Oslo: Norway’s Telenor ASA posted higher than expected first-quarter core earnings on Wednesday as economies improve and said it would cut investment spending, paving the way for a resumption of its stock buy-back programme.

Telenor cut its India investments for 2010 to 2-2.5 billion crowns (around Rs1,490-1,860 crore) from 2.5-3.5 billion crowns and the overall plan to between 13% and 14% of revenue from 14-16%.

“There’s a combination here of a delay and improved ways of rolling out the network," Telenor chief executive Jon Fredrik Baksaas said about the India investment cuts at Telenor’s first-quarter presentation. Telenor’s second launch phase was now planned for later in the current quarter, he said, adding that 2010 was still seen as a peak year for cash expenditures in India.

“We are still of the view that 2010 will be (the) strongest year of cash flow burn in a combination of capex and Ebitda (earnings before interest, taxes, depreciation and amortization) loss," Baksaas said.

Analysts have long been sceptical about the move into India, where margins are wafer thin and competition intense for hundreds of millions of potential clients.

Analyst Tore Tonseth at Argo Securities said the capex cut could open the way for a boost in dividends or investments in new regions. “I think they will resume the stock buy-back programme," he said.

Telenor shares were down 0.43% in Oslo at 9pm; the DJ Stoxx Telecom index was down by the same margin.

Baksaas said share buy-backs would be executed “when time and performance proves it relevant", adding that Telenor would maintain a cap on net debt to Ebitda of 1.6.

The credit metric stood at 0.7 at the end of the first quarter, allowing for flexibility.

“The overall guideline is that we must always have the flexibility to refinance ourself at attractive rates," chief financial officer Richard Aa said.

Last year Telenor bought into a nascent telecom firm floated by Indian realty Unitech Ltd and launched services under the Uninor brand in different parts of the world’s second most populous country.

The Uninor unit had an Ebitda loss of 974 million crowns in the first quarter, against a 1 billion loss forecast by analysts.

“There is a spending time before you can see the curve turn," Baksaas said, adding Telenor stuck to its market share target of 8% despite being “disappointed" in the first quarter. Last week Telenor’s India unit launched a new traffic-based discount plan for mobile calls that could see prices falling.

Baksaas was cool on the prospects of mergers and acquisition in India. “As of now, the bulk of the market is active in the 3G (third-generation) process, so I don’t think that much will happen."