Telcos including MTN, Ooredoo and Bharti Airtel are eager to enter Myanmar, lured by the country’s large population and chronically low mobile penetration rates. But according to a forthcoming report from UK-based research firm Analysys Mason, the picture is more complex than it appears on the surface.
The country’s mobile penetration rate is about 50% among adults in Myanmar’s urban areas, but the figure is far lower for the entire country, with Analysys Mason’s research pointing to about 11%. However, even this figure is higher figure than the 3–10% estimates suggested during the past few years.
Further analysis highlights “phenomenal opportunity” but also various challenges awaiting operators in this newly liberalising market. Mobile penetration is high in major cities and set to grow, but a lack of rural coverage could undermine government targets, the research firm said.
Analysys Mason surveyed people between 18 and 65 years old in metropolitan and suburban areas, and excluded rural areas. Its research indicated countrywide penetration rate of 11%, localised entirely in the major cities.
Anecdotal evidence suggests that Myanmar has between 1200 and 1600 base stations, supporting reports that the country has little or no rural coverage, Analysys Mason said.
“More than half of all subscribers we surveyed had been using a phone for fewer than 12 months, which indicates that the market has experienced enormous year-on-year growth,” said Tom Mowat, principal analyst, Analysys Mason Principal Analyst.
Myanmar telecoms market has a large underserved population, and comparable markets such as Cambodia and Laos achieved penetration rates of more than 65% and 41%, respectively, just five years after their respective market liberalisations.
Analysys Mason expects Myanmar’s overall mobile penetration rate to exceed 50% by 2017. “Our five-year forecasts are based on available data and heavily supplemented by the findings from our survey. We believe strongly in the market’s potential, and expect it to outperform many of its nearest neighbours over a comparable timeframe,” Mowat said. “However, it seems unlikely that the government’s stated target of 50% mobile penetration by 2015 is
achievable because of the lack of infrastructure outside the cities.”
Willingness to pay for services is strong in urban areas, but rural areas remain untested, the report indicates. However, take-up in urban areas will continue to grow rapidly: almost 40% of non-subscribers surveyed intend to own and use a phone in the next 12 months.
Recent discounting of SIM cards via a lottery system has increased access to mobile phones among low-income groups. The average price paid to date for a SIM card among those questioned was still extremely high at $450, which indicates both that these measures are having a limited impact and that consumers have a strong willingness to pay for access to services. Howat said that Analysys Mason’s forecast assumes a rapid network build-out, including deployments in rural areas as well as capacity increases to serve the remaining 50% of the urban population.
Several inhibiting factors could undermine the potential for operators in the market. Some groups in urban areas show a definite lack of interest in services, and the willingness and ability to pay in rural areas remains untested, Howat said.
Furthermore, operators working in areas close to Myanmar’s borders will need to compete with Chinese and Thai networks, which are reportedly popular among Myanmar’s early adopters and are likely to be superior to the country’s own networks for the foreseeable future.
Analysys Mason performed a survey of 1000 residential consumers and 200 businesses in five of Myanmar’s major cities, asking about adoption, usage and attitudes towards mobile services. The findings of our survey will be published in a forthcoming report.