Telenor reports steady performance in the first quarter
May 4, 2021
Fornebu: "Our digitalisation journey continued in the first quarter of 2021 enabling us to add 5 million subscribers and yielding an opex decrease of 7%. Despite a decline in subscription and traffic revenues of 4%, this enabled us to deliver an organic EBITDA decline of 2% and a free cash flow of NOK 3.8 billion.
The Nordic operations delivered a robust quarter with EBITDA growth in Finland and Denmark. Despite the pandemic impacting our Asian operations over the last twelve months, we have been able to adapt and deliver strong customer intake across our operations.
The recently announced merger discussions in Malaysia represents an important next step in Telenor Group’s strategy to strengthen its position and create value in Asia. The new entity will have size and capabilities to meet increasing expectations and demand from a digitally connected society.
In Myanmar, we see an irregular, uncertain, and deeply concerning situation. Since the military coup on 1 February 2021, Telenor’s focus has been on the safety and security of our employees, access to services for customers and continued transparency. Prolonged mobile internet restrictions have severely impacted the people of Myanmar and the country’s economy, illustrating the importance of connectivity services. Telenor calls on the authorities to immediately reinstate unimpeded communications and respect the right to freedom of expression and human rights.
Due to the worsening of economic and business environment outlook and a deteriorating security and human rights situation, we see limited prospects of improvement going forward. Based on this, we have fully impaired Telenor Myanmar with an amount of NOK 6.5 billion in the quarter.
With limited visibility on the development in the country, we have excluded Myanmar from our outlook. For the full year 2021, excluding Myanmar, we re-iterate the expectation of organic subscription and traffic revenues and EBITDA to remain around the 2020 level and a capex to sales ratio of 15-16%."
Sigve Brekke, President and CEO, Telenor Group
Fourth quarter 2020 summary
- The Group’s mobile subscriber base grew by 5 million, including 2 million added in Myanmar. The subscriber base was 187 million at the end of the quarter.
- Subscription and traffic revenues decreased by 4% on an organic basis. Total reported revenues were NOK 28.9 billion, a decrease of NOK 2.1 billion.
- Currency adjusted opex decreased by NOK 0.7 billion, or 7%. Reported opex decreased by NOK 1.1 billion.
- Organic EBITDA decreased by 2%, as the decline in subscription and traffic revenues was only partly offset by the reduction in operating expenses. Reported EBITDA before other items was NOK 13.0 billion and the EBITDA margin was 45%.
- Capex excluding licences and spectrum was NOK 3.7 billion, yielding a capex to sales ratio of 13%.
- Reported net income was negative NOK 3.9 billion. Decrease in operating profit due to the impairment of Telenor Myanmar of NOK 6.5 billion and higher taxes were only partly offset by positive development in net financial items.
- Total free cash flow was NOK 3.8 billion.
- Leverage decreased to 1.8x at the end of the first quarter from 2.0x at the end of the previous quarter.
- On 1 February 2021, the military of Myanmar declared a state of emergency and the overall situation is unstable. Due to the worsening of economic and business environment outlook and a deteriorating security and human rights situation, we see limited prospects of improvement going forward. As a consequence, an impairment loss of NOK 6.5 billion was recognised related to Telenor Myanmar.
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