The Irrawaddy Business Roundup (May 23, 2015)

By Simon Lewis 23 May 2015

Telecoms Firm Ooredoo Changes Up Management

With recent figures showing that the Qatari telecommunications company is losing the race to capture the larger chunk of Burma’s fast-growing mobile phone subscriber market, Ooredoo has announced a reshuffle of its most senior post in the country.

Ross Cormack, the Ooredoo Myanmar chief executive officer who oversaw the firm’s launch as the first private telco to operate in Burma, “has taken the decision to leave his position later this year,” according to a statement from the company.

Cormack has “significantly contributed to the growth of the company’s businesses,” the statement said, crediting him with leading the company “from a green field operation to a fully-fledged telecoms provider” in Burma.

But it hasn’t escaped the notice of observers that the announcement came less than a week after Ooredoo’s rival private telecoms license holder, Telenor of Norway, announced it had picked up 6.4 million subscribers since launching in October.

Ooredoo, which in August began a slow roll out beginning in central parts of the country, had only put on 3.3 million subscribers as of the end of March.

State-owned telco MPT, which has entered a joint venture with Japan’s KDDI and Sumitomo, has 8.4 million subscribers, according to Reuters.

Replacing Cormack at the head of Ooredoo Myanmar will be Rene Meza, the current managing director of Vodacom Tanzania, according to the Ooredoo statement, which also cited the executive’s experience in Kenya, Pakistan and countries in Latin America.

“Rene Meza has considerable experience in leading the growth of telecoms businesses in emerging markets and we believe he has all the qualities to take Ooredoo Myanmar to the next level as we continue to roll-out Myanmar’s first 3G-only mobile network,” Dr. Nasser Marafih, Ooredoo Group CEO, was quoted saying.

Burmese Mobile App Firm Looks to Raise Finance in London

Burmese tech start-up MySQUAR will attempt to raise more than $3 million on the London Stock Exchange, according to the Financial Times.

The London-based newspaper reported that the company, which makes Burmese-language messaging app MyChat, has been valued by brokerage firm Beaufort Securities at about US$36 million.

The company will try to raise about $3.14 million when it floats on the Alternative Investment Market (AIM), a sub-market of London’s main bourse, at the beginning of June, according to the FT.

“But MySQUAR’s services are free for now while it builds its customer base and it will not start to charge users for add-on services or advertisers for space for a while,” the report said. “MySQUAR will not generate cash for months, if not years. The profits may come after that. Then again, they may not.”

MySQUAR launched in 2013 and was touted as “Myanmar’s first social media network” in numerous glowing newspaper features. According to the FT, the company now has some 700,000 users in Burma and is hoping for growth as the number of mobile phone users continues to climb.

However, it faces some stiff competition, and the social media habits among Burma’s nascent smartphone addicts have proven hard to predict.

While Facebook is used by many in Burma as the default internet browser, a survey last year by On Device Research found that messaging app Viber—which has said it has more than 5 million users in Burma—was the most ubiquitous way to chat. Some 79 percent of survey respondents said they use Viber, compared with 27 percent for Facebook messenger.

“Twitter, Instagram, and other popular Western services remain below the 5% threshold,” On Device Research said in a discussion of its findings. “Surprisingly, local mobile social network MySquar wasn’t popular either.”

Telenor Orders More Towers for Mobile Network

Telecoms infrastructure firm Apollo Towers said this week that it has agreed to provide 700 more mobile phone masts to Telenor, as the Norwegian company expands its network around Burma.

The company was selected by Telenor in 2013, shortly after the first private telecoms licenses were awarded to Telenor and Qatar’s Oordeoo. In a statement on May 20, Apollo Towers said that it had received a new purchase order for 700 new towers from Telenor.

The Wall Street Journal recently reported that both Ooredoo and state-run provider MPT have about 2,000 towers around the country each, while Telenor has only 1,500.

“The ongoing partnership between Telenor Myanmar and Apollo Towers Myanmar provides the platform for multi-tenancy on towers in order to accelerate the development of efficient and cost-effective shared mobile telecommunications infrastructure in Myanmar,” the Apollo Towers statement said.

“As part of Telenor Myanmar’s commitment to contribute to the local economy, Apollo Towers Myanmar is working with a number of Myanmar-based companies in the infrastructure build-out across the country, providing opportunities for local businesses and promoting a more vibrant business environment in Myanmar.”

Apollo Towers was founded by former Orange CEO Sanjiv Ahuja, who also serves as a non-executive director at Telenor. Major shareholders in Apollo Towers include US-based entities Tillman Global Holdings LLC and Texas Pacific Group.

Japanese Firms Win Railway Signals Work

Japanese industry giants Mitsubishi Corporation and Hitachi Ltd have signed a contract worth about $20 million to upgrade the ailing signals system on the railway line connecting Burma’s biggest city and the capital.

According to a joint announcement, the companies signed a deal with the state-owned Myanma Railways on May 15 with funding for the work coming from Japan’s state aid organization, JICA.

The agreement will see the firms supply and install a train monitoring system to oversee traffic and control signals on a 140-kilometer stretch of line between Rangoon’s Central Station and Pyuntasa, part of the way to Naypyidaw on the line that continues north to Mandalay.

“Given the aging of existing railway infrastructure in Myanmar, improvement of the quality and safety of railway services has become an urgent issue,” the statement said.

“Furthermore, since most long-haul transportation in Myanmar depends on automobiles and airlines, developing rail transportation infrastructure is needed in order to accommodate increasing demand for passenger and cargo transportation.”

Significant work is required to modernize Burma’s rail network and rolling stock, much of which has seen little attention since the colonial era. Mitsubishi Corporation and Hitachi Ltd. said they would “continue to pursue opportunities for involvement in future railway infrastructure projects” in Burma.

Firm Plans Tourist Hotel in Chin State Capital

The mountainous reaches of Chin State may not be typical tourist territory, but the rugged terrain has begun to attract more adventurous travellers. Not surprising, then, that investors may be starting to get into the local hotel market.

According to a report on Burma News International this week, a company named Mahemiah Co-operation Company (MCC), wants to construct a tourist hotel in the state capital, Hakha.

The report cited company official Pu Thawng Za Lian saying that the firm, which is reportedly registered in the United States as well as in Burma, will open an office in Hakha next month.

The BNI report said the company would be involved in agricultural investment and construction projects in Chin State, but also want to cash in on tourism growth to the region.

“We often hear about the insufficient number of hotels for tourists and travellers in Chin State. So we approached the concerned authorities to construct a hotel. Local elders supported us,” Pu Thawng Za Lian was quoted saying.

Marcus Allender, founder of travel website, told The Irrawaddy there was potential for tourism to flourish in Chin State.

“With remote villages strewn across mountains that are home to distinctive local tribes and colourful fauna and flora, Chin State certainly offers plenty of potential for tourism,” Allender said.

“The issue is access—the only area that currently has any tourism development is Nat Ma Taung National Park, and that is an 8 hour drive on rough roads from the nearest airport at Bagan. Although access for foreigners is now unrestricted and roads are gradually being improved, it largely remains a destination only for the most adventurous and determined.”