By Vivek Roy 1st August 2014

 

Myanmar, the world&rsquo 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&rsquo s latest research, Myanmar&rsquo 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&rsquo 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&rsquo s mobile penetration grew to just 12.3% at end-2013, which is still considerably low &ndash given a 60 million strong population.

Now Ooredoo&rsquo s launch is set to change not just Myanmar&rsquo s telecoms market, but also the country. &ldquo A properly functioning telecoms network will spur innovation in other critical industries &ndash such as education, healthcare and finance &ndash and contribute to overall socioeconomic development,&rdquo says Vivek Roy, Research Analyst in Ovum&rsquo 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&rsquo 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&rsquo s network launch is just the beginning for both Ooredoo and Myanmar. &ldquo 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,&rdquo says Roy. &ldquo 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,&rdquo he says.

Myanmar&rsquo 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.