Analysis: Three-way mobile war on horizon

Analysis: Three-way mobile war on horizon

By Jeremy Mullins   |   Saturday, 02 August 2014

Myanmar's mobile users are now faced with a choice for the first time, as Ooredoo launches its services with Telenor to follow.

The telcos need to attract customers like U Nay Linn Zin if they want to succeed.

A frequent airtime user, he is a successful businessman and not afraid to pay for quality service. He is also sick of porting up to six different handsets along on business trips in the hope that at least one will find a strong connection.

Inside Myanmar, he has only ever had one choice for mobile service: state-owned Myanmar Posts and Telecommunications (MPT). But as of August 2, U Nay Linn Zin – for the first time – has another option. Ooredoo is launching services after an exhaustive six-month licensing process that began in January 2013 and was followed by discussions over its licence that were finalised in January. Finally, there was an intense tower build in the first half of the year that is continuing in some areas.

However, U Nay Linn Zin says he is not ready to make the switch from MPT just yet. He realises there will likely be benefits to changing to Ooredoo, but is also keen to check out Telenor's performance – he uses the Norwegian firm's DTAC service in Thailand on his business trips. He would also prefer to spend his money on a Myanmar company, such as MPT, provided it can offer reasonable connections.

Analysts agree that Ooredoo's service launch is just the start of the competition.

Herbert Smith Freehills (HSF) legal firm senior consultant Mark Robinson said despite Ooredoo getting out of the block first there is plenty of space for competitors to catch up. There may be some advantage to Ooredoo launching a month or two ahead of Telenor, and also ahead of MPT's anticipated re-launch, as customers are often reluctant to switch providers too frequently – but the market is still wide open.

"By the end of the year or early next year we'll see three players in the market," he said.

Mr Robinson said developments at MPT are particularly worthy of attention. The firm signed a deal with Japan's KDDI and Sumitomo in July to overhaul its services, and MPT could emerge as a strong competitor to Telenor and Ooredoo.

"We have to see how quickly they can get operating," he said. "I wouldn't be surprised to see them get off the ground soon."

Although management of split private-public companies can be difficult, MPT has certain innate advantages. It will likely have easier access to government land to build towers and also has an existing network and customer base. Still, its success is not guaranteed.

"MPT is not like incumbents in other markets that are huge monopolies," said Mr Robinson.

One issue that has followed Ooredoo is anti-Muslim sentiment that has even prompted calls for a boycott among some Buddhists because of the firm's Qatari roots. Company officials have said they are aware of the issue but are concentrating on the job of providing telecommunications services, adding mistrust will dissipate as people see the advantages the company brings. HSF associate Rebecca Cochrane said the sentiment is a "manageable issue", and pointed to Ooredoo's extensive marketing campaign as part of its efforts to reach out.

Certainly the initial flood of messages on social media – particularly from Mandalay and Nay Pyi Taw, where SIMs went on sale quite openly for days ahead of the launch – indicate the boycott calls are having little effect. Instead, the overriding sentiment seems to be one of excitement.

"There's been a lot of fanfare," said Mr Robinson of Ooredoo's launch.

Yet its rival Telenor is not idle, and it plans to launch in September.

Telenor CEO Petter Furberg told The Myanmar Times last week that while he does not usually comment directly on competitors, he views mobile competition as healthy because consumers ultimately benefit.

"We are confident that Telenor will become the most affordable operator in the market," he said. Mr Furberg added that because his company is using both 3G and 2G networks, all GSM phones will work on its network.

In other countries, Telenor has pursued a middle-market approach appropriate for the country, said Mr Robinson. While the service provider has made much of its attempts to cast a wide net in Myanmar, Mr Robinson said there may be room for potential positioning below Telenor.

Yatanarpon Teleport is supposed to be the fourth operator in Myanmar. While it too might secure a foreign partner or otherwise prove to be a serious competitor, it is currently the quietest of the four.

There may also be room for services similar to those offered by mobile providers that use new technologies, such as WiMax or 4G-type, Mr Robinson added.

But regardless of who pulls ahead in the race, Myanmar is likely to benefit.

Frost and Sullivan Asia Pacific telecom industry principal Naveen Mishra said mobile penetration is likely to boom from its present 10 to 15 percent, with a phone going from a status symbol to an everyday commodity in perhaps three or four years.

"When there were no competitors to MPT, there were no reasons for it to be very active," he said. "With the new licences [being awarded], the market is going to get very significant growth."

The anticipated growth offers huge potential to other businesses, he added.

"Myanmar offers a very large bouquet of opportunities for pretty much everyone in the telecoms ecosystem," he said, adding that this includes everyone from handset makers to tower builders.

Yet for all the excitement and various teashop predictions about the industry's future, it is much too early to pick a winner.

Mr Mishra said that all three providers – MPT, Ooredoo and Telenor – have a good chance of ultimately leading the market.

And attracting customers like U Nay Linn Zin is at the heart of the race. – Additional reporting Zaw Htike

http://www.information.myanmaronlinecentre.com/analysis-three-way-mobile-war-on-horizon/