In an interview with Light Reading, the Ooredoo CEO says The growth plateauing in Myanmar’s telecom sector will be based on the quality of the network and service because mobile users’ expectations are high. If an operator can’t provide attractive service, customers will definitely switch to another. Our growth is improving quarter-by-quarter. We had 8.2 million active customers in the second quarter of 2016 and 4 million active users in the same period last year.
It appears that Ooredoo is turning around its Myanmar operations. Qatari telecom firm Ooredoo continues to reduce losses in its Myanmar arm relative to 2015, according to the group’s third-quarter results, although the Myanmar operation saw new subscriptions dip compared to the last two quarters. Unlike rival telco Telenor, Ooredoo’s Myanmar operations are not yet consistently profitable. But the Qatari firm’s Myanmar arm is still having a much better year financially than in 2015. Across the first three-quarters of 2015, Ooredoo’s earnings before interest, tax, depreciation and amortisation – EBITDA – were negative Q30 million (K10.
All market projections in developing countries have been wrong, and all wrong in the same way: they have underestimated demand. This was true for voice, then for data, and now for 4G. The sharp increase in 4G usage is the second time the Myanmar market has taken Ooredoo by surprise, Mr Meza said. The first was the speed of smartphone penetration across the country after the company first start operating in 2014. When the Qatari firm entered Myanmar it decided to concentrate on the urban centres and on higher-value customers with heavy data usage.
Ooredoo, which rolled out a 3G network in 2014, skipping 2G altogether, is first to offer 4G over existing frequencies. Ooredoo Myanmar, the country’s third largest operator, launched 4G service in parts of the country’s three major cities — Yangon, Nay Pyi Taw and Mandalay – making it the first to offer the high-speed service. The operator rolled out the service across more than 20 townships in the three cities and aims to cover half of Yangon’s townships, nearly 90 per cent of Nay Pyi Taw’s townships and all of Mandalay, without giving a timeframe, the Myanmar Times reported. Its 4G plans will be priced the same as its 3G offers. Report.
Even if it took some exchange-rate movements, to do it, it’s still good news. My only concern is that Myanmar lawmakers will see these numbers as an invitation to start milking what they as a cash cow. There is much to be done in Myanmar in terms of translating the reforms into real benefits for people and that requires the investors earning a reasonable return. Ooredoo Myanmar took in QAR334 million (US$91.7 million) in the three months to March 31, up 18pc over the previous quarter and 42pc on Q1 2015.
I wish standard metrics would be used when CEOs talk about data use so that we can be sure that Telenor’s 52 percent is comparable to Ooredoo’s 86 percent. But anyway, it’s good to see Ooredoo’s emphasis on data is paying off: “We are thrilled that 86 per cent of our customers currently use our data services. We are seeing explosive growth in data traffic on the network, which has increased 5 times in the last year, driven by the affordability of Ooredoo Internet tariffs. We also see that data usage per subscriber, which reached an average of 580 megabytes per month in Q4, at par with what customers in Europe are consuming on their mobile phones,” he said. According to Meza, Ooredoo products and services are now available in over 100,000 retail outlets, in addition to more than 100 brand stores countrywide.
The first surprise comes from Telenor which has more customers than Ooredoo despite a late start and less money to spend. The second surprise also comes from Telenor, which has apparently made an unexpected profit. There are now at least 18.1 million SIM cards in active use, according to the operators, not including cards that have been sold but are not used regularly. MPT told Reuters last week it had 8.
Some questions that came to mind as I read the report linked below. Myanmar has 325 townships, the third level of administrative units. So, 199 out of 325 is pretty good. But is it that Telenor is in a central location in 199 townships or they cover the entirety of 199 townships? How does Ooredoo calculate its population coverage?
At the end of its First Quarter of operations, Telenor Myanmar reported 3.4 million subscribers. That’s a hefty number, given Ooredoo had a head start and MPT also got energized during that time. But the real story is that 40 percent of that number (1.36 million) were daily active data users.
As we always say, think of the Internet as a chain. A chain is as strong as the weakest link. This imperfectly researched article by a Yangon based journalist (has missed the AAE-1 Cable completely) claims that backhaul problems may be responsible for the poor Internet performance of Ooredoo. For Telenor and Ooredoo to be able to provide the capacity and redundancy needed for stable service, many across the industry point out that the companies need to be as involved with putting up towers and tower equipment as they are with building more long-haul domestic and international fiber links. Although Ooredoo has taken a starring role with regards to eye-catching marketing and corporate service responsibility initiatives, the company has also declined to even acknowledge any plans to beef up infrastructure.
We’ve been thinking about how to promote mobile innovation for some time. Many governments are also grappling with this issue. What Ooredoo is doing in Myanmar is worth the attention of all in this space. They are picking innovators from large competitions and giving them expert help. What is truly unusual is that they will not take the equity stake they are entitled to take, unless the new company grows to USD 1 million.
So Telenor is about to hit the market. They’ve got to work smarter, lacking the billions (USD 15, but I’ve heard even larger numbers) Ooredoo is committed to invest. Being the late comer, Telenor is betting on service quality as well as extensive marketing network to ensure success. While MPT assigned 13 companies and shops to sell its SIM cards, Telenor said that its products would be available at 1,500 shops in Mandalay alone. In direct competition against MPT, Telenor is also offering two low-cost mobile handsets, an entry level second-generation phone and entry level smart phone, for Ks 19,900 [USD 20] and Ks 49,900 [USD 50] respectively.
Incumbent telcos see competition as an unmitigated evil. But what happens is that competition energizes the market and creates new demand. If the incumbent is decently managed, it can catch some (and possibly most) of this demand. After all, it is the known brand. And competitors have their own problems in the start-up phase.
Cummins is a big name, but not in ICTs. So this story caught my eye. Cummins Power Generation has secured a contract to supply hybrid power solutions to Irrawaddy Green Towers (IGT) in Myanmar. Under this contract, Cummins will supply solar hybrid, battery hybrid and diesel generator solutions to over 750 cell-tower sites that IGT will roll out in Myanmar during the next twelve months. .
Xinhua reports mobile SIM numbers for Myanmar as of April 2014. Helped by the lower than estimated population numbers given by the latest census that came out a week back, this means that Myanmar is well on its way to achieving its telecom penetration targets. The current SIM penetration is not known, but if we add 1 million to the Xinhua numbers (reported to be what Ooredoo achieved in first three weeks of rollout), the SIM/100 reaches 18. The number of Myanmar’s mobile phone users has been on sharp rise, reaching 8.278 million as of April 2014, up 7.
It now appears that a month’s lead amounts to one million customers. While there is no bar against those customers also obtaining Telenor, MPT or Yatanarpon SIMs, one would have to conclude that not all will, giving Ooredoo a distinct advantage. While Ooredoo has focused on second-generation cellular, Telenor’s SIM cards will work with any GSM (Global System for Mobile Communications) phone (2G and 3G). Furberg insisted there would be enough SIM cards to meet demand and their price would remain at 1,500 kyat (Bt49). A voice call should cost no more than 25 kyat per minute, he said.