While many Middle East telecom operators dived into the M&A game with gusto prior to the global financial crisis, this zeal for expansion was marred by numerous over-priced licences and flawed acquisitions, some of which continue to weigh on the balance sheets of their acquirers.
But this was a situation that Qatar’s incumbent telecom operator, Ooredoo, managed to avoid. The operator, which has a presence in some 14 countries in the Middle East, North Africa and South East Asia, now appears to be reaping the benefits of a more careful approach to expansion.
In June, Ooredoo added to its international presence when it won one of two mobile licences in Myanmar, a country that is widely viewed as one of the last remaining green field opportunities in the mobile sector.
Indeed, with a mobile penetration rate of less than 10 percent, according to US research firm IDC, Myanmar holds significant potential for Ooredoo. But with the country suffering from grossly underdeveloped infrastructure, deploying a network in the country will be no mean feat.
To this end, Ooredoo has wasted no time in Myanmar and already has a team on the ground in the country, led by seasoned telecoms CEO, Ross Cormack, who was responsible for establishing Ooredoo’s operation in Oman in 2004.
“We already have a team there, more than 120 people on the ground now,” says Dr Nasser Marafih, Group CEO of Ooredoo. “We are in the process of looking how to build the operation. There are many challenges because this country still has very low penetration and there are issues with power and building infrastructure.”
In a bid to keep a lid on deployment costs and to hasten the rollout, Ooredoo is preparing to adopt an approach that would have scarcely been conceivable in the telecoms sector just a few years ago. The operator has been in discussions with Norway’s Telenor Telecom, which won the second Myanmar mobile licence, about potentially sharing the cost of building cell towers.
“We are in discussions and we are moving very well on that side. We believe there is an opportunity,” Marafih says. “We are trying to optimise the investment and also to share some of the infrastructure cost with our competitors, and the government is also encouraging such a move, which we believe is good for the industry. This will also help make those services available and affordable for the majority of people there.”
It is a model that Ooredoo has tried and tested in other markets, including Indonesia, where it has tenants for some of its cell towers and also has its own radio infrastructure in towers that belong to other companies.
“This is something that is happening in this industry, not just in this market. But we believe it needs to happen in more markets. It is more challenging when people have multiple towers but that is the opportunity in Myanmar because we are building from scratch. It makes sense to do that from the very beginning,” he says.
Marafih admits that it is difficult to give a precise launch date for the operation because the government is still working on the final licence conditions. “We are trying to do it as fast as we can but that will depend on the government’s finalisation of the licence conditions, but it will be some time next year for sure,” he says.
But the scale of the challenge ahead in Myanmar has done little to assuage Ooredoo’s appetite for further expansion, should the right opportunities appear.
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