4th Myanmar Mobile Operator Will Face a Tough Battle

Since authorizing two new mobile operators in Myanmar--Telenor and Ooredoo--the two operators, plus existing provider Myanmar Post and Telecommunications, have rapidly signed up millions of new subscribers, boosting mobile penetration from 10 percent in 2013 to over 60 percent in September 2015, according to government figures.

Mobile accounts doubled in the last year, for example, and most of the gains have been made by the two new entrants. MPT was the sole telecoms service provider until August 2014.

As of the end of March, MPT had 18.4 million SIMs in the market, while Ooredoo had 3.3 million SIMs and Telenor 6.4 million SIMs.

At that point, there were 28.1 million total accounts in service, meaning MPT had 65 percent market share, Telenor had 22 percent while Ooredoo had 11 percent.

Telenor--near the end of 2015--now has perhaps 11.8 million subscribers, Ooredoo 4.8 million and MPT has 16 million customer accounts.

But the gains have come at incumbent operator MPT’s expense. MPT experienced a decline in subscribers.

MPT lost 2.6 million customers in three months at the beginning of 2015, for example.

Between 60 percent and 70 percent use smartphones, as well.

But Myanmar now wants to issue a fourth mobile license, to “offer a cheap service,” said Daw Htike Htike Aung, project director at the Myanmar ICT for Development Organization. Its priority should be to bring internet services to rural areas.”

Myanmar expects to issue the fourth license in 2016.

Companies will apply to join a local consortium of 11 local firms and investors, with a state partner, according to The Myanmar Times.

The newest tender winner will join an 11-company consortium including Myanmar Technologies and Investment Corporation, Myanmar ICT Development Corporation, Myanmar Agribusiness Public Corporation, Shwe Pyi Tagon Telecommunication Public Company, Golden Land East Asia Development, Myanmar Edible Oil Industrial Public Corporation, Myanmar Industries Alliance Public, Myanmar Agriculture and General Development Public, International Power Generation Public Company, Royal Yatanarpon Telecom Public Company and Mahar Yoma Public Company.

If mobile adoption reaches 70-percent by 2018, the fourth provider will have to work very hard to gain enough market share to sustain itself. Mobile adoption in Myanmar was nine percent in 2012, but 54.6 percent by mid-2015.

There will not be much new share to get, by the time the new operator is up and running. A low-cost focus might help, but that also will limit revenues and profit margins, especially if the new company has to target the rural areas, where costs are higher and average revenue per user is lower.

A rule of thumb is that the total number of viable mobile service providers in any country ranges between three and four. Many would argue three is the more sustainable number of providers.

So the fourth operator in Myanmar is likely going to have a tough time.