Monday, August 21, 2017

Telecom operators set the record straight on USD flows

Norwegian operator Telenor has not taken any money out of Myanmar and will continue to support the economy by making US dollar payments to the government and reinvesting all of its revenues back into the business, said CEO Petter Furberg last week.

“[I’d like to talk] a little bit about the ongoing discussion on how telecom operators in Myanmar are influencing the economy, and to touch upon a few facts,” he said at a media briefing last week.

His comments come as the Central Bank of Myanmar launches an investigation into the use of US dollars by banks and corporations following a dollar shortage in Myanmar over the past few months.

According to media reports, Pyidaungsu Hluttaw Speaker Thura U Shwe Mann had blamed international telecoms companies Telenor and Ooredoo for the dollar scarcity, accusing them of converting revenues to US dollars and taking them offshore.

Thura U Shwe Mann’s sons own local telecoms firm RedLink Communications which, according to its website, is “cooperated with Yatanarpon Teleport under the blessing of Myanma Posts and Telecommunications (MPT).”

The incumbent MPT is Telenor and Ooredoo’s main rival.

Mr Furberg asserted that the company has not been converting and repatriating revenues. “Everything we are earning from the people of Myanmar will be invested in building more towers, building better data quality and better voice,” he said.

“There is no way we from Telenor would take or have taken any money out of Myanmar,” he added, showing a slide with the words “100pc of revenues reinvested into operations – no revenue repatriation or dividends paid to shareholders yet”.

Furthermore, Telenor has contributed in a positive way to Myanmar’s US dollar supply, said Mr Furberg. “If you look at the financial year which finished at the end of the first quarter, Telenor had transferred US$500 million into Myanmar, which is equivalent to 6pc of the trade deficit last year,” he said.

“A country like Myanmar has to import a lot of things these days to grow the economy for the future. That in itself doesn’t necessarily weaken a currency. What is important for a country is that the government is balancing their budget – their spending on roads and schools with the money coming in from taxes,” he said.

“In this respect, Telenor has also contributed positively, because last year 60pc of our expenses were payments to the Myanmar government for licensing fees, taxes and a lot of other fees,” he said.

Some of the company’s vendors including Ericsson and Huawei are paid in US dollars, but 64pc of Telenor’s US dollar payments in the last fiscal year were to the Myanmar government, according to Mr Furberg. “We are helping to stablise and grow the economy,” he said.

Telenor is one of two foreign telecommunications companies to win an international tender to develop and operate a mobile infrastructure in Myanmar. The other is Qatar’s Ooredoo.

Ooredoo CEO Ross Cormack said that the telecoms industry has had an impact on the economy due to the sheer scale of operations. “The industry of course makes an impact on the country, and it’s true that we do need to convert some of our kyat to dollars,” he said in an interview on July 28.

“A lot of suppliers only take dollars, so we have to pay them in dollars. Obviously we try to maximise the amount of kyat that we pay in Myanmar, but the international element is a very important part of our cost base as we install new infrastructure,” said Mr Cormack. One issue for the international operators, he said, is that there are no hedging facilities available.

“We don’t really have access to those sorts of instruments in this country, and that would of course make a tremendous difference. At the moment we just have to try to pay as many of our national contracts in kyat as possible,” he said.

He added that Ooredoo keeps in regular contact with the Central Bank, the Myanmar Investment Commission and its own banks, to ensure transparency. “We’re proud of what we’ve been doing and we’ve been doing it in a straightforward and transparent manner,” he said.