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Telenor quits Myanmar with $105 million sale to Lebanon's M1 Group

07/08/2021 | 05:43am EDT
FILE PHOTO: Telenor flag flutters next to the company's headquarters in Fornebu

OSLO (Reuters) - 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, 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% of Telenor's earnings last year.

Title: Telenor's earnings in Myanmar 

"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 6.5 billion crowns ($738 million) after seeing its mobile business in Myanmar severely restricted following the Feb. 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 Feb. 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% 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% 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 148.05 crowns at 0921 GMT, unchanged from Wednesday's close.

($1 = 8.8024 Norwegian crowns)

(Additional reporting by Maha El Dahan in Beirut, Fanny Potkin in Singapore, Supantha Mukherjee in Stockholm and Gwladys Fouche in Oslo; Editing by Kim Coghill, Tom Hogue, Simon Cameron-Moore and Barbara Lewis)

By Victoria Klesty

© Reuters 2021
Stocks mentioned in the article
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Sales 2021 113 B 13 092 M 13 092 M
Net income 2021 5 656 M 654 M 654 M
Net Debt 2021 109 B 12 653 M 12 653 M
P/E ratio 2021 35,0x
Yield 2021 6,29%
Capitalization 207 B 23 954 M 23 953 M
EV / Sales 2021 2,80x
EV / Sales 2022 2,65x
Nbr of Employees 18 000
Free-Float 46,0%
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Mean consensus OUTPERFORM
Number of Analysts 22
Last Close Price 147,95 NOK
Average target price 162,20 NOK
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