History was made in Myanmar last May when Ooredoo Myanmar launched the first 4G services in the country, followed shortly by rival operator Telenor Myanmar. The speed of the 4G launches are unprecedented considering Myanmar’s 2G and 3G mobile subscriber penetration increased from 10% in 2014 to above 80%, or 45mn users, as of June 2016 after the country opened to international service providers. Nearly 95% of the population is expected to have connectivity by the end of the 2017, and this rapid rollout stands out as an examplar of the merits of shared infrastructure. In comparison, Thailand and Indonesia took seven to eight years to go from 10% to 95%+, while Vietnam took four years to rollout coverage.
Ooredoo Myanmar was the first operator to launch fourth-generation services last May in Myanmar’s three largest cities. The operator aims to cover one-half of Yangon’s townships, all of Mandalay and about 90% of Nay Pyi Taw’s townships. The company announced recently that 85% of its users go on the internet every day, and that average monthly data usage per user was nearly on par with customers in Europe. Ooredoo’s network consists of more than 3,800 sites, about one-quarter of which will have a 4G by the time this article is released in August 2016.
Ooredoo has stated that its customer base in Myanmar had increased by 108% year-on-year and reported that its data network now covers more than 85% of the population.
In an announcement to investors, Ooredoo stated that it continued to be the data leader in its markets, including Myanmar and Algeria. The company now has around 200,000 4G subscribers across its user base.
Ooredoo Myanmar has rolled out 4G services on two frequencies: 900MHz and 2100MHz; Ooredoo’s licence allows the company to buy additional spectrum for a fee, and the telco successfully applied to purchase more a few months ago. The company announced in a recent press release that it was ready to invest more in spectrum pending a government auction.
The government of Myanmar released a new version of its spectrum roadmap in April 2016, which indicates that the Posts and Telecommunications Department (PTD) could make unallocated portions of the 850/900MHz and 2,100MHz frequency bands available, in addition to the 700MHz, 1,800MHz, 2,300MHz and 2,600MHz bands. The new Ministry of Transport and Communications announced in February 2016 that it would make spectrum on the 2,600MHz band available to telecommunications sector players in an auction, which was postponed in March 2016.
The auction was delayed again in July due to objections from Ooredoo and Telenor who composed a joint letter to the Myanmar Investment Commission and stated that the proposed spectrum prices would not give an acceptable level of return. The tender will be called again for local and foreign firms in August, according to Ministry of Transport and Communications. 1,800MHz spectrum may be up for auction in the first quarter of 2017.
Telenor was second to market with 4G services in the capital of Myanmar, Naypyidaw, starting in July 2016. Former Telenor Myanmar CEO Petter Furberg stated after the launch that in addition to rollout in the capital, the company is continuing to test 4G in other cities including Yangon, Mandalay, Myawady and Muse, and will progressively roll out the technology nationwide. Telenor’s 4G coverage in Naypyidaw is supported by 5MHz of spectrum on the 2,100MHz band.
Furberg also stated that Telenor is looking forward to participating in the spectrum auctions planned by the government later this year and that due to “the explosive growth of data and increasing data demand by the Myanmar people we believe it is urgently required to expand our services to 4G all over Myanmar.” According to the company more than 60% of its subscribers use data, and this percentage is set to increase.
Telenor, Myanmar’s second largest operator with 16.9mn connections and a 37% market share, has more than 5,800 towers across the country.
Due to the company’s continuing strong performance in Myanmar, Telenor’s investments in this market will remain high to secure service quality to 17mn customers and pave the way for further expansion and growth. The strong EBITDA in Myanmar has already achieved positive cash flow, according to Telenor’s Q2 report. At the same time, Telenor added 1.4mn new subscribers over the three months to June – a slower growth in customers than it has seen in the past. New Telenor CEO Sigve Brekke attributed the slowdown in subscriber growth to increasing competition in the market.
Competition in Myanmar will only continue to intensify with a fourth operator license set to be awarded. The fourth operator is to be run by Vietnamese MNO Viettel in cooperation with a government stakeholder, Star High Public Company Limited, and a local consortium, Myanmar National Telecom Holding Public Limited. N
Star High Public Company Ltd. is owned by by the military-controlled Myanmar Economic Corporation (MEC) which also owns MECtel. MECtel reportedly started offering mobile services in 2013, but was deemed ineligible to apply for the fourth operator license. Once the fourth license is awarded, MECtel’s assets, which reportedly include approximately 1,000 towers and over 13,000km of fibre, will be incorporated into the new entity, along with its remaining subscriber base which numbered 3.8mn as of Q3 2015. Viettel has stated intent to add 4G to its 3G rollout.
Implications of 4G for Myanmar’s MNOs and towercos
Ooredoo were struggling to gain market share so were compelled to be first movers in next generation networks. Telenor, as they typically are worldwide, were fast followers so there will be negligible competitive differentiation between the two through 4G.
However Ooredoo and Telenor’s introduction of 4G this early does give them a head start in the battle for the QoS-sensitive high value customer in advance of fourth operator Viettel’s launch, which could take until 2017 before any meaningful coverage is achieved. Viettel, which owns 49% of the venture alongside a consortium of 11 Myanmar companies, has already stated intent to launch 4G on 1,800MHz spectrum, but that may take considerable time as they don’t yet have the license.
The launch of 4G is particularly good news for the towercos who built towers in the first two phases of rollout, which were concentrated in Myanmar’s three largest cities; Yangon, Naypyidaw and Mandalay. While there was a degree of parallel infrastructure built in high population density areas, the demand for infill sites for 4G will further increase demand for space on these already coveted towers.
With 4G amendment revenue kicking in just two years into the rollout, and a fourth MNO launch imminent, 2017 is going to be a good year for some of Myanmar’s towercos.
