Ooredoo reduces Myanmar losses

Qatari telecom firm Ooredoo continues to reduce losses in its Myanmar arm relative to 2015, according to the group’s third-quarter results, although the Myanmar operation saw new subscriptions dip compared to the last two quarters.

Unlike rival telco Telenor, Ooredoo’s Myanmar operations are not yet consistently profitable. But the Qatari firm’s Myanmar arm is still having a much better year financially than in 2015.

Across the first three-quarters of 2015, Ooredoo’s earnings before interest, tax, depreciation and amortisation – EBITDA – were negative Q30 million (K10.3 billion; US$8.2 million). Over the same period this year, EBITA was only negative Q7 million – a 76 percent fall in losses.

In a results call held yesterday a member of the firm’s senior management said the Myanmar operations were “almost EBITDA neutral”.

The firm introduced “voice and internet offers in the market” that helped accelerate revenue growth, said Rene Meza, chief executive for Myanmar. “We also launched affordable 3G devices and partnered with 4G devices manufacturers in order accelerate data usage and 4G adoption.”

The Qatari firm was first to rollout 4G in Myanmar in May, followed by Telenor and state-owned MPT.

Oordeoo’s Myanmar EBITA for the third quarter of 2016 alone was negative Q4 million (US$1 million). Telenor reported its own third-quarter results last week, reporting Myanmar EBITA of N774 million (K117.9 billion; US$93.5 million).

The Qatari firm is also seeing revenue rise relative to last year, hitting Q1.1 billion for the first three-quarters of 2016, compared to Q782 million over the same period in 2015. Around half the revenue raised so far this year is from the most recent quarter, according to the firm’s results.

But although Telenor and Ooredoo are seeing their financial results improve, the rate of new subscriptions is slowing for both firms. Ooredoo added around 800,000 new subscribers in the third quarter of this year, having added at least 1 million in the first and second. Ooredoo’s network now covers more than 85pc of the population, according to the firm’s Q3 results. Sheikh Saud bin Nasser Al Thani, the group’s chief executive, said the firm’s rollout of 4G in Myanmar and the introduction of affordable 3G handsets had supported the expansion.

As the telcos expand further into rural areas, however, revenue per user is likely to drop. Telenor reported that average revenue per user (ARPU) in local currency decreased by 28pc, “due to increased penetration in rural areas and tougher competitive environment”.

Data on Ooredoo Myanmar’s ARPU for the most recent quarter was not available at press time. But Mr Meza, said that as “mobile penetration accelerates in rural Myanmar ARPU [will] remain under pressure”.

Myanmar was also primarily responsible for most of the wider Ooredoo group’s foreign exchange losses in the third quarter, members of the management said in response to questions on the results call.

The Myanmar operation has dollar-denominated debt, with “no local currency debt-raising options”, said one senior Ooredoo representative. The kyat declined over 6pc against the dollar in the third quarter of this year. Payment of dollar debt in local proceeds resulted in foreign exchange losses, he said.