Telenor turns to India to maintain 4Q profits
India led the way for Norway-based Telenor in 4Q, as tough competition in Nordic and European markets caused the carrier to miss analyst’s forecasts for profit during the quarter.
The telco’s profits remained flat year-on-year at 2.1 billion Norwegian Kroner (€266 million) during 4Q, with revenue growth of 8% to 24.9 billion Kronor mostly driven by a strong performance at its Uninor division in India.
Chief Jon Fredrik Baksaas stated the firm’s focus on establishing Uninor as an “ultra low cost operator,” was working well, with four million subscribers added in the “very competitive market,” during the quarter.
That performance boosted overall Asia Pacific revenues 13% year-on-year, mitigating results from Nordic and Central and Eastern European markets, which Baksaas described as “satisfactory.”
He noted the tough competitive environment in the latter two markets means the carrier would have to adopt an “innovative” approach to the regions, which includes further cost cutting.
While 4Q revenues were slightly higher than analyst’s forecasts, profits were lower than the 2.56 billion kroner predicted, Bloomberg reported.
Full year figures made for better reading, though, with profits up 5 billion Kroner at 14.3 billion Kroner and revenues growing by almost the same amount to 94.8 billion Kroner.
Baksaas referred briefly to Telenor’s continuing fight with VimpelCom over the Russian carrier’s acquisition of Wind Telecom, but made no mention of its move yesterday to force VimpelCom to issue pre-emptive shares that would help Telenor prevent its stake being diluted by the deal.
The carrier launched legal action with the Commercial Court in London to trigger the share issue, asking the court to hold the shares in escrow until a separate arbitration proceeding decides if the acquisition meets criteria for the shares to be doled out.
Telenor claims the deal doesn’t offer shareholders good value, because it would result in Wind holding more voting rights than its stake in VimpelCom – a move that would dilute the holding of current holders.
The telco has pledged to return the pre-emptive shares to VimpelCom if the arbitration goes against it, a pledge spokesman Dag Melgaard says is a “fair and equitable solution that will preserve the status quo while the arbitration is ongoing.”