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SingTel Prefers Mobile in Seeking Myanmar Access: Southeast Asia

Date: 15/02/2013
Source: Businessweek
SingTel Prefers Mobile in Seeking Myanmar Access: Southeast Asia

Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, wants to focus on wireless services in Myanmar as it vies for the right to operate in one of the world’s last untapped mobile markets.

SingTel sent in its expression of interest for a phone license in the nation last month and is awaiting further details on the bidding process and terms of the permit, Chief Executive Officer Chua Sock Koong said in a Bloomberg Television interview with Haslinda Amin yesterday.

“Looking at the experience in other emerging markets, the mobile solution appears to be a more cost effective, a faster solution to provide communications infrastructure to the masses, particularly in the rural areas, very quickly,” she said. “While the market potential is very attractive, we would need to understand what the terms of the license issuance would be.”

SingTel, which owns stakes in the biggest mobile-phone companies in Asian emerging markets including Thailand, Indonesia and India, is seeking a foothold in a nation where only 9 percent of the country’s 64 million people have handsets. The nation’s fixed-line penetration rate is about 1 percent, the government said last month.

The nation wants to boost telecommunications coverage to as much as 80 percent of the country by 2016, the government said last month. That’s up from 5.44 million mobile-phone subscribers as of December. In SingTel’s home base in Singapore, there are more subscriptions than people.

SingTel said it will jointly bid with Myanmar partners.

‘Quite Exponential’
“The growth is going to be quite exponential, looking at how Asians use mobile phones,” said Carey Wong, a Singapore- based analyst at OCBC Investment Research Pte. “The challenge is consumer education. Initial sales won’t be great but once it takes off, it’s a developing market for them.”

Still, SingTel faces competition for the two Myanmar licenses the government plans to award by June. Malaysia’s Axiata Group Bhd., Singapore’s ST Telemedia Pte and Norway’s Telenor ASA were among phone operators that indicated their interest in the licenses.

The Myanmar government said today 91 groups submitted expressions of interest. The second stage will include pre- qualification to decide on eligle bidders, it said.

For mobile operators, developing a network in Myanmar would require “almost building from scratch” with base stations and other infrastructure, said Sachin Gupta, a Singapore-based senior analyst at Nomura Holdings Inc. Gupta’s team was ranked first for telecommunications research in Asia by Institutional Investor last year.

Profit Decline
SingTel said yesterday third-quarter profit fell 8.3 percent on charges from its Australia and Philippine businesses, as well as a stronger Singapore dollar that eroded earnings from its regional operations.

The company’s shares fell 0.6 percent to S$3.48 at the close in Singapore, the lowest since Feb. 5. That pared the gain in the past year to 13 percent, compared with the 9 percent increase in Singapore’s benchmark Straits Times Index.

“Singapore is already a mature market, Australia is even more so,” Wong at OCBC said. “If they can get into an untapped market like Myanmar, that will do wonders.”

For much of the past decade, mobile phones have been out of reach for most Myanmar consumers. When first introduced in 2001, the cost of activating a phone using the global system for mobile communications standard, or GSM, cost about 4.5 million kyat ($5,221). The price has fallen to about 200,000 kyat for a GSM chip, according to prices at phone vendors in Yangon.

Phone Affordability
Kyaw Min Tun, who earns about 250,000 kyat a month driving a taxi in Yangon, said prices would have to fall to 50,000 kyat before he could buy a mobile phone for his wife. The father of three, who bought a phone last year when chip activation prices were reduced, said the government should earn more from usage fees rather than on the price of the chip to make cellular phones more affordable.

For SingTel’s Chua, 55, venturing into Myanmar would add to her overseas footprint that includes Australia’s second-biggest phone company and stakes in six mobile operators.

“Myanmar is a market that a lot of operators are looking at,” she said. There’s “certainly a lot of potential. How attractive an investment in the telecoms industry is, would depend on, to a large extent, the regulatory environment.”

Topic: FDI in Myanmar
Did You Know?
Myanmar, which has a total area of 678,500 square kilometres, is the largest country in mainland Southeast Asia, and the 40th-largest in the world. It is somewhat smaller than the U.S. state of Texas and slightly larger... ... More

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