May 21, 2013

Ericsson poised for rapid telecom expansion

With the winning applicants for two new telecom licenses set to be announced next month and a second lottery of 350,000 SIM cards at K1500 apiece being held this month, the country’s weak telecom infrastructure is straining.

Mobile network supplier Ericsson, however, says it is well-prepared for a rapid expansion in Myanmar and has been studying the market and seeking customers since re-establishing its office here in June last year.

“Once the new licenses are awarded, network rollout and expansion will be done at a fast pace,” Ellen Alarilla, head of communications for Ericsson Philippines told The Myanmar Times on May 17. Ericsson is currently interviewing applicants for 50 more jobs “in anticipation of a fast start to deployments once licences are awarded”, she added.

An economic impact study Ericsson conducted last year “indicated that 90,000 jobs could be created within three years” of the licenses being granted and that two-thirds of these would be in the telecom sector, Ms Alarilla said.

Besides providing equipment for the new networks, existing ones need to be expanded due to a surge in new customers since the first lottery of K1500 SIM cards last month. The Ministry of Communications and Information Technology said Yangon, Pathein, Bago and Pyinmana regions are oversubscribed and need more base stations to handle the traffic, deputy minister U Thaung Tin said.

A total of 350,000 CDMA SIM cards were sold last month at K1500 apiece. Previously, SIM cards sold for K200,000 apiece, after falling from K500,000 apiece in April last year.

This month’s lottery for the CDMA 800MHz network is likely to increase complaints from consumers about poor access. U Thaung Tin said the ministry was worried “about creating traffic jams on the network” and as a result the third lottery, next month, will include cheap SIM cards for the GSM network.

Kyaw Haling, president and Research director of Myanmar Survey Research pointed to falling SIM card prices as the trigger for a “massive inflow” of consumers into the mobile market. The potential for expansion is even greater because the influx has been from cities while the penetration rate remains low in rural areas.

“Considering that 70pc of Myanmar’s population is rural, market potential is huge. There are millions of people without a mobile,” Kyaw Haling said.

Ms Alarilla agreed: “Within 3-5 years we will see mobile penetration reach 70-80pc.”

Marita Schimpl, head of qualitative research at MSR, said cell phone access leads to Internet access.

“Studies show huge increases in Internet penetration across Asia because people nowadays use their mobile to access the Internet. In Myanmar most people aspire to own a mobile, and in cities it has to be a smartphone.” she said.

More mobile phones will lead to higher Internet access, she added.

Ericsson is well aware of this trend. “What we have seen in Southeast Asia is that the mobile phone will be the main means to access the Internet for the majority of the population. This area has grown around 60pc year on year, and we now have more than 1.2 billion subscriptions worldwide,” Ms Alarilla said.

Ericsson’s study also indicated that “direct and indirect impacts of mobile telecoms could account for up to 7.4pc of Myanmar’s GDP within three years”.

Ms Schimpl said that there is a perception that weak mobile network infrastructure will be “sorted out by the new market players”. Slow Internet access, weak signals and frequent disconnections are the major problems, she added.

Source: Myanmar Times