News broke last week that Viettel, Vietnam's largest mobile network operator and a government-owned enterprise wholly owned and operated by Vietnam's Ministry of Defence, will invest around 1.8bn in Myanmar to set up a mobile phone network on its own. In a first step, Viettel will create a joint venture with Myanmar's Yatanarpon Teleport, holder of the fourth mobile phone licence, and bring in 800mn in the deal. The rest, 1bn, should come from an unnamed foreign partner, it turned out at shareholders' meeting of Viettel held on December 3.
Viettel together with Ooredoo and Telenor was one of the bidders in Myanmar's 2013 mobile phone licence auction but failed to secure a licence. However, its deputy general director Le Dang Dung said after the auction that the company will continue to seek "co-operation opportunities with winning bidders to launch services in the country."
In turn, Yatanarpon Teleport has been looking for foreign companies to establish a partnership in the telecommunication sector ever since it received the licence. The company is majority-owned by MPT at 51%, with the rest being held by local private investors, among them Elite Tech Co, part of the influential conglomerate Htoo Group of Companies of business tycoon Tay Za, believed to be Myanmar's richest businessman but also a prominent name on the US sanctions list against Myanmar business people.
Before deciding to tie up with Viettel, Yatanarpon Teleport has reportedly mulled partnerships with Thailand's True Corp and Axiata from Malaysia, both large telecoms in their respective countries, but the talks were unsuccessful. Yatanarpon currently offers pre-paid mobile services and Internet packages as well as satellite communication. Ironically, its majority owner MPT will turn a competitor itself as it also holds a mobile phone licence and has recently partnered with Japanese firms KDDI Corp and Sumitomo Corp, which have said they will invest 2bn in their own mobile phone network.
Despite Myanmar still being a country largely underserved by mobile phone services at a current penetration rate of some 11%, future competition between the four operators could turn out to be a tough one and put prices further under pressure. Ooredoo and Telenor launched their new mobile services in August and September this year, respectively, and since prices for SIM cards have plummeted from 150 to 1.50. Both companies paid very high bids for their licences and need to invest billions of dollars in mobile phone tower construction and other telecommunications infrastructure, along with massive marketing incentives.
Adding to the situation is Myanmar's current devaluation of the national currency, the kyat, which brought with it rising inflation for consumer goods and lower purchasing power for Myanmar people, decelerating the speed of mobile phone customer growth.