Telenor Q1 Profit Misses Forecast as Costs Rise

OSLO (Reuters) -Norway’s Telenor posted on Tuesday weaker-than-expected first-quarter profits and said growth in earnings was expected to lag revenue development by a few quarters as costs rose.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for January-March fell 4.5% year-on-year to 11.66 billion Norwegian crowns ($1.24 billion), while analysts in a poll on average had expected 12 billion.

“Growth was held back by the Norwegian fixed line business and intensified competition in Thailand,” Chief Executive Officer Sigve Brekke said in a statement, adding that high energy prices and project costs also hit Telenor’s business.

“These factors are expected to continue into the next quarter. Actions taken are expected to mitigate negative elements, particularly in the second half of the year,” the company said.

The Telenor group, which has 173 million subscribers, gets about half its revenue from Asia and the rest from the Nordic region.

Telenor has said expansion will come from cloud and 5G technology, dubbed “beyond connectivity”, and from planned tie-ups in South-East Asia where its operators in Thailand and Malaysia are each involved in separate consolidation processes.

Revenues however declined 3% in Thailand and 2% in Malaysia in the quarter.

“We expect a gradual recovery of the Thai market but acknowledge the increased global uncertainty,” the company said.

The COVID-19 pandemic is still impacting the business environment in Asia, although it receded in the first quarter Telenor said.

Telenor’s share price has declined by 3.9% year-to-date, underperforming the European telecoms index which is up 1.3%.

($1 = 9.4278 Norwegian crowns)

(Reporting by Victoria Klesty, editing by Terje Solsvik)