Norwegian telecoms firm Telenor has sold its Myanmar business, blaming the difficulties of operating under the military junta and dealing a blow to activists who say they relied on the only Western operator for communications.
Telenor, one of the biggest foreign investors in Myanmar, sold its Myanmar operations to Lebanese investment firm M1 Group for $105 million (roughly Rs. 790 crores), announcing its retreat from a country that slid into chaos after a military coup in February.
It was one of the few Western companies to bet on the South East Asian country after it emerged from military dictatorship a decade ago. Myanmar accounted for 7 percent of Telenor's earnings last year.
"There are three reasons why we think a sale is necessary: it is the safety of our employees, but also the regulatory conditions and also that there is good compliance," Telenor CEO Sigve Brekke told Reuters.
"When we wrote off the business in May, we felt we could still operate in the country, although it was challenging. But after that, it has worsened."
In May, Telenor booked a loss of NOK 6.5 billion (roughly Rs. 5,530 crores) after seeing its mobile business in Myanmar severely restricted following the February 1 military coup.
On March 15, the junta ordered a nationwide shutdown of mobile data, making it harder for pro-democracy activists to organise protests and circulate messages supporting the overthrown civilian government.
Violence since the February 1 coup has driven more than 230,000 people from their homes. More than 880 people have been killed by security forces and 5,200 are in detention, the United Nations says.
Myanmar's junta has banned senior foreign executives of major telecommunications firms from leaving the country without permission and it is pressuring them to fully implement intercept technology that would let authorities monitor users, a source told Reuters earlier this week.
Activists expressed concern over the exit of Telenor, one of two foreign operators present alongside Qatar's Ooredoo. The other operators in Myanmar are state-backed MPT and Mytel, which is part-owned by a military-linked company.
"We are mostly relying on Telenor," campaigner Thet Swe Win told Reuters. "Most of the activists rely on it as a company which has respect for human rights. I hope that the new company will respect human rights as Telenor did in the past."
M1 Group was a major investor in Myanmar's largest independent tower company, Irrawaddy Green Towers (IGT), which has a master lease agreement with military-backed telecom Mytel. Private equity company CVC said in February it would buy IGT from M1 Group and other shareholders.
M1 Group was not immediately available for comment.
Some Telenor investors welcomed the decision.
"It is positive to see that Telenor did not compromise on their basic principles regarding human rights," said Janicke Scheele, head of responsible investments at DNB Asset Management, Telenor's 6th largest investor with a 1.51 percent stake.
"We have had multiple dialogues with Telenor on this and this undoubtedly presented a considerable dilemma for the company," she told Reuters.
The Norwegian state-controlled operator has operations in the Nordics as well as in Asia, where 95 percent of its 187 million customers reside - in Bangladesh, Malaysia, Pakistan, and Thailand, as well as Myanmar.
It has around 18 million customers in Myanmar, serving a third of its 54 million population.
Mads Rosendal, senior analyst at Danske Bank Credit Research, said the price tag was low, given how much Myanmar has contributed to Telenor's earnings.
"On the margin we ... see this as slightly credit negative as we had hoped to see a higher value," he said.
Telenor's shares traded at NOK 148.05 (roughly Rs. 1,260) at 0921 GMT (2:51pm IST), unchanged from Wednesday's close.
© Thomson Reuters 2021