Telenor Q1 sales down, trims outlook

Telenor Q1 sales down, trims outlook

26 APR 2013

Weaker-than-expected sales saw Telenor’s year-on-year Q1 revenue drop, prompting the Nordic operator to cut its full-year organic revenue forecast from 3-5 per cent to 2-4 per cent.

Jon Fredrik Baksaas (pictured), chief executive of the Telenor Group, attributed the weaker top-line performance “to lower growth contribution from India and handset sales, as well as regulatory factors”.

Baksaas nonetheless believed the underlying trends were positive. “We see healthy mobile service revenue growth in our operations in Norway and Thailand contributing to solid margins,” he said, “as well as strong customer acquisition in Bangladesh”.

Group sales during the first quarter dropped 1.6 per cent from a year earlier to NOK24.7 billion ($4.2 billion).

In India, sales fell by 30 per cent, to NOK708 million, largely because Telenor closed down operations in seven of thirteen telecom circles (regions) and is now focused on reducing costs. The cost-reduction efforts appear to be paying off. For the first quarter, Telenor’s Indian unit posted an operating loss of NOK194 million, much lower than the NOK4.68 billion loss it posted a year earlier.

Where Telenor is operational on the continent, it had 23.6 million subscribers by the end of the quarter, up 1.4 million from three months previously. Stricter customer identification requirements, adds Telenor, although resulting in lower gross additions, has reduced churn and improved the quality of its subscription base. The monthly churn rate in India was 5 per cent in Q1, down from 12 per cent in 4Q 2012.

In Pakistan, Telenor’s operations have been hindered by regulatory restrictions on SIM sales through retail channels, introduced in December 2012. Telenor says efforts to strengthen alternative sales channels have improved the situation, allowing it to boost the subscription base by 5 per cent compared with the end of last year.

Howver, ARPU in Pakistan’s local currency decreased by 12 per cent, both as a result of government enforced network outages and the effect from establishing an International Clearing House (ICH), which led to a large reduction of
incoming international traffic. Pakistan contributed NOK946 million to group sales during the first quarter, down from NOK1.1 billion during Q1 2012.

Elsewhere in Asia, Telenor reports that its dtac mobile subsidiary in Thailand completed a nationwide network upgrade and is now preparing for the launch of 3G services on the 2.1 GHz frequency band in the second quarter. “This will represent an important milestone in the transition from a concession to a licencing regime,” said Baksaas.

Telenor’s performance in its Nordic market markets was generally stable, with mobile service revenues broadly flat in Norway and Sweden, at NOK3.2 billion and NOK1.9 billion respectively.

However, revenue from mobile operations in Denmark dropped by 19 per cent, to NOK1.2 billion. The fall, says Telenor, was due to a mixture of falling subscriber numbers, lower ARPU and reduced handset sales. Not helping mobile ARPU, which fell 15 per cent in local currency, was a 65 per cent cut in the mobile interconnect rate, starting 1 January 2013.

More encouragingly, underlying cash profits for the group rose 8.5 per cent, to NOK8.4 billion, helped by improving margins in Norway, Sweden and India.


Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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