Telenor Group earnings growth not enough for analysts, stock market

Telenor Group's fourth-quarter 2014 earnings fell short of analysts' expectations, sending the company's stock price downwards as weakness at key Asia Pacific units and the cost of deploying LTE networks at home weighed down rising revenue in the period.

The Norway-headquartered operator today revealed its adjusted operating profit--which the company defines as operating profit minus other income and expenses and impairment losses--fell from NOK5.4 billion (€629 million/$712 million) in the last quarter of 2013 to NOK5 billion in the same period of 2014. Revenues, meanwhile, increased from NOK26.3 billion in Q413 to NOK29.1 billion in Q414, and earnings before interest, depreciation and amortisation (EBITDA) grew from NOK8.7 billion in the final quarter of 2013 to NOK9 billion in 2014.

Analysts had predicted Telenor's fourth-quarter EBITDA would hit NOK9.7 billion, Reuters reported, adding that the operator's proposed NOK7.30 per share dividend payment is also short of the NOK7.77 per share indicated in a poll of analysts.

The operator's stock price fell by almost 7 per cent in early trading after it forecast that its full year 2015 EBITDA margin will be in the region of 33 per cent to 35 per cent of sales, Bloomberg reported. The company achieved a margin of 35.4 per cent in 2014--slightly up on the 35.1 per cent achieved in 2013--and analysts had expected the company's 2015 margin to continue that trend to hit around 36.5 per cent, the news agency reported.

In Telenor Group's earnings statement, president and CEO Jon Fredrik Baksaas said the company is one of the fastest-growing operators in Europe, but conceded that earnings had been impacted by challenging conditions in key Asia Pacific markets, including Thailand where Telenor's local business dtac has "taken corrective measures so strengthen its market position and return to growth," amid "intense competition" during the fourth quarter.

The operator previously announced that its Malaysian subsidiary DiGi, and Bangladesh operator Grameenphone, each grew earnings during the fourth quarter of 2014, though again those figures fell short of analysts' expectations.

Baksaas also revealed Telenor's newly launched Myanmar business amassed 3.4 million subscribers by the end of 2014, after opening for business in September.

"In just one year, the people of Myanmar's main cities have leapfrogged from very limited connectivity to broadly available mobile services," Baksaas commented, adding. "We will steadily introduce products and services in Myanmar that will include everyone in the country's digital future."

Full year earnings show improvements across the board. Adjusted operating profit grew from NOK21.8 billion in 2013 to NOK22.9 billion in 2014, and revenues increased from NOK99.1 billion to NOK106.5 billion respectively. EBITDA increased from NOK34.7 billion in 2013 to NOK37.6 billion in 2014.

For more:
- see Telenor Group's earnings statement [PDF]
- view this Reuters report
- read this Bloomberg article

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