Telenor's Fire Sale of Myanmar Unit Includes $100 Million in Funds - Sources

Norway’s Telenor is planning to transfer $100 million held by its troubled Myanmar operations to the unit’s new buyers – an amount roughly equivalent to how much it will be paid over five years, three people with knowledge of the deal’s terms said.

The previously undisclosed detail of the controversial sale underscores the urgency of an exit from a seven-year-long investment. Telenor, 54% owned by the Norwegian government, has said continued ownership could subject it to EU sanctions and endanger its remaining staff in military-ruled Myanmar.

Telenor will be selling the business to Myanmar conglomerate Shwe Byain Phyu (SBP) and Lebanese investment firm M1 Group, the sources said, adding that the $100 million in retained earnings are held at a Myanmar bank. Telenor last year announced a sale to M1 for $105 million, $55 million of which will be paid over five years and those financial terms still stand, said two of the sources who declined to be identified due to the sensitivity of the matter.

The sale has been approved by local regulators but awaits approval from an investment commission, according to one source.

Telenor said in a statement it had received a letter from Myanmar’s Post and Telecommunications Department regarding the regulatory approval process but noted there was still a “final” step to full approval.

Telenor did not comment on Reuters reporting about the funds held by the unit. M1 said estimates reported by Reuters were “ill-founded” but did not elaborate. SBP said: “To our knowledge, the mentioned rough estimates and assumptions are inaccurate”.

Telenor in May wrote off its Myanmar operations, which provides mobile phone services to more than 18 million subscribers, for $783 million. It argues it has no choice but to sell after the junta applied pressure on it to activate intercept surveillance technology. The junta has also forbidden its senior foreign executives from leaving the country.

But the move has been condemned by civil rights groups who fear Telenor’s exit could allow the junta means to more easily track political opponents and mine data from subscribers to crack down on dissent.

Small demonstrations protesting the sale have taken place in several Myanmar towns. Opposition lawmakers also raised the matter in Norway’s parliament last month and some Telenor employees have petitioned the company not to withdraw.

The Telenor spokesperson said the company was aware of the petition but the conflict between local and international laws as well as employee safety made continued ownership impossible.

The sale has been delayed for months after Myanmar authorities sought to have M1 partner with SBP, which has interests in petrol stations and gem mining. Reuters reported last month that SBP will own 80% of the unit with M1 holding the rest.

SBP's chairman, Thein Win Zaw, has a history of business ties to the military, including, most recently, as an investor in Mytel, an army-owned telecoms firm, according to corporate records seen by Reuters. 

M1 said if it won the deal, it would announce more details in due course. It said no third party was involved in the deal with Telenor but "one could always identify strategic business partners" with the objective of preserving Telenor Myanmar operations.

Myanmar junta authorities did not respond to Reuters requests for comment.

SBP declined to comment on its potential ownership stake in Telenor Myanmar. It said allegations that SBP had long-standing ties to the army were part of “a misinformation campaign” and the group has had “no direct link whatsoever to any government entity or the military, since its founding days”. It also said it advocates for “ethics and governance in business coupled with consumer protection regulations in terms of data security and privacy”.

Opposition lawmakers in Norway have argued Telenor should delete user data before the sale is completed to protect demonstrators in Myanmar. Norwegian Industry Minister Jan Christian Vestre told parliament last month the government could not prevent a transfer of customer metadata from Telenor Myanmar to the country’s military rulers.

SINGAPORE (Reuters)