Telenor boosts forecast for full year EBITDA margin following strong performance in 2Q17

17 Jul 2017

Norway’s Telenor Group has increased its EBITDA margin guidance for its current fiscal year on the back of reporting ‘strong results and solid cash flow’ in the second quarter of 2017.

In the three months ended 30 June 2017 Telenor generated a total turnover of almost NOK31.5 billion (USD3.8 billion), representing an annual increase of 1.8% when compared to the corresponding period of 2016. Organic revenue growth, meanwhile, was reported to be 2.1% in 2Q17. Telenor noted that the ‘largest contributor’ to group revenue development was its Bangladeshi unit Grameenphone, which saw solid subscriber and increased ARPU in the quarter under review. Also highlighted were higher revenues from fixed broadband services in Sweden and Norway, and customer growth in Pakistan and Myanmar.

Both reported and currency adjusted operating expenditures (OPEX) fell by NOK600 million in 2Q17, attributable to ongoing efficiency initiatives. Cost reductions were said to have been most notable in Norway, Malaysia, Denmark and Thailand, while costs increases were primarily attributable to Pakistan. Telenor’s EBITDA totalled NOK12.7 billion in 2Q17, representing an organic year-on-year increase of 13%, primarily as a result of strong growth in subscription and traffic revenues in Bangladesh, and group-wide OPEX reductions. Improved EBITDA margins were recorded in all business units in the quarter under review, but were said to have been most notable in Thailand, Bangladesh and Denmark. Telenor’s EBITDA margin stood at 40% at the reporting period, a figure which it said was an ‘all-time high’. Despite these positives, Telenor recorded a net loss of NOK200 million in the second quarter, though it noted that adjusted for effects related to the sale of shares in VEON and gains from its disposal of online classifieds assets in Latin America it recorded a net income of NOK3.9 billion.

Based on its first-half performance, Telenor has revised its financial guidance for FY 2017, with its EBITDA margin now forecast at between 38% and 39%, up from a previous figure of 37%. Unchanged though were its expectations for organic revenue growth (1%-2%) and CAPEX to sales ratio excluding spectrum licences (15%-16%).

In operational terms, meanwhile, at the end of June 2017 Telenor Group reported a total mobile subscriber total of 173.9 million, up from 166.5 million a year earlier. Notable increases were reported by the group’s units in Bangladesh (which added 4.7 million customers in the year to 30 June 2017), Pakistan (+ 2.9 million) and Myanmar (+ 1.9 million).

Norway, Telenor Group