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.
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.
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.
Meeting the traget of a billion dollars of FDI in 2008 seems to rest on foreign investment continuing at a high rate in telecom. After all, in the first half of the year, telecom brought in USD 291 million, out of a total of USD 425. However, the increasing hostility to the sector driven by the JHU plus the decline in people’s buying power pulled down profits last quarter. The largest mobile operator, Dialog, stated that its capital expenditures for the coming year will be cut by about 25 percent at an investment briefing recently. One cannot draw conclusions from one quarter, but do not be surprised if the first half of 2008 turns out to be the high point of investment in the sector.
Hutch, a pure BOP play that was making very good profits, has reported declining profits and revenue growth. One quarter does not a trend make. But seen together with Dialog’s bad results for the last quarter, it suggests things are not looking good for the telecom sector which is taking multiple hits with tripled spectrum charges, revenue-raising taxes in the name of the environment and all sorts of additional costs imposed in the name of national security. If the government keeps taking JHU advice, they are likely to make the economy slow to a crawl.