Trouble for Telenor in selling up Myanmar business
Exiting Myanmar following the country's February army coup is proving tricky for Norway's Telenor.
The military junta is reluctant to approve the deal, which requires approval from both the military-controlled Ministry of Transport and Communications and the Myanmar Investment Commission.
In July, Sigve Brekke's telco announced a $105 million sale of its wholly owned subsidiary Telenor Myanmar to Beirut-based investment company M1 Group.
It is a firesale price, given Telenor has invested roughly $1 billion in its operations in the country since being granted a license in 2013.
Telenor already had booked a loss of $750 million from winding up its Myanmar business in its earnings in May, declaring the unit "fully impaired."
Norway's government, which owns a 54% stake in Telenor, is coming under pressure to cancel the sale and look for other prospective buyers.
Telenor Myanmar is one of the country's four main telecoms companies, with 19 million customers out of a population of 55 million.
The junta appear particularly loath to approve the sale to the group founded by Lebanese brothers Najib and Taha Mikati.
This is both out of a distaste for their closeness to the Syrian government and a reluctance to have the country's infrastructure controlled by actors from the Middle East.
Najib Mikati is Lebanon's prime minister designate, and served in the office on two prior occasions.
In an attempt to back their case, the M1 Group has pledged to spend $330 million in the next three years to expand the Myanmar telecom business, a rare move given the rush of most international investors to exit the country.
M1 has a pre-existing telco footprint in the country: It is a major shareholder in Irrawaddy Green Towers, which owns 4,000 towers across the country servicing the military-owned telco operator Mytel.
Interestingly, the distaste for the Mikati brothers' potential purchase is shared even by the military regime's democratic opponents.
A group of 464 civil society groups from Myanmar wrote an open letter to Gunn Waersted, chair of Telenor Group's board, calling on him to halt the sale.
Telenor said in July that as part of the deal it would transfer call records of its 18 million subscribers to the new owners.
"The handover will include all assets, equipment, contracts and will also include call data records in accordance with the licence obligations," the company has said.
Rights activists say these records of who called whom, when and where, would put the company's customers in unprecedented danger if it fell into the junta's hands.
Experts say Telenor may very well find itself caught up in thorny arguments over whether the subscribers enjoy GDPR protections under EU law.
Telenor Group has argued that Telenor Myanmar is the sole data controller and processor for the subscriber data.
But courts may find the group office exerted some influence on data processing decisions of its subsidiary, thus making it a joint controller – and bringing EU data protection rights into play.
Norway's Minister for Trade and Industry, Iselin Nybø, has distanced himself from Telenor's exit from the country, replying that Telenor's investment and operations were the responsibility of the company's board.
However, with Norway approaching parliamentary elections next week, and incumbent Prime Minister Erna Solberg seeking a third term, it is unlikely that the state-owned operator's hasty exit will spark no domestic political repercussions.
Potential alternative buyers could include Chinese companies, a decision which would win the approval of the military government, or Telenor's Qatar-backed rival Ooredoo Myanmar.
Ooredoo and Telenor overcame their rivalry to release a joint statement decrying recent vandalism of the nation's mobile infrastructure, saying the acts appeared to be coordinated.
Amid the controversy, Telenor Myanmar announced several changes to its management team last week, including new heads for its sales and distribution and central marketing divisions.
- Even pre-coup, Myanmar made telcos spy on citizens
- Telenor plunges into the red after Myanmar write-off
- Myanmar military shuts down Internet
- Biden tightens up Huawei restrictions as Quad summit rolls on
- 'No cheating,' Apple tells China's tech giants
- Ooredoo posts Q4 sick note
— Padraig Belton, contributing editor, special to Light Reading