Telenor returns to growth and revises outlook

20 July 2021 | Melanie Mingas

Cover

Telenor Group has adjusted its full year outlook as president and CEO Sigve Brekke declared a return to growth in Q2.

Driven by strong performance in the Nordics and increased data consumption in its Asian markets, subscription and traffic revenues increased 2% resulting in an EBITDA uplift of 4%. However, total reported revenues stood at NOK 27.2 billion, a decrease of NOK 1.8 billion.

Rounding up the results, Telenor said that in Norway, a decline in fixed legacy revenues was offset by growth in fibre and fixed wireless accesses and mobile service revenues. Improved subscription development in Sweden contributed positively towards stabilisation of the subscription and traffic revenues. Furthermore, Finland and Denmark continued their strong performance, delivering both revenue and EBITDA growth in the quarter.

Brekke (pictured) further elaborated that Telenor now expects organic subscription and traffic revenue growth of up to 1%, organic EBITDA growth of up to 2% and a capex to sales ratio of 15-16%.

Announcing that "Telenor returned to growth in the second quarter", he said: "With the first half of 2021 behind us, and a strong set of numbers for the second quarter, we adjust our expectations for the full year 2021."

It was an eventful reporting period for the group, particularly in Asia.

In June Telenor signed a multi-billion-dollar deal with Axiata to create Celcom Digi in Malaysia, then sold its Myanmar business the following month for $105 million.

Commenting on Myanmar, Brekke said: "The situation in the country has over the past months deteriorated, posing challenges related to people security, the regulatory environment and compliance. It has not been an easy decision. The commitment to Telenor’s values and responsible business conduct is the reason why we believe this sale is the best possible solution in this situation."

Total mobile subscribers reached 170 million at the end of the quarter following 1.7million additions. Capex excluding licences and spectrum was NOK 4.4 billion, yielding a capex to sales ratio of 16%.

Total free cash flow stood at NOK 2.1 billion.

Serving the data revolution

Over the last week Telenor's subsidiaries in Bangladesh, Thailand and Malaysia also posted Q2 results.

In Thailand, dtac saw subscription and traffic revenues decrease by 2% while EBITDA decreased by 1%. During the quarter, the number of subscriptions increased by 164,000 to 19.249 million.

In Bangladesh, Grameenphone, saw subscription and traffic revenues in local currency increased by 8%, and EBITDA increased by 8%. During the quarter, the number of subscriptions increased by 1.28 million to just over 82 million.

In Malaysia, Digi, posted a 2% increase in subscription and traffic revenues in local currency, while EBITDA decreased by 4%. During the quarter, the number of subscriptions decreased by 33,000 to 10.22 million.

Brekke said: "We have an ambition to serve the data revolution in the region and the demand for data contributes to the revenue development in Bangladesh and Pakistan. Domestic market performance in Thailand has stabilised the top-line despite impact from the third wave of the pandemic."