Since Myanmar’s army ordered telecoms operators to shut their networks in an effort to finish protests towards its February coup, Telenor’s enterprise there was in limbo.
As certainly one of the few Western firms to guess on the South East Asian nation after it emerged from army dictatorship a decade in the past, the return to military rule led to a $783 million (roughly Rs. 5,760 crores) write-off this week for Norway’s Telenor.
The Norwegian state-controlled agency, certainly one of the largest overseas buyers in Myanmar, should now resolve whether or not to trip out the turmoil, or withdraw from a market which final yr contributed seven p.c of its earnings.
“We are facing many dilemmas,” Telenor Chief Executive Sigve Brekke instructed Reuters this week, highlighting the stark issues going through worldwide companies beneath elevated scrutiny over their publicity in Myanmar, the place a whole bunch have been killed in protests towards the February 1 coup.
While Telenor plans to keep for now, the future is unsure, Brekke stated in a video interview.
Although Telenor had gained reward for supporting what at the time was a fledgling democracy, activist teams have lengthy voiced considerations about enterprise ties to the army, which have intensified since the military retook management of the nation.
Chris Sidoti, a United Nations skilled on Myanmar, stated Telenor ought to keep away from funds similar to taxes or licence charges that would fund the army instantly or not directly, and that if it can’t be independently decided that Telenor is “doing more good than harm” in Myanmar, then it ought to withdraw.
However, Espen Barth Eide, who was Norway’s overseas minister at the time Telenor gained a licence in Myanmar in 2013, instructed Reuters that Telenor ought to keep and use its place as a well-established overseas agency to be a vocal critic of the army.
A spokeswoman for Norway’s Ministry of Trade, Industry and Fisheries, which represents the Norwegian authorities as a shareholder, stated on Thursday that “under the current circumstances Telenor faces several dilemmas in Myanmar”.
“From a corporate governance perspective the investment in Myanmar is a responsibility of the company’s Board and Management. Within this framework the Ministry as a shareholder keep a good dialogue with Telenor regarding the situation,” the spokeswoman added in an emailed response to Reuters.
The Myanmar junta, which has stated it seized energy as a result of its repeated complaints of fraud in final yr’s election have been ignored by the election fee, has blamed protesters and the former ruling occasion for instigating violence.
And it stated on March 23 that it had no plans to raise community restrictions. It has not commented on the curbs since and didn’t reply Reuters calls on Thursday.
New market
Telenor isn’t any stranger to working beneath army rule in each Pakistan and Thailand, the place it challenged the Thai junta over what it stated was an order to block social media entry.
At round the similar time, Telenor was signing up its first prospects in Myanmar.
Its then-CEO, Jon Fredrik Baksaas, instructed Reuters that Telenor had thought “a lot” about the threat that Myanmar’s experiment with democracy won’t final.
“But we argued at that time that, when we get in a western company that delivers telecommunication in a country, we stand also with some responsibility, and a bit of a guarantee that things are done correctly,” Baksaas stated.
Its place had help internationally at the time after Barack Obama grew to become the first US President to go to Myanmar in 2012, the yr after a army junta was formally dissolved and a quasi-civilian authorities put in.
For its half, the Norwegian authorities, which owns a majority of Telenor, had lengthy supported democracy in Myanmar, internet hosting radio and TV stations reporting on it beneath army rule.
And in 1991, the Norwegian Nobel Committee gave the Nobel Peace Prize to Aung San Suu Kyi, who spent 15 years beneath home arrest in Myanmar earlier than main a civilian authorities which retained energy in final yr’s election.
Suu Kyi was detained after the coup and charged with offences that her legal professionals say are trumped up.
While Norway was supportive of Telenor’s Myanmar enterprise, the authorities additionally warned of the dangers, Barth Eide, Norway’s overseas minister at the time, stated.
“We told them that it’s a complicated country which had a harsh military dictatorship. Telenor was very much aware of it … It’s not like they were novices,” he added.
Telenor was certainly one of two overseas operators granted licences in 2013, alongside Qatar’s Ooredoo. The different operators in Myanmar are state-backed MPT and Mytel, which is part-owned by a military-linked firm.
About 95 p.c of Telenor’s 187 million prospects worldwide are in Asia and it has round 18 million prospects in Myanmar, serving a 3rd of its 54 million inhabitants.
‘No direct hyperlinks’
For Telenor, doing enterprise in Myanmar had its challenges, together with attempting to keep away from business ties to the army.
Former CEO Baksaas stated for the first couple of weeks after it started operations in Myanmar, workers had to sit on the workplace flooring as a result of Telenor refused to pay bribes to customs officers for furnishings which it had imported.
He additionally stated they’d to navigate corruption dangers when buying land to construct cell towers.
Then there was coping with the army, whose financial pursuits vary from land to companies concerned in mining and banking. The army has confronted allegations of human rights abuses together with persecuting minorities and violently suppressing protests going again a long time. It has repeatedly denied such allegations.
Activist group Justice for Myanmar stated in a 2020 report that Telenor had proven “an alarming failure” in its human rights due diligence over a deal struck in 2015 to construct cell towers that concerned a army contractor.
Another report by the United Nations in 2019 stated Telenor was renting workplaces in a constructing constructed on military-owned land.
The report stated companies in Myanmar ought to finish all ties with the army due to human rights abuses.
A Telenor spokesperson stated in an e-mail on April 9 responding to Reuters questions that it had addressed the matter of the 2015 deal, with out elaborating, and that its alternative of workplace was “the only viable option” given elements like security.
“Telenor Myanmar has been focused on having minimal exposure to the military and have no direct links to military-controlled entities,” the spokesperson stated.
Since the coup, Telenor has lower ties with three suppliers after discovering hyperlinks to the army, the spokesperson added.
Balancing act
On the day of the coup, the army ordered Telenor and different operators to shut down networks. Telenor criticised the transfer however complied. Services have been allowed to resume however there have been intermittent requests to shut since, and the cell web has been shut since March 15.
Ooredoo has additionally stated it “regretfully complied” with directives to limit cell and wi-fi broadband in Myanmar, which hit its first quarter earnings. It declined additional remark on the outlook for its Myanmar enterprise.
Like different operators, Telenor paid license charges to the now military-controlled authorities in March, which critics argue might assist it finance repression of public protest.
Telenor stated in the emailed response to Reuters that it made the cost “under strong protest against recent developments”.
One of its main shareholders, Norway’s KLP, stated it had been in a dialogue with Telenor after the coup to guarantee it was figuring out the human rights dangers.
“It is a challenging situation because Telenor cannot choose what it can and can’t do. They get their directives from the authorities,” stated Kiran Aziz, senior analyst for accountable investments at KLP. “It is difficult to assess how positive Telenor’s contribution can be in this context.”
Weighing up human rights is only one of the dilemmas Telenor now faces, stated CEO Brekke, alongside safely serving its prospects and sustaining community entry for them.
“We work on that balance every single day,” he stated.
And though that stability, for now, is tilted to Telenor staying in the nation, it isn’t a given.
“We make a difference like we have done since we arrived. But with the situation being this unpredictable, it is impossible in many ways to speculate about the future and how this will develop,” Brekke added.
© Thomson Reuters 2021
