Myanmar recently celebrated its five-year anniversary of liberalisation in the telecom market, changing from monopoly structure to competitive landscape of five operators; from 13 per cent penetration to more than 124 per cent; from a market dominated by 2G to one where 5G trials are taking place; and from a Greenfield market to one approaching maturity.

This phenomenal transformation is certainly worth discussing and exploring.

At the end of 2013, more than 120 countries around the world registered penetration of more than 100 per cent. That same year, Myanmar, a country more populous than many of these markets, had a penetration level of merely 13 per cent (see chart, below, click to enlarge), served only by the monopoly operator (MPT). SIM cards were sold through a lottery for more than $240 each, for a mobile network which was frequently jammed.

Ripe for revolution, the inflection point finally came when the Burmese government, to increase the country’s tele density to between 75 per cent and 80 per cent by 2016, invited non-domestic players into the market.

Telenor and Ooredoo won licences and they launched their services in the third quarter of 2014.

Let us first look at what market looks like today:

• Two new players, Mytel and Ananda Infinity, entered the market in 2018, taking the total count of operators from three to five.
• As of Q3 2019, market penetration by connections stood at 124 per cent with total mobile connections of more than 67 million, exhibiting a compound growth rate of 48 per cent.
• With the entry of new players and fair competition, Myanmar’s total connections grew steadily over the past half-decade with the growth rate so far in 2019 around 17 per cent compared with an average rate of 3 per cent for the Asian region.
• For a cumulative investment of about $3 billion between 2014 and 2019, the industry has consistently generated revenue of more than $2 billion per year since 2016, compared to around $450 million in 2013.

What brought about rapid transformation?
Let us look at what the operators in the market did (or rather did different) to bring the market up to scale in such a short period.

Ooredoo:

• Ooredoo initially rapidly rolled out its 3G-only network in Q3 2014, attracting more than 1 million connections within the first quarter of its launch.
• Interestingly, its 2G network launched much later, in Q3 2017.
• Rolled out the first LTE service for the market in Q2 2016, consequently commanding the biggest market share of the 4G connections pie at 30.5 per cent.

Telenor:

• Unlike Ooredoo, the Norway-based group read the nerve of the market dynamics and entered in Q3 2014 with 2G and 3G services.
• This put Telenor in an advantageous position to build a bigger customer base from the onset of its journey resulting in an overall market share of 32 per cent compared with Ooredoo’s 15 per cent as of Q3 2019.
• Hitherto lagging in 4G connections, the operator is providing tough competition for Ooredoo and is expected to become the biggest 4G player in next couple of quarters.

MPT:

• Responding to new-found competition, low-cost SIMs priced $1.52 were launched in 2014.
• To further combat the competition and deal with falling market share, MPT collaborated with KDDI and Sumitomo to modernise its offerings and infrastructure.

While MPT still commands the biggest market share of 40 per cent in terms of connections in the market, it raises the question of why MPT quickly lost ground to the new operators after holding a monopoly?

• The services offered by the new competitors in 2014 were much more customer centric.
• Compared to the roughly 70 per cent population coverage by the biggest 4G player in the market, MPT’s coverage of around 26 per cent is considerably lower, meaning it is not the preferred choice for users seeking uninterrupted 4G experience.
• MPT initially planned to bid for 2.6GHz spectrum auction in 2016, but later chose to wait for 1.8GHz allocation, which was delayed to mid-2017. This resulted in it launching LTE services a year later than its competitors.

Beyond the provision of basic telecom services, however, new entrants tried to carve unique propositions. Where Ooredoo focused on faster mobile internet, Telenor focused on the digital payments sector with its launch of Wave money (a mobile money service) in 2016. In the nine months to end-September, the service had more than 11 million customers, who remitted around $2.8 billion (equivalent to approximately 2 per cent of the country’s annual GDP for 2018).

The result? Both operators have been succesful at maintaining positive double-digit EBITDA margins with Oordeoo at 33.7 per cent and Telenor at 52 per cent in Q3 (see chart, below, click to enlarge).

What operators now need to consider for long term growth?
Myanmar has come a long way in the transformation of its telecom landscape. The market is entering the phase where contribution from core telecom services is stagnating and operators need to explore different perspectives for a long term growth.

Focus on data offerings and network expansion:
While the overall penetration of MBB-capable connections in Myanmar is high (98 per cent), the actual penetration of unique mobile internet subscribers is still low at 40 per cent, clearly highlighting the untapped potential. Moreover, there is demand from the end-customer indicated through the increase in Telenor’s average monthly data usage from 2.7GB at the end of June 2019 to 3.5GB by September 2019.
New operators entering the market from 2018 (MyTel and Ananda Infinity) are clearly trying to tap this opportunity with regualtory support: MyTel was allowed to offer its services at 70 per cent below the minimum tariff specified by the regulator in the Tariff Regulatory Framework, for a fixed period of three months, helping it to attract 1 million subscribers within ten days and 2 million within a month of its nationwide network rollout. Ananda, on the other hand, also kicked off operations by offering data-heavy plans, further intensifying competition in the market.
Shifting market sentiments also provide a boost to operators’ 5G plans. While Telenor is working with Ericsson to prepare its network for the technology, Ooredoo and MyTel have already conducted tests for 5G network with a range of use cases. MyTel’s CEO even announced they aim to launch commercial services in 2020, based on the timing of an auction of 5G spectrum.

Diversify revenue base:
With the launch of MyTel and Ananda Infinity, Myanmar is now a highly competitive mobile market. And yet, GSMA Intelligence forecasts revenues to remain stable for next few years at around $2 billion. As a result of such stagnation, operators need to start seeking new revenue streams.
And we are seeing operators do just that. For instance, seeing the potential of mobile money services being offered by Telenor (Wave Money) and Ooredoo (M-Pitesan), MPT announced (in March 2018) plans to launch its own mobile financial services, for which it has received the licence in October 2019.
This mirror operators in other regions which are exploring revenue opportunities in adjacent services including convergence, IoT, pay-TV, media and the broader universe of digital services.

The bigger dynamic here, however, is one of evolution, from greenfield to fairly competitive to highly competitive, and the questions that come with it. How will operators remain competitive in long term? Is consolidation round the corner? Will adjacent services be competitive. What lessons are there for other markets in transition?

Beyond any history lesson about mobile services in Myanmar, the future is what’s most interesting as the market moves into maturity.

– Ankit Sawhney – research manager – and Charu Paliwal – team lead, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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