Norwegian telecom operator Telenor ASA Wednesday raised its full year outlook after growth in Asia helped drive up third quarter sales, contributing to a stronger-than-expected operating profit in the quarter. “Telenor Group delivered yet another strong quarter, with increased organic revenue growth,” said Chief Executive Jon Fredrik Baksaas, adding that the company’s Asian operations reported revenue growth of 13%. Telenor raised its organic revenue growth guidance for fiscal 2010 to 5% from the 3% to 5% it had previously predicted, and said it expects an earnings before interest, taxes, depreciation and amortization, or Ebitda, margin of 30% to 31% in the year. It cut its capital expenditure target, excluding licenses and spectrum, to around 12% of revenue, from 12% to 13% previously.
Telenor’s Swedish rivals TeliaSonera AB and Tele2 AB also recently cut the amount they expect to spend on their networks as they benefited from pricing pressure on telecom gear vendors, and posted healthy business growth in emerging markets such as Russia and Central Asia.
Telenor, which operates in regions including the Nordic countries, India and Southeast Asia, reported third quarter sales of NOK24.10 billion, up from NOK22.77 billion a year earlier, but marginally below expectations for NOK24.3 billion.
The strong subscription growth in Telenor’s Asian operations more than offset a negative effect from the appreciating Norwegian krone against the company’s invoicing currencies, it said.
Meanwhile, Telenor said its business in the Nordic region benefited from growing demand for mobile data but was hit to some extent by rising competition.
Indian unit Uninor, which launched operations late last year, posted an operating loss of NOK1.13 billion, against a NOK150 million loss a year earlier.
But the unit saw strong growth in both subscriptions and average revenue per user during the quarter, said CEO Baksaas.
Telenor said it expects Uninor to contribute an Ebitda loss of around NOK4.5 billion in fiscal 2010.
Telenor’s figures were “really strong”, mainly thanks to a good result from the company’s Asian markets, said Carnegie analyst Espen Torgersen, adding that the result at Uninor was better than the market had expected.
Adjusted Ebitda, which excludes extraordinary items such as losses on disposal of fixed assets and one-off pension costs, was around 8% ahead of consensus expectations, he said, adding that this is more important to investors than the declining net profit, which was hit by a range of one-off items.
Adjusted Ebitda fell slightly to NOK7.89 billion from NOK8.19 billion.
Net profit had been expected to fall sharply due to start-up costs for Telenor’s recently-launched Indian operations and one-off items, including previously announced tax provisions of NOK814 million.
At 0939 GMT, shares in Telenor were down 0.9% at NOK93.40 against a flat wider Oslo market.
The company’s shares had traded up over the past few days so the strong result was already priced in, said analyst Markus Bjerke at Arctic Securities.