Myanmar is poised to leapfrog into the 3G era and move up from the bottom of the mobile penetration charts (10 per cent) after Qatar-based Ooredoo was the first of two foreign firms to launch commercial 3G service last Friday.

Ooredoo’s UMTS900 service now reaches an estimated 7.8 million people in 68 cities and towns. Its 3G network went live in early August in the country’s three major cities — Yangon, Nay Pyi Taw and Mandalay.

Telenor is expected to announce its 3G launch in September but has not yet released its precise plans.

Dominic Arena, managing director of AEC Advisory (based in Bangkok), told Mobile World Live that together with the recent signing of the joint operating agreement between Myanmar Posts and Telecommunications (MPT) and KDDI-Sumitomo, the country’s mobile market is going to see an unprecedented period of expansion.

Ovum predicts that mobile connections in the country will grow 29 per cent annually over the next five years to 32.3 million. The country’s mobile penetration rate could soon surpass its electrical power penetration — according to Ooredoo only about 35 per cent of the population has access to electricity.

The Qatar-based operator has its work cut out to hit its target of reaching 25 million people, or about 38 per cent of the population, by the end of the year. The company announced earlier in the year it would spend $1 billion in 2014 to roll out 800-1,000 3G base stations to cover 30-40 per cent of the country’s population of 65 million.

It also has committed to spending $15 billion over five years to provide coverage to 97 per cent of the population.

Given that the biggest city has just over five million people and 75 per cent of the population lives in rural areas, that is a huge undertaking.

Arena said that the operators and tower companies are finding it far more difficult than anticipated to deploy new sites, with some reports suggesting only a fraction of 5,000 planned sites for this year have actually been secured, erected and commissioned into service.

Reasons include slow rental negotiations in a booming market and the inability to secure legal tenancy given land ownership and documentation challenges in Myanmar.

The challenge of site access, he said, possibly puts MPT-KDDI in a stronger position than its rivals Ooredoo and Telenor given its existing base of around 2,000 sites, allowing it to defend its market share better than expected.

The rollout comes more than a year after the Myanmar government awarded two full-service telecom licences to Ooredoo and Telenor. Myanmar will end up with four tier-one telecom players – including MPT and Yatanarpon Teleport Public Company (YTP) – all with strategic investment from foreign operators.

The tender process for awarding the mobile licences was widely praised for being transparent and signaled the government’s openness to foreign investment.

The Asia Development Bank said the country’s GDP grew 7.5 per cent in the fiscal year ending March 31 . The bank is expecting 7.8 per cent growth over the next two years.

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