SingTel Prefers Mobile in Seeking Myanmar Access

Singapore Telecommunications Ltd.,
Southeast Asia’s biggest phone company, wants to focus on
wireless services in Myanmar as it vies for the right to operate
in one of the world’s last untapped mobile markets.

SingTel sent in its expression of interest for a phone
license in the nation last month and is awaiting further details
on the bidding process and terms of the permit, Chief Executive
Officer Chua Sock Koong said in a Bloomberg Television interview
with Haslinda Amin yesterday.

“Looking at the experience in other emerging markets, the
mobile solution appears to be a more cost effective, a faster
solution to provide communications infrastructure to the masses,
particularly in the rural areas, very quickly,” she said.
“While the market potential is very attractive, we would need
to understand what the terms of the license issuance would be.”

SingTel, which owns stakes in the biggest mobile-phone
companies in Asian emerging markets including Thailand,
Indonesia and India, is seeking a foothold in a nation where
only 9 percent of the country’s 64 million people have handsets.
The nation’s fixed-line penetration rate is about 1 percent, the
government said last month.

The nation wants to boost telecommunications coverage to as
much as 80 percent of the country by 2016, the government said
last month. That’s up from 5.44 million mobile-phone subscribers
as of December. In SingTel’s home base in Singapore, there are
more subscriptions than people.

SingTel said it will jointly bid with Myanmar partners.

‘Quite Exponential’

“The growth is going to be quite exponential, looking at
how Asians use mobile phones,” said Carey Wong, a Singapore-
based analyst at OCBC Investment Research Pte. “The challenge
is consumer education. Initial sales won’t be great but once it
takes off, it’s a developing market for them.”

Still, SingTel faces competition for the two Myanmar
licenses the government plans to award by June. Malaysia’s
Axiata Group Bhd., Singapore’s ST Telemedia Pte and Norway’s
Telenor ASA were among phone operators that indicated their
interest in the licenses.

For mobile operators, developing a network in Myanmar would
require “almost building from scratch” with base stations and
other infrastructure, said Sachin Gupta, a Singapore-based
senior analyst at Nomura Holdings Inc. Gupta’s team was ranked
first for telecommunications research in Asia by Institutional
Investor last year.

Profit Decline

SingTel said yesterday third-quarter profit fell 8.3
percent on charges from its Australia and Philippine businesses,
as well as a stronger Singapore dollar that eroded earnings from
its regional operations.

The company’s shares fell 1.4 percent to S$3.45 as of 12:07
p.m. in Singapore trading, the lowest since Jan. 28. That pared
the gain in the past year to 12 percent, compared with the 8.8
percent increase in Singapore’s benchmark Straits Times Index.

“Singapore is already a mature market, Australia is even
more so,” Wong at OCBC said. “If they can get into an untapped
market like Myanmar, that will do wonders.”

For much of the past decade, mobile phones have been out of
reach for most Myanmar consumers. When first introduced in 2001,
the cost of activating a phone using the global system for
mobile communications standard, or GSM, cost about 4.5 million
kyat ($5,221). The price has fallen to about 200,000 kyat for a
GSM chip, according to prices at phone vendors in Yangon.

Phone Affordability

Kyaw Min Tun, who earns about 250,000 kyat a month driving
a taxi in Yangon, said prices would have to fall to 50,000 kyat
before he could buy a mobile phone for his wife. The father of
three, who bought a phone last year when chip activation prices
were reduced, said the government should earn more from usage
fees rather than on the price of the chip to make cellular
phones more affordable.

For SingTel’s Chua, 55, venturing into Myanmar would add to
her overseas footprint that includes Australia’s second-biggest
phone company and stakes in six mobile operators.

“Myanmar is a market that a lot of operators are looking
at,” she said. There’s “certainly a lot of potential. How
attractive an investment in the telecoms industry is, would
depend on, to a large extent, the regulatory environment.”

To contact the reporters on this story:
Sharon Chen in Singapore at
schen462@bloomberg.net;
Kyaw Thu in Bangkok at
kthu1@bloomberg.net

To contact the editor responsible for this story:
Stephanie Phang at
sphang@bloomberg.net

SingTel Prefers Mobile in Seeking Myanmar Access