Telenor CEO talks data consumption, competition and reinvestment

Lars Erik Tellmann, who took over as CEO of Telenor in August this year, spoke to The Myanmar Times about the phenomenal growth in data consumption, preparing to compete with a fourth operator and why Telenor has not repatriated a single kyat of Myanmar profits.

Telenor CEO Lars Eric Tellmann sees data consumption continuing to grow. Photo: SuppliedTelenor CEO Lars Eric Tellmann sees data consumption continuing to grow. Photo: Supplied

How quickly is data usage growing and how much of Telenor’s revenue will come from data in the future?

We have a customer base of 18 million and 64 percent are active data users. They use data in such large amounts that on a daily basis our network is carrying around 360 terabytes.

To put that in perspective, [daily] usage has increased around 1500 times since January 2015. Still, we find [the use of different data] services is limited. Around 70pc of data usage is on web browsing, and 77pc of that is on Facebook. The rest is streaming and video, of which 70pc is on YouTube. [Activity] in other categories of browsing is very small.

Around 40pc of my revenue is from data. I would not give forecasts [on future percentages] but we believe there is growth [potential for data usage]. The dominant factor [in future growth] is more services used and a pickup in rural customers getting from 2G to 3G and having their first experience on the internet and becoming active users.

How far have data prices fallen for customers?

All prices have come down. You started off paying per megabyte and now you have a situation where we give Facebook for free. You have seen a rapid decline in [the] pricing [of] megabytes down to the unit factor. We have two [data plans] My Internet and Smart Internet. [When we started] My was K6 per MB and Smart was K10, we later brought that down to K5 and K6.

On [our] package where people get Facebook free up until 150MB [a day], you are then paying for extended usage at K3 per MB. Over a month that’s 4GB [of free Facebook]. Even by western standards you could say 4GB is a heavy plan.

You’ve said in the past that everyone in Myanmar who wants a SIM card already has one. If the fourth telco scheduled to start operations next year will have to rely on taking customers from existing firms, is there a concern it will offer unsustainable pricing or intense competition in other areas?

The general answer is that there’s evidence that if you go from a three- to a four-player market it generally hurts the industry. We don’t speculate on how [the fourth operator] will come to market, but we’re clearly prepared for the difference scenarios of they can come to market and how we can make sure we always have the best value and product.

MPs have reported residents complaining about the noise that tower generators make. Is that an issue for the tower-building companies or is Telenor also involved?

We are very much [involved] in those discussions. We built 6800 sites predominately through tower company partners. In some villages where construction was not allowed in rice [farm] land [it was necessary] to build in a village, and there have been some complaints about generators being used that are not of the silent type. The first element is to connect towers to the grid, which gets rid of the problem. Right now around 55pc of our towers are fully grid-connected so you have no issues.

[In other cases] we’ve worked with the tower companies to find solutions, one is to change to silent generators; another is to altering some [towers] to [use] solar panels. We’re working with the regulator to see if [in some cases] it’s possible to forgo the restriction we were given on building on farmland. But out of almost 7000 towers we’re talking about very few [cases of complaint].

What pieces of telecoms industry regulation would you like to see put in place?

Legal intercept [legislation] is still in the draft stage. It’s a draft based on input from the EU Commission and it would benefit the whole industry and provide more clarity in terms of how to handle requests from the authorities [for access to communications network data].

[Without that clarity] we have an arrangement with our regulator in terms of what procedure to follow in case of a request. We only release [information] if the police acquire a first instance report from the magistrates’ court, the court order confirms the authentication and the need [for a] request, and we will then validate it before we release anything. The number of requests [we receive] is pretty small, and [the number we agree to] is extremely small.

[Telenor reporting indicates the firm received 37 requests from authorities for data in 2015 and complied with nine. It had received 14 requests as of April this year, and complied with none.]

There have not been any requests [for] lawful intercept, meaning listening in to live conversation, and we have never been asked to shut down our network. These are interesting bearings for a country that has just opened up, and we’ve been super-clear that if we have request we will have to tell the media through our transparency reports that we have been ordered to shut down.

Government officials have suggested that foreign companies repatriating profits has contributed to exchange rate volatility. Has Telenor had any issues in moving profits abroad?

There are so many misconceptions [about this]. It’s been raised in parliament that telecoms [firms] are repatriating money out of the country. We’ve been here for almost three years and invested almost US$1.5 billion to build the network and infrastructure.

We have not [moved] one single US dollar out of the country. We have reinvested every dime. There’s this myth out there that we don’t pay taxes. We’ve paid K80 billion in taxes since we started our operations.

We have kept investing and what you’ve seen here [in Myanmar] is quite amazing. It’s not that you make a one-off investment and then you’re able to have a time lag until the next [investment] cycle comes. What you’ve seen is that we took 2G and 3G and then suddenly 4G is coming and then suddenly a fourth operator is coming. This investment is coming in a much more compressed [timeframe] than what you’ve seen in traditional roll-outs [in other countries].

This interview has been edited for length and clarity