Is Myanmar the next destination for investment in telecoms, media or technology?

Following recent political reforms in Myanmar and the recent electoral success of Aung San Suu Kyi‘s National League for Democracy, Myanmar is currently flavour of the month as an investment destination, and could soon see significant investment in telecoms infrastructure. However, whilst there are opportunities Myanmar is starting out on a long journey that could be derailed very easily.

Whilst after nearly half a century of economic stagnation there is certainly scope for growth, it must be remembered how poor Myanmar actually is today and where it is starting from. With a PPP GDP of c. USD 82 bn and a population of c. 60m its annual GDP per head is somewhere in the region of USD 1,300. To help understand this, that means that Myanmar’s peer group mainly consists of countries in sub-Saharan Africa such as Rwanda and Mali. 

Transparency International ranks Myanmar alongside Afhanistan (above only North Korea and Somalia) as a highly corrupt country and its infrastructure is very underdeveloped.

Alongside the holding of elections, Myanmar has also undertaken or announced a number of general economic reforms including:

In addition, with the news today that the government has met with leaders of the Karen National Union, to the extent that Myanmar is able to start to peacefully resolve internal ethnic conflicts the combination of this engagement together with democratisation and economic reforms means that there is a real prospect of the lifting of economic sanctions.

In terms of opportunities across the telecoms, media and technology sectors, given the state of Myanmar’s infrastructure investment in new mobile networks is both the most necessary and the most likely. In an interview with the Wall Street Journal, Khin Maung Thet, director-general of Myanmar’s Post & Telecommunications Department said:

“A new communications law is being studied to create four new telecommunications licenses in the country, with the licenses available both to local and foreign investors. Currently, foreigners aren’t allowed to hold telecom licenses in Myanmar.

The new law was sent to Myanmar’s attorney general last month and is awaiting his approval now. Once that is obtained the law will be sent to Myanmar’s cabinet and then on to Parliament for approval.

[Mr. Khin Maung Thet said] he wasn’t sure when the attorney general would finish reviewing the law.”

With estimates of mobile penetration between 1-5%, and internet access <1% Myanmar will need significant external investment if it is to stand any chance of hitting its objective of 50% penetration by 2015. I’ll be watching with interest the detail of the new law when it becomes available.

5 thoughts on “Is Myanmar the next destination for investment in telecoms, media or technology?

    • The low-hanging Myanmar-telecom fruit is also small and late to ripe. More or less, India-level revenue with less economies of scale. Tourism is more appetizing of a opportunity. For (at least) the first three years, $3M -worth of Andaman Islands hotels would make more money than a $150M telecom operator.

  1. On the bright side, mobile teledensity is really low. There’s only 2.2M mobile subscribers in Mynamar out of a total of 60M population. YoY growth rates are impressive, hovering at 30%. Sounds promising, right?
    Not so fast… At a GNP of roughly US$1200/capita, the monthly Average Revenue Per User is likely similar to what we see in Laos and Cambodia, i.e. US$1.5 or so. The upper limit of what a Myanmar operator affords to pay for infrastructure is thus very low. As a result, the internal cost-structure of Western network equipment vendors (NEPs) arithmetically prevents them from competing in such an environment, favored by the Chinese vendors. You may say that large infrastructure contracts are often decided on political rather than on pure-accounting grounds, but, then again, China is exerting decisive political pressure in Myanmar.
    There are thus prerequisites for the success of Western NEPs,: China’s willingness to share the market and NEPs’ willingness to assume all kind of risks, in the form of commercial arrangements such as vendor financing and revenue sharing.
    Not an El Dorado by any stretch…

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