May 8, 2021

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Telenor writes off Myanmar business, and is making losses in the first quarter

Oslo: Norwegian company Telenor deleted the value of its Myanmar operation in light of the deteriorating security and human rights situation in the country, which pushed the group into a first quarter loss and pushed its shares lower today.

While it will continue to operate in Myanmar, Telenor’s mobile business in the Asian country, where it has had a presence since 2014, remains severely restricted after the military seized power in the February 1 coup.

The company said the new system imposed network restrictions for all operators, and on March 15 ordered a nationwide mobile data shutdown, which has since cut Telenor subscription and traffic revenue in the country in half.

However, it added about 2 million users in Myanmar during the quarter as the volume of calls increased, increasing its domestic customer base to 18.2 million.

CEO Sigve Brekke said that while Telenor saw a situation that was “erratic, uncertain, and very disturbing” with “limited prospects for future improvement”, Telenor would remain in Myanmar for the time being.

“Despite the difficult situation that we see in the country, we still believe that we make a difference when we keep our operations going,” he said in a profit presentation. “We are striving to continue to do so to the best of our ability.”

The company declined to comment on whether it was realistic to expect any cash flow from the Myanmar operation at this time, with Brik adding that the current uncertainty makes it impossible to comment on future options.

“Our continued existence will depend on the development of the country and the ability to positively contribute to the people of Myanmar,” he said.

Telenor caused Telenor Myanmar to completely weaken its accounts for the first quarter, booked a loss of 6.5 billion kroner (3.2 billion RM) and removed the operation from the company’s overall forecast for 2021.

As a result of the write-off, the net profit of Telenor Group fell to 3.9 billion NOK in the first quarter from last year’s 698 million kroner.

Adjusted earnings before interest, taxes, depreciation and amortization fell 8% year-on-year to 13 billion kronor, in line with analysts’ expectations of 13.1 billion kronor.

Telenor has reiterated its full-year guidance for overall organic revenue and profits to remain unchanged year on year from 2020, excluding the Myanmar impact. She repeated that capital expenditures would range from 15% to 16% of sales.

The company, which serves 187 million customers in nine countries across Europe and Asia, with a net gain of 5 million since the start of the year, announced last month plans to merge its Malaysian unit with rival Axiata, as it seeks to form a market leader. Reuters