officials have said there are plans to fully separate the state-owned MPT, and Yatanarpon Teleport, from the Ministry of Communications and Information Technology.

The Telecoms Law now in force will govern the sector, but the all-important regulations—the detailed rules of the game—are yet to be finalized. A public consultation launched in early November by the government seeks feedback on a draft set of regulations, which it says are in line with international best practice.

The regulations up for discussion include detailed guidelines about the mobile spectrum, how fair competition will be enforced, and how companies will be licensed. “The overarching principles of the Licensing Rules are to establish a multi-service licensing framework that provides transparency to all licensees and end users, promotes market entry, and creates a level playing field in the telecommunications sector,†the consultation document states.

John Lichtefeld, a foreign legal consultant with Singapore-based law firm Kelvin Chia’s Yangon office, said while the law makes mention of competition, most of the detail of how a fair market will be enforced is in the regulations.

“While it’s great that the language [on competition] is in the law, we’re going to have to wait to see how the rules and regulations expand on these prohibitions against anti-competitive practices, and how those prohibitions will be enforced,†he said.

And that competition may be fierce in coming years.

“This is seen as a big opportunity by global telcos to do business in a virtually untapped market,†said Vivek Roy, a research analyst at London-based Informa Telecoms & Media, who described the market as “pristineâ€â€”at the end of 2012 only about 6 percent of the population had a mobile phone.

Although the first two licenses are already awarded, he said, big companies were showing keen interest in Myanmar’s telecoms market. He cited moves this year by Internet service provider Hutchison Global Communications Limited of Hong Kong, Japanese tech firms NTT Communications, NEC and Sumitomo and Malaysia’s U Mobile to enter different parts of the nascent telecoms sector.

“Still, we expect that generating revenues is going to be tough for license winners, Ooredoo and Telenor, since Myanmar has a sorry state of existing telecom infrastructure, including grid electricity coverage, poor road connectivity, low GDP per capita and high handset costs,†said Mr. Roy.

The telecom sector’s current state is an acute reminder, especially to potential foreign investors, of just how far behind Myanmar has fallen after years of military misrule. Hence, Telenor and Ooredoo are primarily charged with expanding access to telecoms rapidly.

In the meantime, to avoid the embarrassment of poor connectivity at December’s SEA Games, a Japanese-funded quick fix has seen temporary 4G infrastructure installed at venues.

The head start from being the first licensees is offset by the obligations to build a modern mobile network almost from scratch, said Mr. Roy. Ooredoo, hailing from the natural gas-rich emirate of Qatar, has said it will invest $15 billion in Myanmar over the 15 years of its license. Telenor declined to provide a figure for its investment, but Mr. Roy said it was likely to be considerably lower than Ooredoo’s.

Hundreds of transmission towers will be required to provide coverage, especially in rural areas, where about 70 percent of the population resides and power is scarce.

“Although diesel-powered base stations would be the short-term solution, they would drive up opex [operating expenditure], so over the longer term, operators would need to look at more green, cost effective options,†Mr. Roy said.

Petter Furberg, CEO of Telenor Myanmar, said the government was keen to get the companies to enter into agreements to share towers, reducing the investment required from each to build the infrastructure.

“One tower costs [an estimated] $100,000,†he said. “Particularly here in Myanmar you have to import all the steel and a lot of concrete, which means a total waste of money at a time when the country needs to spend all its investments on building infrastructure as efficiently as possible.â€

Ooredoo is also open to sharing towers, which could also include the existing government-linked mobile companies.

Adding further complexity, every tower built across the country will involve acquiring land and gaining planning permission—which will likely cause problems in Myanmar, where land ownership is controversial after years of seizures, ill-conceived concessions to cronies and often-forced migration.

“Planning law is complicated and even the government is not exactly certain how we can get all the approvals. But we do have the commitment of the government to ensure that they do happen,†said Ooredoo’s Mr. Cormack, whose company has set itself the ambitious goal of reaching 97 percent of Myanmar’s estimated 60 million population in five years. “It is a challenge.â€

Mr. Furberg said at least 80 percent of the country will be able to get Telenor services in five years.

“It’s a challenge,†the Telenor Myanmar CEO said, echoing his competitor. “It’s not an easy country to operate in. It’s not an easy country to build infrastructure in, so we’re very humbled by the task.â€

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Source: Irrawaddy.org