Some eight years after two international telecoms groups entered Myanmar, quickly driving up mobile broadband penetration, Ooredoo Group and Telenor Group have or are in the process of leaving the country which has been racked by political turmoil over the past 18 months.
The companies had very different reasons for divesting and very different exit paths.
Weeks after a military coup in February 2021, Telenor booked a NOK6.5 billion ($663 million) impairment loss on its Myanmar operation and started a search for a buyer.
By July 2021, it lined up Lebanon-based M1 Group to acquire the unit for $105 million.
Many analysts referred to the divestment as a fire sale following political unrest after the coup. It came down to a governance issue, with Telenor stating it departed because “local laws in Myanmar conflict with European laws”.
Myanmar authorities took more than eight months to approve the sale, making it a condition M1 line up a local partner with majority ownership.
Its local partner Shwe Byain Phyu holds 49 per cent of Investcom, a Singapore-based company established by M1 for the purchase of Telenor Myanmar.
Qatar-based Ooredoo, meanwhile, stated a planned sale to Singapore-headquartered Nine Communications for $576 million was part of a regular strategic assessment of its portfolio in the region. It also faced operational issues around the security of its local and overseas staff.
Nine Communications is owned by conglomerate Link Family Office and U Nyan Win, but it’s unclear if it has secured local partners.
The huge difference in acquisition prices is surprising given Telenor Myanmar had a larger operation and 18.1 million mobile connections at end-December 2021 compared with 11.5 million for Ooredoo.
Market leader MPT closed the year with 29.5 million.
Telenor revealed in 2021 it invested a total of $534 million in its Myanmar unit since launching in 2014 and it turned cash flow positive in 2017.
Japan-based KDDI, part of a joint venture with investment company Sumitomo and state-owned MPT, is likely to face increased scrutiny at home and abroad.
An inside source revealed KDDI evacuated all Japan-based staff from Myanmar. While there is speculation it will pull out of the partnership due to rising pressure, in its earnings release covering April to June, it stated since the coup it’s “been striving to maintain our telecommunications services”.
It is unknown how M1 and Nine Communications will mitigate the regime’s demands for stick control of networks, repeatedly ordering operators to shut down access to the internet or specific websites including WhatsApp and Facebook.
Presumably, to win government approval, both have indicated they won’t oppose draconian orders including surveillance requests.
GSMA Intelligence figures showed Myanmar had 7.2 million mobile connections at mid-2014, with 2G accounting for 77.3 per cent. The population stood at 54 million.
Fast forward to Q1 2021, following the two overseas players investing heavily in mobile networks, connections peaked at 73.1 million, with 4G comprising more than half and 2G 19.5 per cent.
Since the coup, connections declined to 65.6 million at end-June. On the positive side, LTE users accounted for 55.2 per cent, with mobile broadband connections at 88.5 per cent and 79.3 per cent with smartphones.
Julian Gorman, head of GSMA Asia Pacific, told Mobile World Live Myanmar’s growth story from the start was a journey which challenged many observers’ hypothesis about low GDP markets, with the operators quickly deploying LTE networks and the majority of users going straight to smartphones.
Just before the greenfield launch of the new networks, SIMs cost hundreds of dollars, most handsets did not support Myanmar languages and many households did not even have electricity.
“However, the country was keen to access the world which it had been isolated from for so many years. I believe this appetite, pent up demand, lack of installed base anchored in 2G, and the competition and energy that Ooredoo and Telenor brought to the market were major factors in Myanmar quickly achieving market penetration measures even advanced markets were jealous of,” Gorman explained.
He suggested Myanmar’s rapid adoption of smartphones and mobile broadband raises questions why adjacent markets including Bangladesh and Pakistan have not been able to achieve similar metrics and can be a useful case study.
With the UN estimating nearly 1 million people have been displaced by the conflict since the military takeover, the country’s communications networks are more important than ever.
As the GSMA pointed out soon after the coup any bans on internet access affect people’s health, education, and social and economic wellbeing.
Under new management, the world will soon discover how Atom, the rebranded Telenor unit, and Nine Communications fulfil their obligation to ensure Myanmar’s beleaguered population has ubiquitous network access.
The mood is a sea change from the bubbly optimism in June 2013 when Myanmar awarded its first licences to overseas operators, marking an opening of the local economy and the beginning a long-awaited growth period.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.