Telenor on Wednesday reduced its full-year guidance as a result of the collapse of its joint venture plan in Denmark and indicated that its options for the Danish market could include an exit.
"Telenor does not have to be in Denmark. Denmark is not a strategic market for us," Telenor’s new group CEO Sigve Brekke said on the firm’s third-quarter results presentation, his first since taking office in August.
"We were disappointed when we had to withdraw the joint venture application," he said. "We are now looking into other strategic options," he added, but declined to share any further details. "All the strategic options are up in the air."
Telenor revised down its guidance for the full year. It now expects to post organic revenue growth of around 5% and an EBITDA margin of 34%-35%, having previously predicted 5%-7% revenue growth and a 34%-36% EBITDA margin.
"The adjusted outlook is primarily a consequence of the inclusion of the Danish operation," it said.
The Danish market is particularly competitive, Brekke explained. Telenor’s EBITDA margin in the country, adjusted for joint venture costs, is only 15%, he said. And Telenor’s local competitors are in a similar boat.
"The Danish market is not developing in the right direction," Brekke warned.
Telenor generated revenues of 1.27 billion Norwegian kroner (€136 million) in Denmark in the three months to the end of September, up 2.4% on the same period a year earlier.
As such, the country accounts for 4% of group revenue.
At group level Telenor’s revenues reached NOK31.84 billion, up from NOK27.69 billion last year; on an organic basis revenue growth was 4.5%. EBITDA rose to NOK11.85 billion, up 6% organically.
Brekke said he was "happy" with those growth figures. "I’ve got a good start," he said.
The picture was generally positive in Telenor’s home market, Norway, and in neighbouring Sweden; Telenor needs to focus on monetising mobile data and increasing its fixed-line market share in both, Brekke said.
"Myanmar is still the star," he said. Telenor had 11.79 million mobile customers in Myanmar at the end of the quarter, almost all of which were added in the previous 12 months. The telco’s EBITDA margin in Myanmar stood at 39%.
However, challenges remain in Thailand, where "the competition is not easing," and Malaysia, where currency weakness hit the telco’s numbers.
As always, the results were "a mixed bag", Brekke said.
Telenor swung to a net loss of NOK1.77 billion in Q3 from a NOK2.59 billion profit a year earlier, in no small part due to a NOK5.4 billion impairment charge linked to its planned exit from Vimpelcom.
