Since the Burmese military ordered telecom operators to shut down their networks in an attempt to end protests against its February coup, Telenor’s affairs have remained in limbo.
As one of the few Western companies to bet on the Southeast Asian country following its exit from military dictatorship ten years ago, the army’s return to rule has led to a delisting of 783 million dollars this week for Norwegian Telenor (TEL.OL).
The Norwegian state-controlled company, one of Myanmar’s biggest foreign investors, must now decide whether to emerge from the turmoil or withdraw from a market that last year contributed 7% of its profits.
“We are faced with many dilemmas,” Sigve Brekke, CEO of Telenor, told Reuters this week, highlighting the serious problems facing international companies under increased control over their exposure in Myanmar, where hundreds of people have were killed during protests against the February 1 coup.
While Telenor plans to stay for the time being, the future is uncertain, Brekke said in a video interview.
Although Telenor has won praise for its support for what was then a fledgling democracy, activist groups have long expressed concerns about commercial ties with the military, which have intensified since the military regained control of the country.
Chris Sidoti, a UN expert on Myanmar, said Telenor should avoid payments such as taxes or license fees that could fund the military directly or indirectly, and that if it cannot be determined in a way independent that Telenor “does more good than harm” in Myanmar. , then he should withdraw.
However, Espen Barth Eide, who was Norway’s foreign minister when Telenor was granted a license in Myanmar in 2013, told Reuters that Telenor should stay and use its position as a well-established foreign company to sharply criticize the military. .
A spokeswoman for the Norwegian Ministry of Trade, Industry and Fisheries, which represents the Norwegian government as a shareholder, said Thursday that “under the current circumstances, Telenor faces several dilemmas in Myanmar”.
“From a corporate governance perspective, investing in Myanmar is the responsibility of the board of directors and management of the company. In this context, the ministry, as a shareholder, maintains a good dialogue with Telenor concerning the situation, ”added the spokesperson in an e-mail response to Reuters.
The Burmese junta, which said it seized power because its repeated complaints of fraud in last year’s election were ignored by the electoral commission, accused protesters and the former ruling party of having incited to violence.
And he said on March 23 that he had no plans to lift network restrictions. He has not commented on the curbs since and did not respond to Reuters calls on Thursday.
Telenor is no stranger to operating under military rule in Pakistan and Thailand, where it has challenged the Thai junta over what it said was an order to block access to social media.
Around the same time, Telenor was recruiting its first customers in Myanmar.
Its then CEO, Jon Fredrik Baksaas, told Reuters that Telenor had “given a lot of thought” to the risk that Myanmar’s democratic experiment would not last.
“But we argued at that point that when we get into a western company that provides telecommunications in a country, we also have a certain responsibility and a certain guarantee that things are done correctly,” Baksaas said.
His position received international support as Barack Obama became the first US president to visit Myanmar in 2012, the year after the official dissolution of a military junta and the installation of a quasi-government. civil.
For its part, the Norwegian government, which owns the majority of Telenor, has long supported democracy in Myanmar, hosting radio and television stations that report under the military regime.
And 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 retained power in the year’s elections. last.
Suu Kyi was arrested after the coup and charged with offenses that her lawyers say are trumped up.
As Norway backed Telenor’s Myanmar business, the government also warned of the risks, said Barth Eide, Norway’s foreign minister at the time.
“We told them it was a complicated country that had a severe military dictatorship. Telenor was very aware of this… It’s not like they are newbies, ”he added.
Telenor was one of two foreign operators to be licensed in 2013, alongside Qatar’s Ooredoo (ORDS.QA). The other operators in Myanmar are state-backed MPT and Mytel, which is partly owned by a company linked to the military.
Around 95% of Telenor’s 187 million customers worldwide are in Asia and have around 18 million customers in Myanmar, serving a third of its 54 million people.
‘NO DIRECT LINKS’
For Telenor, doing business in Myanmar had its challenges, including trying to avoid commercial ties with the military.
Former CEO Baksaas said that for the first two weeks after starting operations in Myanmar, staff had to sit in offices because Telenor refused to pay bribes to customs officials for the furniture she had imported.
He also said they had to manage corruption risks when acquiring land to build mobile towers.
Then there were the military, whose economic interests range from land to companies involved in mining and banking. The military has faced allegations of human rights violations, including persecution of minorities and violent repression of protests dating back decades. He has repeatedly denied such allegations.
Activist group Justice for Myanmar said in a 2020 report that Telenor had shown an ‘alarming failure’ in its human rights due diligence on a 2015 deal to build towers motives involving a military contractor.
Another United Nations report published in 2019 indicated that Telenor was renting office space in a building erected on land belonging to the military.
The report says Myanmar companies should end all ties with the military due to human rights violations.
A Telenor spokesperson said in an April 9 email responding to questions from Reuters that he addressed the issue of the 2015 deal, without giving details, and that his choice of office was “the only one viable option ”taking into account factors such as safety.
“Telenor Myanmar has focused on minimal exposure to the military and has no direct connection to entities controlled by the military,” the spokesperson said.
Since the coup, Telenor has severed ties with three suppliers after finding links with the military, the spokesperson added.
On the day of the coup, the military ordered Telenor and other operators to shut down networks. Telenor criticized the move but complied. Services have been allowed to resume but there have been intermittent shutdown requests since, and mobile internet has been shut down since March 15.
Ooredoo also said it “reluctantly complied” with guidelines to restrict mobile and wireless broadband in Myanmar, which hit its first quarter results. He declined to comment further on the outlook for his activities in Myanmar.
Like other operators, Telenor paid license fees to the now military-controlled government in March, which critics say could help finance the crackdown on public protests.
Telenor said in the emailed response to Reuters that it had made the payment “under strong protest against recent developments”.
One of its major shareholders, Norwegian company KLP, said it engaged in dialogue with Telenor after the coup to ensure it identified human rights risks.
“It’s a difficult situation because Telenor cannot choose what it can and cannot do. They get their directives from the authorities, ”said Kiran Aziz, senior analyst for responsible investments at KLP. “It is difficult to assess to what extent Telenor’s contribution can be positive in this context. “
Weighing human rights is just one of the dilemmas Telenor now faces, CEO Brekke said, in addition to serving its customers securely and ensuring them access to the network.
“We are working on this balance every day,” he said.
And although this balance, for now, is geared towards keeping Telenor in the country, it is not a given.
“We are making a difference as we have done since our arrival. But with the situation so unpredictable, it is in many ways impossible to speculate on the future and how it will turn out, ”added Brekke.
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