Myanmar survey reveals a rapidly growing market with strong demand for telecoms services

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Following the award of licences to two new commercial operators, Ooredoo and Telenor, mobile penetration in Myanmar (Burma) will rise to more than 50% by 2017, according to a survey by Analysys Mason. Tom Mowat looks at the figures

National mobile penetration was under 10% last year, but by 2017 the average rate
should pass 50%, according to Analysys Mason, with the urban figure passing 90% 
Myanmar’s mobile penetration rate is about 50% among adults in the country’s urban areas, according to findings from Analysys Mason’s survey of the country. This is a much higher figure than the 3-10% estimates suggested during the past few years. 
However, further analysis highlights both the phenomenal opportunity and challenge awaiting operators in this newly liberalising market. In June 2013 the country announced the winners of two new commercial mobile licences, Ooredoo of Qatar and Telenor of Norway. 
Following the award of these licences, mobile penetration is high and set to grow in major cities, but lack of rural coverage could undermine government targets. 
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. Placing our penetration figure in context provides some interesting insight. 
• Roughly 65% of Myanmar’s population live in rural areas so were not covered in our survey. In addition, we surveyed only those between 18 and 65 years old, which excludes 13% of the population. Our received value implies a countrywide penetration rate of 11%, localised entirely in major cities 
• Anecdotal evidence suggests that Myanmar has between 1,200 and 1,600 base stations, which supports the understanding that the country has little or no rural coverage 
• More than half of all subscribers we surveyed had been using a phone for less than 12 months, which indicates that the market has experienced enormous year-on-year growth. 
The capacity for growth in Myanmar’s telecoms market has been widely reported. It has a large underserved population, and comparable markets have achieved high penetration rates. For example, just five years after market liberalisation Cambodia had 65% penetration and Laos 41%. 
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. 
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. Take-up in urban areas will continue to grow rapidly: almost 40% of non-subscribers we 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 we questioned was still a staggering $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. 
Our 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 this optimistic outlook. 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. 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. 
Tom Mowat is the lead analyst for Analysys Mason’s Asia-Pacific research programme and is based in the company’s Singapore office