Telenor posts Q1 loss after writing off Myanmar business following coup

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OSLO (Reuters) – Norway’s Telenor said on Tuesday it had written 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.

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 company added some 2 million users in Myanmar during the quarter, increasing its local customer base to 18.2 million.

But the new regime imposed network restrictions for all operators, and on March 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.

“We see an irregular, uncertain, and deeply concerning situation,” Telenor Chief Executive Sigve Brekke said in a statement commenting on Myanmar.

“Due to the worsening of the economic and business environment outlook and a deteriorating security and human rights situation, we see limited prospects of improvement going forward.”

Telenor fully impaired Telenor Myanmar in its first-quarter accounts, booking a loss of 6.5 billion Norwegian crowns ($783 million) and removing the operation from its overall corporate outlook for 2021.

The company aims to focus on the security of its employees as well as access to services for customers and continued transparency, Brekke said.

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.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 8% 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. It repeated that capital expenditure would amount to between 15% and 16% 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..

($1 = 8.3020 Norwegian crowns)