Telenor cuts costs by NOK 0.4 bn, achieves 42% EBITDA margin

Telenor revenue performance Q3 2017Telenor CEO Sigve Brekke today announced that the telecom operator reduced costs by NOK 0.4 billion, achieved a record high EBITDA margin of 42 percent (+9 percent) and reported a strong cash flow and net income of NOK 5.8 billion in Q3 2017.

Telenor achieved the new milestone after started executing its business transformation strategy to optimize cost and improve customer experience.

“So far this year, our team has achieved cost savings of 1 billion kroner, implying that our target for 2017 has already been met and further efficiency gains should be expected going forward,” Telenor CEO Sigve Brekke said.

Telenor Asia Q3 2017
Telenor Q3 2017

# Revenues of NOK 30.7 bn (+1%)
# Opex reductions of NOK 0.7 bn (–4%)
# EBITDA of NOK 13.0 bn (+9%)
# Net income of NOK 5.8 bn
# Free cash flow of NOK 9.4 bn

Telenor transformation
Telenor transformation Q3 2017Telenor will be focusing on transforming its business by focusing on digitalising the core, improving efficiency across the company and nurturing growth.

Telenor established cluster organization and announced India exit in Q1. Telenor disposed of internet portal Startsiden Q2 2017. Telenor started selling more stake in Russian operator VEON in April. Telenor started monetizing and focusing online classifieds portfolio. Telenor announced disposal of Telenor Banka in Serbia and sold office property in Oslo in Q3 2017

Telenor Capex

Telenor has lowered its mobile investments, primarily in Myanmar and Bangladesh. Telenor has increased fibre investments in Norway and Sweden. Telenor continued 4G and fibre investments in Norway. Telenor is also undertaking network densification program in Thailand.
Telenor Capex Q3 2017Telenor’s Capex (capital expenditure) excluding spectrum licenses was NOK 3.8 billion, resulting in a Capex to sales ratio of 12 percent in Q3. Telenor will be making investment in latest technologies to enhance customer experience.

“We will maintain our focus on digitalising our networks and customer interactions, which are two aspects that we believe are critical to achieving our ambitions and ensuring that our services are value adding for our customers,” Sigve Brekke said.

Telenor said it expects organic revenue growth in the range of 1 percent to 2 percent, EBITDA margin of 38 percent to 39 percent and Capex to sales ratio excluding spectrum licenses of 15 percent to 16 percent in 2017.

Telenor Opex

Telenor Opex Q3 2017Telenor achieved FX adjusted Opex savings of NOK 0.4 billion in Q3 and NOK 1 billion in 9 months. Telenor reported Opex savings of NOK 0.7 billion in Q3 and NOK 1.7 billion in 9 months.

Telenor said FTEs reduced by ~1,900 from Q4 2016. Telenor has also lowered telecom regulatory cost in Thailand and Malaysia and reduced corporate functions Opex by NOK 0.1 billion.

Telenor has increased SIM only sales in Norway and shifted to digital channels and marketing communication optimization in Thailand.