MTN associate buys Telenor Myanmar for just $105m in firesale
The investor that is one of the biggest shareholders in MTN has bought Telenor’s Myanmar operation for just US$105 million.
Beirut-based M1 Group will pay about a tenth of the money Telenor has put into its Myanmar business over the past seven years – and it will pay less than half upfront, with $55 million deferred over five years.
In May Telenor had already written off its Myanmar investment, reporting a loss of 6.5 billion kroner ($752 million) on the business. The group reported a net loss of 3,889 million kroner ($468 million) for the first quarter of the year, compared with a profit of 698 kroner ($84 million) in the same period of 2020.
Sigve Brekke (pictured), president and CEO of Telenor Group, said this morning: “The situation in Myanmar has over the past months become increasingly challenging for Telenor for people security, regulatory and compliance reasons. We have evaluated all options and believe a sale of the company is the best possible solution in this situation.”
Earlier this week the military government of Myanmar, which took power in a coup in February, banned executives of foreign telecoms operators from leaving the country, following a demand that they accept the government’s requirement to intercept traffic in its fight against democracy.
Telenor indicated in May that it was evaluating options and repeated that comment this week.
Brekke said this morning: “The agreement to sell to M1 Group will ensure continued operations. Telenor entered Myanmar because we believed that access to affordable mobile services would support the country’s development and growth.”
The purchaser – which is not connected with the M1 telecoms company in Singapore, which is owned by two local media groups – is run by the prominent Mikati family of Lebanon.
Najib Mikati, twice prime minister of Lebanon, co-founded the telecommunications company Investcom with his brother Taha Mikati in 1982. They are widely said to be the two richest people in Lebanon.
The Mikatis sold the company in June 2006 to MTN for $5.5 billion. Taha Mikati is now chairman of M1 Group and his son Azmi is CEO.
According to Gulf News, Lebanese media reported in 2018 that Najib Mikati and his family members were accused of wrongly receiving millions of dollars in subsidised housing loans. In 2019, according to Alaraby, a Lebanese judge filed charges of illegal enrichment against Najib Mikati and members of his family, during a period when people in Lebanon were protesting against corruption.
He remains involved in Lebanese politics. In March he and two other former prime ministers issued a joint statement criticising the president’s treatment of Saad Hariri, then prime minister-designate. Hariri has not become prime minister.
MTN and M1 remain intertwined, 15 years after the merger or takeover. M1 says it “maintains a predominant share in MTN, a leading worldwide mobile operator”. The 2006 deal, it also says, created “the world’s largest emerging market telecommunications company”.
M1 also owns Areeba, a Beirut-based financial technology company; Areeba was also the name of a Cyprus mobile operator bought in 2018 by Xavier Niel’s Monaco Telecom for €260 million.
The deal to sell Telenor Myanmar to M1 is subject to regulatory approval, said the seller this morning.
Telenor has had a licence in Myanmar since 2014, when it and Qatari investor Ooredoo were named as the two winners of a fierce competition as the then democratically elected government opened up telecoms.
Telenor Myanmar now has 16.2 million mobile subscriptions, bringing in revenue of €694 million in 2020. It employs 747 people in the country.
Brekke said: “I wish to thank all employees and partners who have taken significant efforts to build a company that has impacted the people of Myanmar and has provided state of the art telco services during Telenor’s years in the country.”