Business

Army-Backed Mytel Fined Nearly $200,000 for Giving Away Free SIM Cards

By San Yamin Aung 18 July 2019

YANGON—Military-backed telecom operator Mytel has been fined 300 million kyats (about US$197,800) by the country’s Posts and Telecommunications Department (PTD) for violating the Pricing and Tariff Regulatory Framework by offering free SIM cards.

In an announcement released on Thursday, the PTD said it had imposed a total of five legal sanctions, mostly warnings, on three telecom operators—Mytel, Telenor and Amara Communications—for breaking its rules and regulations since January. Of those five, three were imposed on Mytel. Operated in affiliation with Viettel, a telecom provider owned by Vietnam’s Defense Ministry, Mytel is Myanmar’s fourth-largest telecom operator after MPT, Telenor and Ooredoo. Amara and Telenor were warned in May and June respectively for using microwave links without permission and breaching the Pricing and Tariff Regulatory Framework.

Mytel is 49-percent owned by Viettel, and 28-percent by Star High Company, a subsidiary of the Myanmar Army’s Economic Holdings Ltd. A consortium of 11 local companies owns the rest.

According to the announcement, a 300-million-kyat fine was imposed in March this year. The amount is believed to be equivalent to 5 percent of the operator’s income, in line with Article 41(a) of the operational license bylaw, which states that a violator faces a fine of 5 percent of its revenue among others forms of action, such as warnings and suspension of their operational license.

The military-backed telecom operator has already been warned twice this year—in May and June—under Article 57(a) of the Telecommunications Law for breaching directives and regulations in the Pricing and Tariff Regulatory Framework and for failing to follow licensing agreement rules. The article states that violators can be punished with the withdrawal or suspension of their operation license, or receive a warning.

U Zaw Min Oo, chief external relations officer of Mytel Company, said the 300-million-kyat fine in March and the warning in June were imposed because the firm provided free SIM cards to attract customers when they entered the market.

He said salespersons of Mytel, especially those based outside Yangon, offered free SIM cards—for which the usual market price is 1,500 kyats—as they were eager for sales. He said at that time, the salespersons didn’t understand the existing regulations clearly.

“They offered free SIM cards as they were so eager for sales. People already have SIM cards, and they wouldn’t buy them if we sold them, and thus we offered them [for free],” he said.

The spokesperson said that under the regulations, offering free SIM cards is not allowed.

“People would think a fine of 300 million kyats [suggests] a major law violation, but it’s not,” he said.

The other warning in May was issued because the firm gave wrong database information, he said.

U Zaw Min Oo added that if the Ministry of Transport and Communications allowed free competition among operators, such cases wouldn’t occur.

The company was launched in June last year. The official launch event in Yangon on June 9, 2018 was attended by army chief Senior General Min Aung Hlaing, Vietnamese Deputy Defense Minister Senior Lieutenant General Tran Don, and nearly a dozen generals from both countries. During the launch, the company said it would invest up to US$1.3 billion in Myanmar.

However, Mytel has had a bumpy ride right from the start. One month after its launch, the company was ordered by the PTD to halt its “Shake Mytel” program, which offers a “free” service to its customers, saying it was in violation of fair competition rules.

In May this year, employees of the telecom operator staged a protest against the military-affiliated company over pay disputes in Pathein, the Irrawaddy Region capital. The protestors said they had not been paid for more than a year, and claimed that the company owed more than 20 workers around 40 million kyats combined.

Mobile penetration in Myanmar has skyrocketed since Telenor and Qatar’s Ooredoo rolled out their networks in 2014, breaking a monopoly by state-owned Myanma Posts and Telecommunications (MPT) that for many years had put the price of a SIM card out of reach for most people.

In a joint announcement in February 2018, MPT, Telenor and Ooredoo said they had a combined 53 million subscribers. MPT, which partnered with Japan’s KDDI in 2014, led the way with 25 million subscribers, followed by Telenor with 19 million and Ooredoo with 9.5 million.

According to Viettel, Mytel had 5 million subscribers in Myanmar at the end of 2018.

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