Telenor profits halved despite subs growth

Telenor’s post-tax profit more than halved year-on-year during 2Q11, despite strong gains in Asia Pacific subscribers and higher revenues from data services.
The Norway-headquartered carrier generated post-tax profit of 4.4 billion Norwegian kroner (€564 million) during the quarter, some 5 billion kroner less than in the same period in 2010. The fall comes despite an increase in revenue, which hit 24.3 billion kroner this year compared to 23.5 billion in 2Q10.
Much of the revenue rise is due to subscriber additions totaling 8 million during the quarter, president and chief Jon Fredrik Baksaas said. He notes the bulk of the additions came from operations in Asia Pacific, but that new service offerings in Nordic markets also played a part in growing the total customer base.
“Half way into 2011, we have captured growth opportunities and delivered another quarter with 7 percent organic revenue growth combined with steady customer growth and healthy margins,” Baksaas states, adding. “I am especially pleased to see the mobile subscriber base growing again in Norway and that the growth in data revenues continues to compensate for price pressure on voice.”
Executives claim the apparent slump in profits is misleading, as 2010 figures included a one-off 6.5 billion kroner gain from the transfer of Kyivstar shares to VimpelCom, MSNBC reports.
Despite the higher 2Q11 revenues, the firm’s domestic business remains under pressure with revenue and operating profit down relative to 2Q10. In contrast, the businesses in Sweden and Denmark both reported increased operating profit in the recent quarter. Central and Eastern Europe presented a similarly mixed bag, with lower income in Hungary offset by rises at Telenor’s businesses in Serbia and Montenegro.
India remains Telenor’s only unprofitable market in Asia Pacific, though it cut losses at Uninor 117 million kroner to 1.2 billion kroner during the period. All of the firm’s other operations in the region increased operating profit during the period bar Malaysia’s DiGi, which saw the figure fall 100 million kroner to 629 million.
Moving forward, Baksaas says the firm will continue to seek out cost savings and will maintain investment in next-generation networks in order to maintain the overall growth curve. He stands by the firm’s outlook for the remainder of the year, targeting organic revenue growth of 5% or more, and EBITDA margin of 31%.