Sept. 19 (Bloomberg) -- Telenor ASA, the Nordic region’s largest phone company by revenue, plans to find savings of 5 billion kroner ($876 million) over four years as stiffer competition weighs on earnings.
The reduction in costs from the 2011 level will be made by 2015, Telenor said today in a statement. Improved performance in Russia, where Telenor holds a stake in VimpelCom Ltd., is key to lifting earnings, according to slides on the company’s website. Telenor shares networks with competitors in Sweden and several other regions, and extending this approach may reduce costs and capital expenditure by as much as 35 percent, it said.
Chief Executive Officer Jon Fredrik Baksaas is trying to boost efficiency after net income slumped 45 percent last year and declined more than that in each of the first two quarters of 2012. The company, based in Fornebu near Oslo, is seeking growth in Russia and Asia as competition intensifies in the Nordic region, where almost everyone already has a mobile phone.
Telenor said last month that it was increasing its stake in Russian mobile-phone company VimpelCom to almost 43 percent and expected the deal to close before October. Baksaas said he would like to take advantage of Telenor and VimpelCom’s size, which could lead to better deals when buying telecommunications equipment in Russia.
Russia’s Anti-Monopoly Service, known as FAS, is disputing the Nordic company’s right to raise its stake by buying VimpelCom shares from Egyptian billionaire Naquib Sawiris.
The FAS may withdraw its claim this month, Ria Novosti reported, citing Igor Artemyev, head of the watchdog. The case is “without merit,” Baksaas said today.
Telenor rose 0.1 percent to 109.9 kroner at 12:08 p.m. in Oslo. The stock has advanced 12 percent this year.
The company plans to pay 50 percent to 80 percent of normalized net income as dividends, it said today.
Telenor’s Uninor venture in India had 22 telecommunications licenses canceled this year by the country’s Supreme Court. Telenor said the terms of a new license process have yet to be confirmed and that it would announce its plan for Uninor before Oct. 19.
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