Telenor reported higher first-quarter results, supported by its takeover of DNA in Finland and organic growth. However, the Covid-19 pandemic started to weigh on the company's results late in the quarter, and the operator now expects slower growth in full-year results than its forecast issued in January. In particular, roaming revenues and Asian prepaid markets have come under pressure, and this is expected to continue into Q2.
In the first three months of the year, revenues rose 16 percent to NOK 31.0 billion, thanks to the inclusion of DNA as well as 1.5 percent organic growth. Subscription and traffic revenues increased 1.8 percent on an organic basis to NOK 23.9 billion, led by growth in Myanmar (+25%), Bangladesh (+4%), Thailand (+3%) and Norway (+2%).
Adjusted EBITDA increased to NOK 14.1 billion from NOK 12.2 billion a year ago and rose 2.6 percent on an organic basis. The margin was slightly lower year-on-year at 45.6 percent. Net profit declined to NOK 698 million from NOK 3.8 billion a year earlier, amid a rise in depreciation and unrealised currency losses.
Telenor reduced capex to NOK 3.1 billion in the quarter, a drop of NOK 1 billion year-on-year and equal to just 10 percent of revenues. Network spending slowed in Myanmar and Norway and was also held back by import restrictions in Bangladesh. The company scaled back its full-year forecast to a ratio of 13 percent of revenue compared to a forecast of 15 percent previously.
Free cash flow in the period increased to NOK 3.8 billion from NOK 2.6 billion a year ago, helped by the first payment of NOK 1.2 billion from the sale of its Central Europe activities.
Telenor said it still is working towards its medium-term targets announced at the investors day in March. While the solid first-quarter results support its earlier forecast for this year, the increased uncertainty related to the pandemic, and especially the duration of lockdown measures, mean growth will likely be slower over the full year. This means lower growth in subscription and traffic revenues and EBITDA than previously expected, the company said. It will focus on capex and cost management in order to ensure robust cash flow through the year.
