Doing Business in Myanmar Is Tough, but One Company Finds That Leaving Isn’t Much Easier

After last year’s military coup in Myanmar, the local subsidiary of Norwegian telecommunications company Telenor AS TELNY -1.65% A faced orders to block social media, shut off mobile services nationwide and allow the junta to spy on citizens through an invasive new intercept system.

By July, the company decided that operating conditions in the country had become unbearable and said it would pull out. Now it is learning that isn’t easy, either.

The company has found a buyer, but it has spent months awaiting approval from the junta-controlled regulator. Democracy advocates and members of Myanmar’s ousted civilian administration have asked the Norwegian government, which owns a controlling share in Telenor, to stop the sale. A complaint in Norway is seeking assurance that customer data won’t fall into the hands of junta-linked entities.

Many foreign companies in Myanmar face similar dilemmas over pulling out. Some are under pressure to exit from shareholders concerned about risks to their reputations and from activists seeking to isolate or bankrupt the junta. Other companies are finding day-to-day operations untenable with a weak economy and heightened security risks as conflict between the junta and anticoup fighters worsens.

Almost two dozen major foreign companies have decided to exit since the coup, according to the World Bank. Western energy giants TotalEnergies SE TTE -1.01% and Chevron Corp. CVX -1.61% , Japanese beer maker Kirin Holdings Co. KNBWY 3.18% , and Swiss luxury hotelier Kempinski Hotels SA are among them. Others in sectors like garment manufacturing, less financially linked to the military, have opted to stay but have taken on extra due diligence, such as ensuring staff safety.

Telenor says it became impossible to stay. The deal breaker was the regime’s directive that it activate intercept equipment, the company said in September. Such spyware would enable authorities to eavesdrop on customers. Telenor said in September that it hadn’t activated the system and wouldn’t do so voluntarily. The company declined to comment further on the matter.

Myanmar’s military didn’t reply to a request for comment.

In July, the company announced a $105 million deal to sell its subsidiary to M1, a Lebanese company owned by the family of the country’s prime minister. The arrangement prompted criticism from human-rights advocates who say M1 has a spotty record on rights. Activist group Justice for Myanmar published an investigation last year alleging that the company’s telecom business operated under authoritarian regimes in Syria and Sudan.

M1 didn’t respond to a request for comment.

“‘Telenor had the trust of Myanmar people because they made their pitch around business and human rights.’”

— Htaike Htaike Aung, digital-rights advocate from Myanmar

Pro-democracy activists say they are also concerned that control of the company could land in the hands of army-linked entities, which would put up little or no resistance to regime demands for access to historical data or to activate spyware. Telenor said it doesn’t comment on speculation. Its agreement doesn’t prevent M1 from transferring a majority of shares after their transaction is complete, Telenor said.

Stakes are high for Telenor Myanmar’s 18 million customers. Of the country’s four internet service providers, two are controlled by the military, while another, Qatar-based Ooredoo, hasn’t publicly resisted orders from the junta. Ooredoo didn’t respond to a request for comment.

“Telenor had the trust of Myanmar people because they made their pitch around business and human rights,” said Htaike Htaike Aung, a digital-rights advocate from Myanmar.

TotalEnergies is among the foreign companies deciding to exit from Myanmar since the coup.

Photo: Agence France-Presse/Getty Images

Telenor faced a new challenge last week: a complaint to Norway’s data-protection authority asking it to investigate the sale and ensure it wouldn’t violate user privacy. It was submitted by Oslo-based law firm Sands and supported by the Centre for Research on Multinational Corporations, the Dutch nonprofit behind a separate complaint against Telenor to the Organization for Economic Cooperation and Development last year. That complaint alleged that the company failed to comply with the group’s guidelines on responsible disengagement.

Telenor said in September that it is committed to compliance and open to dialogue with the OECD and the complainant.

Last week’s complaint said that data protected under European laws—including users’ names, addresses, identification numbers and other information—would be transferred during the sale without consent. That could help authorities find people who are in hiding or lead them to suspects’ relatives, the nonprofit said. Telecom companies in Myanmar are required by law to register who owns which SIM cards and to store call records for five years.

Ketil Sellæg Ramberg, the attorney who filed the complaint, said, “The message we’re trying to get across is that if you know that risk and you have to leave, you do it in a manner where you can look customers in the eye and say, ‘We didn’t hand your data over to the junta.’”

In early 2021, Myanmar’s military declared it was taking over the country for a year as it detained civilian leader Aung San Suu Kyi and other members of her party. Here’s how the coup played out on the ground, and what it means for the nation’s democratic transition. Photo: Lynn Bo Bo/Shutterstock (Video from 2/1/21)

Telenor said that European privacy laws don’t apply to customer data in Myanmar, which it said isn’t controlled by parent company Telenor ASA. It has previously said that the company is required to store metadata, which includes records of which phone numbers communicated with each other, when and roughly where. The company has said it doesn’t possess the content of any user communication such as phone calls or text messages.

Industry experts say Telenor has little room to maneuver. Staying in the country isn’t a viable option, but local laws prevent it from altering existing data before leaving, and doing so could subject staff to repercussions. Data-privacy experts say this type of data is of little value in many contexts and was already within reach of authorities through other laws.

Still, they say, there is a chance it could be harmful to anti-junta dissidents. “For telcos and governments, it’s in their interest to say it’s nothing harmful or invasive,” said Jamael Jacob, a Manila-based lawyer specializing in digital privacy. “But civil society would say it’s still capable of disclosing people’s identities and putting them at risk if it got into the hands of the wrong people.”