Just days after moving to quell rumours it was planning to sell off its Myanmar mobile telco business, Norway’s Telenor has revealed it has sold its Telenor Myanmar subsidiary to M1 Group for US$105 million.
On 8 July, the Norwegian majority state-owned multinational telecommunications company said in a post on its website that it had entered into an agreement to sell 100 per cent of its mobile operations in Myanmar to M1 Group, a Lebanese conglomerate that owns subsidiaries in a diverse array of sectors such as telecommunications, real estate, aviation and more.
According to the post, US$55 million of the total transaction amount is a deferred payment over five years.
Telenor said its funding for the Myanmar business over the years has been around 5.3 billion Norwegian Krone (NOK), which equates to more than US$600 million -- the implied enterprise value of the business under the current deal with M1, which barely breaks the US$100 million mark.
The move comes after months of hardship for Telenor Myanmar and, indeed, all other telco operators in Myanmar, after the country’s military declared a state of emergency in February, subsequently shutting down mobile internet across the country.
Other internet services have also been increasingly restricted, according to Telenor.
As reported by ABC News, Myanmar's military forces declared a state of emergency and mounted what was effectively a coup in early February, swooping on the homes of elected leader Aung San Suu Kyi and other figures in her National League for Democracy (NLD) party.
The series of arrests and subsequent detainment of key individuals followed the country’s November 2020 elections, in which a majority of the population reportedly voted for the NLD. The military subsequently claimed the poll was marred by fraud.
In early May, Telenor Group, as one of the major telco players in the country, announced an impairment of Telenor Myanmar due to the worsening economic and business environment outlook and a deteriorating security and human rights situation, with limited prospects of improvement.
On 2 July, the telco said it was still evaluating whether it would continue to operate its telco business in Myanmar as trading conditions in the country deteriorated amid the ongoing political turmoil, dismissing reports at the time that it was seeking to sell the Myanmar business unit.
Clearly, a sale was in the works.
From its impairment announcement in May, Telenor had always maintained that the future presence would depend on the developments in the country and the ability to contribute positively to the people of Myanmar.
Now, further deterioration of the situation and recent developments in Myanmar have formed the basis of the decision to divest the company.
But under the present situation it has not been possible for Telenor to conduct an ordinary sales process, the company said.
“The situation in Myanmar has over the past months become increasingly challenging for Telenor for people security, regulatory and compliance reasons,” said Sigve Brekke, president and CEO of Telenor Group. “We have evaluated all options and believe a sale of the company is the best possible solution in this situation.
“The agreement to sell to M1 Group will ensure continued operations. Telenor entered Myanmar because we believed that access to affordable mobile services would support the country’s development and growth.
“I wish to thank all employees and partners who have taken significant efforts to build a company that has impacted the people of Myanmar and has provided state of the art telco services during Telenor’s years in the country,” he added.
Telenor’s Myanmar operations started in 2014. Now, with effect from the second quarter of 2021, Telenor Myanmar will be treated as an asset held for sale and discontinued operations for the company.
The transaction remains subject to regulatory approvals in Myanmar.
According to a report by news agency Reuters, which cited a person with knowledge of the matter, Myanmar’s military junta, via the country’s Department of Posts and Telecommunications, issued a confidential order last month telling senior telco execs that they needed to seek special authorisation to leave the country.
It is thought that the travel restrictions, which reportedly apply to both Myanmar nationals and foreigners, were ordered in a bid to convince the country’s main telco provider firms to implement intercept technology allowing authorities to spy on calls, according to Reuters.
Telenor Myanmar's CEO is Jon Omund Revhaug. Based in Yangon, he came to the role in 2020 after serving as CEO of the Telenor Procurement Company from Singapore for three years.