The merger man (Finansavisen)

Jørgen Rostrup has worked at his local prison, disobeyed orders while in the Norwegian Armed Forces and faced a military coup in Myanmar. And both of his predecessors have become CEOs of Telenor.

He is surprisingly energetic. Jørgen Rostrup moved to Asia to set up a regional hub [for Telenor] in the middle of the pandemic, has spent months in strict quarantine, endured a military coup in Myanmar and completed two of the largest billion-dollar transactions in Southeast Asia. Everything at once.

“In Bodø district’s prison [in Norway], the inmates were allowed at least one hour of fresh air in the yard every day,” says Jørgen Rostrup with a clear Northern Norwegian dialect. He is head of Telenor’s operations in Asia and on a short visit back in Norway. Seen through the lens of the pandemics, the timing of his move to Asia in May 2020 could not have been worse. Ignorance about the virus was sky high, and so were the security measures. Rostrup stopped counting how much time he spent in quarantine once it exceeded four months.

“In Singapore, I would be quarantined two weeks at a time. Often, the rooms had no fresh air. Food, towels, and linen for the bed were placed right outside the room, which I was not allowed to leave. To put it another way: I got to know myself well during the time in quarantine.”

The son of a priest from Bodø in Northern Norway, Rostrup has never been jailed. But for several years, he took extra shifts and summer jobs as a guard at the local prison.

“It was a fantastic job, where I learned to respect others. The inmates were mostly decent people who had their own struggles,” he says.

For a young Rostrup, life had been relatively easy up to and including high school. And the plan was for his military service at Skjold to go just as smoothly. It didn’t work out that way.

“What happened then has shaped my life,” says the 57-year-old, talking about the worst accident the Norwegian Armed Forces have experienced in peacetime.

In Vassdalen, on 5 March 1986, during the NATO winter exercise named Anchor Express, a platoon of engineering soldiers was caught in an avalanche. Sixteen young men died. In total, the avalanche hit 31 soldiers and three vehicles.

“I was my unit’s representative in that garrison. Three days after the 16 dead soldiers returned in coffins, we were ordered to go out for another exercise. The weather was still bad, and the flag was still flown at half-mast. One thousand soldiers said no! They were still afraid and didn’t want to go. When the situation escalated, I was one of the three representatives that had to voice our refusal [to the commanding officers],” Rostrup recalls.

“The situation was deadlocked, and there was a bad atmosphere in the camp. The military isn’t used to being told no. It was terribly difficult until brigade commander Arne Pran arrived by helicopter and led us from Skjold back to Setermoen. He called for a press conference and declared that the exercise was cancelled. That year has been with me ever since, and the late Arne Pran is still a hero to me for how he shouldered responsibility.”

Two big mergers in the bag

After the military, Rostrup studied at the Norwegian School of Economics (NHH). He then moved from Bergen to Oslo and got a job at Norsk Hydro. He was there for around 20 years and held various management positions in Norway and the USA.

“I left Hydro because my wife wanted to move to Africa,” he says. “She worked in the Ministry of Foreign Affairs, and I had travelled around the world. Now it was her turn to shine.”

Rostrup then joined Yara and became head of Yara’s operations in Ghana. His interest in Telenor began in 2016.

“I was contacted when they were looking for a new CFO. I was tempted to learn something new and use what I had in my toolbox from Hydro and Yara,” he says.

“In the resources industry, you must be good at utilizing resources and operating efficiently, while at the same time ensuring health and safety [HSE]. HSE is a moral responsibility and a business advantage. It was these combined perspectives that made my background relevant for Telenor in the new era they were about to enter.”

By new era he means the ground-breaking shift after mobile phones became universally owned.

“The first twenty years were an incredible growth phase,” Rostrup explains. “Few people had a mobile phone but everyone needed one. Telenor was among the first to shift focus from Europe to Asia. We created a mass market there, too,” he says.

In the period 2012-2014, the market began to saturate, and prices fell dramatically. To respond, the company had to operate more efficiently, the organization had to be simplified and digitization was on everyone’s lips.

Rostrup also had experience with this from his background at Hydro. In the period from when Rostrup joined Telenor in 2016 until when he travelled to Asia in 2020 to establish a regional hub, a lot happened: 5G, the Internet of Things, artificial intelligence, and new opportunities for building a digital future.

“Development is as fast in Asia as in Europe, and I moved to build a team, shake up the old telecom companies and build larger units,” he says.

Telenor had tried this around five years earlier. Telenor was set to merge with a Malaysian company that had a relatively similar profile to Telenor and 300 million customers. The merger was not concluded, but Telenor’s work to become a significant player in Asia continued.

Reaping the seeds that had been sown, Rostrup and his team recently completed two huge mergers: one in Malaysia and one in Thailand. The latter was announced on 1 March this year. The first was in concluded three months earlier.

“Now we have the largest tech company in Malaysia. It would be a top ten company in Norway with a stock market value of well over NOK 100 billion and 20 million customers. The recently completed merger in Thailand is even bigger: the largest cross-industry IPO transaction ever, and the largest Southeast Asian telecom transaction in history. The company has 55 million mobile customers and an estimated turnover of NOK 64 billion,” he says.

“When it comes to these two mergers, we had to give something to get something. We have relinquished some control and shifted from being a majority owner to a minority owner with partners.”

What do these two mergers mean for the balance sheets?

“We have increased equity by NOK 50 billion. The ownership stake in the various companies is now worth NOK 25 billion more than before the mergers were announced. It is an enormous value creation. The mergers will realize significant synergies, for example, we can operate with one network instead of two,” Rostrup replies.

How were you able to reach an agreement despite such great cultural differences?

“The negotiations in Thailand have taken three years. The first year was all about explorations with few parties involved. In the second year we had negotiations with lawyers and advisory teams. And in the third year, there were 200 people involved in regulatory processes and integration planning for the mergers. To reach our objective, we had to be willing to live with some of what we perceive as strange and peculiar.”

“For example, agreements were to be signed at 07:07 on a specific day. There were certain colours we were not supposed to wear [at the signing ceremony], and it was important who should and should not be present. But we all have our idiosyncrasies, and I have always lacked the understanding of need for endlessly long lunches with leisurely talk. When I quickly want to return to a meeting, they laugh at me,” says Rostrup.

“However, the cultural card cannot be played all the time. To be successful, it is about establishing an understanding that we are professional partners. The different flavours we all bring cannot overshadow what we must agree on.”

Though times

The history of Telenor and Asia includes some darker chapters despite its successes over a 20-year period. Telenor invested NOK 65 billion in Asia and brought home NOK 65 billion to Norway in dividends.

“We are left with around NOK 95 billion in assets in Asia now. This means that we have created between NOK 4 and 5 billion in value every year, which also includes India, Bangladesh, Pakistan, and Myanmar,” he says.

Telenor pulled out of India after an operating loss and investments of around NOK 25 billion.

“In Bangladesh, we are the market leader with around 80 million customers, but it is a demanding country to do business in. At the same time, we have an opportunity and a responsibility to develop that society further, so we are trying,” Rostrup explains.

“In Pakistan, it is different. Telenor wrote down values ​​in Pakistan by NOK 2.5 billion last summer. For the past few years, it has been difficult to do business there due to political turbulence, economic hardship, high inflation, and a weakening currency. In the last year and a half, it has only gotten worse. It doesn’t look promising, and I feel a responsibility to find a good way to solve this.”

“In Myanmar, Telenor had no choice but to pull out. When you are faced with a military regime, it is all about survival. The fight was lost the day the military took power,” says Rostrup.

He admits that it has been difficult for Norwegians to understand what everyday life in Myanmar was, with gunfire in the streets and a society torn apart with no prospects for improvement. When Telenor entered Myanmar in 2014, they were supported by the Norwegian authorities, and the international community encouraged businesses to invest there. A state of emergency and martial law has now been introduced in many areas.

“If we had left Myanmar overnight, it would have been seen as sabotage and would have been very provocative to the military regime. We could also delete the data before the sale, but the coup leaders would see that as sabotage. Some have disagreed about selling, but in the end, a sale was the only realistic option,” he says.

Could be a divorce?

The Asia venture has been an important chapter in Telenor’s history but may be coming to an end. Asia has already been separated into a separate legal entity, and an IPO is not unthinkable.

“Although we have had enormous value creation in Asia, we believe there is room to start a significantly larger telecommunications operator. One way to do that is to go public. The second is to find a large partner to work with. We still believe that size is key. The industry is shifting towards fewer but larger units, and we want to be an early mover.”

“Now we are exploring if we can create a larger Southeast Asian operation. We moved to Singapore to gain more decision-making power closer to the markets in Asia. We want to create an Asian telecom structure that is attractive in Asia. Then there is also another point, and that is the interest in Telenor among European investors. The company is one of the world’s largest telecommunications companies with over 170 million customers in Europe and Asia,” Rostrup says.

“Previously, it was exciting to have a telecoms company with an Asian growth engine at the top. Now, there is tougher geopolitical risk in Asia. It is exciting, but perhaps a little too exciting. The shareholders know that now. The share has gone up over 30 per cent so far this year, but in the last five years it fell by about the same amount. Dividends are NOK 9.4 per share for this year, up from NOK 9.3 per share last year.”

Smiling comes easily to this emigrant from Northern Norway; and answers come lightning fast and presumably without filter. Until now. The conversation just took a turn from the share price to his two predecessors, Jon Fredrik Baksaas and Sigve Brekke, who have both led Telenor in Asia and later received the key card to the CEO’s office at Fornebu. A chatty Northerner can also be silent.