Myanmar: The last telecom frontier


Myanmar: The last telecom frontier

Dominic P Arena  |   February 19, 2014
Following the direct awarding of two full-service telecom licenses to Ooredoo and Telenor last year, the final pieces of the telecom market jigsaw are falling into place. Myanmar will emerge as a four-player tier-one telecom market with strategic investment from foreign operators - alongside several tier-two local players largely focused on the broadband sector. 
Myanmar is the final frontier for critical-scale telecom markets in Asia, with a population of 62 million and just over 30% urbanization. As of today, the market has less than 9% mobile penetration, under 50% mobile coverage, fixed-line penetration of around 1%, and incumbent telecom operator, MPT, still operating as a department of the Ministry of Communications and Information Technology (MCIT). To date it has lagged its ASEAN peers in ICT development - however, the largely successful execution of its recent "ICT leapfrog" strategy will see all this change and enable Myanmar to flourish from 2014.
A rapid and intricately planned transformation of the ICT sector - or "leapfrog" plan - has been underway over the past year, coordinated by the MCIT and executed through several stakeholders including external advisers and the President's office, among others. The leapfrog plan was designed to learn from and avoid the mistakes of other markets, which for reasons of technological development or socio-political factors at the time caused an often painful and stop-start development of their ICT sectors.
Examples of the leapfrog plan's accelerated development strategies and avoided mistakes include, most notably the rapid, transparent and direct award - via tender - of 100% foreign telecom licenses (with packaged spectrum) to experienced developing and developed market operators. This strategy was balanced with the invitation of foreign partnership with local/incumbent players to form sustainable, competitive national champions and to safeguard social and national security obligations. 
Within this process, the avoidance of market-distorting structures such as concessions has been avoided, and it is widely understood - though officially not confirmed - that the two main local players, namely MPT and YTP, are in the closing stages of executing contracts with strategic foreign operational partners to bring much needed expertise and investment to enable the "local champions" to sustainably compete.
The liberalization process has not been without controversy. A long delay in the passage of the new Telecom Law, passed several months after the announcement of the two foreign license winners, and the continuing delay in awarding the actual operating licenses to Telenor and Ooredoo (awarded in early February) have been criticized in some circles. While there is no official policy of the foreign license delays being linked to the ongoing partner selection processes of MPT and YTP, there has been widespread speculation among industry experts that there is at least some correlation between the delay in MPT and YTP selecting a strategic partner and the awarding of the foreign telecom licenses and finalization of rules governing telecom operators.
It is also well understood within industry analyst circles that the speed and approach to telecom liberalization had unsettled several local players and investors, who felt they suddenly found themselves in a situation where the pendulum had swung too far and too fast in favor of foreign players over the local operators and ISPs.


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