The Unprecedented Explosion of Smartphones in Myanmar

Just six years ago, only North Korea had fewer mobile phones than Myanmar. Now, almost everyone in Southeast Asia’s poorest country is connected.

Outside the offices of an internet startup called nexlabs, a snarl of honking cars and rickshaws grinds to a standstill on a trash-strewn street lined with crumbling buildings. Inside, though, the scene could be straight out of Silicon Valley.

Programmers in t-shirts and jeans tap away at laptops beneath posters exhorting them to “Innovate” and “Dance Like Crazy.” Local demand for their smartphone apps and websites is exploding, and in the last 12 months they’ve inked marketing contracts with multi-nationals like Samsung Electronics Co. and Nestle SA.

“It’s in the air,” says the company’s 25-year-old chief executive officer, Ye Myat Min. “Yesterday, I was in a cafe and the guys next to me were talking about building an app.”

What’s remarkable about Ye Myat Min’s internet success story is that it’s happening in a country where most people are farmers, the majority of roads are unpaved, and reliable electricity remains a luxury: Myanmar.

Just six years ago, when Myanmar was emerging from decades of isolation imposed by its military dictatorship, phones were an extravagance available only to the rich and well-connected. Only North Korea had fewer mobile phones. Now, though, after the airwaves were opened to foreign investors willing to bear some of the cost of building a vast wireless network, almost everyone in Southeast Asia’s poorest country is connected.

“It’s amazing,” said Marc Einstein, an analyst at Tokyo-based consulting firm ITR Corporation, who’s advised several telecommunications businesses moving into Myanmar. “I can’t think of another market where things have transformed so quickly.”

The watershed came in 2013, when a government led by former president Thein Sein ended the state monopoly over phone service. A smartly planned tender offer made sure new licenses weren’t a simple giveaway. Investors had to commit to covering the country’s farthest reaches, not just its cities, where population density makes for easier money.

By the following year, Norway’s Telenor ASA and Qatar’s Ooredoo Q.S.C. were starting to spend billions of dollars to cover a land mass the size of Texas, spread over steep mountains and lowlands that flood in monsoon season. Japanese carrier KDDI Corp. and trading company Sumitomo Corp. struck partnership deals with the government’s Myanmar Posts and Telecommunications to invest another $2 billion.