Telenor Group has announced an agreement to sell 100 percent of its mobile operations in Myanmar to M1 Group, following what it called a further deterioration of the situation and recent developments in the country. It said conditions had become challenging in terms of staff safety, and regulatory and compliance considerations. The total sale consideration is USD 105 million, of which USD 55 million is a deferred payment over five years, implying an enterprise value of approximately USD 600 million.
The sale follows Telenor Group’s announcement of an impairment of Telenor Myanmar on 04 May, when it said its future presence in the country would depend on developments there, and its ability to contribute positively to the people of Myanmar. It now says that a further deterioration of the situation and recent developments in the country form the basis for the decision to divest the company. In the present situation, it has not been possible for Telenor to conduct an ordinary sales process, it added.
Telenor Group CEO Sigve Brekke said that in recent months, the situation in Myanmar has “become increasingly challenging for Telenor” in terms of personnel security, and for regulatory and compliance reasons. It evaluated every option and believes a sale of the company is the best possible solution in this situation.
Brekke said the agreement to sell to M1 Group will ensure continued operations. Telenor entered Myanmar because it believed that access to affordable mobile services would support the country’s development and growth.
Since operations started in 2014, Telenor’s funding to Myanmar has been around NOK 5.3 billion. After turning cashflow-positive in 2017, Telenor Myanmar has distributed approximately NOK 3.2 billion in dividends. With effect from second quarter of 2021, Telenor Myanmar will be treated as an asset held for sale and discontinued operations.
The gain or loss calculation arising from the transaction will be affected, among other things, by the accumulated translation differences related to the Myanmar operation and will be finally determined at closing. The transaction is subject to regulatory approvals in Myanmar.
In February 2021, the military declared a state of emergency, and Telenor announced that the Myanmar Ministry of Transport and Communications (MoTC) had directed all mobile operators temporarily to shut down data networks. Voice and SMS services remained open. The MoTC said the decision followed Myanmar’s Telecommunication Law, and was designed to restrict the circulation of fake news, as well as preserve the stability of the nation and interest of the public.
Later that month, in response to the Myanmar authorities' request for consultation, Telenor Group raised concerns about the proposed Cyber Security Bill. Telenor Group said that the bill should not be passed as proposed, because it did not progress relevant regulatory frameworks and law for a digital future, nor promote and safeguard digital safety and rights.
