Telenor Earnings Fall Short Amid Norway Wireless Competition

  • Margin forecast for 2016 also trails analysts' estimates
  • Asia subscriber gains fail to offset domestic slowdown

Telenor ASA, the Nordic region’s largest phone company, reported fourth-quarter earnings trailing analysts’ estimates as competition in its home market of Norway weighed on prices and increased costs. The stock fell.

Fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization rose 17 percent to 10.9 billion kroner ($1.3 billion), the government-controlled carrier said Wednesday. Analysts predicted 11 billion kroner on average. Ebitda included one-time gains of 280 million kroner, meaning the miss was larger, Pareto Securities said.

Operating profit in Norway fell about 7 percent as Telenor lost mobile subscriptions and spent more expanding its mobile and broadband networks. The company is trying to fend off Swedish rival TeliaSonera AB at home, while seeking to win subscribers in Asia and turn around its Danish business.

The shares fell 4.6 percent to 125.5 kroner at 9:06 a.m. in Oslo, valuing the carrier at 188 billion kroner. The stock had lost 11 percent this year through Tuesday.

Sales rose 10 percent to 33.5 billion kroner, matching the average estimate. Telenor said it expects an adjusted Ebitda margin of 33 percent to 34 percent and organic sales growth of 2 percent to 4 percent this year, excluding acquisitions, asset sales and currency fluctuations. Analysts projected full-year Ebitda margin of 35.4 percent on average, Pareto said in a note to clients.

Telenor is counting on stable growth in Norway, where it makes about a quarter of its revenue, as it works to add users in Thailand, Malaysia and Bangladesh and revive its Danish business, where it failed to merge its carrier with that of TeliaSonera. Chief Executive Officer Sigve Brekke plans to sell Telenor’s 33 percent stake in VimpelCom Ltd., the wireless carrier being investigated by authorities over connections to alleged bribes in Uzbekistan.

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