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Mon 1 Sep 2014 06:06 PM

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Qatar telco's Myanmar start-up focuses on pay-as-you-go

Ooredoo has sold more than 1 million pre-paid SIM cards following its Aug 2 launch in the country

Qatar telco's Myanmar start-up focuses on pay-as-you-go

Qatar's Ooredoo will focus on adding more pay-as-you-go subscribers in Myanmar a few weeks after it launched operations, the unit's CEO said on Monday, but may provide monthly mobile contracts and fixed services in the long term.

Ooredoo and Norway's Telenor Group last year won telecom licences in the southeast Asian country, whose mobile penetration is about 10 percent, among the lowest globally.

Ooredoo has sold more than 1 million pre-paid SIM cards following its Aug. 2 launch.

Ross Cormack, Ooredoo Myanmar chief executive, said his firm had not decided whether to expand into post-paid contracts.

Subscribers on such contracts usually spend more on telecoms services and are also less likely to switch provider.

"We have the functionality to deliver it, but at the moment we've huge demand for exactly what we're offering in pre-paid," Cormack told Reuters in a telephone interview.

Ooredoo's licence allows it to launch fixed services, but the company has yet to decide if and when to do so.

"We see a lot of opportunities in different areas and the challenge is structuring the right approach in terms of what's the best order of priority," said Cynthia Gordon, Ooredoo chief commercial officer.

Ooredoo declined to say how much it paid for its licence, its capital expenditure or when it hoped to break even.

Its 3G network, which currently covers 7.8 million people, offers mobile Internet and many subscribers are getting online for the first time, said Cormack.

"The biggest demand has been browsing, with Facebook close behind and other social networking probably third," said Cormack. "Self-generated content is where a lot of people spend their time, which is why Facebook is popular here."

In June, the International Monetary Fund forecast Myanmar's economy would expand 8.5 percent in the current fiscal year, growth Ooredoo believes it can exploit.

"There's a huge enterprise opportunity as the country opens up," said Cormack.

Ooredoo hopes to expand coverage to reach 25 million of Myanmar's approximately 60 million people by the end of the year and 97 percent of the population within five years.

Such a build out will lead to greater network sharing, a common practice in emerging markets, especially in rural areas, because it allows operators to share costs and avoid unnecessary duplication of infrastructure.

"Everybody is in start-up mode so is focusing on getting coverage up," said Cormack. "The further out we get in time the more we would love to share. It's not just towers but fibre and any other passive infrastructure. I would expect a high percentage of sharing long-term."

Ooredoo and Telenor will also compete against state-run Myanmar Posts and Telecommunications (MPT), which has partnered with Japan's KDDI Corp and Sumitomo Corp.

The Japanese firms said in July they would invest $2 billion expanding MPT's mobile and broadband network.

"As long as we listen to customers and deliver the services they want we're confident we will be very successful long term," added Cormack, who acknowledged monthly average revenue per user (ARPU, an important industry metric) was likely to be low.

In neighbouring India, ARPU was 113 Indian rupees ($1.87) in the three months to March 31, data from country's regulator shows, while ARPU in Bangladesh was $3.41 at 2012-end.

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