Oslo: Norway’s Telenor ASA posted a bigger-than-expected 6.8% rise in second quarter core earnings but said the global crisis would pressure its revenues and cut its capex.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for one of the world’s biggest mobile groups with 168 million subscribers rose to 7.82 billion crowns ($1.24 billion).
It beat an average forecast for 7.6 billion crowns in a Reuters poll of 16 analysts, whose predictions ranged between 7.37 and 7.91 billion.
“In spite of pressure on the top line development, our operations are improving their performance, resulting in a record high operating cash flow,” chief executive Jan Fredrik Baksaas said in a statement.
Telenor, which has operations in 13 countries in Europe and Asia, affirmed its 2009 guidance for an EBITDA margin of around 34% but put a negative slant on its organic growth goal.
“Telenor expects organic revenues in line with 2008, however on the negative side,” it said. Previously, Telenor targeted flat 2009 organic revenues compared to last year.
Revenues rose 3.3% year-on-year to 24.51 billion crowns in the quarter but lagged analyst views at 24.7 billion.
“For the rest of the year we expect revenues to remain under pressure,” Baksaas said, adding that Telenor will scale activities to deliver strong cash flow and sustain market share.
It reduced its CAPEX prediction, excluding India investments, to 13-15% of revenues from an earlier 15-17%.
An impairment charge of 1.97 billion crowns in its Serbian operations hit its bottom line, with earnings per share down to 0.86 crowns from 2.19 a year ago and missing consensus at 1.53.
Telenor said it did not make any provisions for its Russian court case, where it could lose its multi-billion dollar stake in Russian mobile group Vimpelcom.
Russian bailiffs seized Telenor’s 30% voting stake in Vimpelcom and plan to auction it off within months, unless the Norwegians pay a $1.7 billion fine awarded by a Siberian court in a contested case a against a tiny Vimpelcom shareholder.
“It is more likely than not that this case would not have a material adverse effect on the financial position of the group, and accordingly no provision has been made for any liability or loss of shares in these financial statements,” Telenor said.
($1=6.302 Norwegian crowns)