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Telenor Cuts Sales Forecast as Profit Trails Estimates

Telenor ASA (TEL), the Nordic region’s largest phone operator, reduced its full-year sales forecast after posting earnings that missed analysts’ estimates amid intensifying competition in its home markets. The stock fell.

Sales will grow 1 percent to 2 percent this year, excluding acquisitions, the Fornebu, Norway-based carrier said today. In July, it projected 2 percent to 4 percent. Third-quarter net income rose 7.3 percent to 3.92 billion kroner ($662 million), missing the 4.35 billion-krone average of analysts’ estimates compiled by Bloomberg.

Sales growth, excluding acquisitions, slowed to 1 percent in the third quarter as Nordic rivals cut prices to gain users in a saturated market. To fight back, Chief Executive Officer Jon Fredrik Baksaas is expanding the company’s wireless network in the Nordic region and adding users in Asia and Eastern Europe, while seeking to cut costs by 5 billion kroner by 2015.

“It’s a strong market but we have a lot of work to do, especially in Norway, when it comes to rebalancing of prices up against phenomenal volume growth,” Baksaas said at a press conference in Fornebu.

The state-controlled company’s shares fell as much as 4.5 percent, the most since June, and declined 4.2 percent to 142.5 kroner at 10:13 a.m. in Oslo. The stock had jumped 33 percent this year through yesterday.

Bulgaria, Myanmar

The carrier reiterated its forecast for a margin on earnings before interest, taxes, depreciation and amortization of about 34 percent of sales in 2013. In the third quarter, Ebitda was 9.62 billion kroner, or 37 percent of sales. Analysts estimated 9.61 billion kroner on average.

Total revenue rose 2.8 percent to 26 billion kroner, compared with the 26.1 kroner projected by analysts on average, helped by international expansion. Sales in Norway, Telenor’s largest market accounting for about a quarter of revenue, slipped 2.6 percent to 6.27 billion kroner. Revenue in Denmark declined 6.3 percent and sales in Sweden rose 1.8 percent.

This year, Telenor bought Globul, the second-largest mobile carrier in Bulgaria, and also acquired one of the two national licenses issued in Myanmar in June. The Myanmar license should be issued by the end of the year, with services starting in mid-2014, Telenor said.

Sales increased in Thailand, Malaysia and Bangladesh on growth in subscribers.

To contact the reporters on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net; Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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