The Irrawaddy Business Roundup (August 1, 2015)

By Simon Lewis 1 August 2015

Ooredoo Lagging Behind as Telenor Subscribers Top 10 Million

Norwegian telecommunications operator Telenor has announced that its subscriber base in Burma is now more than 10 million, more than double the number claimed by competitor Ooredoo.

The two foreign companies now have a total of more than 14 million customers, underlining the massive growth in mobile phone use in the country, where only a year ago the state-owned Myanmar Posts and Telecommunications (MPT) was the only provider of mobile phone and internet services.

The latest figures from each operator suggest that Telenor is pulling ahead in the race to reach new subscribers in Burma. Telenor and Ooredoo, a Qatari company, were the first two private companies to be awarded telecoms licenses in the country. The government is set to open up a tender for another license, but only local companies, or joint ventures involving a local firm, are being asked to apply.

In quarterly results published on July 22, Telenor Group said that its Burmese venture “continues to exceed our expectations” and had passed the 10 million subscriber mark in July.

“Customers’ strong demand for voice and data services keeps driving revenues and profitability,” Jon Fredrik Baksaas, President and CEO of Telenor Group, was quoted saying in a press release.

“During the quarter [April to June] we further expanded the network, reaching 213 of a total of 330 townships at the end of June. The speed of our network expansion is the key challenge in a nation where approximately 70 per cent of the population lives in rural areas.”

Ooredoo published its own results on Wednesday, saying that it had reached only 4.3 million mobile customers.

“The high quality of its 3G network contributed to almost doubling the number of customers in the first half of 2015,” it said.

The results also said that the company’s Burma venture was already in profit, but clearly the company is far behind its main rival, which is now closer to the incumbent provider than to its private rival in terms of subscribers.

MPT has teamed up with two Japanese firms to expand its services, and reportedly has some 11 million subscribers.

Yoma Strategic Reports ‘Record’ Sales in Tractor Business

Yoma Strategic Holdings Ltd., the Singapore-listed company controlled by Burmese tycoon Serge Pun, has announced strong growth in sales in its new business selling tractors.

The company—which recently brought American fast food to the country with the opening of the first KFC restaurant in Rangoon—posted gross profits of US$7.28 million for the first quarter of the current financial year, from April to June.

The results were filed with the Singapore Exchange and disclosed in a press release July 27. They include the company’s real estate ventures, but not revenue for KFC, which only opened in late June.

Yoma Strategic acquired the rights to distribute agricultural equipment produced by Italian machinery group Case New Holland in February.

The company said the new venture “continued to record strong sales” in the first quarter. It said the business, primarily selling tractors, was responsible for lifting the group’s quarterly automotive revenue to more than $5 million, up from only about $145,000 a year before.

“Positive momentum from the Group’s non-real estate business is expected to continue in the next quarter driven by the Group’s consumer and automotive segments,” the group said in an analysis of the outlook for its businesses. “The Group’s opening of its first KFC outlet on 30 June 2015 has received strong consumer interest and positive media publicity.”

Burma Investment Vehicle Raises $20 Million

A London-listed company has raised almost $20 million for investments in Burma, according to an announcement.

Myanmar Investments International Ltd. raised the money in a new share issuance on the London Stock Exchange’s Alternative Investment Market (AIM).

The company first listed on the exchange in June 2013, as enthusiasm for the country’s economic prospects surged following re-engagement with Western countries. It announced at the time that it had raised $6.7 million on the first day of trading.

The company announced on July 21 that it had raised a further $19.9 million by issuing 17.3 million new shares, according to a report from Alliance News in London.

Myanmar Investments has already been involved in a micro finance project in Burma, but has not said what specific investments it will make with the new capital.

Alliance News reported that the company was “considering investments in the finance, telecommunications, manufacturing, healthcare and education sectors, including a potential securities joint venture with two partners to acquire all four types of securities [licenses] being issued ahead of the opening of the new Yangon stock exchange later in 2015…”

It also said Myanmar Investments may get involved in the rapidly growing telecommunications tower business in Burma.

“There continues to be a good flow of potential investment opportunities in a range of sectors in Myanmar,” the report quoted Maung Aung Htun, the companies managing director, as saying in a statement. “This is underpinned by a real need to upgrade infrastructure or provide products and services that are available in the rest of Asia. As a result Myanmar Investment will continue to raise capital to participate in these opportunities.”

London-listed Myanmar Investments has an office in Singapore, but is registered in the British Virgin Islands, an offshore jurisdiction.

Thai Company to Help Lay Fiber-Optic Cables in Rangoon

Thai broadband Internet company Benchachinda Group is part of a consortium that will lay fiber-optic cables in Rangoon, a report in Bangkok-based The Nation newspaper said.

The company, part of the business empire of Boonchai Bencharongkul—Thailand’s 25th richest man, according to Forbes—is the joint venture partner of Telenor in its Thai interest, DTAC.

The Nation reported on June 24 that the Thai group was partnering with an unnamed Burmese firm and four other companies—United Information Highway, ALT Telecom, United Distribution Solution and A&F Communication—to form a new venture called the Myanmar Information Highway Limited (MIH).

The report cited Benchachinda Group’s president, Vichai Bencharongkul, saying that MIH wants to become the “leading premier-broadband provider in Myanmar” by providing services “on par” with Thailand’s broadband standard.

“MIH will provide international-standard broadband services in Myanmar,” Vichai was quoted as saying. “At present, it has already won the right of way to lay down fibre-optic network from Yangon Electricity Supply Corporation. MIH will start the infrastructure installations in the authorised zones.”

ADB Helps Burma’s Customs Prepare for Asean Integration

With the Association of Southeast Asian Nations (Asean) set to begin a process of regional economic integration at the end of this year, Burma’s Customs Department is having to make rapid improvements to meet new regional standards.

The start of the Asean Economic Community (AEC) will see tariffs dropped, allow the free movement of skilled labor, and promises to create a “single window” for multinationals wanting to set up supply or distribution networks within the region.

The Asian Development Bank (ADB) said in a statement on July 27 that it was holding a three-day workshop with Burmese customs officials to support the development of an Authorized Economic Operators (AEOs) scheme. It said the new system “will simplify and expedite the release of imported and exported goods.”

“Through the workshop, customs officials will identify accreditation criteria and appropriate trade facilitation measures for AEOs in Myanmar, identify the most appropriate customs management structure for the AEO scheme, and develop a work plan to pave the way for a detailed AEO implementation plan,” the statement said.

“As Myanmar’s economy continues to expand and open to the world, it’s increasingly important for it to have strong customs measures in place to facilitate the free flow of goods,” the ADB’s director for regional cooperation and operations coordination in Southeast Asia, James Lynch, was quoted saying.

“By taking this important step, Myanmar Customs is ensuring adherence to the ASEAN Economic Community Blueprint and the ASEAN Trade in Goods Agreement, as well as ensuring the country is in line with important World Customs Organization’s international standards and the World Trade Organization’s Trade Facilitation Agreement.”