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Telenor delivers critical services in demanding times


 «This quarter has brought unprecedented challenges for our customers and employees, as societies in the regions Telenor operates in have endured the COVID-19 pandemic and the impact of measures taken to stop it. In such a situation, providing our customers with critical services and ensuring our employees’ health and safety has been our first priority. Despite the challenges, I am proud to say that during the past months, Telenor has taken a leap within digitalisation. We are now further increasing our focus on touch free operations, digital customer interactions and new ways of working.

Our operating model has given us flexibility to manage operations, cost and investments, contributing to an EBITDA growth of 1 percent and free cash flow of NOK 4 billion in the quarter. As expected, lockdowns have affected prepaid markets in Asia and global roaming revenues negatively. Combined with a reduction in new sales, this led to a decline in organic subscription and traffic revenues of 4 percent, which was offset by an opex reduction of 12 percent. The financial results this quarter are positively impacted by the strong performance in our operations in Norway and Finland, while Bangladesh and Pakistan, as expected, remain the most challenged prepaid markets.

Our strategy of growth, modernisation and responsible business has provided us with the ability to deliver critical services and manoeuvre in these demanding times. Going forward, we will use this experience to further enhance the execution of our modernisation journey. For 2020, we expect a low single digit percent decline in subscription and traffic revenues, stable organic EBITDA and around 13 percent capex to sales. We will continue to focus on cost management and capex to secure resilience in cash flow.»

Sigve Brekke, President and CEO, Telenor Group

Second quarter 2020 summary1

  • In the second quarter, subscription and traffic revenues decreased by 4 percent on an organic basis, driven by the loss of prepaid revenues in Asia as well as roaming revenues. Total reported revenues were NOK 30.9 billion. This is an increase of NOK 4.0 billion or 15 percent, driven by currency effects of NOK 2.8 billion as well as the consolidation of DNA.
  • Currency adjusted opex excluding DNA decreased by NOK 1.1 billion or 12 percent in the second quarter. Reported opex increased by NOK 0.7 billion, as underlying cost reductions partly offset the increases related to the consolidation of DNA and currency development.
  • EBITDA before other items grew by 1 percent or NOK 0.1 billion on an organic basis in the quarter, as substantial opex reductions were able to mitigate the revenue loss. Reported EBITDA before other items was NOK 14.3 billion and the EBITDA margin was 46 percent.
  • Capex excluding licences, spectrum and leases was NOK 3.8 billion in the quarter, yielding a capex to sales ratio of 12 percent.
  • Free cash flow before M&A was NOK 4.0 billion. Total free cash flow was NOK 3.6 billion.
  • In May, Telenor ASA paid the first tranche of the dividend for 2019 to its shareholders of NOK 6.3 billion, or NOK 4.40 per share. The Annual General Meeting further approved to buy back shares from the Norwegian state related to 2019/2020 share buyback programme, resulting in the recognition of an interest bearing liability of NOK 4.1 billion.
  • The net debt to EBITDA ratio decreased from 2.3x at the end of the first quarter to 2.2x at the end of the second quarter.
  • On 29 June 2020, the EFTA Surveillance Authority (ESA) issued a decision against Telenor concerning abuse of dominant position. Based on the decision, Telenor has recognised a provision of NOK 1.2 billion in the second quarter. The decision will be appealed to the EFTA court. See Note 6 Legal disputes for further information.
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