Low growth until 2020, says Telenor

Alan Burkitt-Gray
Published on:

Telenor CEO Sigve Brekke says the company aims to be more efficient but sees little organic revenue growth over the next three years

Telenor has set modest targets for growth between now and 2020 after disappointing fourth-quarter and full-year results, reported in Oslo this morning.

CEO Sigve Brekke told a capital markets day that the company is aiming for year-on-year organic growth in the low single-digits, with net opex reductions of 1%-3% a year.

“Entering 2017, our priorities are clear: We will continue to digitise our core business in order to build strong and engaging customer relationships and to capture the efficiency opportunities that digitization brings,” said Brekke. “Towards 2020, we aim to continue growing and significantly improving our efficiency, driven by a digital transformation of our core business and a strict prioritisation of resources.”

The company said it plans to maintain a capex/sales ratio of around 15%, excluding licences, and a year-on-year growth in ordinary dividend per share.

“The key to our future success lies within the opportunities related to digitising customer interactions, leveraging scale within networks and IT, as well as using advanced analytics to improve customer insight,” said Brekke. “Our strategy will strengthen our cash flow generation and support our commitment to deliver a growing dividend to our shareholders.”

Annual organic revenue growth in the fourth quarter was just 0.6% and full-year growth was a little better, at 1.1% – way down on last year’s figures of 2.3% and 4.7% respectively.

Brekke explained: “The revenue growth was primarily driven by the rapidly increasing data consumption in Pakistan, Bangladesh and Myanmar. We also saw positive effects from the ongoing fibre roll-out in Norway and Sweden. The intense competition in our Thai, Malaysian and Danish markets continued during the quarter.”

The company said it was continuing “to seek a solution for its operations in India”. At the beginning of January Telenor was reported to be seeking a merger with Airtel in India, and a few weeks later it was reported to be talking to Aircel and Reliance Communications.

Telenor said it would “review other assets of less strategic importance”, without identifying the markets affected. It “will seek to leverage scale, both through global operations and synergies within its four geographic clusters: Scandinavia, Central and Eastern Europe, emerging Asia and mature Asia”.

It will step up fibre roll-out in Norway and Sweden and “will explore early positions on fibre in emerging Asia, utilising the company's existing mobile infrastructure”.