Telenor writes down NKr4.2bn on Indian woes

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Telenor, the Norwegian telecoms company, was forced to write down nearly £500m on its Indian business in the fourth quarter after the country’s highest court revoked the group’s mobile licences.

The supreme court decision, which led to a NKr4.2bn (£459m, $729.2m) writedown, has threatened Telenor’s future in India, given the possibility of having to bid again for licences it had already acquired.

It reported a net loss of NKr2.5bn for the quarter, a sharp reversal from the NKr2.3bn net income a year earlier, and a pre-tax loss of NKr1.8bn, from a NKr3.4bn profit a year earlier.

Jon Fredrik Baksaas, chief executive of Telenor, which is part owned by the Norwegian government, said it would work to protect its investments “in all possible manners”, and would consider every option before making further investments in the country.

The company expects further losses from its Indian business next year, with losses before interest, taxes, depreciation and amortisation expected to reach about NKr2bn, and capital expenditure, excluding licences and spectrum, of NKr1bn.

Before the recent court verdict, Telenor had expected to break even in its Indian business in 2013.

Mr Baksaas said the company would now communicate with the Indian government about the future of the spectrum, adding that the Norwegian government would also speak with the country’s officials.

The shares rose 2.7 per cent to NKr96.5 on Wednesday morning, in spite of the company’s Indian woes, after it predicted organic revenue growth of above 5 per cent for 2012, and a better operating margin of 32-33 per cent.

Investors also welcomed Telenor’s decision to raise its dividend for 2011 to NKr5 a share, above consensus analyst forecasts.

Full-year revenues increased 3.9 per cent to NKr98.5bn after continued strong subscription growth at its Asian operations, and improved performance in Sweden and Serbia more than offset the reduced revenues in Norway and the NKr2.3bn hit it took on adverse currency movements.

Likewise, ebitda increased by NKr1.4bn to NKr30bn on the improved performance in its Asian business, with its earnings margin for the full year in line with the company’s target at 30.5 per cent.

“In the midst of the turmoil in India, these are a good set of results ... that stem mainly from Asia,” Mr Baksaas said. “The writedown is a direct consequence of the supreme court ruling.”

Telenor’s fourth-quarter ebitda was NKr7.08bn, below consensus forecasts, owing to a mobile phone promotion in its Norwegian business. This dragged down mobile average revenue per user by 7 per cent.

Total mobile revenues decreased by 4 per cent in spite of higher numbers of subscriptions.

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