• Norwegian incumbent strikes $105m deal with Lebanon-based M1 Group
• 'Further deterioration' following February's coup leads telco to pull the plug
• Sale marks a sad end to Telenor's Myanmar adventure

Telenor's seven-year presence in Myanmar will soon come to a somewhat sad end, after it agreed on Wednesday to sell its operation there to Lebanon-based investment firm M1 Group for $105 million.

The transaction gives Telenor Myanmar an 'implied value' of $600 million. Under the deal, Telenor will receive $50 million up front, and the remaining $55 million over five years.

The sale comes just days after Reuters reported that Myanmar's junta has issued an order requiring all senior executives of telecoms firms – including foreigners and Myanmar nationals – to seek permission before leaving the country.

"The situation in Myanmar has over the past months become increasingly challenging for Telenor for people security, regulatory and compliance reasons," said Telenor group CEO Sigve Brekke, in a statement. "We have evaluated all options and believe a sale of the company is the best possible solution in this situation. The agreement to sell to M1 Group will ensure continued operations."

Based in Beirut, M1 Group is a diversified investment holding company with interests in telecoms, real estate, fashion and financial assets. Included among its holdings is a 10 percent stake in South Africa-based telco group MTN.

Telenor's withdrawal marks an unwelcome milestone in Myanmar's regression.

In 2013, Telenor and Qatar-based Ooredoo became the first foreign entities to win operating licences in Myanmar. Whittled down from a shortlist of 11 other interested parties, the granting of their nationwide, 15-year permits was hailed as a sign that Myanmar was becoming a more liberal society.

"This is the start of an exciting journey in Myanmar's development, which Telenor will support through the delivery of world-class mobile services, responsible business practices and high standards that we live by in all of our markets," said Telenor's then-CEO Jon Fredrik Baksaas, at the time.

Indeed, up until then, the extortionate price of SIM cards and the lack of competition meant Myanmar had one of the lowest mobile penetration rates in the world, making it one of, if not the last, greenfield telecoms market.

Telenor began offering services in late September 2014, and by the end of its first full quarter it had signed up 3.4 million customers.

It seemed there was no stopping the liberalisation of Myanmar's mobile market. In 2017 it awarded another licence, this time to MyTel, a joint venture between Vietnam's Viettel and Star High Public Company, owned by Myanmar's military. In less than five years the country had gone from a telco market with a single, state-run monopoly, to a four-player market.

According to the Oxford Business Group (OBG), mobile penetration in Myanmar surged from 10 percent in 2013 to 105 percent by 2018. Very impressive for a country of nearly 55 million people. By then, competition was fierce and Telenor was feeling the heat. In its Q4 2018 report, Telenor blamed intense competition for 800,000 net customer losses in Myanmar, leaving it with 17.2 million in total.

However, Telenor managed to stem the losses, and by the end of Q2 2019, it reported 19.8 million mobile customers. By OBG's calculations, that made it the second-largest player behind state-owned incumbent, Myanma Posts and Telecommunications (MPT), which claimed to have 23 million users. By comparison, Ooredoo Myanmar had 11.1 million customers, while MyTel had around 5 million, according to OBG.

In February this year though, everything took a turn for the worse in Myanmar, when the military overthrew the elected government..

As part of the crackdown that followed the coup, the junta in April ordered the suspension of all mobile Internet services. Telenor pledged to continue to operate voice and text services and that it would continue to monitor the situation. In May, it wrote down the entire value of its Myanmar operation.

Then this week, reports emerged of what could well have been the final straw for Telenor. Reuters reported on Monday that the junta issued an order in mid-June requiring all mobile operators to effectively spy on their customers. They would have to allow authorities to monitor calls, texts and Web traffic on their networks. According to Reuters' sources, telcos were dragging their collective feet, prompting the aforementioned travel ban as a means of motivating them to deploy the necessary spyware.

Whatever it was that finally prompted Telenor to pull the plug, the sale to M1 Group is a sorrowful curtailment of Telenor's Myanmar adventure.

- Nick Wood, reporting for TelecomTV