© Reuters. File photo: The Telenor flag flies next to the company’s headquarters in Fornebu, Norway, June 1, 2017. Reuters / Ints Kalnins / File Photo
Written by Victoria Clisty, Goldis Foch, and John Jedi
OSLO (Reuters) – Since the Myanmar military ordered telecom operators to shut down their networks in an effort to end protests against the February coup, Telenor’s business there has been in limbo.
As one of the few western companies to bet on the Southeast Asian country after emerging from military dictatorship a decade ago, a return to military rule has led to a $ 783 million write-off this week for Norwegian Telenor.
The state-controlled Norwegian company, one of Myanmar’s biggest foreign investors, must now decide whether to survive the turmoil, or withdraw from a market that last year contributed 7% of its profits.
“We face many dilemmas,” Telenor CEO Sigve Brekke told Reuters this week, highlighting the stark problems facing international companies that are under increased scrutiny over their exposure in Myanmar, where hundreds of people were killed in protests against the February 1 coup.
Bricky said in a video interview that while Telenor plans to stay in the present time, the future is uncertain.
Although Telenor has been praised for supporting what was at the time a fledgling democracy, militant groups have long voiced concerns about trade relations with the military, which have intensified since the army retook the country.
Chris Sidoti, the UN expert on Myanmar, said that Telenor should avoid payments such as taxes or licensing fees that can directly or indirectly fund the military, and that if it cannot be independently determined that Telenor is “doing more than harm” in Myanmar, Then you must withdraw.
However, Espen Barth Eddy, who was Norway’s foreign minister at the time Telenor obtained a license in Myanmar in 2013, told Reuters that Telenor should stay and use its position as a well-established foreign company to be a vocal critic of the military.
“Under the current circumstances, Telenor faces several dilemmas in Myanmar,” a spokeswoman for the Norwegian Ministry of Trade, Industry and Fisheries, which represents the Norwegian government as a shareholder, said on Thursday.
“From a corporate governance perspective, investing in Myanmar is the responsibility of the company’s board and management. In this context, the ministry as a shareholder maintains a good dialogue with Telenor regarding the situation,” the spokeswoman added in an email response to Reuters.
Myanmar’s junta, which said it seized power because the election commission ignored its repeated complaints of fraud in last year’s elections, blamed protesters and the former ruling party for inciting violence.
It said on March 23 that it had no plans to lift the network’s restrictions. She has not commented on the restrictions since and did not return calls from Reuters on Thursday.
Telenor is no stranger to operating under military rule in both Pakistan and Thailand, where she challenged the Thai junta over what she said was an order to block access to social media.
Around the same time, Telenor was registering its first client in Myanmar.
John Frederick Backsas, the company’s chief executive at the time, told Reuters that Telenor had thought “a lot” about the danger that Myanmar’s experiment with democracy would not last.
“But we argued at the time that when we enter into a Western company that provides telecommunications in a country, we also assume some responsibility and we somehow guarantee that things are done right,” Baqas said.
Its position garnered international support at the time after Barack Obama became the first US president to visit Myanmar in 2012, a year after the junta was formally dissolved and a quasi-civilian government formed.
For its part, the Norwegian government, which owns the majority of Telenor, has long supported democracy in Myanmar, hosting radio and television stations reporting on it under the military rule.
In 1991, the Norwegian Nobel Committee awarded the Nobel Peace Prize to Aung San Suu Kyi, who spent 15 years under house arrest in Myanmar before leading a civilian government that held power in last year’s elections.
Suu Kyi was arrested after the coup and charged with charges that her lawyers said were fabricated.
Barth Eide, Norway’s foreign minister at the time, said that while Norway was supporting the Telenor project in Myanmar, the government had also warned about the risks.
He added, “We told them it was a complex country with a cruel military dictatorship. Telenor was very aware of it … It was not like they were beginners.”
Telenor was one of two foreign companies that were licensed in 2013, along with Ooredoo Qatar. Other operators in Myanmar are state-backed MPT and Mytel, which is partly owned by a military-linked company.
About 95% of Telenor’s 187 million customers worldwide are located in Asia and have about 18 million customers in Myanmar, serving a third of its population of 54 million.
(Graphic: Telenor Subscribers Worldwide, https://graphics.reuters.com/MYANMAR-POLITICS/TELENOR/qzjvqbqyrpx/chart.png)
(Chart: Telenor’s profits in Myanmar, https://graphics.reuters.com/MYANMAR-POLITICS/TELENOR/xegpbdndqpq/chart.png)
No direct links
For Telenor, doing business in Myanmar has faced its challenges, including trying to avoid business ties with the military.
Former CEO Paksas said that in the first two weeks after he started working in Myanmar, employees had to sit on the office floor because Telenor refused to pay bribes to customs officials for the furniture it had imported.
He also said that they had to overcome corruption risks when acquiring land to build mobile towers.
Then there was the dealings with the military, whose economic interests range from the land to the companies involved in mining and banking. The military has faced allegations of human rights violations, including the persecution of minorities and the violent suppression of protests for decades. She has repeatedly denied such allegations.
The Justice for Myanmar activist group said in a 2020 report that Telenor showed a “disturbing failure” in human rights due diligence over a 2015 deal to build mobile towers in which a military contractor participated.
Another UN report in 2019 said that Telenor was renting offices in a building on land owned by the military.
The report said that companies in Myanmar should end all relations with the military due to human rights violations.
A Telenor spokesperson said in an email on April 9 in response to Reuters’ questions that it addressed the issue of the 2015 agreement, without elaborating, and that choosing the office was the “only viable option” given factors such as safety.
“Telenor Myanmar has focused on minimal exposure to the military and has no direct links to entities controlled by the military,” the spokesman said.
The spokesman added that since the coup, Telenor had cut ties with three suppliers after finding links to the military.
On the day of the coup, the military ordered Telenor and other operators to shut down the networks. Telenor criticized the move but complied. Services were allowed to resume but there have been intermittent requests to shutdown since then, and the mobile internet has been shut down since 15 March.
Ooredoo also said it “unfortunately complied” with the directive to restrict mobile and wireless broadband in Myanmar, hurting its first-quarter earnings. It declined to comment on its business prospects in Myanmar.
Like other operators, Telenor paid a licensing fee to the now-controlled government in March, which critics say could help fund the crackdown on public protest.
Telenor said in an email response to Reuters that it had made the payment “amid strong protest against recent developments”.
Norwegian company KLP, one of its largest shareholders, said it was in dialogue with Telenor after the coup to ensure it identifies human rights risks.
“It is a difficult situation because Telenor cannot choose what it can and cannot do. They are receiving their direction from the authorities,” said Kiran Aziz, senior analyst for responsible investments at KLP. “It is difficult to assess how positive Telenor has contributed in this context.”
Balancing human rights is just one of the dilemmas that Telenor now faces, as well as safely serving its customers and maintaining their access to the network, CEO Pricky said.
“We are working on this balance every day,” he said.
And although this balance, for now, tends to have Telenor staying in the country, it is not for granted.
“We are making a difference like we have done since our arrival,” Bricky added. “But since the situation is unpredictable, it is impossible in many ways to predict the future and how this will develop.”