Ooredoo myanmar to sell stock to Nine Communications

Ooredoo myanmar to sell stock to Nine Communications

Nine Communications Co Ltd (NCC) will buy 14 percent of Myanmar’s Ooredoo from Norway’s Telenor ASA, giving it a majority stake in the operator. Under the agreement announced by the two companies on Thursday, NCC will also get four seats on Ooredoo Myanmar’s board of directors for three years, and an option to purchase another 4 percent in 2020. The deal includes cash and services payments worth about $1 billion, the companies said in separate statements to the Yangon Stock Exchange on Thursday. It’s expected to close before the end of 2017, they said.

Why did ooredoo choose Nine?
Nine was founded by two telecommunications experts, Jerry Yang and Terry Semel. Having the backing of these veterans in the industry should bode well for Ooredoo Myanmar in terms of getting up and running quickly and developing a profitable business plan. Terry Semel is also well-known for his long history of managing Yahoo!, another company in which he had to come up with a plan from scratch that would bring success from hard work.
Jerry Yang has also been making waves with his own mobile messaging platform called WeChat, the most successful app in China, where he served as an executive at Tencent Corporation. Through this experience, Yang demonstrated his business savvy by integrating new features into WeChat including services such as an e-commerce website. With Yang’s ability to innovate, it will be interesting to see what strategies he employs when designing Ooredoo’s plans for their future success. These moves have already paid off for both companies: both Ooredoo and WeChat’s parent company, Tencent Corporation have seen significant increases in their share prices since these deals were announced. However, the question remains if Jerry Yang can find similar success with Ooredoo Myanmar given its smaller market size. If Ooredoo is able to replicate some of the success found on other continents then they are poised to become one of the dominant players in Asia. With more than 400 million people living in Myanmar, there is potential for growth in all sectors of society if they are able to use their expertise effectively.
The merger between Ooredoo and Telecom Malaysia was finalized in 2014 after just six months of talks between the two companies. The agreement granted Telecom Malaysia access to a wealth of knowledge about how to operate efficiently and make good business decisions based on the economic development present within Myanmar’s borders. In return, the Malaysian company agreed to give ownership rights over shares back to ooredoo after five years so that it could start profiting from any successes realized during this time period. As such, it is expected that more global investors will now consider investing in telecoms stocks because they know that whoever manages to control the networks in Myanmar stands to reap enormous profits.
One advantage of investing in these two giants would be being able to enjoy steady revenue streams from selling data packages and internet service. At least 90% of the population relies on either voice or text messages to communicate.
Furthermore, the government sees Internet service as a necessity rather than luxury item like in many western countries; thus, there is huge demand for this product across many markets due to the lack of alternatives. Even though the country only has 40% Internet penetration rate right now, estimates show that 100% of people will be online by 2020. Although Ooredoo currently faces competition from True and Telenor who offer 3G services to rural areas while it still lacks coverage outside of urban centers, once full infrastructure is implemented then customers will flock back with no alternative providers available at current levels. This is especially true for individuals looking to purchase affordable handsets that would be necessary to surf the web with ease. With 95% of people living in Myanmar below the poverty line, many citizens cannot afford the modern gadgets they desire and as such, there is a pent-up demand for smart phones among this segment of the population. This means that even at current levels of competition, Ooredoo will be able to rake in plenty of money by attracting these lower-income individuals to their side. With so much room for growth, Jerry Yang’s plan will not fail without a doubt!

A look at Myanmar’s telecom market
The number of telecommunications networks in Myanmar is currently six. The country’s population is just under 50 million and over-population remains a problem. Ooredoo Myanmar has recently come into the market with aggressive marketing and has seen success. Earlier this year, they were announced as the biggest customer of Telenor Myanmar (the third network). Their growth has been helped by the fact that their services are more affordable than others.
A consortium of investors led by China Unicom bought out much of QTEL shares from Vodafone Group Plc back in 2016.
Nine Communications is a private company with major investments from Bharti Airtel, one of India’s leading mobile operators; it also holds minority stakes in telecom operators like Turkcell, which operates across Europe and Central Asia; Orange Congo; Warid Telecom; Hutchison Global Services Ltd.; and Freedom Mobile Inc.
In December 2017, Nine invested $7 billion USD in Warid Telecom following discussions on expanding its presence outside Pakistan through investments in high potential markets such as Africa and Latin America. More so, many analysts have commented on how it might be wise for other companies operating in these countries to follow suit because many African countries lack quality connectivity while there is a huge demand for smartphones. Moreover, the increased interest from companies such as Google Inc., Facebook Inc., Apple Inc., Huawei Technologies Co. Ltd., Nokia Corporation and Microsoft Corporation has made an already highly competitive industry even more intense and unpredictable for smaller players. Ooredoo Myanmar has recently become aware of Nine’s investment in Warid Telecom and since then have expressed concern about the prospects of future investment opportunities.
Nine will likely find significant challenges ahead if they do indeed wish to expand their operations beyond Pakistan, given that there are few regulatory frameworks around internet regulation and online privacy protection in most developing nations. Furthermore, a study conducted by research firm Ovum found that the average smartphone user only uses 2GB data per month. Meanwhile, the average person in Western Europe uses up 12GB per month and the average American 18GB. With regards to content creation, Nine faces competition from established players like Netflix Inc., Amazon Prime Video LLC, Hulu LLC and HBO GO LLC who have no intention of retreating anytime soon. Nonetheless, Nine has shown a commitment to invest in the region and should not be underestimated.

How the public reacted to the news
I believe many people are upset that they are not given the opportunity to purchase the company. People were unaware of this information, which can lead many people feeling left out of important decisions. They had a lot invested in the company and now feel that their investment is dwindling as other countries show interest in buying Ooredoo Myanmar. Many who put money into Ooredoo’s IPO didn’t know about these talks and may feel lost. Some worry about nine communications intentions for their new investment, especially if they have plans for job cuts or asset liquidation. However, some believe this is good news as it may result in better infrastructure and product availability for customers. It may also be positive because there will be more opportunities for young entrepreneurs. The negative reactions will hopefully die down as more time passes and people become aware of what Nine Communications has planned for the company. Those worried about job cuts should keep in mind that Nine Communications has an agreement with its staff members and isn’t obligated to fire anyone on the team. There is still no information on how much money will change hands from one company to another or when this deal might take place but we do know they plan on keeping their staff. In addition, both companies said that there would be no changes until 2019 at least. Until then, everything will remain unchanged for customers, employees and investors. We hope for the best for everyone involved.
While some are excited about owning part of a new telecom company and sharing their vision, others seem nervous over such big changes. However, even though these things tend to make headlines worldwide, they usually don’t impact us directly. If you’re wondering why you never heard anything about them before today and think something strange must be going on behind closed doors: nothing of that sort has occurred yet. We promise! Things like mergers often begin with low-key talks and discussions between major players behind closed doors – only gradually becoming public knowledge once all legal matters are sorted out. That said, sometimes things happen so quickly that even those involved don’t see it coming. That appears to be the case here: Ooredoo Myanmar announced last week that they’ll soon be selling their shares to Nine Communications for USD $430 million – a move that seems like quite a jump in price after just two years. Is there more than meets the eye? What does this mean for local customers? What does this mean for employee benefits?

What will happen next?
It has not been clear how Ooredoo Myanmar would proceed following the announcement of their intention to surrender its stake in the company. At a meeting on Wednesday it was decided that 66% of the shares will be sold to local firm, Nine Communications and 33% will go to minority shareholders. The transaction is expected for complete by April 2018. Shareholders will receive two different payment options; an option to receive cash or an option to hold shares until they mature in five years. Shareholders who decide to opt for cash are eligible for Ks2.75 per share while those who decide to keep their shares can expect a Ks4.10 payout per share at maturity. Many major investors have chosen to retain their shares as most of them bought into the company when the price was lower than today’s market value. On Monday the Company’s stocks surged past Ks7 before settling at around Ks6.30 with one analyst predicting they may reach Ks8 by year end if management follows through with plans to improve operations within the country. If you are thinking about investing then now might be a good time but make sure you do your research before jumping in too deep! The Group has embarked on a new strategy since signing a partnership agreement with Norway’s Telenor ASA (TEL) and Qatar Telecom Co. Ltd (QTEL). This strategy includes restructuring the group from operating under three separate entities to being fully integrated under one unified brand – which started this week with the launch of Ooredoo’s new website.