Telenor’s revenue declines in 1Q17 on currency movements

4 May 2017

Norway’s Telenor Group has reported a 3% year-on-year decline in revenues in the first quarter of 2017, attributed to currency effects. In the three months to 31 March 2017 the company generated a total turnover of NOK30.5 billion (USD3.5 billion), down from NOK31.5 billion in the corresponding period of 2016. Organic revenues, however, were said to have been ‘in line’ with 1Q16, while Telenor was keen to note that turnover continued to be positively impacted by both an improved and a higher number of customers in Bangladesh, as well as ‘sustained growth’ in the subscriber base at its units in Myanmar and Pakistan. Organic mobile subscription and traffic revenues increased were up by 1% y-o-y, meanwhile, with this partly offset by lower handset sales and a reduction in interconnect revenues.

In 1Q17 Telenor’s operating expenditure (OPEX) fell by NOK400 million – again primarily due to currency effects – to NOK11.4 billion. Adjusted for the foreign exchange movements, OPEX was reportedly stable, with the company saying that ongoing efficiency initiatives were beginning to yield results. With cost reductions said to have been most notable in its Thai and Danish operations, the group’s Myanmar subsidiary and new digital businesses were primarily responsible for cost increases. EBITDA in the quarter under review, meanwhile, was NOK11.5 billion, a figure which was roughly stable y-o-y in reported terms, but represented 3% growth on an organic basis. Reported net income to equity holders of Telenor in 1Q17 was NOK4.2 billion, down marginally from NOK4.3 billion a year earlier, with reduced net income from associated companies partly offset by improved net income from Telenor India, which is now being classified as a discontinued operation; in February 2017 the group confirmed it had inked a definitive deal with Bharti Airtel which will see the latter take full ownership of Telenor India.

In operational terms, at the end of March 2017 Telenor Group’s total mobile subscriber base stood at 172 million, an increase of two million from the previous quarter, with growth in Bangladesh (up two million q-o-q) and Pakistan (+600,000) helping offset declines in Malaysia and Thailand.

Commenting on the quarterly performance, Telenor Group CEO Sigve Brekke said: ‘I’m pleased to see Telenor continuing to deliver organic EBITDA growth, while revenues were stable in the first quarter … As previously communicated, simplification and efficiency improvements are on top of our agenda. Our announcement to exit India, the continued sell-down in VEON and the launch of our cluster organisation are all examples of these efforts. Together with the company-wide initiatives to improve profitability, we believe that we are laying a solid foundation for Telenor’s future.’

Norway, Telenor Group