Yes, Myanmar, the mountainous Asian country that was politically isolated for decades. A more liberal government (now quasi-political rather than restrictive military) has opened the country to foreign investment. Telecommunications companies providing mobile phone and Internet service are the first to test the emerging market.
The market is passing the test.
Ooredoo, based in Qatar, started offering service in August 2014 and now has 4.3 million customers. Norway-based Telenor followed in September, and it now has more than 10 million customers. Government-owned Myanmar Post and Telecommunications (MPT) has used the advantages of incumbency, favorable regulations, and familiarity to serve at least 11 million customers.
Just three years ago there were about 2 million SIM cards (the chips that authenticate network subscribers on mobile devices) in circulation in Myanmar. The cards went for as much as $4,500 on the black market. Today, there are at least 25 million mobile-phone subscribers in the country. And with a population of about 55 million, according to the World Bank, there’s room to grow.
“In Myanmar, performance continues to exceed our expectations,” Jon Fredrik Baksaas, Telenor’s president and CEO, said in the company’s second-quarter earnings report. The company somewhat unexpectedly turned a profit from its Myanmar operations in the second quarter of 2015, driven by voice and data services.
Telenor has offered specific services that cost pennies a day, the company told FORTUNE. That allows it to profit on monthly revenue of $1 or $2 a month per customer.
Ooredoo reported positive operating results in the second quarter on average revenue per user of $6.50.
Telenor and Ooredoo came into Myanmar with extensive experience with markets in the Asia/Pacific region. Thailand is Telenor’s biggest single market outside Norway, accounting for 16% of its revenue; Malaysia generates 13%. Ooredoo gets 22% of its revenue from Indonesia, its biggest market outside Qatar.
While MPT has operated in Myanmar for decades, it enlisted Japanese companies KDDI and Sumitomo as partners to help with its expansion. They invested about $2 billion in sales, marketing, and infrastructure.
Infrastructure has been a big investment for Telenor, Ooredoo, and MPT, which have been on a cell-towers building spree (to deliver 3G service) in the remote rural areas where 70% of the country’s population lives.
As of the first half of 2015, Telenor had more than 2,500 towers, followed by MPT with about 2,200 towers, and Ooredoo, with about 2,050.
In May, Telenor placed an order with Apollo Tower for 700 cell towers. That month Ooredoo called on Singapore Windsor Holdings Limited to build 500 towers. Then in July, MPT and its partners announced they would expand the venture’s tower count to 5,000 within a year.
That telecommunications was the first of several industries that Myanmar plans to open to outside companies and investors was not surprising. Besides enabling Myanmar residents to communicate, a robust communications system also offers commercial opportunities for banking, retail, media, and more businesses.
While the US has restored diplomatic relations with Myanmar (which the US calls Burma), restrictions on doing business in the country remain in place for US companies.
|Myanmar by the Numbers|
|Source: World Bank|
Tim Green has covered business, technology and science at newspapers and in higher education. At Hoover’s he covers computers and telecommunications.