What is the Lebanese ‘M1 Group’ that just entered Myanmar's telecom market?
Norwegian telecommunications company Telenor announced on 8 July that it was selling its Myanmar operation to the Lebanese M1 group for $105m.
The sale came as Telenor described regulatory challenges to its work since Myanmar's bloody coup in February 2021, in which the army overturned the democratically elected government and established a military junta.
Reportedly, the military junta has forced the Norwegian company to provide users' data and call history, as well as told the company it needed to install intercept software on its users by 5 July.
The M1 Group will acquire all shares in Telenor Myanmar, and continue the operation of the company. In response to the sale, Myanmarese activists have expressed concern that the Lebanese group will give in to demands from the junta to share users' data.
The executive director of the M1 Group, Joe Issa el-Khoury, told The New Arab, that the M1 Group would "never jeopardize its principles or reputation when it comes to human rights issues." El-Khoury added that the Group "will abide by the law" and only comply with "lawful interception requests" for users' information.
What is the M1 Group and who are the Mikati brothers?
The M1 Group is a Lebanon-based holding company owned by the Mikati family. The group was founded by billionaire brothers Taha and Najib Mikati, the latter of which was prime minister of Lebanon in 2005 and from 2011 to 2014. Najib Mikati is also reportedly being considered as a successor to prime minister-designate Saad Hariri should the latter abdicate his position as prime minister-to-be.
"The M1 Group was founded by billionaire brothers Taha and Najib Mikati, the latter of which was prime minister of Lebanon"
Though the holding company has a diverse set of investments, telecommunications has always been one of the main revenue streams for the company.
The brothers' first venture into telecom was in 1982 when they co-founded "Investcom" in Lebanon in the midst of the country's civil war. Investcom initially sold satellite cell phones to private individuals and later grew to construct Lebanon's first privately-owned cell phone network.
The brothers quickly expanded their telecom business from Lebanon into a multinational operation, branching out into other Middle Eastern countries and Africa. At its height, the company was active in eight countries. By 2005, when Investcom was listed on the London Stock Exchange, it was the largest Middle Eastern company on the exchange.
Investcom specialised in developing, authoritarian countries such as Sudan, Syria, and Yemen, where the company was able to enter into exclusive and lucrative contracts.
Investcom was granted the first of two telecom licenses in Syria just a few weeks after Bashar al-Assad came into power in 2000. Alongside Rami Makhlouf, rumoured to be the wealthiest man in Syria, Investcom was granted the license to operate a cellphone network in Syria for 15 years. Investcom's Syria subsidiary was named "Areeba", while Makhlouf's company was named "Syriatel".
The lack of competition within Syria's telecommunications sector meant large profits for the Mikati brothers. Within five years, the Syrian subsidiary of Investcom came to be worth $340m and comprised over 40% of Investcom's total revenue.
In 2006, the Mikati brothers sold Investcom to MTN, a South African telecommunications company, for $5bn. Though they sold the company, they also bought 10% of MTN through their subsidiary M1 Limited, giving them the "predominant" share of the company - which they maintain up to this day.
MTN Syria has continued to operate in the country until present day, however MTN announced in August 2020 that it would be selling its shares in the Syrian subsidiary.
The sell-off was preceded by pressure by the Assad regime on both MTN Syria and Syriatel, as well as a demand by the regime that the two companies pay $32m in back taxes. Reportedly, the bureaucratic pressure reflects tensions between Najib Mikati and the Assad family.
Conversely, the CFO of MTN told Bloomberg that the exit was part of a broader departure from "conflict markets" whose small revenues were no longer worth the complexities of operating.
Fears of complicity with an authoritarian regime
Activists expressed concern that Telenor's sale to M1 Group could be a death knell for digital privacy within Myanmar.
Though Telenor acquiesced with some demands from the junta, such as blocking access to social media networks and divulging some users' data, the telecom company is seen as the best provider in Myanmar when it comes to safeguarding user privacy.
Activists fear that, in contrast, the M1 Group will have little qualms in complying with the junta's demands.
"In 2012, MTN Syria blocked texts on its network that contained keywords like 'revolution' and 'demonstration'"
Justice for Myanmar, an NGO, told a Myanmarese publication that "Telenor is failing in its human rights responsibilities through this rapid-fire sale to the M1 Group," citing the Mikati brothers' long track record of working with authoritarian regimes.
Indeed, MTN, in which M1 holds the biggest share, has been identified as complying with authoritarian regimes' requests to surveil users and constrain digital privacies on multiple occasions.
In 2012, MTN Syria blocked texts on its network that contained keywords like "revolution" and "demonstration". In 2010, the company was also reportedly in discussion to buy surveillance technology for its provider in Syria, in violation of US sanctions. MTN has denied they ever wanted to buy such technology.
In 2013, MTN also installed "lawful interception equipment" in its mobile network in South Sudan, according to Amnesty International. In response to Amnesty's report, MTN claimed that it "only shares customer data in strict compliance with its legal and regulatory obligation."
This article was updated to include a statement from the M1 Group, and includes minor linguistic changes.
William Christou is The New Arab's Levantine correspondent, covering the politics of the Levant and the Mediterranean. William is also a researcher with the Orient Policy Center. Previously, he worked as a journalist with Syria Direct in Amman, Jordan.
Follow him on Twitter: @will_christou