Oslo: Norwegian telecommunications group Telenor ASA on Wednesday reported a 25% jump in fourth-quarter profits, primarily thanks to growth in Asia, but said it may have to cut costs this year to strengthen its finances.
Net profit rose to 2.5 billion kroner ($425 million) in the October-December period, from just under 2 billion kroner a year earlier. Revenues slipped to 24.2 billion kroner during that time, from 25.9 billion kroner in the fourth quarter of 2008. That excludes pro forma figures from Telenor’s troubled Ukrainian holding Kyivstar that were also provided for comparative reasons.
Telenor shares dropped 3%, to 75.85 kroner ($12.84), in morning trading in Oslo.
A strong quarter for Telenor in the Pakistani, Thai and Bangladeshi markets, as well as in the company’s consistently strong Scandinavian operations, contributed to a sustained revenue stream.
New subscriptions in these markets offset slumping revenues from Telenor’s operations in Eastern Europe, where the global financial crunch has depressed the telecoms market. Telenor subscriptions grew by 2 million in the fourth quarter.
Carnegie analyst Espen Torgersen said the result was “substantially over market expectation.” He attributed the negative market reaction to Telenor’s lower-than-expected outlook for 2010.
Telenor CEO Jon Fredrik Baksaas warned of potential cost-cutting measures in 2010 to cope with hits to the group’s finances in the wake of the financial crisis.
Telenor “will strive to secure our market positions, while capturing organic growth opportunities. We will continue to implement necessary efficiency measures and provide innovative and viable solutions to our customers,” Baksaas said.
Among its priorities in 2010 are the expansion of its Indian subsidiary, which launched on 22 December, and the end of a long and expensive legal battle with Russian conglomerate Alfa Group over joint operations in Russia and Ukraine.
Telenor employs more than 40,000 people in 14 countries and claims 174 million subscribers worldwide.
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