Price war, what is it good for? Absolutely nothing, say Myanmar cellcos

28 Sep 2015

Competition in Myanmar’s nascent mobile market is threatening to drive prices to unsustainably low levels, the Myanmar Times cites Ooredoo Myanmar’s chief executive, Rene Meza, as saying. The price level of services has been driven down to the extent that ‘there will be question marks around the quality of service for consumers going forward and how much we will continue to invest in the market,’ the official commented, adding ‘I think we reached a certain level too quickly… We probably already crossed the line between affordability and sustainable prices.’ Mr Meza went on to say that prices in Myanmar were on par with those of more developed markets, where operators had already stabilised their investments. Clarifying the company’s position, the executive explained that Ooredoo would indeed continue to invest in the market, but there would be pressure on the industry to remain sustainable, especially in light of the planned introduction of a fourth mobile operator: ‘When the industry stops being sustainable then everybody loses.’

Takashi Nagashima, the CEO of KDDI Summit Global Myanmar, the Japanese partner of Myanmar Post and Telecommunications (MPT), echoed Mr Menza’s comments, warning that pricing would need to be balanced carefully with investment: ‘We have to expand our network coverage. However, to do so we have to invest a huge amount of money in Myanmar, and those investment will be [made using] revenue from our services.’ MPT must react to the changes in the market, but the company cannot afford to get involved in a price war, Mr Nagashima noted: ‘To be honest, we don’t have enough spare money to [engage in] a price war right now. We have to invest in the expansion of the network and quality improvement at this stage.’

Norwegian-backed operator Telenor Myanmar, which currently offers the lowest rates in the country for basic voice and data services, has shrugged off accusations of sparking a price war after it responded to price cuts from Ooredoo by lowering its own tariffs further. The cellco’s chief executive, Petter Furberg, explained that the company had built its business around a mass-market approach, and had expected revenue per customer to be low. The official went on to confirm that Telenor’s intention is to position itself as the market leader on price: ‘We have definitely not been leading in terms of driving a price war, but …we are very clear – we want to be affordable. We want people to see Telenor as the most affordable operator.’

According to TeleGeography’s GlobalComms Database, Ooredoo Myanmar’s monthly ARPU has fallen from USD7.46 in Q4 2014 to USD6.48 in Q2 2015, whilst for Telenor the rate has been more consistent, increasing from USD5.67 to USD5.85 over the same period.

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