Telenor Q2 Profits Slide on Serbian Writedown

Norwegian telco, Telenor has reported a drop in Q2 profits of NOK 1.38 billion (US$220 million), compared to NOK 3.54 billion (US$563 million) a year ago - due largely to heavy impairment losses. The company recorded an impairment loss of NOK 1.97 billion (US$313 million) on goodwill in Telenor Serbia. Revenues were up by 3% to NOK26.9 billion (US$4.3 billion).

"The trends from the first quarter of 2009 continued into this quarter, with a challenging business environment also affecting the telecom sector. In spite of pressure on the top line development our operations are improving their performance, resulting in a record high operating cash flow. At the end of the quarter, we reached a total of 168 million mobile subscriptions," said Jon Fredrik Baksaas, President and CEO of Telenor.

"For the rest of the year we expect revenues to remain under pressure. We will continue to scale our business activities accordingly, while delivering a strong operating cash flow and sustaining our market positions," Baksaas said.

CAPEX for the quarter was NOK 3.24 billion (US$515 million), compared to NOK 6.4 billion (US$1 billion) a year ago, although that earlier figure included NOK 1.55 billion for operating licenses.

Capital expenditure including new licences and spectrum for the fi rst half of 2009 decreased by NOK 4.7 billion mainly due to the investment in the satellite Thor 5 of approximately NOK 1.1 billion, capitalisation of the 3G spectrum licence in DiGi of approximately NOK 1.1 billion and the acquisition of 2x20 MHz in the 2.6 GHz spectrum in Sweden for approximately NOK 450 million during the fi rst half of 2008. In addition there have been lower network investments in most operations so far in 2009.

The forecast for the rest of 2009, based on the proforma group structure including Kyivstar (Unitech Wireless not included), and using currency rates as of 30 June 2009, Telenor expects organic revenues in line with 2008, however on the negative side.

Telenor expects that Unitech Wireless will contribute to a marginal increase in revenues, an EBITDA loss in the range of NOK 1.5-2.0 billion and capital expenditure in the range of NOK 3.5-4.5 billion for 2009.

The company has currently made no provision has been made for any liability or loss concerning the seizure of its shares in Russia's VimpleCom.

Posted to the site on 23rd July 2009