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Military coup brings Telenor’s future in Myanmar near.

As Myanmar’s military orders telecom operators to shut down their networks in an effort to end protests against the February coup, Telenor’s business has fallen to no limits.

As one of the few Western companies to bet in the Southeast Asian country after a decade of dictatorship emerged from the military, the return to military rule led to a $ 783 million write-off this week for. Telenor of Norway (TEL.OL)

The Norwegian state-controlled company, one of the largest foreign investors in Myanmar, must decide whether to eliminate chaos or withdraw from the market, where last year contributed 7 percent of its revenues.

“We are facing a number of dilemmas,” Telenor Chief Executive Sigve Brekke told Reuters this week, highlighting the issues international companies face under increased scrutiny from disclosures in wives. Come

While Telenor plans to stay But the future is uncertain, Brekke said in a video interview.

Telenor, though, was praised for his support for the democracy with children at the time. But activists have long voiced concerns about business ties with the military, which have escalated since the military took control of the country.

Chris Sidoti, a United Nations expert on Myanmar, said Telenor should avoid payments such as taxes or license fees that could directly or indirectly fund the military and if it could not be independently identified that Telenor was. “Do better than hurting” in Myanmar, then should withdraw.

However, Espen Barth Eide, Norway’s foreign minister while Telenor received a license in Myanmar in 2013, told Reuters that Telenor should stay and use its position as a. A well-known foreign company to be a military critic.

A spokeswoman for the Norwegian Ministry of Trade, Industry and Fisheries, representing the Norwegian government as a shareholder, said on Thursday. “Under current circumstances, Telenor has faced a number of problems in Myanmar.”

“From a corporate governance perspective, investing in Myanmar is the responsibility of the company’s board of directors and management within this framework. The spokeswoman added in an emailed response to Reuters.

The Myanmar military government, which said it seized power because the electoral commission ignored several complaints of election corruption, last year blamed former protesters and coalition parties for inciting violence.

And said on March 23 it had no plans to lift restrictions on the network, had not commented on curb since then, and had not answered Reuters calls on Thursday.

New market

Telenor is no stranger to military operations in both Pakistan and Thailand, who have challenged the Thai junta over what it says is an order to block access to social media.

Around the same time, Telenor was signing its first customer in Myanmar.

At the time, CEO Jon Fredrik Baksaas told Reuters Telenor had a “very” thought about the risk that Myanmar’s democratic trials might not end.

“But at the time, we argued that when we joined a western company providing telecommunication services in a country, we took a certain responsibility and could guarantee that things were going the right way,” Baksaas said.

The position received international support at the time after Barack Obama became the first US President to visit Myanmar in 2012, the year the military government was officially dissolved and there was a A semi-civilian government is installed.

The Norwegian government, which owns a majority of Telenor, has long supported democracy in Myanmar, hosting radio and television programs reporting the matter under military rule.

And in 1991, Norway’s Nobel Committee awarded Aung San Suu Kyi, who spent 15 years under house arrest in Myanmar, before leading the civilian government, which remains Dominated last year’s election

Suu Kyi was detained after the coup and charged her lawyers said it was an offense.

While Norway supported Telenor’s Myanmar joint venture, the government warned of the risks, Norway’s Foreign Minister Barth Eide at the time said.

“We told them that it was a complex country with a violent military dictatorship. Telenor was very aware … it was not like they were a novice,” he added.

Telenor was one of two foreign service providers licensed in 2013 alongside Qatar’s Ooredoo (ORDS.QA). The other carriers in Myanmar are MPT and Mytel licensed. State-sponsored as part of the military-linked company

About 95% of Telenor’s 187 million customers worldwide are in Asia and approximately 18 million customers are in Myanmar, serving a third of the 54 million people.

‘No direct link’

For Telenor, doing business in Myanmar presents challenges, including trying to avoid military ties.

The former CEO Baksaas said that in the first few weeks after it began operations in Myanmar, employees were required to sit on the office floor as Telenor refused to pay customs officials bribes for imported furniture.

He also said they faced corruption risks when it came to acquiring land to build mobile cell towers.

Then there was a deal with the military, whose economic interests ranged from land to mining and banking related companies. The military has faced accusations of human rights abuses, including the persecution of minorities and the crackdown on violent protests dating back decades. Has repeatedly denied such allegations.

Activists group Justice for Myanmar said in a 2020 report that Telenor had performed A “shocking failure” to investigate human rights over a deal struck in 2015 to build mobile towers involving military contractors.

Another United Nations report in 2019 said Telenor rented an office in a building built on military-owned land.

The report said the Myanmar-based company was terminating all ties with the military due to human rights abuses.

A Telenor spokesperson said in an email on April 9 to answer Reuters’ questions that it had handled the matter of the 2015 deal without elaborating and that the office selection was. “The only choice possible” due to factors such as safety

A spokesman said “Telenor Myanmar attaches the least importance to military exposure and has no direct links to military-controlled entities,” the spokesman said.

Since the coup, Telenor has cut ties with three suppliers after finding links with the military, the spokesman added.

Balancing Act

On the eve of the coup, the army ordered Telenor and other operators to close the Telenor network, criticizing the move. But follow Services are allowed to be re-used. But a request has been shut down sporadically since then and mobile internet has been shut down since March 15.

Ooredoo also said: It was “regretfully adhering to” orders to restrict mobile and wireless broadband in Myanmar, which were profitable in the first quarter. Declined further comment on business trends in Myanmar.

Like other operators, Telenor paid a license fee to the military-controlled government in March, which critics said could help support a crackdown on public protests.

Telenor said in an emailed response to Reuters it had made the payment. “Under intense protest against the latest developments”

Norway’s KLP, a major shareholder, said it was negotiating with Telenor after the coup to ensure human rights risks were identified.

“It is a challenging situation because Telenor cannot choose what it can and cannot do, they are instructed by the authorities,” said Kiran Aziz, senior analyst for responsible investments at KLP. What would a positive Telenor look like in this context? “

Human rights escalation is just one of the issues currently faced by Telenor, CEO Brekke said, coupled with providing customers with secure customer service and maintaining network access for them.

“We work with that balance every day,” he said.

And even if that balance is now tilted towards the domestic telenor. But still not received

“We make a difference as we have done since we arrived. But in so many ways unpredictable situations it is impossible to predict the future and how it will evolve, ”added Brekke.

Our Standard: The Thomson Reuters Trust Principle.

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