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Ooredoo to cut losses in Myanmar to tune of $2.3bn

Described as 'a pristine and beautiful but undeveloped country', Myanmar had low telecoms penetration when Ooredoo entered the market Unsplash/Alexander Schimmeck
Described as 'a pristine and beautiful but undeveloped country', Myanmar had low telecoms penetration when Ooredoo entered the market
  • Qatar’s Ooredoo entered the Myanmar telecoms market in 2013
  • Ooredoo’s losses in the country were $2.37bn from 2013-22
  • Plans to sell up and exit the market require regulatory approval

Should Ooredoo succeed in selling its Myanmar subsidiary, the Qatari telecom operator will exit nursing multi-billion-dollar losses in what has proved to be a disastrous strategic failure for the former monopoly.

Ooredoo Myanmar’s customer base has shrunk by nearly half in just over two years, while its cumulative pre-tax losses from 2013-2022 total QAR8.6 billion ($2.37 billion), according to AGBI calculations based on the Qatari operator’s annual reports.

Last September Ooredoo agreed to offload its Myanmar operations to Singapore’s Nine Communications for just $162 million once the unit’s debts are repaid.

The deal still requires regulatory approval so may not succeed, Ooredoo warns in its 2022 annual report, and there is growing speculation that Myanmar’s authorities will block it.

Ooredoo, which owns majority stakes in mobile operators in eight countries including Kuwait, Iraq and Oman, declined to comment on when it expects the Myanmar sale to be completed.

In 2021 Ooredoo took impairments of QAR2.25 billion ($618.1 million) on its Myanmar subsidiary. Ooredoo declined to comment on whether it had taken full impairments on Myanmar or the total amount of impairments it has taken so far.

Such financial woes contrast with Ooredoo’s bullish pronouncements upon winning the Myanmar licence in June 2013 when it said it would spend $15 billion over the course of its 15-year tenure.

Ooredoo and Norway’s Telenor won mobile licences at the same time, the first foreign companies to receive them, and launched services in 2014.

Fleeting democracy 

A part-civilian government took power in Myanmar in 2011, ending nearly 50 years of military rule and introducing sweeping economic reforms to woo foreign investors and reduce the country’s international isolation.

More than 90 companies or consortiums expressed interest in telecom licences. Mobile penetration was just 12 percent and fewer than 400,000 people had internet access, Ooredoo’s 2013 annual report stated.

The sole operator was state-run Myanmar Post and Telecommunications (MPT) which only offered 2G services.

In October 2013 Ooredoo’s then chief strategy officer Jeremy Sell outlined the challenges the company faced in Myanmar at a conference in Dubai.

“No one speaks English, we can’t get galvanised steel,” said Sell. “There aren’t enough cranes. The country is covered in jungle. The roads flood. There’s no power. It’s a pristine and beautiful but undeveloped country.”

Sell compared Myanmar’s fledgling democracy to Germany after the fall of the Berlin Wall, acknowledging that while the military was behind the shift to civilian rule, he believed it would endure.

“Are they going to go back and nationalise whatever we invest? I don’t think they will because the prize is too big for them and they’ve opened the door too wide now,” said Sell.

“They are very open to dropping censorship and dropping the control the military typically tries to put on technology.”

Sell left Ooredoo in October 2015, according to his LinkedIn profile, and his bet on the military willingly reducing its political power has proved wrong.

In February 2021 a coup removed Myanmar’s elected government, put army leaders in charge and declared an ongoing state of emergency.

In March the United Nations described the takeover as “devastating”, highlighting a brutal crackdown on dissent.

“It's a very tough country in which to operate,” said Omar Maher, a telecoms analyst at EFG Hermes in Cairo.

Growing instability

Myanmar’s mobile penetration soared over the five years following the launch of Ooredoo and Telenor’s services, according to a report by Australian telecoms analyst BuddeComm.

A fourth mobile operator, Mytel, launched services in 2018, to the chagrin of Ooredoo and Telenor.

Following the 2021 coup the military shut down the internet that April, and levied new taxes and fees on telecoms that hurt companies’ revenues.

The military also ordered operators to install spyware, which Ooredoo and Telenor refused, prompting the military to bar some executives from leaving the country and to threaten to withdraw their licences, Buddecomm wrote.

Telenor soon quit the market, while Ooredoo wants to do likewise.

“It soon became a civil war-like situation with increased violence, explosions on a weekly basis, economic insecurity on top of the pandemic crisis and the imposition of martial law,” stated a May 2023 Telenor report.

It noted the company would have breached international sanctions had it obeyed government orders.

Ooredoo’s 2022 annual report highlights other problems including “social media shutdowns, network instability in conflict areas and significant currency depreciation against the US dollar”.

Meanwhile, Ooredoo Myanmar’s customer base shrank to 8.3 million subscribers as of March 31, from 14.7 million in 2020.

The unit made a pre-tax loss of QAR360 million in 2022, compared with a loss of QAR3.52 billion riyals in 2021.

“Myanmar was touted as the world’s last greenfield telecoms market and there was great excitement about its potential,” added EFG Hermes’ Maher.

“I doubt anyone ever expected it would turn so sour.”