Data grow and margin expansion

Data growth and margin expansion Press Releases: 23 July 2014

Telenor Group is reporting solid financial performance for the second quarter with profitable growth. The results show close to four million new customers, continued revenue growth, a strong EBITDA margin of 36% and an operating cash flow of more than NOK 5.6 billion. Telenor Group reported revenues of NOK 26.8 billion in the quarter, representing an organic revenue growth of 1.6%.

The strong results in Norway reflect the rapid rise in customer demand for mobile data and our ability to provide relevant services supported by superior network quality and coverage. Our customers almost doubled their data usage from the second quarter last year. The extensive network expansion and increase in 4G enabled phones are the key drivers of this positive development resulting in an ARPU increase of 4% and underlying mobile revenue improvement of 6%. While the results are strong, the high investments in modern infrastructure and changes in customer expectations demand continued efficiency improvements, as well as strong efforts for building capabilities for the future, said Jon Fredrik Baksaas, President and CEO of Telenor Group.

In Thailand, our ability to successfully migrate customers to the new 3G network and complete the transition to a licensing regime is key to delivering high quality services as well as improving profitability. A combination of intense competition, a lower interconnect rate and weaker macro-economic development have material effect on sales this quarter. Dtac has managed to further reduce regulatory costs, and has also taken measures to increase efficiency and enhance capabilities to manage evolving market conditions and to meet customer expectations, said Baksaas.

I am pleased to note strong performance by our operations in Sweden and Malaysia as well as growth in Pakistan, Bangladesh and India. However, the Danish telecom market remains challenging. The operational performance this quarter underscores the benefits of a well-diversified Group, said Baksaas.

On the back of strong performance so far this year and our estimates for the remainder of 2014, we now expect an EBITDA margin above last year while our revenue outlook remains at low single digit organic growth. Following the shift of the satellite-related capex to next year, we adjust this year's capex to sales ratio downwards to be in the range of 14-15%,'' said Baksaas.

Key figures The table below contains key figures for the second quarter of 2014, compared to the previous year.

2Q 2Q 1H 1H

(NOK in millions except earnings per share) 2014 2013 2014 2013

Revenues 26 803 25 747 53 318 50 463

EBITDA before other income and expenses 9 616 8 857 18 915 17 280

EBITDA margin before other income and expenses (%) 35.9 34.4 35.5 34.2

Adjusted operating profit[1] 5 881 5 466 11 461 10 451

Adjusted operating profit/Revenues (%) 21.9 21.2 21.5 20.7

Profit after taxes and non-controlling interests 2 319 3 249 5 995 6 850

Earnings per share from total operations, basic, in NOK 1.54 2.13 3.98 4.46

Capex 4 880 3 484 11 475 6 351

Capex excl. licences and spectrum 3 985 3 484 7 679 6 351

Capex excl. licences and spectrum/Revenues (%) 14.9 13.5 14.4 12.6

Operating cash flow [2] 5 632 5 374 11 236 10 929

Net interest-bearing liabilities [3] 44 387 31 660

[1]Adjusted operating profit is defined as operating profit less other income and expenses and impairment losses.

[2]Operating cash flow is defined as EBITDA before other income and expenses - Capex, excluding licences and spectrum

[3]Net interest-bearing liabilities are defined as net interest-bearing debt excluding net present value of licence liabilities.

Media Contact: Meera Bhatia, Tel: ( 47) 46844959, E-mail: meera.bhatia@telenor.com

Press and analyst conference In connection with the publication of the financial results, a press and analyst conference will be held on Wednesday 23 July at 09:00 hrs Norwegian time/CET. The presentation, which will also be broadcast live over the Internet, will be held in Auditorium Voice, Telenor Expo Visitor Centre at Fornebu near Oslo. CEO Jon Fredrik Baksaas and CFO Richard Olav Aa will present the results. The presentation will be held in English.

Internet and mobile broadcast The press and analysts conference will be broadcast live over the Internet, and will also be available as a recording after the conference. The live service also allows for written questions to be submitted. In addition, the conference will be available live and as a recording on mobile phones - for access, SMS expo to 2440 or ( 47) 2440 from abroad.

Conference Call and Q&A You may also call in and listen to the presentation over the phone. This service allows you to ask questions at the Q&A session at the end of the presentation. To participate in the conference call, please register before the conference starts by calling 47 23162787 and state the confirmation code: 1999839.

Material The quarterly report and English versions of the presentations will be made available here http://www.telenor.com/investors/reports/2014/telenors-results-for-the-2nd-quarter-2014/

lang: en_US --

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