The Norwegian telecoms company Telenor said yesterday that it has agreed to the sale of its operations in Myanmar to the M1 Group, a Beirut-based investment firm, for $105 million.
In May, Telenor announced that it was writing off the value of the business after the military coup in February plunged the country into a political crisis, and the new junta imposed strict limits on mobile and internet access. “Further deterioration of the situation and recent developments in Myanmar form the basis for the decision to divest the company,” Telenor said in a statement announcing the sale.
The company said that M1 Group would take over its entire Myanmar business, acquiring 100 percent of the company, its spectrum, licenses, contracts and operations, employees, and customers. The prominent Norwegian company said “the transaction corresponds to an implied enterprise value of approximately $600 million.”
The decision was foreshadowed by an announcement on July 5 that the firm was “in the process of evaluating various options with regards to its presence in the country,” in light of the fraught and uncertain political situation. This came shortly after reports that the military junta was preventing foreign telecoms company executives from leaving the country without permission.
The travel ban was the junta’s apparent means of forcing the country’s four main telecoms firms to implement special intercept technology that would allow authorities to eavesdrop on the communications of citizens, particularly anti-junta forces, who have used the internet and social media networks to coordinate protests and get their message out to the world.
Faced with this pressure, Telenor seems to have decided that the only viable option was to cut its ties to Myanmar, eight years after initiating a venture that began with such promise. “The situation in Myanmar has over the past months become increasingly challenging for Telenor for people security, regulatory, and compliance reasons,” Telenor Group CEO Sigve Brekke said in the statement. “We have evaluated all options and believe a sale of the company is the best possible solution in this situation.”
Telenor’s exit from Myanmar marks a remarkable turnaround in fortunes for both the company, and the country as a whole. Like many other foreign investors, the Norwegian firm plunged into the Myanmar market during the heady days of reform that took place in the decade after 2011, as the military liberalized the country’s political life and engineered a limited opening to the West.
As one Myanmar wag noted on Twitter, $105 million was about the price paid in 2014 by the U.S. consumer goods company Colgate-Palmolive for the purchase of Myanmar’s Laser Brand Toothpaste – such was the bullish sentiment on Myanmar during the years of reform.
Telenor’s successful winning of a highly prized mobile operator license in Myanmar in 2013 was not only a big vote of confidence in the country’s political and economic reforms; it was also a transformative event for the country’s information environment, which in just a few years leapfrogged from crackly landline phones to web-enabled smartphones – exactly the technology that has proven so useful to anti-coup protesters.
Now, with the military government seeking to extend its control over telecoms networks, as part of its attempt to crush the anti-junta resistance, little good will come of Telenor’s exit. As I noted recently, any company willing to buy a telecoms network in Myanmar at this juncture would have to have a massive appetite for risk and be indifferent to domestic and international sentiment.
That certainly seems the case with M1 Group, a firm co-founded by Najib Mikati, a former Lebanese prime minister, and who, according to the advocacy group Justice for Myanmar, has a track record of investments in both Syria and Iran.
The company is also a major shareholder in Irrawaddy Green Towers, which operates around 4,000 telecom towers across the country and is working for the military-owned Mytel telecom operator, which the United Nations has linked to human rights abuses committed by the military. All this suggests that while Telenor resisted the junta’s demands that it divulge user data and implement phone intercept technology on its networks, M1 Group will have no such compunctions about complying.
“While Telenor has made moves to act with transparency, and made limited attempts to protect user data, we cannot expect the same from M1 Group,” Justice for Myanmar spokesperson Yadanar Maung told Nikkei Asia yesterday. He also accused Telenor of “failing in its human rights responsibilities through this rapid-fire sale to M1 Group.”
However, it’s hard to see how else the Norwegian firm could have acted. The military takeover on February 1 impaled it on the horns of a dilemma. According to a recent joint report by Frontier Myanmar and the Danish investigative reporting organization Danwatch, Telenor has since been forced to block access to social media platforms Facebook, Twitter, and Instagram and to cut internet access to its 18 million subscribers. It was also allegedly coming under pressure to hand over data about known regime opponents.
This was the price of Telenor remaining in Myanmar, and it is unrealistic to think that it could have stayed and successfully opposed the junta’s orders or found a buyer willing to uphold human rights principles. While Telenor would probably have been better than most of the alternatives, the news that the military government had banned foreign telecoms executives from leaving the country suggested that continued resistance could put its staff in danger.
Given the circumstances, “it’s not at all surprising that Telenor decided to exit,” Phil Robertson of Human Rights Watch said in an emailed statement. “The sad part is Telenor will likely be replaced by a company that is less principled in standing up to the junta’s rights abusing demands, and the Burmese people will be worse off because of it.”
Telenor wasn’t the first Western firm to make such a calculation in Myanmar, and given the current situation, it probably won’t be the last.