Telenor ASA (ADR) ((TELNY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Telenor ASA (ADR) painted a generally positive picture, underscored by robust performances in key markets such as the Nordics and Pakistan. The company highlighted strong free cash flow and reiterated its commitment to sustainability. Nonetheless, challenges in Bangladesh and some one-off impacts slightly dampened the overall group results.
Strong Nordic Performance
The Nordic region was a standout performer for Telenor, achieving a 6% growth in EBITDA. This growth was primarily driven by successful transformation efforts and enhanced operational efficiencies. Notably, mobile service revenue in the Nordics grew by 4.6%, reflecting the region’s strong market dynamics and Telenor’s effective strategies.
Free Cash Flow Exceeds Expectations
Telenor reported a total free cash flow, including mergers and acquisitions, of NOK 13.3 billion for 2024. This impressive figure exceeded the proposed dividend payments for the year, showcasing the company’s strong cash generation capabilities.
Resilient Performance in Pakistan
In Pakistan, Telenor demonstrated resilience with a 12% growth in service revenue and a substantial 25% increase in EBITDA. This was largely attributed to effective pricing strategies and reduced energy costs, highlighting Telenor’s ability to adapt and thrive in diverse markets.
Commitment to Sustainability
Telenor made significant progress in its sustainability efforts by reducing Scope 1 and 2 emissions and increasing the proportion of spending covered by science-based targets. These initiatives underscore the company’s commitment to sustainable business practices.
Challenges in Bangladesh
The macroeconomic environment in Bangladesh posed challenges, affecting Telenor’s performance in the region. The company faced a revenue correction of NOK 90 million and had to account for larger-than-usual bad debt provisions, reflecting the ongoing economic difficulties.
One-Off Impacts on Group Results
Telenor’s group results were affected by several one-off factors, including VAT-related issues in Norway and a negative revenue correction in Bangladesh. These impacts slightly overshadowed the company’s otherwise strong performance.
Increased Lease Payments
There was a sequential increase in quarterly lease payments by close to NOK 300 million, with expectations of continued increases into 2025. This rise is anticipated to affect Telenor’s future financial planning and operational costs.
Forward-Looking Guidance
Looking ahead, Telenor expects low single-digit service revenue growth in the Nordics and mid-single-digit EBITDA growth. The company forecasts a CapEx to sales ratio of around 14% and anticipates group EBITDA to grow in the low to mid-single digits. Free cash flow before M&A is projected at around NOK 13 billion. Telenor remains focused on shareholder remuneration and strategic capital management to foster profitable growth.
In summary, Telenor ASA (ADR) delivered an optimistic earnings call with strong regional performances and a commitment to sustainability. While challenges persist in Bangladesh and some one-off impacts were noted, the company’s forward-looking guidance suggests continued growth and shareholder focus.
