The Norwegian corporation Telenor, one of the four main telecoms providers in Myanmar, announced on July 8 its $105 million sale to M1 Group, a Lebanese investment firm. The low selling price surprised observers given Telenor Myanmar’s “implied enterprise value of approximately $600 million,” but the company cited challenges with “people security” and regulatory compliance in Myanmar since the February coup.
Telenor’s hasty exit reflects the hostile operating environment for businesses of all scales, a drastic shift since the early 2010s when firms eagerly rushed in to stake a claim in the country’s opening market. More alarmingly, the junta’s interventions in the telecommunications sector are symptomatic of its broader efforts to undermine human rights and civil liberties in Myanmar.
Nationwide interruptions to Myanmar’s telecommunications sector began on February 1, after Sen. Gen. Min Aung Hlaing overthrew the democratically elected civilian government led by Aung San Suu Kyi. Though the Myanmar government began imposing temporary internet blackouts in Rakhine state in June 2019, the February 2021 internet outages, which aimed to suppress pro-democracy protests, were the first on a nationwide scale. For nearly three months, the junta maintained a nightly ban on fixed-line and fiber internet services, shut down mobile and wireless broadband networks, and restricted access to popular social media platforms.
Telenor, for example, regularly updated its website during the first two weeks of February with statements responding to the unpredictable network outages imposed by the junta. Seeking to offer some semblance of transparency in an otherwise opaque operating environment, Telenor detailed the orders it received from the junta, which included temporarily blocking access to Facebook, Twitter, and Instagram within five days of the coup. Likewise, a senior official at MPT, the first telecommunications firm in Myanmar, reported to Frontier Myanmar that the junta had ordered the company to block its 20 million-plus customers from accessing “hundreds of thousands of IP addresses” over the course of several weeks.
These interventions have exacerbated existing instability across Myanmar’s finance and e-commerce sectors. Pandemic-induced movement restrictions before the coup had already slowed wholesale and retail business activity, which prompted 38 percent of Myanmar firms to move to online platforms, according to a report from the World Bank. This resulted in a “73 percent increase in e-commerce payments” year-on-year, the same World Bank report added. However, without reliable internet access, businesses dependent on the internet could not facilitate financial transactions or access computing services critical to the functioning of their operations, like Amazon Web Services.
Political instability after the coup further destabilized Myanmar’s internal banking infrastructure. A May 2021 joint survey conducted by 10 foreign chambers of commerce reported that nearly 50 percent of Western companies surveyed experienced between 50 to 75 percent reductions in business activity in Myanmar and 12 percent of Western companies had ceased all their activities amid the political crisis. Meanwhile, 68 percent of Myanmar companies surveyed reduced their business activity and 4 percent terminated their activities entirely.
Cognizant of the reverberating effects of the internet outages, Myanmar’s Ministry of Transport and Communications lifted the nighttime internet ban in April and distributed to internet service providers and telecommunications firms a whitelist of over 750 permitted web services and 450 domains. Over 300 business and productivity-related applications, such as Microsoft Office and Google Suite applications, made the cut, as well as over 60 entertainment and gaming sites, 20 delivery services, and 10 educational sites. Online and mobile banking services also resumed, with over 50 firms among those approved.
However, Telenor’s fire sale in July is evidence that the whitelist failed to make Myanmar a more hospitable business landscape as the junta intended. Rather, the whitelist precipitated the further deterioration of human rights under military rule as the junta’s demands have grown bolder over time. For example, before Telenor’s exit, the junta began pressuring the firm to implement phone intercept technology, which Telenor was uncomfortable doing, according to Human Rights Watch. Human rights groups have suggested that corruption charges filed in 2019 against M1 Group’s founder indicate that the investment firm does not share Telenor’s support for freedom of expression and that M1 Group may readily enable the junta to surveil political opposition without hesitation.
Pro-democracy activists have raised concerns that the conditions of Telenor’s sale to M1 Group endanger anti-junta protestors. On July 27, the Centre for Research on Multinational Corporations submitted a formal complaint to the Organization for Economic Cooperation and Development (OECD) alleging that Telenor’s withdrawal failed to meet the OECD’s “standards of responsible disengagement.” The complaint, filed on behalf of 474 Myanmar-based civil society organizations, asserts that in Telenor’s haste to sell all its operations, the company did not “conduct appropriate risk-based due diligence” or “meaningfully” consult relevant stakeholders, such as those participating in filing the complaint. On August 12, a group of 45 human rights groups expressed similar concerns in public letters addressed to Telenor’s board chair and Norway’s prime minister and king (the Norwegian government is the majority shareholder in Telenor).
Other civil liberties groups worry about the security of call data records for Telenor’s 18 million customers, which M1 group will inherit. Though Telenor clarified in a later statement that call data records do not “contain any information on content” of communications, civil society organizations contend that the location data and phone numbers listed within call records are enough to compromise the safety of activists hiding from the military.
These disruptions in the telecommunications sector, combined with the junta’s use of military-grade surveillance technology, point to Myanmar’s acceleration toward a surveillance state. The junta has already suspended provisions in the 2017 Law Protecting the Privacy and Security of Citizens, thereby allowing the military to search and seize peoples’ belongings and intercept phone call data without warrants. Facebook and Twitter remain blocked unless accessed through a Virtual Private Network, and while social networking sites like WhatsApp, LinkedIn, and Instagram are whitelisted, the junta’s omnipresence and disproportionate use of force is conditioning people to censor themselves online.
Despite all these developments, few corporations have so far pulled out of the country. Still, Telenor’s sale follows recent efforts by international corporations to distance themselves from Myanmar’s junta. This trend will accelerate in the coming months if the humanitarian crisis worsens and the reputational, financial, and security costs of maintaining operations in Myanmar begin to outweigh the benefits.
This article was originally published on New Perspectives on Asia from the Center for Strategic and International Studies and is reprinted with permission.