10 ' J1[P' PIINOM PENH POST FEllRUARY 20, 2013

Business
Investment options for local telcos
Anne Renzenbrink
W
ITn Myanmar's
telecom indus
try shO\'\ri.n g
of gradual
ly openi ng. operators in Cam
bodia's overcrowdeu telecom
market see opponwl ities for
p l) tential invest ment.
Bur ill stride with the
latem potential come challeng
es, indust ry experts say. and
lessons leamed locaUy need to
be applied overseas.
"Myanmar rernains one ofthe
last fi'on tiers and least touched
tel ecom markets," said Antbo
ny GalJiano, CEO ofCamboclian
Tnvestment Management. "The
mobile market presents both
tremendous opportunities and
challenges. Network and in
frastructure development has
been severely lacking, penetra
tion levels are extremely low at
less than 9 per cent, and there is
little or no competition."
With a low penetration rate
and a population of about 54
million, Myanmar's telecom in
dustry stands in stark contrast
to that of Cambodia, where the
number of SIM cards sold has
reached more than 20 m illion
last year, overtaking a popula
ti on of about 15 million, ac
cording to the Ministry ofPosts
and Telecommunications.
According to statistics from
Cambodia-based Social Me
dia Plus, Cambodians have, on
average, 1.3 mobile subscrip
tions, and C,unbodia was the
firST COUlltry in the worl d with
more mobil e phones than fixed
li ne pJl0nes.
Accordil1g to Mokhtar
Sahab, chief commercial oli
t er at Beeline, the firm woul d
not relocate to Myanmar and
bel ieves m the Cambodian
market, but a possibili ty would
he La extend [he bus loess.
"Myanmar has a much bigger
population. so that is actually a
quite significant opportuni ty
right there," he said.
Tbe Myanmar governmen1
has asked interested partJes lo
submit an expression of inter
est for t"vo nationwide tele
communication licences.
According the Myanmar gov
ernment, 91 entities submitted
their expression of interest.
One of them was Axiata
Group Berhad, the owner of
Cambodian provider Hello.
"Like many other tekos, we
feel it is a logical and interest
ing market to consider invest
ing," Simon Perkins, CEO of
Hello, said.
"It represents a strategic mar
ket given its high growth po
tential. HOVlrever, it is still an in
teresting time for the telecoms
in dusrry in Cambodia. We will
further re-affiml our commil
ment, and in tbe same ti me,
increase our investment in
the Cambodia market to meet
the eVer increasing demands,"
A man speaks on a mobile phone in front of a Hello mobile service centre in Phnom Penh's Chamkar mon
district, HONG MENEA
But with more than 90 will determine whether an op He also said the local mar
groups interested in licences erator can run a feasible and ket could provide a number
in Myanmar, it remains to be profitable business in the mar of lessons in what not to do in
seen whether any awardee ket," he said, ':Another potential Myanmar. "One is the crowd
will see a favourable business unknown wi1l be local partners. edness, tWl) is the price dump
proposit ion in the Gul It is likely the govemmt:nt will ing," he said.
liano sa.id. "The ulti mate cost partner with some fo reign op Galliano also said Cambo
of the licences, the terms and erators, including the military." ilia is a market with a lesSDn
conditions, the regulatory en According to Sahab, the po learned. "Too many li censes
vi ronment. and how many ad liti cal situation in Myanmar is a were awarded, creating an over
di tional Ucences are awarded potential risk for operators ex supply of operators, rC' lenrlcss
in the short and medium term panding inlo tJle l'Ounl.ry. l'orn pC>lilioll , il lIIl IIlti1llal.. l,
unsustainable busjnesses mod
els. The mergers, ball kruptcies
nd acquisitions of operators
over the last tWO years is a tes
tament ensuring the right bal
ance of number or operators in
the market," he said.
Local telecoms operator
Mfone, pan uf [he Tbaicom
,group, fLi ed for bankruptcy
month. Cambodian mo
bile operators Smart and Hello
have announced Ihat they will
merge in a $155 million deal ,
the PoSt reported in December.
, alliano sai d he expetts fur
ther consolidation in Cambo
dia's mobile markeL "The fact <
is, the population is relatively
small, the market is already sat
urated' and the fail ure of global
operators to build successful
models bere will likely deter
further entrants," he said.
"Most small to middle-sized
markets are basically con
trolled by two to three opera
tors, and that wi1l 1ikely be how
the scenario plays out here.
The opportunities in Myanmar
do not have any correlation
with potential new operators
entering the market here; we
are already at capacity."
Galliano added that Myan
mar's potential development of
the mobil e market and open
ing to foreign investors could
result in significant benefits
the country, with a ui
reet contribution () f $ 1 billioll
ill 11)(' W il l'S.