MPT Growth Outstripping New Telecoms Rivals
The state-owned Myanmar Posts and Telecommunications (MPT) has added 5 million new subscribers since two new private companies entered the mobile phone market, according to figures cited by the Wall Street Journal this week.
The new users mean that MPT, which is now partnered with two Japanese firms, is well ahead of Ooredoo of Qatar and Telenor of Norway in the race to capture the millions of Burmese entering the mobile market for the first time.
The Wall Street Journal report, which included an interview with MPT’s general manager Kyaw Soe, cited figures saying that the company had 11 million subscribers as of January, with 5 million added since Ooredoo entered the market in August.
“Bolstered by a $2 billion investment and strategic advice from Japanese mobile carrier KDDI Corp. and trading house Sumitomo Corp., MPT has adopted new marketing strategies and a modern new logo and has cut the cost of its services by almost 40%,” the Wall Street Journal reported.
“These upgrades are boosting the reach of the operator’s already-superior network, analysts say, and helping it to add new customers.”
Also this week, Ooredoo released its earnings for 2014, reporting that its Burma operations, while generating almost US$52 million in revenue, made a net loss of $145.8 million “reflecting the continued roll-out in Ooredoo’s newest market.”
The company said that as of the end of last year it had 2.2 million customers, well behind the number MPT says it has added since competition began in the telecoms market.
Telenor announced last month that it had added 3.4 million subscribers by the end of 2014.
The Wall Street Journal also said that both MPT and Ooredoo had networks of about 2,000 mobile cell towers, while Telenor has 1,500 towers in place.
Yoma Strategic Gets the Go-Ahead for Railway Office Development
Yoma Strategic Holdings said Wednesday it had received confirmation that its lease on the site of its “Landmark” downtown Rangoon hotel development would be extended.
In an update to shareholders, the company said the Meeyahta International Hotel Limited, in which it owns a controlling stake, had received a letter dated Mar. 10 from the Myanmar Investment Commission (MIC).
The MIC said “it had approved the extension of the lease in accordance to the Myanmar Foreign Investment Law for the redevelopment of the former headquarters of the Burma Railways Company into a five star hotel as a Build-Operate-Transfer project,” according to the statement, which was filed with the Singapore stock exchange, where Yoma Strategic’s shares are listed.
The letter directs the Ministry of Rail Transportation to extend the lease, the update from Yoma Strategic CEO Andrew Rickards said.
Alongside the hotel, the company is planning to build a massive mixed-use development that will replace the Meeyahta hotel, which closed in late 2013.
The interests of the sprawling conglomerate controlled by Sino-Burmese tycoon Serge Pun include the Star City development and the Pun Hlaing Golf Estate, both in Rangoon; a business selling New Holland tractors in Burma; and the Balloons Over Bagan tourism operation. Pun also controls Yoma Bank.
Also this week, Yoma Strategic announced financial results for the first nine months of the 2014-15 fiscal year, disclosing that an issue of rights to new shares was oversubscribed, and that the issue had generated $118.52 million to go toward the purchase of the Landmark development site and other investments.
The company’s revenue grew by 15.3 percent year on year to $60.4 million in the nine month period, the results said.
Competition Law Vague on State-Owned Firms
A new Competition Law passed last month does not make clear whether all its provisions will apply to the state-owned enterprises (SOEs) that dominate large sections of the economy, according to a legal analysis.
Legal consultants VDB-Loi published a briefing note on March 8 that offers a detailed analysis of the Competition Law 2015—passed into law on February 24—asking whether the legislation is “A pitbull or a paper tiger?”
The law targets acts restricting competition, acts leading to monopolies, unfair competitive acts and business combinations that lead to market dominance, VDB-Loi says in the note, adding that it is “a legal game change which seems poised to shake up the practice of some major market players.”
Although Burma has officially had a market economy for more than two decades, large swaths of industries from telecommunications to the extractive industries and some areas of manufacturing are still dominated by SOEs or companies linked to the military.
According to VDB-Loi, the Competition Law is largely based on Vietnam’s 2005 law of the same purpose. But while Vietnam’s law explicitly states that it applies to government-run companies, “The [Burmese] Act stops short of stating explicitly that SOEs are within its scope.”
The note does say that there’s “can be little doubt” that SOEs are “engaged in business,” the necessary conditions for an individual or enterprise to be subject to the Competition Law’s rules, but the lack of specificity on such a key point is likely to raise concerns.
The new law establishes two new bodies, the Competition Commission to monitor competition and an Enquiry Committee to investigate possible breaches, which are punishable with three years in prison and/or a fine of up to $15,000.
The briefing also warns that those investing in joint venues should be wary that their venture doesn’t lead to “excessive market concentration.” And it says the domination of trade bodies in some sectors could be considered anti-competitive. “Myanmar has a long and rich tradition of powerful trade associations, some of which may have to review their practices,” it says.
US Energy Supplier Announces Expansion of Kyaukse Plant
Florida-based power company APR Energy announced this week that it will step up the amount of power it sends to the grid from its gas-powered plant in Mandalay Division.
In a statement Tuesday, the company said it would expand its plant in Kyaukse by 20 megawatts to provide a minimum of 102MW to the state-owned Myanmar Electric Power Enterprise.
The company says the plant—which has been running since May 2014 on natural gas taken from the Shwe gas pipeline running through from the Bay of Bengal to China’s Yunnan Province—provides electricity to more than 6 million people.
The fast-installation “turn-key” project is one of a series of contracts the government signed with companies in order to provide short-term power generation while longer-term solutions to Burma’s energy shortage are put in place.
When APR Energy first announced the Kyaukse plant, Clive Turton, the firm’s managing director for the Asia-Pacific told The Irrawaddy that the company was looking at several other projects in the country. No other deals have since been announced, however.
A spokesman for APR Energy did not respond to a request for comment this week, but Turton was quoted in the company’s statement saying: “We look forward to playing a continued role in helping Myanmar supply reliable, efficient power to its people and industries, supporting economic growth and improving overall quality of life.”
Rangoon’s Rich Predicted to More than Double in a Decade
Burma’s former capital may be about to face an epidemic of HNWI, according to a new report. This is not reason to panic, however, since the initials don’t stand for a new virulent strain of influenza, but for high-net-worth individuals—how real state consultancy Knight Frank decides to refer to US-dollar millionaires in its recently published “Wealth Report 2015.”
The global report predicts that Rangoon will be home to more than 3,500 such people by 2024, more than double the current number, making the city “a classic example of emerging market wealth creation.”
“Benefiting from the gradual opening up of its economy, following the introduction of democratic reforms in recent years, the city has seen strong employment growth and inward investment, with annual GDP growth at a national level predicted to eclipse that seen in India and even China in 2015 and 2016,” the report says.
“Accounting for a fifth of overall economic output, Yangon is set to be the lead beneficiary of this process.”
The report puts Rangoon alongside Belgrade, Panama City and Addis Ababa as “cities of the future,” concluding that, sadly, no billionaires live in the four cities. Not to worry, it says: “Even if [the cities] are unlikely to be on the second-home list of most UHNWIs (ultra-high-net-worth individuals, or those with assets worth more than $30 million*), they should certainly be on their radars in terms of the wealth creation opportunities they will present.”
*Correction 16/03/15: The original version of this article incorrectly referred to UNHWIs as individuals with over $1 billion in assets.