SINGAPORE (Reuters) -Myanmar’s junta has given the final approval for the sale of Norwegian telecommunications company Telenor’s operations in the country to a local company and a Lebanese investment firm, the firm said on Friday.
Telenor Chief Executive Sigve Brekke said in a statement the firm had to leave the country to “adhere to our own values on human rights and responsible business, and because local laws in Myanmar conflict with European laws”.
“The security situation is extreme and deteriorating, and we must ensure that our exit does not increase the safety risk for employees,” he said.
Reuters reported the approval earlier on Friday, citing three sources with knowledge of the deal.
According to a letter of approval sent on March 15, seen by two of the people, the transfer of Telenor’s Myanmar unit to its new owners must happen within five days.
Myanmar authorities did not immediately respond to telephone and email requests for comment.
“The last year has been an extremely difficult situation, I think it is the most challenging Telenor has ever had to handle, even more for the people living on the ground,” Brekke told Reuters.
One of Telenor’s investors, pension fund KLP, which owns 1.43%, welcomed the approval of the sale.
“It is satisfying to know that Telenor has finally received an approval on the sale given the demanding circumstances,” Kiran Aziz, KLP’s head of responsible investments, told Reuters.
“Until the approval it had been a balancing act for the company in order to stay neutral in the ongoing conflict, (while) at the same time (managing) the employee safety risk and respecting human rights.”
Telenor, one of the biggest foreign investors in Myanmar, sought to leave the country after last year’s military coup. The company told Reuters in September it was selling its operations to avoid European Union sanctions after “continued pressure” from the junta to activate intercept surveillance technology.
Its departure from a country that accounted for 7% of its earnings in 2020 has been mired in difficulty.
Military leaders late last year rejected its plan to sell its local operations to Lebanon’s M1 Group for $105 million, Reuters reported. Instead, they wanted M1 to partner with a local firm, Shwe Byain Phyu.
Reuters reported in February that Shwe Byain Phyu, whose chairman has a history of business ties to the military, will own 80% of the unit while M1 will own the rest.
Telenor only learnt “a couple of months ago” who would become the new majority owner, Brekke told Reuters. “We have not been involved in discussions as such.”
Shwe Byain Phyu has denied ties to the Myanmar army and previously said it was “selected by Telenor … because it was the most unrelated to the military”.
In its statement, Telenor said the agreement to sell the Myanmar unit was with M1 alone, but added that the “regulatory approval requires that M1 ensures a local majority owner after the closing of the transaction between Telenor and M1.”
The firm said on Friday that M1 had informed Telenor that its local partner, Shwe Byain Phyu, would be the 80% owner after the transaction.
“Sanctions screening from external consultants has assured Telenor that Shwe Byain Phyu and its owners are not subject to any current international sanctions,” Telenor said.
“The reason for sanctions is that there are close ties between individuals and companies and the military,” Brekke said. “Knowing that the Shwe Group is not on the sanctions list has been important for us.”
M1 said in a statement that it had partnered with Shwe Byain Phyu Group to form a joint venture to take over ownership of Telenor Myanmar called Investcom PTE.
The company said it would work with stakeholders to close the transaction as “soon as possible”.
CEO Azmi T. Mikati said in the statement that, “M1 Group is committed to support Investcom PTE in providing essential communications services and investing to develop the telecommunications infrastructure.”
Shwe Byain Phyu did not respond immediately to requests for comment by Reuters.
Reuters reported earlier in March that Telenor is planning to transfer $100 million held by its Myanmar operations to the unit’s new buyers – an amount roughly equivalent to how much it will be paid over five years, three people with knowledge of the deal’s terms said.
Senior foreign Telenor executives were barred from leaving Myanmar while negotiations around the sale were ongoing, a junta minister told Reuters last year.
Two of the sources said a senior Telenor Norwegian foreign executive had recently received permission from authorities to fly out.
A company spokesperson said in a statement that “one Norwegian employee has been allowed to leave after 10 months of being banned from leaving Myanmar”.
Civil rights groups have said the deal could put the data of 18 million people within the junta’s reach and called on Telenor to delete the personal information of customers.
Telenor has said doing so would violate local laws and expose employees to danger.
(Reporting by Fanny Potkin, Poppy McPherson and Gwladys Fouche; Editing by Kenneth Maxwell, Jason Neely and Jan Harvey)