Telenor's service launch to intensify competition in Myanmar

Telenor Myanmar will launch its mobile service in Mandalay at 11am tomorrow as the first step towards rolling out a nationwide mobile network in the region’s most underserved market.

The launch in Mandalay will be followed by an expansion to Nay Pyi Taw a week later, while Yangon will be added in about two weeks, Telenor Myanmar CEO Petter Furberg told a press conference late yesterday. After the network covers the three cities it will be expanded as swiftly as it can erect more telecom towers.

“Everything is ready. Every SIM card comes with voice, SMS, Internet, etc. Also roaming is enabled from the start. It is important when you travel you can immediately use roaming if that country has signed an agreement with Telenor,” Furberg said.

Telenor is one of two telecom companies winning the 15-year licences, along with Qatar-based Ooredoo. Ooredoo launched its service on August 1 and experienced overwhelming success. Long queues formed in front of mobile shops and the scarcity of SIM cards also encouraged black-market sales. 

According to MPT, though its SIM card’s price tag is only Ks 1,500, demand pushed the black-market rate to between Ks 15,000 and Ks 20,000. Despite the high number of SIM cards from Ooredoo, a customer in July also ended up paying Ks 7,000 for a Ks 1,500 card when sales agents in Mandalay began selling ahead of the planned debut. 

The phenomenon had been anticipated, given Myanmar’s low mobile penetration rate. It explained why about 90 per cent of the globe’s major mobile network operators expressed interest in joining the licence auction, including Singapore Telecom and a France Telecom SA-Marubeni Corp group. 

Only 10 per cent of Myanmar people have mobile phones, compared to near or over 100 per cent in Asean countries. New comers have brought down the SIM card prices, which a few years ago went for as high as US$250 apiece, making the phones a preserve of the rich. More mobile phone operators also mean new voice and data services. It is seen as crucial for the economy because new operators will allow mobile banking or payment applications. Smartphones will also potentially bring millions of consumers to the Internet.

According to Ministry of Telecommunications and Information Technology, the number of mobile phone users in Myanmar is expected to reach up to 80 per cent of the country’s population during the next fiscal year, while the number of Internet users is also expected to reach 50 per cent in the same period.

The mobile phone penetration rate is expected to rise to 27 per cent this year and 50 per cent before next April, when the country starts its next fiscal year. The rate is rising fast. It was estimated at 3 per cent of the population in 2011, when the country’s first quasi-civilian government took office in decades.

Ooredoo’s presence sparked new frenzy in the market, as its SIM card sale reached a milestone of 1 million shortly after their launch. Earlier this month, MPT launched new products and services through a partnership with Japanese telecommunication giants KDDI and Sumitomo.

MPT also announced earlier that it would sell a total of 14 million mobile phones by the end of fiscal year 2015-16. MPT said it would sell 4 million in this fiscal year, and 5 million each in the next two fiscal years.

Being the late comer, Telenor is betting on service quality as well as extensive marketing network to ensure success.

While MPT assigned 13 companies and shops to sell its SIM cards, Telenor said that its products would be available at 1,500 shops in Mandalay alone. In direct competition against MPT, Telenor is also offering two low-cost mobile handsets, an entry level second-generation phone and entry level smart phone, for Ks 19,900 and Ks 49,900 respectively. Both include Internet bonus time. 

Telenor Myanmar CEO Petter Furberg also said its Internet speed would be swifter than MPT’s even though it would use MPT’s fibre optic line. “We have provided extra equipment to upgrade the capacity. We may use the same fibre line, but the capacity has been significantly increased,” he said.

Furberg yesterday declined to provide figures on how many customers the company anticipated signing up, saying sales would “depend on whether people will like what we are selling or not”. “I do not want to speculate,” he added. Sales will depend on perceptions of the network’s quality and its pricing strategy, Furberg said, but he suggested that the company was preparing for a massive rush of customers to its service.

“We are not going to limit the number of SIMs,” he said.