How Investors Helped Myanmar Telecoms

When going into a completely greenfield market, flexibility, patience and due diligence will go a long way toward ensuring projects’ staying power.


Brent Lewin

In 2010, when Myanmar held historic elections that would reduce the influence of the military and put the country on a path to democratic rule, it was a country that had endured decades of isolation. Less than 3 percent of the populations had mobile phones. This lack of connectivity limited not only access to service and information but also the county’s potential for economic growth.

Today the country has a democratically elected government — Aung San Suu Kyi and the National League for Democracy won a landslide election in 2015 — and its mobile penetration is closer to 75 percent, surpassing what had been considered extremely optimistic targets from the government of Myanmar. This long-isolated country is a standout success story.

The ability of private companies to swiftly construct a network of telecom towers and dramatically improve connectivity in Myanmar is a testament to the speed at which progress can occur in emerging markets when demand for a product or service is strong, local governments are motivated and encourage foreign direct investment, and financing is available.

One of the key players in this telecom expansion, Apollo Towers Myanmar, has delivered nearly 1,800 multitenant cell towers across the country in a relatively short period of time. It’s a fantastic achievement in the face of extremely challenging logistics in a nascent business environment. Apollo is poised to build an additional 4,000-plus towers, which will extend coverage to rural areas and expand coverage in cities, so that more advanced data services can be accessed.

At OPIC (the Overseas Private Investment Corp., an arm of the U.S.’s development finance institution), we supported Myanmar’s telecom expansion with financing provided to Apollo. This was the first project OPIC has ever supported in Myanmar, and it presented many challenges.

Myanmar had little history of development finance, no international banks and a lack of a developed legal framework to support foreign investment or secured lending. In addition, the project required leasing and building out a series of telecom tower sites in a country that had a murky land registration system, while also needing to ensure that the project avoided working with individuals covered by sanctions. Here are some takeaways we at OPIC got from the experience:


Be flexible. Sometimes in developing countries, doing business the way in which we may be accustomed is just not possible. During the military government’s dictatorship in Myanmar, there was no efficient land registry, which made it virtually impossible to completely document rights related to the thousands of new tower sites. Although we couldn’t expect to secure full documentation prior to closing for all of the sites, we were able to make a judgment call that the large number of tower sites and their wide geographic dispersion helped to reduce the risks that the nascent land registry system created, and we also agreed with Apollo to pursue further improvements to the registration process going forward.

Take the extra time to be thorough. Four years ago, the U.S. Treasury’s Office of Foreign Assets Control implemented new investment in Myanmar but left some individuals in the country covered by sanctions. The process of conducting due diligence on all the parties involved in the transaction was lengthy and complex but essential to the long-term success of the project.

Be patient. One of the reasons Myanmar has had trouble attracting foreign investment is because of its shallow foreign exchange reserves, which make it difficult for borrowers to convert kyats to dollars to repay their debt. To take a long-term view, though, it is expected that as the country attracts more foreign direct investment, its currency reserves will deepen.

Focus on the mitigating factors. There were several mitigating factors that made the Apollo project promising, despite the challenges. First among those is the extremely strong demand for mobile and Internet services in the country. Apollo’s customers include two mobile network operators (Norway’s Telenor and Qatar’s Ooredoo), which were awarded licenses to operate in Myanmar in 2014, and Myanma Posts & Telecom, the incumbent operator. Both Telenor and Ooredoo have seen demand for their service far exceed market projections. Their overall penetration today underscores how this Apollo project was addressing strong pent-up demand. The government’s willingness to work with investors also provides an environment that is encouraging for foreign investment.

When advanced communications technology is introduced to a place that has long lived without access, the results can be transformative to the delivery of information, financial services and health care, bringing significant improvements to the way people live and work.

Mary Mervenne is managing director, credit policy, and Julia Robbins is associate director, structured finance and insurance, at the Overseas Private Investment Corp., the U.S. government’s development finance institution, in Washington.

Get more on emerging markets.