After two mergers, Telenor is still exploring options for AsiaAfter two mergers, Telenor is still exploring options for Asia

Outgoing Group CEO is looking to increase "optionalities" in Asia, while the Nordics transformation program starts to yield results.

Anne Morris, Contributing Editor, Light Reading

July 18, 2024

4 Min Read
Telenor CEO Sigve Brekke
Telenor CEO Sigve Brekke remains preoccupied with Asia during his final months in charge.(Source: Telenor)

Sigve Brekke will be stepping down from his role as head of Telenor Group in December this year, to be replaced by Benedicte Schilbred Fasmer, but the long-serving CEO clearly has no intention of taking his foot off the gas in the few remaining months of his tenure.

 In Thursday's earnings call for the second quarter of 2024, Brekke indicated, for instance, that Asia remains a key preoccupation for him, despite all the changes that Telenor has already implemented in this region.

While noting that the main focus in Asia is to "deliver on the synergy ambitions we have in Malaysia and in Thailand" following the respective mergers in these two countries, as well as finalize the group's planned exit from Pakistan and build up its operations in Bangladesh, Brekke said Telenor "is also looking for structures in Asia which can increase our optionalities going forward." 

"We continue to have dialogs with potential partners [with which] we can combine our assets together," Brekke said, noting that Telenor is also looking at the potential of bringing in new partners for its existing Asian operations.

 "This could potentially lead into an IPO in Asia going forward, to increased optionalities for us in the years to come," he said, while adding that it will take time to "figure out what is the right value creation for us."

In terms of the various operations in Asia, Brekke said Grameenphone in Bangladesh and CelcomDigi in Malaysia "already have solid cash flows, but to reach our ambition, True in Thailand will be the key … I continue to be impressed by how far [True's management has] come since the merger last year. True has really been gaining traction, with growth picking up, as well as synergies, being ahead of plan."

He added: "We also expect a closing of our Pakistan divestment towards the end of the year, although there is some uncertainty around the exact timing, which could also slide into 2025."

Here, Brekke is no doubt referring to competitive concerns raised in May by the Competition Commission of Pakistan (CCP), which is now conducting an in-depth review of the proposed acquisition.

Overall, Telenor Asia's organic second-quarter service revenues increased by 6%, to 4.77 billion Norwegian kroner (US$444 million), with positive contribution from both Bangladesh and Pakistan. Total revenue in Asia was up 5%, to NOK5.18 billion ($482 million). EBITDA increased 2%.

Nordics transformation

Telenor now has four business areas: Nordics, Asia, Infrastructure and Amp. Group service revenues in the second quarter amounted to NOK16.3 billion ($1.5 billion), corresponding to an organic increase of 4.5% compared with the same period last year. EBITDA was 3.8% higher, at NOK8.79 billion ($820 million). Telenor generated free cash flow of NOK2.2 billion ($200 million) in the period.

In the Nordics, total service revenues increased by 4% on an organic basis, to NOK11.15 billion ($1 billion), while total revenue was 1% lower, at NOK13.9 billion ($1.3 billion). The operator has now raised its full-year forecast for Nordic service revenues to low- to mid-single-digit percent organic growth, compared with the previous forecast of low single-digit growth.

Telenor also noted that the planning and execution of its Nordic transformation program gained further traction in the quarter, "with an increasing amount of customer benefits and cost efficiencies set to materialize in coming periods."

Here, Brekke said the Nordics management team, which is currently headed up by Jon Omund Revhaug following the sudden death of Jørgen Rostrup in June, is executing on "fairly radical improvements in terms of customer benefits and operating efficiencies."

As an example of "tangible results" from this program, Brekke pointed to the fact that Telenor is now migrating network and IT operations to the cloud, "shutting down legacy platforms and systems, and planning to scale up the use of generative AI."

In 2024, "we have set an ambition to shut down 200 legacy systems, and so far, we have done 98 of them," he said.

He also noted that Telenor is building a "common Nordic platform within areas such as cloud enablement, analytics and software-defined networks, which will provide the basis for use of AI and transformed customer experiences going forward."

In the Nordics, the focus generally is to improve synergies among the operations in Denmark, Finland, Norway and Sweden. For example, a new shared services hub in Portugal has achieved opex savings of NOK101 million ($9.4 million) in the year to date, with NOK175 million ($16.3 million) planned for the full year.

At commercial level, cross-Nordic programs are underway in fields such as TV, managed services and B2B, including the use of AI-based customer support.

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About the Author

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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