Telenor slips into the red during Q3 as impairments offset EBITDA and revenue growth

Sigve Brekke, Telenor president and CEO
Telenor president and CEO Sigve Brekke hailed solid third quarter earnings

Telenor paid a hefty price in terms of costs relating to its stake in VimpelCom and impairments at its Indian operation, which dragged its third quarter net income into the red despite overall increases in revenues and EBITDA during the period.

The Norway-headquartered operator saw its net loss widen from NOK1.8 billion (€198 million/$217 million) in the third quarter of 2015 to NOK4.8 billion in the recent quarter, but noted that it generated net income of NOK4.7 billion when the figure is adjusted to account for the effects of VimpelCom, impairment costs in India and other items.

In its earnings statement, Telenor explained that the bulk of the loss in the third quarter related to a reassessment of the value of its operating licences in India, which resulted in an impairment of NOK4 billion. Excluding that and the VimpelCom costs, adjusted net income for the period was NOK1.1 billion higher year-on-year, which Telenor said was mostly due to an increase in EBITDA from NOK11.8 billion in the third quarter of 2015 to NOK12.4 billion in the recent quarter. Revenues increased 3 per cent year-on-year to NOK32.8 billion in the recent period.

Sigve Brekke, Telenor’s president and CEO, said the operator “showed good performance, with continued revenue growth and an all-time high EBITDA” during the third quarter. Earnings were boosted by a “strengthened cost focus” and encouraging signs of “data monetisation in Bangladesh and Pakistan.”

Domestic revenues were “impacted by lower roaming revenues” during the quarter, Brekke noted. However, the operator  “experienced solid uptake on our new mobile tariffs” during the quarter, and saw a good performance in terms of high speed broadband in Norway and Sweden.

Brekke noted that Telenor had begun the process of divesting its 33 per cent stake in VimpelCom during the quarter.

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Telenor booked an NOK2.5 billion impairment relating to its VimpelCom holding in its second quarter earnings, which may have mitigated the impact on its recent earnings.

The operator remained confident of achieving its full year 2016 forecasts of organic revenue growth in the range of 1 per cent to 2 per cent, an EBITDA margin of around 35 per cent, and capex to sales ratio (excluding licences) of around 17 per cent.