Telenor has lowered its full year outlook to flat underlying revenues and a small decline in EBITDA, due to weaker results at its Asian activities. Nevertheless, the company said its strategy was on track, with an EBITDA margin of nearly 40 percent in Q2 and progress in accelerating revenues and reducing costs.
Total reported revenues rose 1.9 percent year-on-year to NOK 28.0 billion in Q2, while subscription and traffic revenues decreased by 0.7 percent on an organic basis, due to the decline in legacy copper services in Scandinavia as well as lower revenues in Pakistan, Myanmar and Malaysia. EBITDA before one-time items fell 2.2 percent to NOK 11.1 billion, giving an EBITDA margin of 39.6 percent, down from 41.2 percent a year ago. Excluding a provision in Bangladesh to restate historical commission payments, EBITDA decreased by 1 percent on an organic basis.
Net income rose to NOK 3.1 billion from NOK 2.6 billion a year earlier, helped by lower depreciation and a higher dividend from Veon. Capex excluding licences and spectrum increased to NOK 4.1 billion from NOK 3.4 billion, equal to 15 percent of sales. This contributed to negative free cash flow in the quarter of NOK 0.9 billion.
Telenor said it expects to complete its takeover of Finnish operator DNA in August, after receiving clearance from the European Commission. It also aims to finalise the merger of its Asian operations with Axiata in Q3.
The difficult markets in Asia, notably Malaysia, and the provision in Bangladesh caused Telenor to lower its outlook for the full year. The company now expects subscription and traffic revenues at around the 2018 level and a low single-digit EBITDA decline. That compares to a previous forecast for 0-2 percent growth in organic revenues and 1-3 percent higher EBITDA. Capex excluding licences and spectrum is still expected to be in the range of NOK 16-17 billion.
