Telenor Earnings: Revenue and EBITDA Increase by 4%; Well Positioned To Meet Guidance

Narrow-moat Telenor TEL reported service revenue of NOK 15.8 billion in the second quarter, which represented a 4% organic increase year over year. The increase in service revenue was driven by mobile service revenue growth in the Nordics, thanks to price adjustments and larger subscriber bases in Sweden and Finland. In the Asian market, service revenue increased 5%, primarily attributed to increased data usage and price adjustments in Grameenphone. EBITDA came in at NOK 8.8 billion or a 55.7% margin, up 4% year over year on an organic basis, thanks to service revenue growth and energy costs remaining stable compared with the previous year. The increase in personnel expenses grew less than inflation, according to management. Telenor is well positioned to reach its 2023 financial ambitions of low- to mid-single-digit growth in service revenue and EBITDA. We are maintaining our NOK 130 fair value estimate.

All Nordic geographies increased service revenue nicely, thanks to mobile price increases to pass on inflation to customers, with Sweden and Finland as the standouts at 5% and 6% organically. Norway, Telenor´s largest division, increased service revenue by 2% organically with EBITDA declining 1%. In Asia, mid-single-digit revenue and EBITDA growth in local currencies did not translate into reported growth as currencies have been depreciating against the Norwegian krone. Telenor’s tower business increased service revenue by 5% organically with EBITDA after leases growing 20%. Group capital expenditures for the quarter were stable compared with last quarter at NOK 3.4 billion or 17% of sales.