Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telenor ASA (TELNF, Financial) reported a 4.5% growth in group service revenues and nearly 4% growth in EBITDA for the second quarter.
- The Nordic transformation is progressing well, with flat OpEx and expectations of a slight reduction by the end of the year.
- In Asia, True in Thailand is showing strong growth and synergy realization, with expectations of dividend payments in 2025.
- Telenor ASA (TELNF) has launched a new cybersecurity offering in Norway, strengthening its market position in digital security.
- The company has a strong balance sheet with a net leverage ratio of 2.3x, maintaining financial stability.
Negative Points
- Operating expenses increased by 3.7% year-over-year, primarily due to rising energy costs in Asia, particularly in Pakistan.
- Inflation remains a challenge in Asian markets, impacting EBITDA growth in regions like Pakistan and Bangladesh.
- The Amp business unit continues to face gross margin headwinds and growth costs, causing a drag on group-level growth.
- There is uncertainty around the exact timing of the Pakistan divestment, which could extend into 2025.
- Despite strong performance, there is increasing competition in the large enterprise and public segments in Scandinavia, leading to some ARPU erosion.
Q & A Highlights
Q: Can you provide an update on your strategy for Asian ownership and whether there are plans to shift ownership positions in 2024?
A: Our main focus in Asia is on delivering synergy ambitions in Malaysia and Thailand, finalizing the exit in Pakistan, and capitalizing on data growth in Bangladesh. We are exploring structures to increase optionality, including potential partnerships and IPOs, but these discussions take time. We will update when there is concrete progress. - Sigve Brekke, CEO
Q: Why is Norway performing better than expected in terms of EBITDA growth, and do you expect this to continue?
A: Norway's performance is driven by revenue growth through the more-for-more pricing strategy and cost reductions. We are differentiating with network quality and security, which supports price increases. This trend is expected to continue. - Sigve Brekke, CEO
Q: Why hasn't the cash flow guidance for the full year been raised despite strong performance in the first half?
A: We have seen significant cash flow improvements in the first half, but timing effects on CapEx and working capital will impact the second half. We maintain our guidance due to these expected variations. - Kasper Kaarbo, CFO
Q: Can you explain the impact of regulatory changes in Norway regarding fiber networks and tower lease charges?
A: The tower lease charge changes could be positive, either through higher rental prices or lower charges when using others' towers. The fiber regulation may reduce overbuilding in remote areas and offer opportunities to sell our products on others' fiber. Financial impacts are still being assessed. - Sigve Brekke, CEO
Q: What is the impact of the forced migration to unlimited plans and security offerings on customer churn in Norway?
A: The forced migration of 800,000 customers went better than planned, with customers appreciating our security and network offerings. Price increases in the low-end segment were also well-received, despite competitive pressures. - Sigve Brekke, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
