Ukrainian conflict affects Telenor bottom line

4 May 2007

Telenor has reported a 32% decline in its first quarter net profits because results from its Ukraine unit were excluded because of a legal dispute. The group said its net profit for the three months ended 31 March 2007 was NOK2.76 billion (USD460 million) excluding revenues from Ukraine’s Kyivstar, compared to NOK3.65 billion a year earlier. Had the revenues from Kyivstar also been excluded from the first quarter of 2006, the decline in net profits would have been 16%. ‘Telenor’s results are affected by the fact that we are not able to include Kyivstar, since the existing injunctions in Ukraine are prohibiting us from receiving financial information,’ said President and CEO of Telenor, Jon Fredrik Baksaas.

Telenor has been in ongoing dispute with Russia’s Alfa Group, the key owners of Russia’s Vimpelcom, over business strategy in Ukraine and Vimpelcom’s offer to buy Kyivstar, in which Telenor owns 56.6%. In March Telenor announced that it was dropping Kyivstar results from its first quarter report because of legal actions brought by Alfa units in Ukraine in December.

Telenor’s revenues increased to NOK22.4 billion (USD3.7 billion) for the quarter, from NOK21.3 billion a year earlier. ‘Our consolidated mobile operations added more than six million subscriptions’ Baksaas said. ‘DiGi in Malaysia continues its excellent performance. Telenor Pakistan is growing even faster than we expected.’

Norway, Telenor Group