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Telenor sees slowdown in 2016 as profits plunge

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Telenor sees slowdown in 2016 as profits plunge
Telenor chief executive Sigve Brekke presented the company's 2015 results in Oslo on Wednesday. Photo: Vidar Ruud / NTB scanpix
09:45 CET+01:00
Norwegian telecoms operator Telenor said on Wednesday it expected its earnings to slow this year after provisions and impairment losses heavily impacted its 2015 earnings.
Telenor's share price slumped on the Oslo stock exchange, shedding 7.5 percent in early afternoon trading after the group's fourth quarter earnings came in below analysts' forecasts. 
 
Last year Telenor saw its net profit plunge by 62 percent for the full-year, to 3.4 billion kroner (€353 million, $398 million), with a loss of 2.1 billion kroner in the fourth quarter alone.
 
Gross margins on earnings before taxes, depreciation and amortisation (EBITDA) remained nonetheless stable, at 34.5 percent.
 
For 2016, the group said it expected its EBITDA margin to land at between 33 and 34 percent and forecast organic growth of two to four percent, after registering growth of 4.7 percent last year, which boosted sales to 128.2 billion kroner.
 
"We are ... entering 2016 with increased competition in some of our key markets," chief executive Sigve Brekke said in a statement.
 
In the fourth quarter, Telenor registered an impairment loss of 2.1 billion kroner in Denmark.
 
The country has been the source of recurring problems for Telenor: earnings are regularly in the red and the company had to axe plans to merge its Danish subsidiary with its Swedish rival TeliaSonera in September because of the risk of anti-trust issues.
 
The Danish impairment loss comes on the heels of a 5.4 billion kroner impairment loss Telenor registered in the third quarter for problems related to its 33-percent stake in Russian subsidiary Vimpelcom, which has been accused of corruption in Uzbekistan.
 
VimpelCom is being investigated in the United States and the Netherlands for alleged kickbacks paid to a company linked to the daughter of the Uzbek president, in exchange for licenses in the country in the 2000s.
 
Telenor has denied any wrongdoing. It has said it wants to offload its stake in the Russian operator but there are few potential buyers, according to analysts.
 
Meanwhile in Thailand, Malaysia and its home market Norway, which accounts for a quarter of Telenor's sales, margins are under pressure amid rife competition.
 
The group, which is 54-percent owned by the Norwegian state, now counts more than 200 million subscribers in a dozen countries in Asia and Europe.
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