MTN sets its sights on Burma

IT SOUNDS almost archaic: a place where mobile penetration is sitting at about 10%.

MTN CEO Sifiso Dabengwa. Picture: BUSINESS DAY

But this is the prospect that has mobile operators round the world salivating at the chance to enter Burma, which was under military rule until 2010.

One of the contenders is home-grown mobile giant MTN, which has formed a consortium with Singapore telecommunications company M1 Telecom and Amara Communications, a subsidiary of IGE, which is reported to be owned by the sons of former Burmese industry minister Aung Thaung.

For MTN, which is facing increasing competition in Nigeria and South Africa, a licence to operate in Burma would be just what it needs to boost flat revenues.

Evelin Petkov, founder and owner of the Myanmar Business Organisation, said Burma’s telecommunications market had poor infrastructure and excessive costs.

According to Petkov, until the beginning of this year the cost of a sim card was nearly $250 (about R2100 at an average rate of R8.50), but the cost was down significantly to about $10.

A survey released this week by research firm Analysys Mason on the Burmese telecommunications market, said the discounting of sim cards via a lottery system had increased access to cellphones among low-income groups.

“Even though the sim cards are relatively cheap, they are not freely available on the market as the supply is very limited,” said Petkov.

He said that although the telecommunication infrastructure was underdeveloped, the government had plans to increase penetration from 10% to 85% in the next couple of years.

“Currently, there is only one telecom provider, a government-owned company, but by the end of this year there will be four companies. This will lead to competition, higher quality infrastructure and cheap sim cards. As a result, cellphone users will benefit the most,” said Petkov.

The Analysys Mason report also put a damper on the Burmese government’s mobile penetration ambitions, saying lack of rural coverage could undermine government’s targets.

“We believe strongly in the market’s potential, and expect it to outperform many of its nearest neighbours over a comparable time frame.

“However, it seems unlikely that the government’s stated target of 50% mobile penetration by 2015 is achievable because of the lack of infrastructure outside the cities,” the report said.

Although the report lauded Burma for the new opportunities, it raised issues that tint the rosy picture.

“Some groups in urban areas show a definite lack of interest in services, and the willingness and ability to pay in rural areas remains untested,” said the report.

Problematic factors included a lack of disposable income, not being aware of services, minimal coverage in urban areas and the use of English as Burmese scripts are not normally supported on handsets.

“Operators working in areas close to Myanmar’s borders will need to compete with Chinese and Thai networks, which are reportedly popular among Myanmar’s early adopters and are likely to be superior to the country’s own networks for the foreseeable future,” the report said.

MTN is up against some big hitters for the licence. They include India’s Bharti Airtel, France’s Orange Telecom and Qatar Telecom.

However, many observers feel that as Vodafone and China Mobile have withdrawn, MTN’s chances are good. Indeed, analysts believe that MTN’s experience in emerging markets might tip the scales in its favour.

“I think MTN probably has a reasonably good chance of winning this licence,” said Dobek Pater, an analyst at Africa Analysis. “MTN does have the experience of growing the telecoms (mobile) market in practically greenfields operations in developing markets (some of them similarly underdeveloped and impoverished to Myanmar),” said Mr Pater.

• This article was first published in Sunday Times: Business Times

Source : Business Day BD live