Telenor’s topsy-turvy quarter leaves it down but not out

Life is anything but dull at Telenor currently.

The Norway-based operator reported its results on Tuesday amid two senior resignations and some pending law suits.

altFirst, to the figures; revenues were up 4.3 percent year-on-year to €3.3 billion between January and March.

In the company’s home market of Norway, revenues remained flat, but the president and CEO highlighted the migration to new bundled mobile tariffs that accounted for that oh-so-rare occurance – an increase in ARPU.

“The introduction of pricing that reflects the change towards data usage, and investments in better network capabilities, will enable us to further pursue mobile data opportunities,” said Jon Fredrik Baksaas.

The CEO also added that efficiency measures were continuing as demand for fixed line services keeps falling.

“We are in the midst of launching new operating models in the Nordic region and have recently entered into agreements for network sharing and a partnership for customer service in Denmark,” he said.

Much of the growth was down to the continued take up of mobile services in Asia, where the company’s businesses all saw double digit growth with the exception of Bangladesh.

“Customer growth continues and the demand for data services is increasing rapidly,” commented Baksaas.

In particular, he described the performance of Telenor Pakistan as “outstanding” as it delivered revenue growth of 17.6 percent and EBITDA of 44.7 percent on the back of a 1.2 million increase in subscriptions.

However, this is where most of the good news ends.

The company reported a €51.5 million loss following the first major problem – India.

As European Communications reported last week, Telenor wrote down its Indian business to the tune of €513 million over the 2G licence dispute and has threatened to pull out of the country all together.

Baksaas said he was “working actively to safeguard our investment” and urged the Indian government to “clarify a sound framework for the industry”.

Given revenue growth in India was up over 80 percent on the same period last year, Telenor is keeping its fingers crossed that the situation can be resolved, but serious questions remain over its due diligence and future involvement there.

The company is also facing problems in Russia, where it has promised to fight accusations of violating Russian Strategic Investment Law after it upped its stake in Vimpelcom.

Baksaas said he was confident that “we have fully complied with applicable laws and regulations”.

The company must fight both Indian and Russian fronts without two key figures.

Harald Norvik, the chairman of the Board of Directors, and Jan Erik Korssjøen, chairman of the Corporate Assembly, resigned within a week of each other in early May.

Norvik left, just short of his fifth year in the role, after Norway’s Minister of Trade and Industry criticized the handling of the January sale of TV station TV2.

The government, Telenor’s largest shareholder, was understood to be unhappy with the sale of a national channel to foreign owners.

The move left a bad taste in the mouth of Korssjøen.

"The reason for my resignation is that I disagree with the largest shareholder, on the decision, timing and the process leading to the resignation of the chairman of the Board of Telenor ASA," he said.

Given the problems in India, the last thing Telenor needs is the added distraction of a fight with the Russian regulator and disagreements with their own government and largest shareholder.

Luckily, the financials are on an upward curve but another hit could well mean an unnecessary situation turns very ugly.

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