Telecom giant Telenor has entered into an agreement to sell 100 percent of its mobile operations in Myanmar to M1 Group for 105 million dollars, or around 900 million kroner, according to a statement.
$ 55 million, or about $ 470 million, is paid over five years.
– It is a very sad day, not only for Telenor now that we are leaving the country, but it is also sad to see what is going on in Myanmar, says CEO Sigve Brekke to E24.
Brekke says that the company has “considered many alternatives in recent weeks”, and that the process “has been ongoing until recently” before the agreement was entered into on Wednesday night.
– How much has it cost to organize this?
– I do not have any figures on this, but in terms of resources this has taken time for us, we have been very close to the situation since 1 February both on the ground and at group level. That’s how it is, says Brekke.
The agreement entails an estimated company value of approximately USD 600 million, or NOK 5.2 billion. M1 Group, an investment company based in Beirut, Lebanon, will take over all the shares in Telenor Myanmar and continue operating the company, it states.
– The new owner has been very impressed with what we have achieved in the country since 2014, they have seen how profitable it has been for us with early positive cash flow and significant dividends, says the top manager.
– Everything became more challenging
In May, it became known that Telenor wrote down the entire Myanmar investment of NOK 6.5 billion .
– How far were you in the sales process at that time?
– This situation has been demanding since February, and we have thought carefully before we decided that sales was the best solution both for us, but also for our 730 employees in the organization, in addition to our customers, he says.
Brekke points to the following conditions as particularly challenging in Myanmar:
- Employee safety
- Regulatory conditions
- Business practice
– Everything became more challenging, and when we wrote down the investment, we found a good balance between all three things. Since then, it has become more demanding, and it has led to sales today, Brekke explains.
– Have you received assurances that the employees will keep their jobs?
– The new owner takes over the entire organization with employees and operations, and the new owner will deploy his team. They are also impressed with what we have achieved in the country since we entered 2014, but I do not know what kind of vision they have, the top manager explains.
Brekke does not want to speculate on the further development in conflict-ridden Myanmar, and points out that the situation “depends on the current authorities”.
Telenor entered Myanmar in 2013 and opened its mobile business in 2014, in connection with the release of Aung San Suu Kyi from house arrest and the military junta opened for elections. Telenor’s entry had solid support from the government and the investment was also a success – far faster than expected
Myanmar became an important new growth driver for Telenor in Asia, which also has operations in Bangladesh, Pakistan, Malaysia and Thailand.
On 1 February this year, the situation changed abruptly. The military launched a coup and took power from the elected representatives, which has created a lot of unrest, large demonstrations and violence against the civilian population.
The military regime’s restrictions on mobile networks led to Telenor’s daily traffic and subscription revenues “being roughly halved”, according to the company.
– The situation in Myanmar has in recent months become increasingly challenging for Telenor related to safety for our employees, regulatory conditions and good business practice. We have considered all possibilities and believe that the sale of the business is the best possible solution in this situation, the CEO stated in a statement from the company on Thursday morning.
– The agreement to sell Telenor Myanmar to M1 Group will ensure that operations continue. Telenor entered Myanmar with a belief that affordable mobile services would contribute to the country’s development and growth. I am grateful to all our employees and partners who have made a significant effort to build a company that has been a positive contributor to the people of Myanmar and provided top-class telecommunications services throughout Telenor’s presence in the country, he added.
Telenor has a market value of NOK 207 billion after a price drop of 18 percent since the turn of the year.
The transaction is subject to regulatory approvals in Myanmar.