Telenor has lowered its outlook for full-year results, after the Covid-19 outbreak led to a slowdown in the second quarter. Organic growth in subscription and traffic revenues turned negative in the quarter, down 3.6 percent, and Telenor now expects a low single-digit decline over the full year. Cost reductions helped the company lift EBITDA in the quarter, and Telenor targets a stable result in the full year.
Second-quarter revenues were hurt by lower roaming revenues due to reduced travel following the pandemic and reduced prepaid top-ups in large markets like Bangladesh and Pakistan. Combined with a reduction in new sales after store closures, this led to the decline in organic subscription and traffic revenues of nearly 4 percent. This was offset by a reduction in adjusted operating costs of 12 percent, leading to 1 percent growth in organic EBITDA.
On a reported basis, revenues still rose 15 percent to NOK 30.9 billion, thanks to currency effects and the takeover of DNA last year. EBITDA rose 19 percent to NOK 14.3 billion, and the margin improved to 46.4 percent from 44.7 percent a year ago. Telenor said its flexible operating model allowed it to reduce costs as business slowed, supported by a continued shift to digital sales and service channels. Net profit jumped to NOK 4.4 billion from NOK 2.9 billion a year ago, helped also by currency gains and a gain on the sale of Canal Digital.
Capital expenditure fell to NOK 3.8 billion or 12 percent of sales from NOK 4.0 billion a year earlier, excluding spectrum and licences. This helped improved free cash flow to NOK 3.6 billion from a cash outflow of NOK 1.1 billion last year. Telenor reduced its capex plans for the year to an estimated 13 percent of revenues from earlier guidance of 15 percent.
Telenor lost 3.2 million mobile customers during the quarter, due to substantial losses in Asia, almost solely prepaid customers, the company said. In Pakistan the subscriber base decreased by 1.4 million, while Grameenphone and Dtac lost 0.8 million subscribers, respectively, and Digi’s mobile customer base fell by 0.4 million. The operation in Myanmar maintained growth, adding another 0.2 million customers, and Denmark also reported a small increase of 11,000.
