market entry


I wrote earlier about the importance of timing when companies enter new markets. One hopes that this timetable will be adhered to in this fast maturing market. U Zaw Min Oo, a director of Myanmar Technologies and Investment Corporation – one of the 11 local firms – told The Myanmar Times this week that he expects the telco to receive its licence on December 21. “The ministry is arranging to provide the telecom license on that day in Nay Pyi Taw,” he said, adding that he could not share any further details of the new firm. U Zaw Min Oo said in October that senior management positions have been filled, with a Viettel official taking the chief executive position.
Speed is important in entry to competitive markets. The issues have been discussed in the context of other countries. One hopes that the negotiations will be speeded up and that they will make the necessary investments fast. However, according to the Myanmar Times, negotiations are still ongoing, the venture is not yet formally established and as such has not been able to apply for an operating licence. In addition to Viettel, the JV will comprise a government shareholder, known as Star High Public Company, and a local consortium, Myanmar National Telecom Holding.
In July, I wrote that Myanmar was about to adopt a flawed telecom law, which had the support of the Bangkok Office of the ITU. Appears that saner counsel had prevailed: Two other sources with close knowledge said the government realized its mistakes this July, when a revised law sent to President Thein Sein was quietly recalled because it was “deeply flawed”. A senior government official said Thein Sein wants to implement reforms fast, aware of the proven links between telecoms expansion and GDP growth and the urgent need for transparency in a crucial sector. Expansion and liberalization would not only create thousands of jobs in a country with chronic unemployment, but it would also allow for mobile money services, like transferring cash that could be collected by a relative in rural areas by showing a simple text message. “It’s not just phones, it’s other cross-cutting factors.
My response to incessant complaints in the region about profits disappearing and investment drying up because of excessive licensing has been to say that liberal and transparent market entry policies must be accompanied by clearly stated exit policies that are consistently enforced. I have also pointed out that in many South Asian markets the levels of competition, as measured by the HHI, are relatively higher than in the US and that what applies in S Asian markets does not necessarily apply in N American markets and vice versa. In this light, it is worth tracking what happens to the AT&T acquisition of T Mobile. AT&T customers, though, could benefit in one notable area: service. Both AT&T and T-Mobile operate on the same technology, known as GSM, so the combination should provide better coverage.
I was asked today by a reporter whether the Sri Lanka market could support another entrant. I answered, but wasn’t sure it would be carried accurately. Therefore, here is the answer. The market should determine the number of suppliers in a market, not government officials. This requires two things: (1) an orderly policy on market exit, whereby, for example, suppliers have clear rules on what can be done about the assigned spectrum, existing customers, and so on; and (2) transparent license and renewal procedures that allow for as many licenses to be issued as possible within the constraints of spectrum.

Profits and investment

Posted by on February 11, 2011  /  1 Comments

In most countries in the early stages of liberalization, I get asked about the profits operators make and how they should be monitored. I tend to say that the priority should be on monitoring investments (not committed, but actually made) and that it’s not a bad idea for the regulator to have some knowledge about profits. The reason I give priority to investment is because that is what drives performance. If investment declines, the regulator can expect problems. Profits are relevant for two reasons: first, if they are below the norm (more on this below), investments will most likely be affected negatively.