Wednesday, 28 June 2017

Telenor CEO talks up solid foundation as Q1 sales dip

By Nick Wood, Total Telecom
Thursday 04 May 17

Sigve Brekke hails strong emerging market data consumption.

Telenor CEO Sigve Brekke on Thursday insisted the company's decision to leave India and sell its Veon stake is laying a solid foundation. The comment was made alongside the publication of Telenor's first quarter financial results, which showed a slight dip in revenue and EBITDA. "Simplification and efficiency improvements are on top of our agenda…

Telenor CEO Sigve Brekke on Thursday insisted the company's decision to leave India and sell its Veon stake is laying a solid foundation.

The comment was made alongside the publication of Telenor's first quarter financial results, which showed a slight dip in revenue and EBITDA.

"Simplification and efficiency improvements are on top of our agenda," Brekke said. "Our announcement to exit India, the continued sell-down in Veon, and the launch of our cluster organisation are all examples of these efforts."

Telenor agreed in February to offload its Indian operation to market leader Bharti Airtel amid an intense price war sparked by disruptive new player, Reliance Jio Infocomm.

In April, the Norwegian incumbent put another €244.03 million worth of Veon shares on the block, as part of a plan to divest its entire holding in the telco formerly known as Vimpelcom.

Earlier this year, Telenor restructured its management team and business units into four regional clusters in a bid to become a more integrated global operator.

On Thursday, Telenor raised its full-year EBITDA margin outlook to 37% from 36%, to reflect its new organisational structure. In 2016, Telenor achieved an EBITDA margin of 35.4%. Its guidance otherwise remains unchanged – it expects organic revenue growth of 1%-2%, and a capex-to-sales ratio of between 15% and 16%.

"Together with the company-wide initiatives to improve profitability, we believe that we are laying a solid foundation for Telenor's future," Brekke said.

In terms of its Q1 financial results, revenue inched down to 30.46 billion kroner (€3.20 billion) from NOK31.49 billion a year ago, due to currency effects. On an organic basis, revenue remained flat.

Reported EBITDA fell to NOK11.46 billion from NOK11.63 billion; organic EBITDA was up 3%. Meanwhile, net income fell to NOK4.86 billion from NOK5.09 billion in Q1 2016.

"Highlights were the strong data consumption in emerging Asia and the solid fibre momentum in Norway as well as Sweden," Brekke said. "It has been a busy quarter, as we have introduced new and improved mobile offers in several markets, with encouraging customer reception."

Telenor ended March with 172 million mobile subscribers, up from 163 million a year earlier. The growth was driven primarily by Bangladesh and Pakistan, which offset declines in Thailand and Malaysia.

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