Rising Mobile ARPU Boosts Telenor Q1 Revenues by 43%

Norway-based Telenor has reported first-quarter 2006 revenues of 21.9 billion Norwegian kroner (US$3.56 billion) - a 43% y/y rise - buoyed by rising average revenue per user (ARPU) in its home Nordic markets. The increased usage of mobile services saw ARPU in Norway rise from 297 kroner in the first quarter of 2005 to 305 kroner a year later. In Denmark, ARPU rose from 229 kroner in the first quarter of 2005 to 250 kroner a year later. Mobile ARPU in Sweden rose from 164 kroner to 229 kroner on the same basis. Telenor also successfully rebranded Vodafone Sweden to Telenor Sweden during the quarter (see Sweden: 5 April 2006: Vodafone Sweden Changes Name to Telenor).

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose sharply, by 56.4% (from 5.09 billion kroner in the first quarter of 2005 to 7.95 billion kroner a year later). Similarly, growth in net income was also high, reaching a 115.9% y/y increase in the first quarter of 2006 to 3.69 billion kroner. Commenting on the result, chief executive Jon Fredrik Baksaas was optimistic of sustained revenue and EBITDA growth for 2006. 'We expect an increase in reported revenues of around 30% in 2006, and we expect the EBITDA margin before other income and expenses to be above 34%,’ he said (see World: 16 February 2006:Telenor 2005 Revenue Up 13.8%).

Outlook and Implications

• Mobile Growth Continues: Besides rising ARPU, Telenor's mobile unit enjoyed another impressive quarter, thanks to continued subscriber growth in its international markets and increased mobile usage in its home markets. 'All our mobile operations successfully defended or even improved their market positions,' said Baksaas. Telenor added 7 million new customers in the quarter to take its total mobile customer base to 90 million. In Norway, Telenor's share of mobile market remained flat at 56% although subscriptions decreased by 9,000. While DTAC in Thailand reached the 10 million subscriber mark in April, Telenor's Kyivstar affiliate maintained its market leader position in Ukraine. However, Telenor is locked in a legal battle with Russia's Alfa group over the Kyivstar stake. Telenor has asked Alfa to pay US$5 billion to take full control of Kyivstar but the latter has yet to accept the offer. (see Russia: 29 March 2006: Alfa Rejects Telenor Proposal to End VimpelCom Dispute , 20 March 2006: Telenor Suggests VimpelCom Buys Kyivstar, andUkraine: 10 February 2006: Kyivstar Increases Customer Base by 2.7% in January 2006)  .
• Telenor Leads Nordic Broadband Market: Telenor remains the broadband market leader in the Nordic region, with its 1.2 million total subscriptions as at the end of the quarter. In Norway, the company added 36,000 subscribers to take its total to 511,000, maintaining its retail broadband market share of 58%. Telenor added 20,000 VoIP subscribers in the quarter, to take its total VoIP customer base to 44,000. The company's cable-TV subscriber base increased by 3,000 in the quarter to 684,000 and the number of cable TV internet access subscribers rose by 5,000 to 78,000. The company has also made a big push into the Swedish broadband market, snapping up smaller providers and mounting a big challenge to TeliaSonera. In Denmark, Telenor raised its ADSL subscriber base from 16,000 at end-2005 to 138,000 at the end of the quarter. VoIP subscriptions rose from 11,000 at end-2005 to 37,000 by 31 March 2006 (see Sweden: 28 March 2006: Telenor Acquires 96.6% of Glocalnet , 8 February 2006: Norway's Telenor Boosts Stake in Glocalnet and 4 March 2005: Telenor Expands Broadband Network in Sweden).