Telenor swings to Q1 loss on Myanmar write-off

Norwegian incumbent Telenor has been left reeling by the military coup in Myanmar, which has forced it to completely write off the value of its operation there.

The telco announced on Tuesday it recorded a NOK6.5 billion ($780 million) impairment charge relating to Telenor Myanmar during the first quarter, causing the whole group to swing to a Q1 net loss of NOK3.9 billion from a year-earlier profit of NOK698 million.

“In Myanmar, we see an irregular, uncertain, and deeply concerning situation,” said Telenor CEO Sigve Brekke, in a statement. “Due to the worsening of economic and business environment outlook and a deteriorating security and human rights situation, we see limited prospects of improvement going forward. Based on this, we have fully impaired Telenor Myanmar.”

The coup, which took place on 1 February, undid years of progress towards a more open, outward-looking Myanmar. Back in 2011, when the military first agreed to begin loosening its grip on power, the country had the lowest mobile penetration rate in the world. This was due to the lack of competition and the exorbitant cost of SIM cards, which at the time cost hundreds of dollars apiece. Myanmar was the last proper greenfield telecoms market.

All that changed in the summer of 2013, when Telenor and Qatar-based Ooredoo became the first foreign telcos to be granted operating licences. It paved the way for massive expansion of network coverage, followed by rapid uptake of affordable mobile services. Two more telcos later entered the market: joint ventures MPT-KSGM, and Mytel. Myanmar’s flourishing telecoms industry contributed to the overall sense that it had joined the 21st Century.

Telenor’s announcement this week shows the extent to which the coup has wound the clock back.

“Prolonged mobile internet restrictions have severely impacted the people of Myanmar and the country’s economy, illustrating the importance of connectivity services,” said Brekke, who oversaw Telenor’s Asian operations when the company won its Myanmar licence. “Telenor calls on the authorities to immediately reinstate unimpeded communications and respect the right to freedom of expression and human rights.”

Even excluding the travails of Telenor Myanmar, it was a fairly lacklustre first quarter for the group. Telenor described its performance as ‘steady’; but then it’s their job to put a positive spin on things.

Group revenue was down 6.7 percent year-on-year to NOK28.9 billion, while EBITDA before other income and expenses fell to NOK13 billion from NOK14.1 billion. Telenor added 5 million new mobile subscribers during the quarter, including – somewhat perversely – 2 million in Myanmar, which is particularly curious given Telenor was ordered to shutdown its mobile data network there. The group ended March with 187 million mobile customers in total.

Then of course there is still COVID to contend with, “in particular in Asia and through a reduction in roaming revenues,” Telenor said, in its financial report. “There have been new waves of outbreaks during the first quarter in several of our markets. Thailand, Pakistan and Bangladesh are ending the first quarter entering new waves with significant increases in daily infections.”

It is safe to say that between coups and coronavirus, it has been a bumpy Q1 for Telenor. With that in mind, a ‘steady’ performance is perhaps the best that anyone could have hoped for.