The Myanmar telecom industry has witnessed phenomenal growth since its liberalisation in 2013. The opening up of the country’s telecom market has provided the much-needed push to investments. In addition, the entry of foreign companies such as Norway-based Telenor and Qatar-based Ooredoo has led to a significant increase in foreign direct investment (FDI) in the industry. According to the Myanmar Mobile Symposium held in January 2017, the telecom industry attrac­ted a total FDI of $2.8 billion from various countries including Japan, Norway and Qatar over a two-year period post-telecom liberalisation.

This surge in investments has enabled the two foreign entities, and state-ow­ned telecom service provider Myan­mar Posts and Telecommunications (MPT) to considerably increase the country’s telecom penetration, from 35 per cent in 2015 to around 99 per cent at present. Further, cut-throat competition in the industry has compelled operators to jump on to the 4G bandwagon.

In Myanmar, high speed long term evolution (LTE) services were introduced in 2016, bringing it on par with telecom industries in other Southeast Asian re­gi­ons. The most recent telecom licence was granted to Vietnam-based Viettel along with a consortium of domestic firms, which is expected to further intensify competition in the country’s rapidly growing telecom market.

A look at the key developments in Myanmar’s telecom industry…

Evolving market structure

The market structure of Myanmar’s telecom industry has undergone a rapid transition over the past few years owing to changes in the regulatory environment. Until August 2014, Myanmar’s telecom in­dustry was monopolised by MPT. As a result, network coverage was limited and only a few people owned SIM cards. How­ever, the launch of wireless services by new licensees Telenor and Ooredoo in the latter half of 2014 changed the market dyna­mics completely, and led to a significant increase in telecom penetration.

To further improve telecom penetration in the country and meet the growing demand for mobile services, the Ministry of Communications and Information Techno­logy (MCIT) recently decided to grant a 15-year licence to a fourth operator. Under the plan, 11 domestic companies were selec­­ted through bidding to be part of a special purpose vehicle (SPV), and a foreign operator was chosen by the government.

After conducting talks with various stakeholders, MCIT formally awarded the country’s fourth telecom licence to Myan­mar National Tele and Communica­tions Company Limited (MNTC) in January 2017. The company is a joint venture between Vietnam-based Viettel; Star High Public Company, a subsidiary of Myanmar military-backed Myanmar Economic Cor­po­ration; and Myanmar National Telecom Holding, a consortium of 11 domestic firms. MNTC paid $300 million for the licence and is expected to commercially launch its services by 2018.The new licen­see will operate under the Mytel brand name and focus on extending 2G, 3G and 4G coverage in rural areas.

Foray into 4G

Ooredoo launched the country’s first commercial 4G LTE services in May 2016 in select parts of Nay Pyi Taw, Yangon and Mandalay. In June 2016, Telenor started testing 4G in the Yangon, Mandalay, Nay Pyi Taw, Myawady and Muse regions, and finally launched the service in the Nay Pyi Taw region in July 2016. State-run telecom operator MPT was a relatively late entrant in this space and soft-launched its 4G LTE services in the Yangon and Nay Pyi Taw regions in October 2016.

Currently, the coverage of 4G services by the three operators is limited to only a few regions, primarily due to spectrum constraints. The operators could launch services only using the 900 MHz or 2100 MHz frequency band available with them.

In May 2017, in order to help oper­ators expand their 4G reach and make the services more commercial, MCIT issued licences for using frequencies in the 1800 MHz band. According to the ministry, the three existing operators were issued a 12-year licence for 2×10 MHz frequencies in the 1800 MHz band at a price of $80 million, using a direct allocation method. Fur­ther, a 2×10 MHz block was reserved for newcomer MNTC.

In May 2017, MPT commercially laun­ched LTE services in the Nay Pyi Taw, Yangon and Mandalay regions, using frequencies in the 1800 MHz band. Further, Telenor Myanmar recently launched LTE services in six new cities, extending its 4G network to a total of 17 cities.

Role of tower companies

The efforts of operators to expand network coverage have been successful with the support of telecom tower companies. Currently, the market is served by seven major tower companies that operate arou­nd 7,900 towers. The total number of towers including operator-captive towers stands at approximately 12,030. This number is expected to increase considerably in the coming years on account of the growing smartphone penetration and entry of new telecom operators in the market.

Tower companies have stepped up their investments to install additional towers to meet the growing needs of the market. For instance, Irrawaddy Green To­wers secured a loan worth $122 million in January 2016 from a group of Europe-based development financial institutions. The funding is a part of the tower company’s investment plan worth $230 million, which includes the deployment of more than 2,000 towers across the country. Further, the edotco Group has earmarked investments of around $200 million over the next eight years. The group will utilise this investment to install around 5,000 towers in the country. The company also plans to introduce a host of services that it already offers in other Asian markets. As per the company, the number of towers operated by tower companies in Myanmar is expected to reach approximately 29,000 towers by 2024. According to industry experts, the telecom tower market in Myanmar is expected to grow at a compound annual growth rate of over 28 per cent between 2015 and 2020, higher than that in Indonesia, Malaysia and Cambodia.

Issues and challenges

Despite the considerable efforts made by stakeholders, Myanmar’s telecom industry is still at the early stages of development. There are several factors that impede the growth of the industry. For one, there is a lack of reliable data sources for parameters such as population and physical infrastructure availability. Further, inadequate infrastructure and the dearth of skilled labour have been big hurdles for telecom operators. Providing adequate power supply to telecom towers is also a major challenge. As per GSMA’s Green Power for Mobile report, the telecom industry’s demand for power is expected to reach 455 GW by 2017, which cannot be met by the currently installed and planned capacity. As a result, operators and tower companies resort to power backup solutions such as diesel generator sets and off-grid green en­ergy solutions. Another major obstacle in the way of network roll-outs has been the limited skillsets of most potential workers. Operators have to impart extensive training, which leads to delays in the installation of base transceiver stations as well as in carrying out civil works. In addition, there are land acquisition and right-of-way issues for foreign telecom companies. There are uncertainties regarding landownership and lease structures, which are likely to be resolved only after the country’s regulatory framework gains maturity.

Future outlook

The challenges notwithstanding, Myan­mar’s telecom market presents significant growth opportunities for industry stakeholders. The reforms undertaken by the government to create a competitive market structure have encouraged operators to invest in network roll-outs and provide better services to customers. The recent entry of a new operator will sharpen this competition and pave the way for im­proved telecom services in the future.

Kuhu Singh