Financing already appears to have stalled for CVC Capital’s $700 million purchase of the owner of Irrawaddy Green Towers, the country’s largest cell phone tower company – the second-largest deal involving Myanmar assets. Elsewhere, Japanese drinks group Kirin terminated its partnership with a military-linked conglomerate and Australian oil-and-gas giant Woodside is reviewing its nascent activities.
The stakes are higher for telecoms operators already invested. Norway’s Telenor, for example, has helped lead a huge uptake in mobile communications and internet usage since it won a licence to operate back in 2014; smartphone penetration is now amongst the highest in the world. Telenor started generating cash faster than expected and the country accounted for 7% of its EBITDA in 2019. Japan’s KDDI and trading house Sumitomo partnered with state-owned MPT around the same time. And U.S.-based private equity fund TPG Capital became a top investor in towers.
Now, in addition to the business risk of prolonged economic instability, the promising sector must grapple with military-directed internet shutdowns and consider the cost of an intrusive new cybersecurity bill. The junta has already restricted access to Facebook, used by more than half of the 54 million population.
The timing is unfortunate. The market had just stabilised after a painful price war led by new entrant Mytel, backed by Vietnam’s state-owned Viettel. Even before the coup, Ooredoo from Qatar was a mooted seller given its Muslim background plays poorly in majority-Buddhist Myanmar, and it has struggled to scale its network.
Any sweeping sanctions could force Western players to abandon the market to Chinese rivals. Barring that, they may look past a reversion to authoritarianism. After all, Telenor’s top revenue-generating Asian market in 2019 was Thailand, where the prime minister is a former general who also overthrew an elected government. The officials that Myanmar’s military have put in charge of economic policy served prior to the democratic transition in 2015, and did a decent enough job to lure in investors. That makes leaving – or staying – a difficult call.