OSLO: Norway's Telenor wrote off the value of its Myanmar operation in light of the country's deteriorating security and human rights situation, plunging the group into a first-quarter loss and sending its shares lower on Tuesday (May 4).
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 following the military's seizing of power in a Feb 1 coup.
The new regime imposed network restrictions for all operators, and on Mar 15 ordered a nationwide shutdown of mobile data that has since cut Telenor's subscription and traffic revenues in the country in half, the company said.
However, it still added some 2 million users in Myanmar during the quarter as call volumes rose, increasing its local customer base to 18.2 million.
While Telenor saw an "irregular, uncertain, and deeply concerning situation" with "limited prospects of improvement going forward", Telenor would stay in Myanmar for now, CEO Sigve Brekke said.
"Despite the challenging situation we see in the country we still believe we are making a difference when keeping our operations running," he told an earnings presentation.
"We strive to continue to do so to the best of our ability."
READ: What does military rule mean for foreign investments in Myanmar?
READ: Commentary: Myanmar’s post-coup economy is in free fall
The company declined to comment on whether it was realistic to expect any cash flow from the Myanmar operation for the time being, with Brekke adding that the current uncertainty made it impossible to comment on future options.
"Our continued presence will depend on the development in the country and the ability to contribute positively to the people of Myanmar," he said.
Telenor fully impaired Telenor Myanmar in its first-quarter accounts, booking a loss of 6.5 billion crowns (US$783 million) and removing the operation from its overall corporate outlook for 2021.
As a result of the writedown, the Telenor group's net earnings slumped to a loss of 3.9 billion Norwegian crowns in the first quarter from a year-ago profit of 698 million crowns.
Telenor shares were down 1.9 per cent at 0829 GMT, lagging a flat Oslo benchmark index.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 8 per cent year-on-year to 13 billion crowns, in line with an analyst forecast of 13.1 billion crowns.
Telenor reiterated full-year guidance for overall organic revenue and earnings to remain unchanged year-on-year from 2020, excluding the Myanmar impact. It repeated that capital expenditure would amount to between 15 per cent and 16 oer cent of sales.
The company, which serves 187 million customers in nine countries across Europe and Asia, a net gain of 5 million since the start of the year, last month announced plans to merge its Malaysian unit with competitor Axiata, seeking to form a new market leader..