Telenor stays confident in year of change

Telenor Group sees 2022 as a year of transition as it completes the decommissioning of legacy copper networks in Norway, builds 5G and fiber networks and takes what it hopes will be further steps toward the completion of planned mergers in Malaysia and Thailand.

Petter Børre Furberg, CEO of Telenor Norway, said that by the end of this year the operator expects to have a remaining cost base relating to the copper network of about NOK400 million (US$43 million) to NOK500 million ($53 million), down from NOK1.2 billion ($127.8 million) in 2018. He noted that the remaining costs are expected to be gradually reduced over the next two to three years.

Figure 1: Sigve Brekke, Telenor Group president and CEO, said higher energy prices and activities related to the planned mergers had a negative impact on core earnings in Q1 of 2022.
(Source: Orjan Ellingvag/Alamy Stock Photo)

In 2023, we will be "a completely legacy free operation" in our retail business in Norway, Furberg said.

"Our 5G rollout and modernization program is running at very high speed and we are planning for a completion of the 5G modernization program by mid 2024," he said.

Furberg also indicated that Telenor is open to opportunities for profitable investments in fiber and said "we are evaluating the possibility of establishing a passive fiber infrastructure company."

At group level, Sigve Brekke, Telenor Group president and CEO, said higher energy prices and activities related to the planned mergers had a negative impact on core earnings in the first quarter (Q1) of 2022, although he indicated that the group's mobile business performed well overall.

'Fairly confident'

On the subject of the mergers, Brekke said he is "fairly confident" that the group will get regulatory approval both in Malaysia and in Thailand, with both processes going according to plan.

In Thailand, Telenor is in talks with Charoen Pokphand (CP) Group on a potential merger between their respective Thai operations Dtac and True Corp. In Malaysia, Axiata Group and Telenor agreed to merge their Malaysian operations Celcom and Digi.

In terms of the group's financial performance in Q1 2022, group revenue was slightly lower at NOK27 billion ($2.9 billion), while organic EBITDA fell 2.5% to NOK11.6 billion ($1.2 billion).

Telenor was able to report net income of NOK6.57 billion ($700 million) compared to a year-ago loss of NOK3.88 billion ($413 million).

However, this was primarily owing to the NOK6.5 billion ($692 million) impairment for Telenor Myanmar last year, as well as fixed network divestment gains in Sweden and a reversal of tax expenses.

Want to know more? Sign up to get our dedicated newsletters direct to your inbox.

Brekke said he was "especially pleased" with mobile service revenues and ARPU across the group's Nordic markets.

He also described growth in Bangladesh and Pakistan as "solid" and pointed to the completion of the sale of Telenor Myanmar during the quarter, "concluding a challenging process in a very difficult situation."

As for the outlook, Telenor expects EBITDA growth "to lag" revenue development over a few quarters.

For 2022 as a whole, and excluding Digi in Malaysia, Telenor is forecasting low single-digit growth in organic service revenues and organic EBITDA that is broadly in line with the 2021 level or slightly higher.

Related posts:

— Anne Morris, contributing editor, special to Light Reading