Exiting Telenor still mired in the Myanmar woods

Telenor is not out of the Myanmar woods yet.

Exiting its operations there after the country's February army coup is proving an ongoing headache for the Norwegian operator. Add to this two minor facts.

Hardware store with signs and banners for the Norwegian telecom group Telenor at Bagaya Street in Yangon, Myanmar.  (Source: Jorgen Udvang / Alamy Stock Photo)
Hardware store with signs and banners for the Norwegian telecom group Telenor at Bagaya Street in Yangon, Myanmar.
(Source: Jorgen Udvang / Alamy Stock Photo)

One is that ​​Sigve Brekke's company was one of the biggest foreign investors in Myanmar. Making it harder to slip out of the country in the dead of night. And the other is that Telenor is majority state-owned, meaning its dirty laundry comes under extra examination in Norway.

In July, Brekke announced the company would sell its operations in Myanmar to Lebanon's M1 Group for $105 million.

To put that firesale price in context, Telenor has ploughed roughly $1 billion into Telenor Myanmar since receiving a license from the country in 2013. Telenor already booked a loss of $750 million from winding up its Myanmar business in its earnings in May, declaring the unit "fully impaired."

The military junta has dug in, though, indicating it wants a local company to be at least part-owner of the telco, if not owning a controlling share outright. M1 may find itself relegated to taking at most a minority stake.

Pick your partner wisely

M1 has been dutifully scoping out local partners. The Shwe Byain Phyu Group is one, which sells petrol under an SBP Oil brand, and also does some precious jewel mining.

Its founder and chairman Thein Win Zaw is a director of a consortium with a stake in Mytel, another of the four national carriers--and a joint venture between Myanmar's army and Vietnam's army-run Viettel. There's interest from other Myanmar companies too, even though talks with Zaw's company sound to be at a particularly advanced stage.

Another possibility is Yoma Group, owned by Serge Pun, one of Myanmar's richest citizens. His empire runs to Yoma Bank, the country's fourth biggest bank where he is chairman, and to a real estate firm called Serge Pun & Associates, with footholds in automotive manufacturing, construction, healthcare and technology to boot.

Yoma partnered with Telenor in an e-wallet service called Wave Money, where it has been particularly keen to increase its stake.

Leaning towers of Burma

Telenor also confirmed, in a third-quarter update last week, that its 8,900 towers across 330 townships in the company are in an awful state, because of vandalism and other damage.

As many as 800,000 customers of Telenor Myanmar can't fully access voice and data services because of damage to its infrastructure, says the company. Altogether Telenor has 19 million customers out of a population of 55 million.

The other three operators' towers are probably affected to the same degree, Telenor says. Meanwhile, the governing junta is telling all four operators to limit connectivity.

The junta since mid-September has cut off internet access in several areas of Sagaing Region; Chin State; and the three Magwe townships of Gangaw, Tilin and Myaing. One resistance group, the People's Defence Force, has threatened to destroy telecom masts belonging to Telenor, MPT and Ooredoo, if the operators don't restore services.

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It's better treatment than resistance groups are dishing out to masts belonging to Mytel, the junta-run operator. Over 80 of its masts had been destroyed across the country by mid-September, with more blown up since.

Other international investors are finding themselves in similar positions to Telenor. Australia's natural gas giant Woodside Energy has said all its operations in Myanmar are "under review", but it's more inextricably linked in multi-year, huge infrastructure projects from which it's harder to cut and run.

Only companies from China, Vietnam, Thailand and Singapore are expected to remain, once remaining international investors withdraw. But at the current pace of things, Telenor may still be there against its will for quite some time yet.

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Pádraig Belton, contributing editor special to Light Reading

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