ASIA NEWS NETWORK

WE KNOW ASIA BETTER

» Business

Malaysia's Axiata in Myanmar telecom race

Publication Date : 08-10-2012

 

Myanmar's emergence as an investment destination has been hogging news bulletins globally. One area of business that holds vast potential is its telecoms market, labelled as the last greenfield telecoms turf in Asia.

It is no surprise that international telecom firms have been vying for a piece of Myanmar's market and Malaysia's Axiata Group Bhd is one of them.

Axiata has said it hopes to play a major role in the Myanmar telecoms market and has no qualms about partnering a Burmese party for that purpose.

Axiata, though, faces competition.

Global players like Norwegian firm Telenor (parent of DiGi.Com Bhd), Digicel, the largest mobile operator in the Caribbean, Vietnam's VNPT-Fujitsu, Russian heavyweight VimpelCom and Sweden's TeliaSonera AB, are all jockeying for a chance for the four telecom licences that will be dished out, according to reports.

Telecoms suppliers like China's Huawei are fast positioning themselves as network suppliers and consultants.

The Myanmar government is in the midst of selecting a consultant that will oversee an upcoming tender for the telecom licences.

It is yet unclear when the tenders will be out.

The attractiveness of Myanmar as a market is clear enough, considering it has a population of more than 60 million people and its economy is only now opening up.

“Myanmar is a logical and interesting market to consider investing into and it represents a strategic market given its high growth potential,” said an Axiata company official.

But he added: “The investment there has to meet our strategic criteria and strict financial hurdles.”

Axiata is a regional player that has stakes in ten telecom companies across Asia, with over 200 million mobile subscribers. Axiata said it was prepared to move forward as and when tangible opportunities presented themselves in Myanmar, subject to regulatory and financial considerations.

Telenor, which is also looking at having a presence in Myanmar, reckons that the rapid reforms Myanmar is putting itself through is very encouraging.

A Telenor official said: “What is needed now is for the government to establish a sound legal and regulatory framework that provides the necessary predictability and security for foreign investment. With its geographical location, low mobile penetration and expected economic growth, it is natural for us to consider Myanmar.”

Gerard Teoh, a Malaysian corporate advisor involved in Myanmar-related deals, said that with the opening up of the economy there and jobs being created, there is an incremental increase in the income of locals.

“This, in turn, will lead to more energy and communications needs and poses a growth potential for fast moving consumer goods-type businesses as well as agricultural development.”

His firm Crave Capital is focusing on just those sectors, advising foreign companies looking to invest in Myanmar as well as Myanmar companies looking for foreign partners.

Of the telecoms market, Teoh said: “The pent-up demand and growth potential is obvious, but the landscape is highly competitive although worth the effort as ultimately, it proffers a coveted prize in the form of a telco licence in one of the world's most untapped mobile markets.”

Teoh added that in Yangon, locals were already getting their hands on smart phones made by Chinese giant Huawei at prices of around US$150 per phone.

“Over time, more will be able to afford it (smart phones). So the key now is to develop new services to cater for this growing group.”

Teoh said another related business that had potential is Internet service provider (ISP) and wireless and data centre businesses. The Myanmar government has said that four telecom operating licences would be granted two for Burmese companies and two for foreign firms with 4G services targeted as early as 2013.

A regulator would be formed and state-owned Myanmar Post and Telecommunication, the country's sole operator, would be privatised to form the Myanmar Telecoms Company, which would be awarded one of the mobile phone licences. Another would go to local ISP Yataraporn Teleport, a report said.

The report quoting a Burmese telecoms source said it was unlikely the two local firms had the resources to operate alone and would likely form joint ventures, but it was unclear whether more than two foreign firms would be allowed to operate.

Those tracking the telecoms sector in Myanmar though have not offered any forecasts of the kind of capital investment needed to jump-start the growth of the industry there. There are limited telecom services available currently and penetration rates are low.

Usage is said to be extremely low, at just 1.24 per cent of the population in 2010, compared with 64 per cent in Laos, 57 per cent in Cambodia and more than 100 per cent in Thailand and Malaysia where individual ownership of multiple phones pushes usage above population levels, according to the Asian Development Bank.

The Burmese government said the current level was 5.6 per cent, but experts doubted that, one report said.

On the other hand, things are moving at a pace never seen before in Myanmar.

“There is a hunger for growth and new technology all around. It is hard to predict the pace of growth of things like mobile telephony,” Teoh said.

 

Mobile Apps Newsletters ANN on You Tube