2008 Asia - Telecoms, Mobile and Broadband in Myanmar and Thailand

This Annual Publication profiles two of the countries of South East Asia. The neighbouring countries of Thailand and Myanmar continue to provide an interesting contrast. Similar in both population size and land area, the two countries have been developing along totally different economic paths. Thailand, a constitutional monarchy, which has certainly been struggling with its democratic processes and institutions, has nonetheless been able to offer an essentially open market. On the other hand we have Myanmar operating as it has under a repressive military dictatorship for many years now and presenting a market that remains totally closed and centrally controlled. GDP per capita in Thailand is running at around US$4,000; in Myanmar it is less than US$250. The development of their respective telecom sectors reflects the same divide. In mobile and Internet penetrations Thailand leaves Myanmar far behind. Even in basic fixed-line telephone services, a segment of the market that the Thais have not given any priority, Myanmar is continuing to lag far behind Thailand.

The overthrow of the Thailand’s Shinawatra government in a military coup in September 2006 was followed by a period of government by a military-appointed administration; happily this interim period ended without too much pain and certainly no further militarily intervention when general elections were held in late 2007 and a new government was installed. As the country continued its search for increased politically stability, there can be no doubt that the upheaval over the last few years has had considerable negative impact on (1) the Thai economy, (2) the administration of the country and (3) investor confidence.

The telecom sector witnessed the appointment by the post-coup government of a Minister for Information and Communication Technology who, at least initially, took a policy position that was essentially against what were seen as Thaksin Shinawatra’s telecom reforms. The new minister, for example, wanted to roll back the process of privatisation of the two state-owned telcos, TOT and CAT; further to this, he wanted to restore some of their regulatory powers. While generally seen within the industry as a rather regressive administration, some positive reforms did emerge during this period.

Despite all the difficulties, Thailand’s telecom sector has continued to display a surprising amount of energy. The country’s mobile telephone market in particular has recorded strong annual growth rates, the recent high level of growth taking the industry by surprise. By early 2008, mobile penetration was around 82%. In a matter of only six years, the mobile market had moved from 8 million in 2001 to 53 million in 2007.

Apart from the booming mobile sector, the Internet is an area of the Thai market that has also been popular – at least in its dial-up form. Oddly, the development of broadband Internet has been languishing. It was not until 2005 that the number of broadband subscribers started to move in any serious fashion. A reasonably strong growth trend has continued since then and by end-2007 there were around 1 million broadband subscribers in the country. Broadband penetration was still under 2%, however.

Thailand has certainly been seeing the benefits of a liberalised market with the highly competitive mobile sector being the big beneficiary. Nevertheless, sectoral reform remains unfinished business. It took four years after the enabling Telecommunications Act was adopted as law in 2000 for the country’s new regulator, the National Telecommunications Commission, to be put in place. And once it became operational, the NTC had to contend with the volatile political environment following the 2006 coup, again throwing uncertainty over the regulator’s role. Even with a newly-elected government in place in early 2008 the future direction for the regulator was not exactly clear. For the country overview, see chapter 2, page 16.

Myanmar’s telecom sector continues to be dominated by the state-owned monopoly telephone service provider, Myanmar Posts and Telecommunications (MPT). This ministry’s form has indeed been consistent with the overall operating environment of an economy where change is simply slow. The country has been battling both economic problems and a troubled political climate. Soaring inflation remains a major problem (34% in 2007). The country’s centrally planned economy is plagued by weak fiscal and monetary management, resulting in major economic imbalances, which are not likely to be easily or quickly resolved.

These problems, combined with a disturbing lack of transparency, have not surprisingly frightened off foreign investment. In the meantime, the telecom sector is characterised by what can only be described as stunted growth. In fact, following the political and social upheaval of late 2007 subscriber data reports suggested that things were actually going backwards.

The telecom sector reflects the overall state of the national economy and society. It should also be noted that Myanmar’s official economic data is not considered reliable, making actual growth rates difficult to ascertain. Nevertheless, it is reasonable to assume that fixed-line telephone penetration remains at or below 1%; the penetration of mobile services is even less than that; and Internet access continues to be severely restricted in its availability to the general public.

At the same time, given the state of the economy and the absence of serious foreign investment, the MPT’s level of capital investment in telecoms infrastructure has been depressingly low. To cap this off, the country suffered a devastating cyclone in May 2008 resulting in a huge loss of life and massive damage to the country’s fragile infrastructure. For the country overview, see chapter 1, page 1.

Key highlights:

• Thailand’s mobile market had reached 53 million subscribers by end-2007. After more than seven straight years of strong growth, the annual increase in the mobile subscribers was still running at over 30% coming into 2008. For more information, see chapter 2.10, page 98.
• The broadband Internet market in Thailand saw another year of vigorous subscriber growth in 2007, running at an annual rate of around 60% with all the signs suggesting that this would continue through 2008.
• While interest in broadband services was finally picking up in Thailand, it was happening from a relatively small base; overall broadband penetration remained low (under 2%). For more information, see chapter 2.8, page 79.
• Despite a slowing in economic growth following the September 2006 coup, the post-coup government, after a number of missteps, worked hard to stimulate the economy, looking to such initiatives as free trade agreements. Then in December 2007 a newly-elected government committed itself to the task of getting the country back on track.
• Myanmar’s mobile market, after reportedly growing at an annual rate in excess of 100% in 2006, managed another healthy expansion in 2007 with a 40% jump in subscribers.
• Of course, this growth was from a low subscriber base in the first place – up from 126,000 subscribers (0.3% penetration) in 2005 to 325,000 (0.7%) in 2007. For more information, see chapter 1.8, page 12.
• With information on growth patterns being difficult to obtain, one source suggested that mobile subscriber numbers had in fact declined from a mid-2007 peak.
• From totally different perspectives Thailand and Myanmar must both seriously address regulatory reform; Thailand needs to work to get fresh momentum in its stalled reform processes; Myanmar needs to get some sort of reform process started. The latter has a lot further to travel in this regard.

Myanmar versus Thailand – mobile, fixed-line and Internet subscriber penetration – 2007

(Source: BuddeComm)

Data in this report is the latest available at the time of preparation and may not be for the current year.