The Last Frontier: Myanmar Telecoms

The new Telecoms dawn coming over Yangon

Myanmar has opened up one of the last territories in the world not to have extensive telecommunications service. This is one of a string of modernizations that the country is undergoing having decided to abandon its isolationist policy. The auction of telecoms licenses to international companies is the first major public contract tender outside the natural resources sector. The auction liberalises the telecommunications network which was previously controlled by the state.

Norway’s Telenor and Qatar’s Ooredoo won the fiercely contested auction and will launch their telecoms services in the next few years. Telenor will provide nationwide coverage within five years, but the first mobile services start in 2014. The two operators will install modern telecoms networks across the country. Each company could spend US$1-1.5 billion to create a network from scratch in a country with poor infrastructure and limited skills. The state-run telecoms operator, Myanmar Telecoms, will continue to operate, although it has notoriously poor network coverage that supports mobile penetration of only 5%.

Expanding to villages all over Myanmar

The sheer magnitude of the task facing Myanmar shows what they have been missing out on for the past 60 years of isolation. Just 10% of the population has a mobile phone compared to 80% in Cambodia and Laos and over 100% in Thailand. With mobile phone ownership so low, many ordinary citizens communicate using makeshift phone kiosks. Actually it is the lack of mobile phones in this country of 60 million people that has attracted interest from the world’s major telecoms companies.

Myanmar are hoping that Telenor and Ooredoo will be able to boost Myanmar’s telecoms coverage to 80%, in line with Cambodia and Laos by 2016. Yet for the companies themselves this venture is not without significant political and economic risk. At least for Telenor they have considerable experience creating new networks in frontier markets with involvement in Pakistan. It will be interesting to see how improved mobile penetration in Myanmar feeds a nascent mobile app development industry among young entrepreneurs in the country.