Telenor slips into the red in Q4 as Danish merger failure takes its toll

Telenor's failed bid to merge its Danish operations with those of rival TeliaSonera cost it dearly in the fourth quarter, as a related NOK2.1 billion (€218 million/$246 million) impairment charge resulted in the Norway-headquartered operator slipping into the red during the period.

The operator on Wednesday announced a post-tax net loss of NOK2.1 billion for the fourth quarter compared to a profit of NOK496 million in the same period of 2014. Telenor recorded the loss despite increasing EBITDA from NOK9.3 billion in the fourth quarter of 2014 to NOK10.8 billion in the recent period, and growing revenue from NOK30.4 billion in the 2014 quarter to NOK33.4 billion in 2015.

Telenor's fourth quarter EBITDA fell marginally short of the average NOK11 billion predicted by analysts polled by Bloomberg, resulting in a drop in the operator's share price in early trading on the Oslo stock exchange.

However, fourth quarter revenues were marginally above the average predicted by analysts, MarketWatch reported.

In its earnings statement, Telenor noted that there are solid trends in its mobile consumer segment in Norway and Sweden, spurred by higher data usage and related offers. The operator said it added 6.6 million mobile subscribers throughout all of its markets during the fourth quarter, taking its total mobile customer base to 203 million by end-December.

The operator recorded steady annual gains in revenue and EBITDA in the full year to end-December. Revenue increased from NOK111 billion in 2014 to NOK128 billion in 2015, and EBITDA from NOK38.4 billion to NOK44.1 billion.

However, those increases failed to stem a decline in post-tax profit, which fell from NOK9 billion in 2014 to NOK3.4 billion in 2015.

Management predicted that 2016 will see Telenor continue to make steady gains in organic revenue growth of between 2 per cent and 4 per cent, but noted that EBITDA margins would be hit by "fierce competition and headwinds in key markets like Thailand and Malaysia," resulting in a predicted rise in EBITDA margin of 33 per cent to 34 per cent through 2016.

Investment bank Pareto Securities told Bloomberg that analysts had predicted a 2016 EBITDA margin of 35.4 per cent.

For more:
- see Telenor's earnings statement
- view this Bloomberg report
- read this MarketWatch article

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