Launching Mobile Financial Services in Myanmar: The Case of Ooredoo Custom Case Solution & Analysis

Evidence Brief: Ooredoo Myanmar and Mobile Financial Services

1. Financial Metrics

• License Cost: Ooredoo paid 1.06 billion dollars for the nationwide telecommunications license in 2013.
• Market Opportunity: 51.4 million population with 95 percent lacking access to formal banking services.
• Mobile Penetration: Increased from 7 percent in 2012 to over 54 percent by 2015.
• Capital Expenditure: Initial commitment of 15 billion dollars globally by Ooredoo Group, with a significant portion allocated to the Myanmar 3G network rollout.
• Average Revenue Per User: Declining trend as the market shifts from early adopters to price-sensitive rural populations.

2. Operational Facts

• Network Infrastructure: Ooredoo launched with a 3G-only network, skipping 2G entirely to focus on data services.
• Distribution: Required a network of approximately 30000 agents to compete effectively with Telenor and MPT.
• Regulatory Environment: Governed by the Central Bank of Myanmar under the Mobile Financial Services Regulation issued in 2016.
• Product Branding: M-Pitesan launched as the primary mobile money platform.

3. Stakeholder Positions

• Ross Cormack (CEO, Ooredoo Myanmar): Focused on rapid network expansion and high-speed data as a differentiator.
• Central Bank of Myanmar: Cautious regulator prioritizing financial stability and Anti-Money Laundering compliance.
• Telenor Myanmar: Primary competitor using a mass-market, 2G-compatible strategy to build a larger subscriber base.
• Yoma Bank: Partner for Telenor, providing the necessary banking license for Wave Money.

4. Information Gaps

• Specific customer acquisition costs for M-Pitesan versus traditional voice/data users.
• Churn rates of agents migrating between Ooredoo and Telenor platforms.
• Detailed breakdown of rural versus urban transaction volumes for early MFS pilots.

Strategic Analysis: Market Differentiation and Scaling

1. Core Strategic Question

• How can Ooredoo overcome Telenor’s first-mover advantage in distribution to capture the 95 percent unbanked market?
• Can a data-centric 3G strategy support a mobile money platform in a country with inconsistent power and low-end hardware?

2. Structural Analysis (Porter’s Five Forces)

• Rivalry: Intense. Telenor and MPT have larger footprints. Competition is shifting from connectivity to services.
• Bargaining Power of Suppliers: High. Success depends on a limited pool of liquid agents and local bank partners.
• Threat of Substitutes: Moderate. Informal Hundi systems are entrenched and trusted in rural areas.
• Barriers to Entry: High. Massive capital requirements and strict regulatory licensing prevent new mobile entrants.

3. Strategic Options

4. Preliminary Recommendation

Pursue the B2B Payroll and NGO Focus. Ooredoo cannot outspend Telenor on agent density in the short term. By securing large-scale disbursements (salaries, aid), Ooredoo forces a captive user base into the M-Pitesan platform, creating pull-demand for agents to join the network.

Implementation Roadmap: M-Pitesan Operationalization

1. Critical Path

• Month 1: Finalize partnership with a local commercial bank to satisfy Central Bank liquidity requirements.
• Month 2: Deploy automated Know Your Customer (KYC) tools to reduce agent onboarding time from days to minutes.
• Month 3: Launch pilot payroll program with one major garment manufacturer and one international NGO.

2. Key Constraints

• Agent Liquidity: Rural agents often lack the cash on hand to facilitate large withdrawals, leading to transaction failure.
• Regulatory Lag: Changes in Central Bank policy can freeze product features or marketing campaigns without notice.

3. Risk-Adjusted Implementation Strategy

To mitigate liquidity risks, Ooredoo must implement a tiered agent structure. Tier 1 agents (super-agents) in township centers will act as cash hubs for smaller village shops. This reduces the physical distance cash must travel and ensures reliability. If the 3G network remains spotty in deep rural areas, a USSD-fallback mechanism must be prioritized to ensure transactions do not fail on low-end devices.

Executive Review and BLUF

1. BLUF

Ooredoo must pivot from a retail-led growth model to an institutional-led strategy. Telenor owns the distribution advantage. Ooredoo cannot win a war of attrition in agent count. By securing NGO and corporate payroll contracts, Ooredoo will generate the transaction volume necessary to attract and retain agents. Success depends on converting data-heavy urban users into MFS advocates while using institutional disbursements to penetrate rural markets. Speed is the only defense against market saturation.

2. Dangerous Assumption

The analysis assumes that 3G network superiority translates to a competitive advantage in MFS. In reality, mobile money in emerging markets thrives on basic USSD protocols. Reliance on high-speed data may exclude the very rural populations Ooredoo needs for scale.

3. Unaddressed Risks

• Currency Volatility: Rapid devaluation of the Myanmar Kyat could erode the real value of the 1.06 billion dollar investment and increase the cost of imported network equipment.
• Political Stability: Shifts in the governing regime could lead to sudden changes in telecommunications law or internet shutdowns, rendering the digital platform useless.

4. Unconsidered Alternative

The team did not evaluate a full merger or deep shared-infrastructure agreement with MPT. While MPT is a competitor, a joint venture specifically for the MFS agent network would provide Ooredoo with immediate access to the largest rural distribution footprint in the country, neutralizing Telenor’s primary advantage.

5. Verdict

APPROVED FOR LEADERSHIP REVIEW