Telenor’s Strategic Approach to Revenue Growth and Capex Optimization

Telenor, a global telecommunications powerhouse, has strategically optimized its capital expenditures (Capex) and stimulated service revenue growth across diverse regions and business verticals.
Telenor updated outlook for 2023
Capex excluding leases stood at NOK 2.7 billion, resulting in a Capex to sales ratio of 13.3 percent in Q3 2023, a three percentage points improvement from the previous year. The overall service revenue growth amounted to NOK 15.8 billion in Q3 2023, marking a marginal increase of 4 percent from the previous year.

In the Nordics, Telenor’s investments of NOK 2.1 billion in Q3 2023, a 14 percent reduction from the previous year, were channelled into the ongoing 5G rollout and fiber optic infrastructure in Norway. These investments substantially improved data speeds, leading to an 8 percent growth in service revenue. Norway experienced a 3 percent service revenue growth, driven by compelling marketing campaigns and network quality enhancements. Sweden witnessed an impressive 8 percent growth, reflecting effective market positioning. Denmark and Finland excelled with 15 percent and 21 percent service revenue growth, respectively, owing to innovative offerings tailored to local preferences. In future, Telenor aims to sustain mobile growth, manage fiber competition, and continue transformative efforts, ensuring market resilience.

In Asia, Telenor’s Capex in Q3 2023 amounted to NOK 318 million, reflecting a 23 percent reduction from the previous year. Despite this, strategic maneuvers, including mergers and acquisitions, were executed. In Malaysia, the merger of Digi and Celcom resulted in CelcomDigi, the largest mobile network operator, ensuring stable service revenues. In Thailand, the merger of dtac and True led to True Corporation, adopting cost-effective strategies. Bangladesh witnessed a 2 percent service revenue decline, attributed to economic challenges. Pakistan faced a more substantial 19 percent decline, reflecting complex market conditions. With these indications, Telenor plans to conclude strategic reviews in Pakistan, drive dividends from CelcomDigi and True, and foster growth in Bangladesh despite economic challenges.

Telenor’s infrastructure investments, totaling NOK 189 million in Q3 2023 (a 19 percent reduction), were instrumental in enhancing network resilience and efficiency. These investments led to a 10 percent rise in external revenues. Strategic pricing adjustments ensured competitiveness, contributing to service revenue growth within the infrastructure sector. Premium services in colocation markets amplified customer satisfaction, indirectly enhancing service revenue figures. Within Infrastructure business, Telenor will focus on enhancing operational efficiency, driving innovation in colocation markets, and exploring strategic exits for mature assets within its infrastructure business.

Telenor Amp, despite a Capex reduction to NOK 26 million in Q3 2023 (a 19 percent decrease), pursued strategic investments. Within Telenor Amp, Maritime and Connexion emerged as key innovators. Maritime’s advanced connectivity solutions laid the foundation for future revenue streams, while Connexion, Telenor’s IoT provider, witnessed growing demand, paving the way for long-term growth. Initiatives were undertaken to develop IoT and security solutions and optimize the portfolio for sustainable growth and value creation. Mature assets were considered for potential exit strategies. Telenor Amp’s future focus includes developing cutting-edge IoT and security solutions, optimizing its portfolio for sustainable growth, and evaluating potential exits for mature assets, ensuring long-term value creation.

Detailed Analysis:

Norway: Strategic investments in 5G and fiber optics led to a 3 percent service revenue growth. Capex growth was 1186 NOK million in Q3 2023, a decrease from 1615 NOK million in Q3 2022.

Sweden: The 8 percent service revenue growth showcased effective market positioning. Capex growth was 441 NOK million in Q3 2023, up from 364 NOK million in Q3 2022.

Denmark: A customer-focused approach resulted in a 15 percent service revenue growth. Capex growth was 161 NOK million in Q3 2023, down from 180 NOK million in Q3 2022.

Finland: Tailored data packages and aggressive marketing led to a remarkable 21 percent service revenue growth. Capex growth was 344 NOK million in Q3 2023, a slight increase from 347 NOK million in Q3 2022.

Bangladesh: Despite challenges, Grameenphone’s focus on data offers led to a 9 percent increase in ARPU. Capex growth was 259 NOK million in Q3 2023, a decrease from 292 NOK million in Q3 2022.

Pakistan: Prudent cost management and improved data monetization resulted in a 4 percent service revenue growth. Capex growth was 59 NOK million in Q3 2023, down from 117 NOK million in Q3 2022.

To conclude, Telenor’s strategies, amidst challenges, showcase its adaptability and resilience in diverse markets. Tailored investments, technological innovation, and customer-centric offerings fortify Telenor’s standing in the competitive telecom landscape. The emphasis on strategic reviews, mergers, and acquisitions, along with portfolio optimization, positions Telenor for sustained growth, signaling a promising trajectory for the future.

Rajani Baburajan