July 16, 2020 / 9:32 AM / a month ago

Telenor's subscriber base takes hit from Asian virus outbreaks

OSLO (Reuters) - Telenor (TEL.OL) reported solid growth in quarterly earnings on Thursday, but the Norwegian telecoms operator cut its forecast for the full year, saying uncontrolled coronavirus outbreaks in Bangladesh and Pakistan had dented its subscriber base.

FILE PHOTO: Telenor's logo is seen in central Belgrade, Serbia, March 21, 2018. REUTERS/Marko Djurica

The Oslo-headquartered firm, active in nine countries across Europe and Asia, said the base fell by 3.2 million to 182 million between April and June, with declines in prepaid contracts in Asia particularly sharp.

It said it expected a single-digit decline in both the base and traffic revenue in 2020.

The overall impact of the pandemic on first half earnings was around 1 billion crowns (£85.21 million), with Asia - notably Pakistan and Bangladesh - accounting for 80% of that, Chief Executive Sigve Brekke told the results presentation.

“In those two markets the spread of the virus is out of control, as we see it, and it’s unclear when the markets could be reopened,” he said.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for April-June rose 19% to 14.33 billion Norwegian crowns, beating the 13.77 billion average of analysts in a Refinitiv poll.

Excluding acquisitions, EBITDA rose 1%, it said, cutting its full year forecast for that measure to flat from a rise of 2-4%.

Telenor shares fell 4.5% at the opening, and were down 3.3% by 0845 GMT.

Overall, operational costs were reduced by 12% year-on-year, offsetting the 4% decline in organic subscription and traffic revenue.

Brekke said the company planned to focus on three growth areas: new additional services in the Nordics, development of 5G wireless networks, and data services in Asia, Brekke said.

($1 = 9.3120 Norwegian crowns)

($1 = 9.3101 Norwegian crowns)

Reporting by Nerijus Adomaitis, Editing by Sherry Jacob-Phillips and John Stonestreet

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