Norwegian titan may have been pre-empted by Ooredoo's swift move, but is confident its long-term focus gives it the edge
Planning to introduce millions of SIM cards next month, Telenor Myanmar is confident that its services will satisfy local consumers and allow it to reach 90 per cent of population within five years as planned, said the company's top executive.
Petter Furberg, chief executive officer of Telenor Myanmar, said in an e-mail interview that the services would be launched in three major cities including Yangon and Mandalay next month, slightly ahead of the October 5 deadline committed to in the licence agreement.
"Our goal is to reach 90 per cent of the population in Myanmar within five years and we will do so by partnering with thousands of local retailers, distributors and franchisees to build an extensive and wide-reaching distribution network that will ensure that the company’s latest products and services are affordable and accessible to customers throughout the country," he said.
Telenor’s launch will be about two months behind that of Ooredoo, a Qatari telecom firm which was the other winner of two new licences awarded in hotly contested tender last year. An Ooredoo source said last week that more than 1 million SIM cards had been sold since its debut in the first week of August. Yet, there are reports of complaints on lower-than-expected service quality. A stark difference is that while Ooredoo focuses solely on 3G, Telenor’s SIM cards will work in any GSM phone on either a 2G or 3G network.
Furberg assured that the number of SIM cards available will be enough for all retailers and that the price will remain at Ks 1,500. The voice call should cost no more than Ks 25 per minute, he said.
"An extensive distribution network will be the backbone of our mass market approach. As part of Telenor Myanmar’s network roll-out plan, we will recruit distributors and franchisees in each and every state and region in Myanmar with the goal of establishing a network of 100,000 retailers within five years of the network and service roll-out. These partners will include ‘mom-and-pop’ shops and other small businesses, and will sell a wide range of Telenor’s mobile communications products and services, such as SIM cards, recharge vouchers and other value-added services, at locations convenient to our customers," the CEO said.
Furberg is confident that the company’s products would be welcomed by consumers in Myanmar, banking on its track record of services in many Asian countries. Service quality is also assured, with total funding from Norway-based Telenor Group whose mobile operations cover 13 markets and in additionally 17 markets through VimpelCom.
Declining to answer all questions about competitors, the executive said Telenor remains focused on fulfilling its promise to provide innovative, high-quality and accessible mobile communications services to the mass market.
"We are committed to serving as a catalyst for development in each and every market in which we operate and we hope to do the same for Myanmar."
Myanmar’s telecom market potential is immense, as the government aims to boost telecom penetration rate from below 10 per cent to 50 per cent by 2015. Like people elsewhere, consumers in Myanmar are now accessing more data through their mobile phones. Before Ooredoo and Telenor, the only operator was Myanma Posts and Telecommunications. Last month, Japan's KDDI Corp and Sumitomo Corp, in cooperation with MPT, announced a plan to invest US$2 billion over the next decade to expand and upgrade MPT’s service in Myanmar.
According to Furberg, Telenor believes that healthy competition in the mobile industry will ultimately benefit consumers by giving them a wider choice of innovative products and services at more competitive prices. He expressed confidence that Telenor would become the most affordable operator in the market.
He noted that a predictable and level playing field, among many other factors, is important to the promotion of foreign direct investment in telecoms and other industrial sectors in Myanmar. The passage of the Telecommunications Law is an important step in the development and modernisation of Myanmar’s telecommunications sector.
"What we can say is that Telenor believes that there are immense opportunities in enhancing Myanmar’s telecoms infrastructure and advancing the country’s telecoms industry.
“We are prepared and will offer our customers a range of products and services. Telenor has entered the mobile communication market in Myanmar with a strong track record of providing mobile services in Asia through our many successful operations in the region. We are confident that our customers will be happy with the quality and variety of relevant services, and that we will become the preferred mobile operator through our commitment to creating trust and building enduring relationships with our customers,” Furberg said.
Below is more from the interview:
How will you balance market demand and service capacity?
Telenor has a clear network roll-out plan to build an advanced mobile network to deliver high-quality voice services and data speed connections across Myanmar. We will continuously review our infrastructure needs to ensure that we are able to support the delivery of high-quality mobile communications services to people throughout Myanmar.
To reach 90 per cent of the population within five years, we will partner with thousands of local retailers, distributors and franchisees to build an extensive and wide-reaching distribution network that will ensure that the company’s latest products and services are affordable and accessible to customers throughout the country.
What are the biggest challenges in the launch?
There are always challenges when establishing a new business, especially in an industry as complex as mobile telecommunications. Availability of skilled experts for specialised tasks such as tower erections is one of the challenges, but many other factors also need to be considered before we launch our network and services. While we build our telecom network, we need to address factors including build permits, where we need to collect and verify legal documents to ensure we are dealing with the correct and legal land owners, as well as understand and align with the local authorities on building permit requirements; the climate because it is challenging to build towers during Myanmar’s wet season; transportation issues where we need to consider the road conditions and distance of building sites; and ensure that we adhere to policies and best practices in health, safety, security and environment.
How is Telenor funding its investment?
The 15-year licence includes spectrum in the 900MHz and 2.1GHz band. The total peak funding, defined as the licence fee plus accumulated losses until operating cash flow break-even is expected to be around US$1 billion. The majority of our investment (entirely from Telenor Group) will be channelled into building towers to roll-out our network.
We are focusing on building a low-cost operation. By taking experiences from our operations in five other low-cost markets in Asia we believe it will be possible to reach this target and, therefore, give the people of Myanmar affordable Internet and voice services.
How many towers you will need by 2015?
Our aim is to have 8,000 network towers after this period. We will continuously review our infrastructure needs to ensure that we are able to support the delivery of high-quality mobile communications services to people throughout Myanmar.
The government’s support for infrastructure sharing will benefit all parties in the telecommunications industry. This approach will support the rapid network roll-out planned and is consistent with Telenor’s commitment to ensure affordable and accessible mobile communications for people across Myanmar. In addition, it will allow us to reduce the environmental impact of our operations.
How will you achieve service sustainability?
We will work with industry partners across the value chain. Such partners include government organisations, industry players – including telecom operators, infrastructure vendors, handset manufacturers, as well as Internet and technology companies, among others – and industry associations. We will also promote a vibrant business environment and create opportunities for local businesses and entrepreneurs at every intersection of our business – from deploying the network, to selling Telenor products and services, to providing customer service support, among others.
In addition, Telenor will also run programmes and initiatives aimed at delivering mobile communications to under-served groups and rural communities. For example, Telenor is partnering with MIDO, Myanmar’s ICT development organisation, to establish and run around 200 community information centres across the country. The centres aim to foster user adoption of mobile services and Internet in rural areas and improve digital literacy, and will be open to anyone in the local community, from farmers to youth and local villagers. The initial pilot project will establish five centres by the end of 2014 in Ayeyarwady, Kayin, Nay Pyi Taw, Yangon and Bago.
Telenor has also signed a memorandum of understanding with healthcare provider Marie Stopes International Myanmar to develop and launch affordable mobile health initiatives for maternal and child healthcare to women and their families in under-served communities in Myanmar.
How will you maintain a competitive edge?
We are prepared and will offer our customers a range of products and services. We will share our information on our pricing plans closer to the network launch. However, we can assure all our customers that our products and services will be market competitive and affordable.
Will higher penetration rates boost economic growth?
Telenor has witnessed the benefits of increased access to mobile communications on the lives of people all around the world, and we believe that mobile communications services are a basic necessity for everyone.
Research commissioned by Telenor Group and carried out by the international consulting firms of Deloitte and the Boston Consulting Group, found a linkage between mobile connectivity and a country’s GDP growth. Our study showed that a 10 per cent increase in mobile penetration generated 1.2 per cent growth in a nation’s GDP and a 10 per cent increase in Internet penetration resulted in a 3-5 per cent rise in GDP in emerging economies.