Page 1
Telenor ASA Q1 2014 Results
Page | 1 Ref 7880881 7 May 2014
Company: TelenorASA
ConferenceTitle: Q12014Results
Moderator: MeeraBhatia
Date: Wednesday7thMay2014
MeeraBhatia: GoodmorningandwelcometotheTelenorGroup’sFirstQuarterResultsPresentation.
MynameisMeeraBhatiaandIhavethepleasureofguidingyouthroughtoday’spresentation.
WehaveourCEOJonFredrikBaksaasandCFORichardAawhowillpresentthefinancialresults
today.AsusualtherewillbeaQ&Asessiondirectlyafterthepresentationfirstlyherefromthe
audience and then from our phone and webcast participants.We aim to end the session at
10o’clockand formediapresent therewill be theopportunity to speak tobothourCEOand
CFOaftertheQ&Asession.
ButwithoutfurtheradoIwillleavethestagetoourCEOJonFredrikBaksaas.
JonFredrikBaksaas: ThankyouMeeraandalsowelcometoFornebuandalsothoseonthenettothis
firstquarter2014presentation. I’mgladtosaythatwehadanencouragingstart to2014.We
are growing in terms of revenues, EBITDA and subscribers and this happened both for voice
servicesanddataservices.Theorganic revenuegrowth improved thisquarter to1.5%,up0.5
percentagepointfromlastquarterandwesawa5%underlyingmobileservicegrowthwhichis
a stronger figure thatwehadaveragedon the fourthquarter lastyear.This isamongstother
things fuelled by an impressive subscriber intake in our Asian operations with 6million new
subscribersinQ1whichisthehighestintakeofnewcustomersintwoyears.
OntheprofitabilitywehadanEBITDAbeforeother itemsof9.3billionandthistranslates into
4.9%organic growthon theEBITDA innominal termsyearon year. Keydrivers for this is the
growth and efficiency initiative thatwe’re running inNorway and the regulatory cost savings
thatwenowseeinThailand;butasusualthereisalsoalotofworktobedoneintherestofthe
yearandwearestartingtheyearoptimisticonthescorethatweaimatdeliveringandcontinue
todeliverprofitablegrowthaimingalsothentogrowtheoperatingcashflowinto2015.AsIsaid
animportantelementtothisisourabilitytoexecuteonthemobiledataopportunitywherewe
Page 2
Telenor ASA Q1 2014 Results
Page | 2 Ref 7880881 7 May 2014
haveinitiativesinallmarketsaimingofcoursetomonetisethissignificantgrowthpotentialthat
weseeacrossallourmarkets.
Let’stakealooktoNorway.I’mverypleasedtoseethatNorwaynowinthisquarterreportstop
linegrowthagainwhichisthefirsttimesinceQ42012.The2%revenuegrowthisdrivenbyboth
mobile and fixed internet and TV services. Mobile service revenues excluding interconnect
increased by 2% which is significantly of course better than the 2% decline that we saw in
previous quarters. We still see an improved sales mix in the consumer segment versus the
beginning of 2013. Telenor Norway recently launched a new portfolio which we believe will
supportthesetrendsgoingforward.TelenorNorwayisalsofocusingonselecteddigitalservices
to drive its core business, already seeing a significant uptake of the online backup service,
MyCloudandbeinglaunchedasearlyinFebruarythisyearwecanlastweekseethatthegrowth
has comeup as high as close to 90,000 users already. This is then an added feature thatwe
bundledtogetherwithoursubscriptions.
While thesepositive trends continue in the consumer segmentwehave to say thatwe seea
continualpricepressure in theenterprisemarket. Fixed internetandTVservices increasedby
7%againdrivenbypriceincreasesoncableandagrowingnumberoffibrecustomers.Thetotal
customerbasenowiscloseto90,000.Thecompetitivepressureanddecliningrevenuesinthe
traditional firm business has required then unfortunately special focus on streamlining
operationsandcostefficiencies inthatpartofwhatwe’redoingandthiscomesontopofthe
heavy investments that we drive in both the mobile space as well as in the fibre space, so
through theseeffortswehave throughoutMarchconcluded the right sizingexercises thatwe
introduced at the beginning of the year.We continue the high investments in infrastructure
initiativestoincreaserevenuesandtore-usecostsfurtherandthiswillofcoursebehighonthe
agendainallaspectsofwhatwearedoinginNorwayin2014.
Moving then to theothercountries inScandinavia, there isa two-sidedstory forSwedenand
Denmark. In Telenor Sweden delivers another strong quarter with strong EBITDA margin
developmentinQ1againdrivenbymobilerevenuegrowthandlowersalesandmarketingcosts,
followingaquarterwithlowermarketactivitiesoverall.TheunderlyingEBITDAinSwedishkrona
increased by 12% in Q1 following improved gross profits from the mobile operations, lower
Page 3
Telenor ASA Q1 2014 Results
Page | 3 Ref 7880881 7 May 2014
subscriberacquisitioncostsaswellaseffectsfromseveraloperationalefficiencyinitiatives.The
acquisitionofTele2’sfibreandcablebusinesswascompletedonJanuary2ndandtheintegration
work is now going according to plan. We are significantly strengthening our position in this
segmentinbothfibreandTVmarketsinSweden.
Denmark is again a challengingmarket also in this quarter. Revenueswere down 10%out of
which 2% comes from Interconnect, 3% from fixed services and 5% from service revenues in
mobile.Onthepositivesidewehaveseenastabilisationinthepost-paidsubscriberbaseinthe
pastquarters.Thecustomerbaseisnow-3%yearonyearifwecomparequartertoquarterand
ournetworkhas recentlycomeontop inaseriesofmeasurements, so theoperatingposition
hasimprovedthroughout2013into’14.WeareinatransitioninDenmarkanditwilltaketime
torepositionthecompanyandwehopetoseeeffectsinlate2014into2015oftheseefforts.
We then move on to Asia. We have two very strong South Asian activities in Thailand and
Malaysia. InThailanddtac’smigrationtothe licensednetwork isontrack.Themovefromthe
concessiontothelicenceregimeisalreadycontributingsignificantlytoregulatorycostsavings.
The new 3G network now covers 70% of the population and almost 60% of dtac subscribers
havebeentransferredtothenewnetworkandthisalsoexplainsofcoursethehighercapexin
this period for dtac. Interconnect costs from 1st July 2013 continues toweigh heavily on the
reportedrevenues.Inadditionthecompetitionremainsintenseandtherecentweaknessofthe
Thaieconomyalsoputssomepressureonthetoplineinthisquarter.
DiGi in Malaysia once again demonstrates its robust performance both in terms of revenue
growthandprofitability.The7%organicgrowthinsubscriptionandtrafficrevenuesisdrivenby
solidmobiledatatrendsonthebackofthecompany’sveryfocusedinternetforallstrategy.
Abit furthernorthwehavealso two strongperformingactivities inBangladeshandPakistan.
Both countries see an improvement in thebusiness environment this quarterwherewehave
seen both regulatory changes and political unrest in previous quarters. In Bangladesh we’ve
seen less disruptions and a resumption of economic activities after the elections in January.
Grameenphoneadded1.6millionnewsubscribersandaveragedailyservicerevenueshoweda
positive development during the quarter. The 3G network now covers all 64 district
Page 4
Telenor ASA Q1 2014 Results
Page | 4 Ref 7880881 7 May 2014
headquarters and around 40% of our customers are now having access to the 3G network.
Several initiativesshoulddriveawarenessandrelevanceofmobile internetaretakingplace in
thisperiodinBangladesh.InPakistan,TelenorPakistanadded1.8millioncustomersandsawa
9%organic growth in subscription and traffic revenues this quarter. 2%of this growth comes
from financial services. In April we secured 3G spectrum in the 2.1 gigahertz band for the
reserve price of $147.5million.With a 3G ready network already in placewe are planning a
rapidrolloutacrossPakistan.Ourserviceofferingshavealreadybeendevelopedandintroduced
inpartnershipwithFacebookforexample.
For the last operation in India for our operational not forgetting thatMyanmarwill comeon
boardlaterthisyear,inIndiawehaveseenaverysolidcustomeruptakeperiodinthisquarter,
2.5millionnewsubscribersversus2millioninQ42013andthisquarterreportsa44%organic
revenuegrowthcomparedto36%inthepreviousquartersoweareonasolidgrowth line. In
parallel tothischurncontinuestodeclineand iscurrentlyaround4%amonthwhich is in line
withincumbents.Wearenowtakingtheleadingchallengerpositioninthecircleswhereweare
present. We are successfully positioning ourselves as a provider of affordable, basic data
services.OurinternetforallstrategywaslaunchedinMarchfocusedontimebasedofferingsof
both Facebook and WhatsApp usage by running fixed offers in rupees per day or per time
period.15%ofourcustomersinIndiaarenowactivedatausersandinFebruarywealsosecured
a supplementary spectrum in four of our circles and added a new circle as well. As
communicated inFebruaryweplan to redeploy5,000 sites this year, sites coming fromthose
circlesthatweclosedduringthedifficultperiodaroundthelicence.Thelaunchofnewsiteswill
impactoperatingcashflowsinIndiathisyearbyapproximatelyNOK600millionandinthefirst
quarterthisyearwehavebeenabletolauncharound1,000newsitesandwealreadyseequite
a promising revenue contribution from these new sites.We also have a record high average
revenueperuserinIndiathroughoutthisquarter.
So to conclude then mobile data represents the next growth curve for Telenor. Our total
consumerbase isnow172million,20%are currentlyactive internetusersandaswecan see
fromthegraphhere,seeingEuropemoreorless50-50onbeinginternetusers,thispercentage
is low in Asia and we see this as a very interesting growth potential going forward.We are
working hard to increase the number of active internet subscribers across all ourmarkets by
Page 5
Telenor ASA Q1 2014 Results
Page | 5 Ref 7880881 7 May 2014
enabling and stimulating usage. At the same time of course we have to make sure that we
monetise on the heavy network investments to realise this, also including the spectrum
processeswhicharebecomingmoreandmoresophisticatedaswemovealong.Allinallwelook
atthisfirstquarterin2014asasolidquarterandwebelievethatitleadstoanexcitingstartof
thisyear.
Thankyou.ThenIwillleavethefloortoRichard.
RichardOlavAa: Thank you Fredrik, yes, an encouraging start to the year. A lot of positive
one-timeeffects in thisquarterwhich Iwill comeback tobutmaybemost importantly is that
thebigTelenormachineistickingverywell inthisquarterandIwilltakeyouthroughsomeof
themetricsthatarekeytounderstandingwhyIcansaythatandthatgoesontherevenueandit
goesonthecostprogrammesanditgoesonthecapex,soIwillgothroughthatinmoredetailin
mypresentationandincludingtheguidance.
But let’sstartwiththerevenues.Wehave increasedrevenuesyearonyearbyNOK1.8billion
this quarter. That is one of the highest revenue growths in nominal terms to have had in
Telenor. Three factors contributing to that, we have some acquired entities, Globul and the
Tele2fibreandcablebusinesscontributingaboutthreepercentagepointstothegrowth;then
wehavecurrencyeffects,positivethisquarter,alsothreepercentagepointstothegrowth;and
thentheorganicrevenueshavegrownabout1.5%,so intotalmorethan7%reportedgrowth
thisquarter.Butthemainthingistheorganicservicerevenuegrowthandwewilltrytovisualise
thatintherighthandchartthereandasyouseeorganicrevenuegrowthisat1.5%butthenit’s
very important to remember the interconnect effects in Thailand, taking the revenue growth
down by 1.7% and remember this has no profit effect becausewe have an offsetting on the
costs.Sowhatmattersarethegreenbarsthere,particularlythetwototheleftwhichisrelated
for mobile business, underlying growth in the mobile business contributes three percentage
points to the growth of Telenor. That’s where we make the profit. 3% on the mobile
subscription traffic and then including the voice because it’s a part of it, that translates into
approximately 5% organic service revenue growth on the revenue base of mobile which is
around60%of the revenues.SowhenFredriksaid inhispresentationwehave5%underlying
servicerevenuegrowth,thatisonthemobilerevenuebaseandthat’swhatwemeasureonthis
Page 6
Telenor ASA Q1 2014 Results
Page | 6 Ref 7880881 7 May 2014
slidewhichiskeytounderstandingtheprofitdevelopmentoftheTelenorGroup.Theblueline
here is thesumfor thegroup inunderlyingmobileservicerevenuegrowthandthathasbeen
fairlystableoverthelasttwoyearsasisvisualisedherebetween4-6%.ThisquarterweseeAsia,
the red line is stable. dtac is down which I will come back to but that is compensated by
improvedgrowthinIndiaandPakistaninparticularinthisquarter.Europe,moreorlessstable
butthemostencouraginginthisquarteristhatwehavemanagedtoturntheblackline,Telenor
Norway, into positive organic service revenue growth andwedid big investments inNorway,
thatisabsolutelyvitalandthatisatrendlineweworktocontinuetoworkinthisdirection.So
it’sagoodstarttotheyear.Ourambitionsareactuallyhigheraswesaidin2013,thebluelineis
strongbutourambitionsalsoin2013arehigher.Sowearedependentonsolidmomentumon
theinvestmentswe’remakinginNorwayandalsorevenuepick-upinThailandwhichIwillcome
backto.Butallinallgoingintherightdirection.ThisrevenuegrowthofNOK1.8billionforthe
group,thattranslates intoagrossprofit improvementofNOK1.5billionandthatcomesfrom
threeeffectsagain:aboutonethirdcomesfromcurrency;onethirdfromacquiredcompanies–
youseeittherefromGlobulandalsothenTele2;butstrongunderlyingservicerevenuegrowth
translates into gross profit improvement across the group and in particular this quarter
Grameenphone, Sweden, DiGi and India are contributing very well to the gross profit
development.
Sothenwe’redowntogrossprofitandwhat’snext?Yes,that’stheopexandwehavelaidouta
costprogrammeback in2012whereweshouldsavegrossopexof5billion intheyears2013,
2014 and 2015 andwe arewell underway to achieve that.We have visualised here the two
biggest mobile units and their progress towards the cost target, Norway, aim to contribute
2billionof the5billion inthecost targetandasyouseeNorwaydeliveredonthecostsaving
ambition in ’13andwiththeactionsnowtaken in ’14wearewellunderwaytodeliveronthe
savingstargetfor’14;andthenthepipelinefor’15withconcreteinitiativesarealsostartingto
fillup.AlsoalotofthecapexreducinginNorwayisintendedtotakeoutcosts.Sowellunderway
and good progress so far this year. Then the regulatory cost savings in Thailand which is
together with the cost saving programme in Norway the biggest cost saving initiative in the
groupwherewespendsignificantcapex,closetoNOK3billionboth in ’13and ’14tomigrate
thenetworkfromconcessiontolicence.dtachaslaidouttheambitiontohalvetheregulatory
costsasapercentageofservicerevenuestowards2016from31%toaround15%andtheyare
Page 7
Telenor ASA Q1 2014 Results
Page | 7 Ref 7880881 7 May 2014
progressingwell.Nowinthefirstquarterthisyearisthefirstquarterwhereyouseesignificant
improvementonthecostsideandEBITDAmarginindtacisimprovingfrom31%to37%yearon
year largely due to the regulatory cost savings coming through, so the two big units are
contributingverywellnowtothecostagendaandingeneralacrossthegroupwearedelivering
onthecostsavingagenda.
SothattranslatesintosolidimprovementinEBITDA.EBITDAmarginstandsat35%,that’supone
percentagepointfromlastyearandtheEBITDAimprovesclosetoNOK900million.Somecomes
fromacquiredcompanies,Globul,238millionbutyouseethestrongperformanceonboththe
revenue and the cost side translating into solid EBITDA improvement in Grameenphone,
Sweden,DiGiandingeneralacrossthegroupwithafewexceptions.
Thentothecapex.Becausewedon’tseeasimilar improvement inthecashflow,becausewe
are increasing capex year on yearwithmore thanNOK800million.As you seehere capex is
3.7billioninthequartercomparedto2.9billioninthesimilarquarterlastyearandthatis14%
capextosales.We’reguidingforthefullyear16%capextosales,so2014willbeaveryheavy
capexyearforTelenor.Weexpectthattocomedownin2015whichIwillcomebackto.
The righthandcharthere isvery important tounderstandwhereweare in thecyclenow for
Telenor and as you see we visualised here Sweden, DiGi, Denmark and Hungary as a
representativeforourmobileoperations.Wehavebeenableduringthelastfouryearsthrough
heavynetworkswapsandheavydatagrowthtorunthoseoperationsataround10%capexto
sales likewe saidon the capitalmarketsdayback in2010.Howhavewedone that? Yes,we
have deployed network sharing.Wework with partners to becomemore efficient.We have
utilised our global sourcing strength and new vendors in particular from China; andwe have
executedanetworkswapaswellanddeployedthecapexcarefully.Sotheunderlyingcapexfor
ourmobileoperationsarearound10%,sowhyarewethenguidingat16%isaquestionweare
asked all the time and we were asked a lot after the Q4 presentation. First of all we are
launchinganewsatellitethisyear,that’sabouttwopercentagepointssoitcantakefrom16%
downto14%whichisthelevelweareatnow;andthenIwanttoexplaindtac.dtacisthepurple
lineanddtacbeforewestartedmovingthenetworkfromconcessiontolicencehadacapexto
salesonaveragearound10%.Wehadsomeverylowyearsbeforeweswappedthenetworkand
Page 8
Telenor ASA Q1 2014 Results
Page | 8 Ref 7880881 7 May 2014
alsobuiltout3Gon850underconcessionbutnowwe’respendingnowclosetoNOK3billion
bothin’13and’14tomovethenetworkfromconcessiontolicence.Wewouldhaveneverdone
that unlesswe saw the regulatory cost saving, not at least in that speed, but that has a very
strong return on its own and should normalise back to the levels where you see the other
companies.Wewillseealowerspendingonthatindtacnextyear,sothatincludingthesatellite
isthesecondexplanation;andthenthethirdexplanationistheincreasedcapexinNorway.We
haveincreasedcapexspendtofibrebecauseweseewecannowdeployfibreprofitablytothe
home and increased fibre spending through the base stations which we also share with our
competitors where we get revenues and we were later than our competition with 4G
deploymentbutwhenthehandsetswerereadyandwehadaspectrumwehaveincreasedthe
capexspendon4GandthatisalotoncoverageaswellandcoverageinNorwayisexpensive.So
thecapextrendinNorwayisgoingupfrom12percentagepointsofrevenueto18percentage
pointsofrevenuewhichisthenthekeyunderlyingreasonwhywedeviatefrom10%,butifyou
takeoffthesatelliteanddtacyouarebacktoalevelofaround12%plus,sothenthebigtrend
shift is in Norway and that’swhywe’re so concernedwhenNorway shows negative revenue
figures because we need to see profitability on these increased investments and that is the
variable going forward, howmuch capexwill be deployed in Norway going forward and that
dependsonhowwellwe’reable tomonetise,andagainaveryencouragingstart for2014on
thesemetrics.
Then on the cash flow, yes, a strong EBITDA improvement of close to 900 million but then
800millionmoreincapexsocashflowisonlymarginallyupforthegroup,butstillverystrongat
5.6billiondespiteveryheavyinvestments.Sowe’reabletoimprovecashflowinarecordhigh
investmentenvironment.
ThenontheP&L,Isaidwehadverymanypositiveeventsthisquarter.Someofthemarehitting
theP&L.SomeofthemarenotshowingupintheP&Lbutlet’smaybestartwithsomethatare
notshowingup.WehadtheoldfinallicenceawardinMyanmar.Wehadtwosuccessfullicence
auctions in Pakistan and India in this quarter. Then we have sold Conax, that will give an
accounting gain of 1.2 billion. The cash came inApril 4 and itwill give a cash gain of around
1.5billiontotheTelenorGroup.WefinallygotthelicenceoffsetinIndia.Thatwillhaveacash
effectoverthenexttenyearsasitwillbespreadoutoverthedeferredpaymentswehavetoday
Page 9
Telenor ASA Q1 2014 Results
Page | 9 Ref 7880881 7 May 2014
but in total we could book an income of 1.8 billion distributed between EBITDA and net
financials. Then we have one negative, that’s from VimpelCom. VimpelCom resolved the
situation in Algeria – that resulted in a settlement of tax disputes in Algeria of a total of
$2billion. VimpelCom owns about 50% of the asset in Algeria and we own about 33% of
VimpelCom so we take one sixth of what VimpelCom books so when VimpelCom books
$2billionasacost,onesixthofthatisNOK2billion,so$2billionbecomesNOK2billionforus.
SointotalfromtheseeventswehaveanetimpactofNOK1billiontoourP&Lthisquarter.
Then the full P&L, we have been down to EBITDA,we have seen other items there, positive
0.6billion.ThemaineffectstherearethesaleofConaxandthelicencerefundinIndia,soavery
strong EBITDA due to those one-time effects and strong underlying EBITDA. D&A up,we are
writing off the network in Globul in addition to increased depreciation following the higher
capex inNorway.Thecompaniesarenegative largelyduetothesettlement inAlgeriathatwe
wentthrough.Lownetfinancialsthisquarter, lowerinterestcostsandcurrencyeffectsandso
on. Iwould say normal taxes but it’s important to note an increased leakage tominorities in
non-controllinginterestsbecauseweseestrongprofitdevelopmentinGP,dtacandDiGiwhere
wedon’thave100%sothat leaksoutaminority.Sothenet incometoTelenorthisquarter is
3.7billionor2.43pershare.
Thentothebalancesheet,netdebt.Wearealsoimprovingourfinancialpositionthisquarter.
Netdebt toEBITDA isdown from1.1 to1.0,EBITDA isupanddebt isdown.EBITDAwehave
beenthrough.Thedebtisdownapproximately2billion.StrongEBITDAbuttwooftheone-off
items, like Isaidboth licencerefundsandthesaleofConaxwillnothaveaneffect inthefirst
quarters.Wehad thecorrectdata, that’s the2.9billionyousee thereon the righthandside.
Thensignificantcapexthisquarter,5.9billion,that’salsolicencepaymentsinMyanmarandall
the licence payments in addition to the operational capex of 3.7 I went through earlier, so
despite a record high capex level and licence paymentswewere able to reduce debt. Lower
taxesthisquarterbutalsowehavesomepositiveeffectsonworkingcapitalandrevenueshare
and currency effects and I would like maybe a small comment on working capital. If you
followedthisoverthelasttwoorthreeyearsyoucanseealotofmoneycomingininworking
capitalbysystematicworkonimprovingworkingcapitalinthegroup.It’simportanttocontinue
toworkonthattocontrolthedebtlevel.
Page 10
Telenor ASA Q1 2014 Results
Page | 10 Ref 7880881 7 May 2014
Thentotheguiding.Wearemaintainingtheguidingfor2014.Ontherevenuegrowthwehavea
goodstarttotheyearof1.5%.LikeIsaidweaimhigher.Weseeaneedforstrongprofitability
ontheinvestmentsinNorwayandweexpectarevenuepickupinThailandandtheinterconnect
in Thailandwill disappear from the second half, so I think the guiding there should be fairly
robust. Then the EBITDA margin, we maintain the guiding in line with 2013. We are one
percentagepointaheadsofarthisyearsoyoumaysaythiswouldbeontheconservativeside,
but it’s stillearly in theyearand there’sa lotofwork tobedone inallourunitsbothon the
revenuesideandthecostside,sowedecidedtomaintaintheEBITDAmargindespitethatwe
arewellaheadinthefirstquarter.CapextosalesI’vebeenthrough,16%withanexplanationon
satellite Norway and dtac, there’s nothing mysterious there and that should come down
significantlyin2015.
Iwillmakesomewordsthenonthe2015ambition.Wehaveanaimofanoperatingcashflowin
2015 of 28-30 billion. The main drivers behind reaching that ambition is a continued strong
mobileservicerevenuegrowthcombinedwithgoodcostcontrol.In2013ourtrendswerenotas
strongasweexpectedandmadetheambitionhardertoreach.Wehadanencouragingstartto
2014, that takes us in the right direction but we are now fully dependent upon strong
profitabilityfromtheheavy investments inNorway, improvedrevenuegrowthinThailandand
goodexecutiononourplansfortherestofthegroup.
Summingupthen,agood,solidstarttotheyear.Alotofpositiveone-timeeventsaroundthe
auctioninPakistan,auctioninIndia,licenceawardinMyanmar,licencerefundinIndiaandthe
sales of Conax butmaybemore importantly is than the big Telenormachine is now back on
growthandweareexecutingwellonthecostprogrammes.
Then finally Iwant toendwith an invitation like Fredrik endedhispresentation showing that
about80%ofourcustomersarestillnotconnectedtothe internetwithabigpotential inour
Asianoperations.Wehavearrangedaninvestorseminar inLondonon6thJunewhereyouwill
gettheopportunitytomeetpeoplefromourbusinessunitsthatareexecutingontheinternet
forallstrategyinAsiaonadailybasis.IthinkthatwillbehighlyinterestingandIhopeweseeas
manyaspossibleofyouthere,soMeera,wecantakeQ&A.
Page 11
Telenor ASA Q1 2014 Results
Page | 11 Ref 7880881 7 May 2014
MeeraBhatia: ThankyouRichard.CouldIaskFredrikbackonstageplease.Wewillnowopenuptothe
Q&Asession.Wewillstartherewiththeaudiencepresent.Anyquestions?Themicrophonewill
be reachedtoyou?Noquestionsatall?All crystalclear it seems,ok.Wewill takeoneofour
online questions before we open up to the phone lines. It’s actually a question on Globul
Bulgaria:whatisyourevaluationofGlobul’sperformance?Areyousatisfiedasofyet?
JonFredrikBaksaas: Iwould say that Globul coming in is as expected, even a little bit ahead. The
companyhascomeintotheTelenorGroupandshowedeagernesstoshareinwhatTelenorasa
biggerindustrialsystemhastoofferandofcoursesomeofthedecisionsthathavebeentaken
leadingtoacompletenetworkswap,embarkingonanewphaseforthecompanyisalsoabig
motivating factor. So as per now no negative surprises of significance, a positive drive in the
wholeoftheorganisationandalittlebitaheadofplanonintegrationtotheTelenorGroup.
MeeraBhatia: Thankyou.Anyquestions from theaudience? Ifnotwewillopenup thephone lines.
Operator,pleasetakethefirstquestion.
Operator: OurfirstquestioncomesfromAndrewLeeofGoldmanSachs.Pleasegoahead.
AndrewLee: Goodmorningeveryone. I justhadaquestiononNorwayand thenoneonDenmark.
Norwegianmobile,youdeliveredweakergrowththanmighthavebeenexpectedinwhatshould
beastrongmarket lastyearbutthishasrecoveredwell. I justwonderedhowsustainableyou
thinkthecurrentgrowthrateisandinrelationtoRichard’sclosingcomments,whatgrowthrate
doyouneedat aminimum toget fromyourNorwegianmobilebusiness toget towards your
group 2015 OCF guidance? Then just secondly on Denmark, clearly conditions are still very
difficult there.Weasked lastquarter if youneed tohaveaconsumerbusiness inDenmark to
fulfilyourpan-Nordicserviceofferingtocorporatecustomers,soIjustwonderedifyouhadany
updateonyourthoughtsthere?Thankyou.
JonFredrikBaksaas: The sustainabilityofwhatwe’redoing inNorway I believe isquite strongand
thewaywehaverepackagedthepricingstructuretowardstheendof2013andinto2014also
trying to concludewith new service offerings to all those specific segments just recently this
Page 12
Telenor ASA Q1 2014 Results
Page | 12 Ref 7880881 7 May 2014
monthwebelievewill give long term visibility on better aligning the underlying consumption
and the growth in the data consumption and data activities in general with the pricing
mechanisms,butofcoursethisalsodependsfullyonhowcompetitorsviewthislandscapeand
wehavealwaysbeentalkingabouttheneedtolinkrevenuedriverswithgrowthdriversandwe
believethatwehaveabetteralignmentonthisaswemove into2014thanwhatwehad ina
coupleofquarterslastyear.Tomoveintometricsonhowmuchdoweneedspecifically,Ithink
thatbecomesa littlebit toodetailedso Idon’twant togo into thatone.As forDenmark the
questionthatyouraisedisalsoonourmindandweaddressedthequestionaswellandit isa
fact that the market leader TDC has the overall momentum and a very strong position in
particular in fixed line services and the three competitors struggle to find their way on
sustainableeconomicsintheirinvestments,soonecouldanticipatethesheerfactsonhowthis
market is structured should lead to this kind of discussion not only on our table but also on
othertables.
AndrewLee: Thankyou.
MeeraBhatia: Nextquestionplease.Dowehaveanyquestionsfromtheaudienceinthemeanwhile?
Anyonecurious?Wehaveajournalist.
MariusLorentzen: Marius Lorentzen from E24. I have a question about Myanmar. You started
reportingitasaseparatesegmentthisquarterandyounotedthatyouspentabout3.2billionin
capex of which 2.9 is the licence but the pace of investments is about 300 million which I
assumeisnetworkandoperations.Isthatapacethatwillcontinueoverthecomingquartersor
areyouexpectingittobemorefrontheavythisyear?
JonFredrikBaksaas: Thisisfrontheavy,thefirstyearofcoursehoweverthecoveragethatwillbein
placebytheendoftheyearisnotatallthefullcoverageneeded,soitwillbeasalwaysthe2-3
firstyearsofanoveralloperationhavesignificant investmentscarriedwiththem,butherewe
arealsothendoingtowerrentalssowedon’tcarryalltowerstructuresonourowninvestments.
ThatisanopexstructurewhichismoreusualinIndia,inAsiathaninEurope.Ithinkwecansay
that progress is very good in Myanmar. We have all aspects of preparing for launch under
reasonablecontrol.Themostchallengingparthasbeenthatofgettingthetowercompaniesup
Page 13
Telenor ASA Q1 2014 Results
Page | 13 Ref 7880881 7 May 2014
tospeedwhenitcomestogettingthetowersphysicallyintothegeography.Ihavetoremindall
of us the fact that there are no administrative procedures in that society for such an
industrialisationprocesswhichnow is starting in thecountry, so this isquitegroundworks. If
greenfieldshad inaway it’stherightexpression itmusthavebeenborn inMyanmarbecause
thisisreallyagreenfield.Thankyou.
MeeraBhatia: Ok,thankyouverymuch.Ithinktheoperatorshouldnowbeonline.Canwetryagain?
Nextquestionplease.
Operator: OurnextquestioncomesfromPeterNielsenofKeplerCheuvreux.Pleasegoahead.
PeterKurtNielsen: Thank you. Two questions please, one on Sweden and one on Denmark. You
already discussed the Norwegian revenue trend. Sweden, you have for the past year I guess
reported extremely strong underlyingmobile serve revenue trends. Did you see those trends
continuing for the remainderof this year?Do you see any reasonwhy it shouldn’t? Secondly
whenwillthestrongunderlyingservicerevenuegrowthi.e.adjustedforthehandsetdiscounts
comethroughinreportedservicerevenuesaswell?SecondlyifImayreturntoDenmark,you’ve
obviouslyseenimprovedmomentuminsubscriberintakebutclearlyitcomesatahighcostboth
toyourselvesandtothemarket.Youcontributedtothere-introductionofhandsetsubsidiesin
combinationwithvery lowprices.Youareexpectingtosee improvedtrendsattheendofthe
year.Didyouthinkthesecurrentnegativetrendscanbereversedlatertothebenefitofyourself
andthewholemarket?Thankyou.
RichardOlavAa: InSweden,whatwehaveseen inSwedenand I think that’s ingeneral for the
market is the slowdown in handset sales. I think the Swedishmarket is nowwaiting for new
innovationsfromAppleandthenyouwillseeapickupintheoverallreportedgrowth,butthe
reportedservicerevenuegrowthnowinthefirstquarteralsostandsat2%andwewillseethe
effectofthehandsetdiscountgraduallybeingwashedoutasthiswasanewwayofpackaging
our offering in Sweden that was introduced now two years ago and it takes a while before
everythingismovedovertothesamestructure.Butthemainfactorwillbethehandsets.When
it comes to Denmark, yes, we see like Fredrik said the EBITDA pool in the Danishmarket is
largelytakenbyTDCandunfortunatelythemarketalsothatismovingwiththesubsidies,evenif
Page 14
Telenor ASA Q1 2014 Results
Page | 14 Ref 7880881 7 May 2014
youonlyhaveasixmonthcommitmenttothecustomers,butwehadmassivesubscriberlosses
lastyearwhenwetriedtobemorerational inthemarketthatthatcouldnotcontinue,sowe
hadtousethemeasuresavailabletostabilisethecustomerbaseandunfortunatelythatresults
also then ina lowerEBITDA forus in theDanishmarket.Whetherornot thiswillpickup, it’s
veryhardtosay.Itdependsonthemarketsituation.Ithinkunfortunatelyweseeoffersinthe
DanishmarketswherethepricestaysverylowfromourcompetitorssotheDanishmarketisin
averydifficultconditionandit’sveryhardtopointtoanimprovementinthatmarket.
PeterKurtNielsen: Ok,thankyou.
MeeraBhatia: Nextquestionplease.
Operator: As a reminder to ask a questionpleasepress *1on your telephone keypad.Ournext
questioncomesfromDominikKlarmannfromHSBC.Pleasegoahead.
DominikKlarmann: Yes, thank you. Firstly just to clarify the2015operating cash flow target, that
still includestheMyanmarstart-up lossesandmaybeyoucanshareabitmorecolouronhow
weshouldthinkaboutyougettingthere?IfIassumeasharpfallofcapexsalestojust10%next
yearIwouldstillneedasignificantaccelerationofEBITDAgrowth.Whereisthatcomingfrom?
Thensecondlyon India,maybe justabigpicturequestion.Does India lookmoreattractive to
you today than say two or three years ago when you balanced the improving pricing
environment,theimprovingregulationsagainsttheoperationalchallengesandthechallengeto
get break-even and actually generate returns? I’m curious about your thoughts there? Then
maybe justa thirdquestionon the ideabehind thenewmobile tariffs that you introduced in
Norwayandwhyyouarelaunchingthosenow?Thankyou.
JonFredrikBaksaas: Thiswasawhole seriesofquestions so letmestarton theaim for2015cash
flow targets. Yes, it includesMyanmar but it also includes Globul, so in the first three years
those two operationsmore or less compensate each other. In 2015what then is the EBITDA
contribution,cashflowcontributionfromGlobulshould inawaymoreor lesscompensatefor
the programmes that are executed inMyanmar. Yes, you’re right to the effect thatwe need
thosekindsofimprovementsbutasalsoRichardtriedtoalludetothroughhispresentationon
Page 15
Telenor ASA Q1 2014 Results
Page | 15 Ref 7880881 7 May 2014
capextherearepretty importantcapexelements inthis.Numberone,thesatellitewillnotbe
therein2015.Mostoftheprogrammefordtacwhenitcomestoheavyinvestmentstodothe
3Ggenerationdeploymentmovingfromconcessiontolicencewillmoreorlessbedoneandon
top of that the growth aspects of the entire economy should also be there. It’s lower in this
quarterandprobablyalsosointhefirsthalfofthisyearbutwehopethatthesecondhalfyear
canshowmoredynamicsintheThaieconomy.Thenofcoursewhatisneededhereistoseethat
thetrendlinethatwenowseeinNorwaycontinuesandthatalludesstronglytothethirdpartof
yourquestion,namelythatofasuccessfulredesignoftheserviceofferingsinNorwayinsucha
waythatwestimulateourcustomerstoupgradetoahigherserviceofferingandweseethatis
workingquitewellrightnow,butthattrendneedstocontinue.MoresoIndiawillnotbeonthe
minusside in2015. Indiawillbeonthepositiveside,sothereareanumberofelementshere
whichclearlycanshowthatthereisarealisticpossibilitytoaimforthetargetsin2015thatwe
have spelledout tobebetweenNOK28-30billionoperating cash flows. Then for India,more
attractive,yesof coursebutbyallmeanswhenwehad,whenyou referred to2-3yearsback
that was at the bottom of the curve, but does the lines in India go to sky high from here?
Absolutelynot.Wearedifferentlypositioned.Weareonthemove.Wehaveverygoodtraction
whereweofferservices.WhenyousawtheMarchstatisticsofcustomeracquisitioninrelative
terms towherewe are having distribution in India,we are clearly on top of the statistics on
getting new customers on board, so thatmeans that our affordable service offering really is
broadeningintosegmentsthatgetthetasteofmobilecommunicationsforthefirsttimeintheir
life, and at the same timewe see the average revenue per user growing and of course one
importanteffectisthatalsochurniscomingdown.Whenweaddallthesekindsofelementswe
are on the positive trend line in India, but we have also come to learn that India is full of
surprises,sowearepreparingourselvesalsoforsomeelementsofsurpriseandwhatitwillbe
thistime–thatisdifficulttosay,butinthemeantimewearepositioningandmakingtheUninor
operation as strong aswe possibly can do and then it is very, very good to see thatMorten
KarlsenSørbywhomovedfromgroupmanagementtoIndiaasaCEOreallyhasgotagriponthis
inhisfirstquarterbaseduponwhatwassosolidlyexecutedin2013.
DominikKlarmann: Great,thankyou.
Page 16
Telenor ASA Q1 2014 Results
Page | 16 Ref 7880881 7 May 2014
MeeraBhatia: Please could I ask you kindly to limit yourself to one question.We have quite a few
callersontheline.Thankyou.
Operator OurnextquestioncomesfromBarryZeitounefromBerenberg.Pleasegoahead.
BarryZeitoune:Hi, it’sBarryZeitoune fromBerenberg. Iwill keepmyquestion toDenmark.A lotof
thefocushasbeenonwhetheryoucouldbeaseller.Iamalsointerestedinwhetheryoucould
potentiallybeanacquirerand I’mnotreally talkingaboutmobileassetsbutmore in termsof
thefixedlineassetsinDenmark.We’veseenyoubuildingoutfibreinNorway.You’veacquired
fibreinSwedenandthefixedlinemarketinDenmarkisobviouslyaverygoodmarketandthere
couldpotentiallybeanumberoffibreassetsavailable inthatmarket,so Iwas justwondering
whetheryou’vegotanyinterestininvestingfurtherinfixedlineinDenmarkorwhetheryou’ve
justcomfortablewhereyouareandwanttoseewherethatbusinessgoes?Thankyou.
JonFredrikBaksaas: Wearenotcomfortablewithwhereweare.Onthecontraryweareputtingalot
ofeffortintoimprovingtheexistingoperation.Rightnowweareconcentratingonthatandthat
meansthatwearenotextendingtheoperationinanydirectioninDenmarkinoureffortsright
now.Thatdoesn’ttakeawayhowthemobilespaceisgoingtoaddressthefixedissueovertime
becausefixedlineoperationsalsowillplayaroleinparticularwhenitcomestoWi-Fioffloading
andwhenitcomestohowthelastmileactuallyeventuallyevolvesintothefuture,solet’smake
thatabiggerandmorestrategicindustryquestionatalaterstage.Thankyou.
BarryZeitoune:Ok,thankyou.
MeeraBhatia: Nextquestionplease.
Operator: OurnextquestioncomesfromStefanGauffinfromNordeaBank.Pleasegoahead.
StefanGauffin: Yes, hello. We have already talked about the cost initiatives in Norway, the entire
regulatory improvements. Iwould like to focuson someother issues relating toPakistan and
Hungary.Despitearecordhighoravery,veryhighsubscriberintakeinPakistanyouhadafairly
goodmargin and I believe that comes from impact from the network swap. I wonder if you
Page 17
Telenor ASA Q1 2014 Results
Page | 17 Ref 7880881 7 May 2014
couldgivesomeinformationregardingtheenergysavingsthatthisnetworkswaphascreated?
SecondlylastquarterIsensedaconcernhowthetelecompacksinHungarywouldplayoutgiven
unlimitedvoiceandSMSplansandIwonderifthedevelopmentinQ1haseasedyourconcerns
relatedtothis?
JonFredrikBaksaas: Let’s start with Pakistan. We have concluded a network swap and we see
significantenergysavingsfromthat.Wealsochangedthebatterysystemsonseveralofthebase
stations which are also contributing well but we have also seen a somewhat better energy
situationingeneralinPakistaninthefirstquarter,butyourquestionisappreciated.It’sonthe
topfivelistofopexinitiativesinthegrouptoimprovetheenergysituationinPakistanandsofar
wehavedeliveredwell.WhenitcomestoHungarythesameconcernisthere.It’saverystrange
situationwhenyou includethefreeSMSandminutes inyourpackagesandthetelecomtax is
basedontheconsumptionsoyou’rereallypayingtaxonsomethingyoucannotprice,so it’sa
veryunfortunatedevelopmentintheHungarianmarket.
StefanGauffin: Ok,thankyou.
Operator: OurnextquestioncomesfromJakobBluestonefromCreditSuisse.
JakobBluestone: Hi,goodmorning.I’vegotonequestiononVimpelCom.Couldyouperhapsjust
updateusonwhatyourcurrentthinkingontheownershipoftheassetis,howcoreyouseeit
particularlyinlightofthepoliticalsituationwiththesanctionsonRussia?Doesthataffectyour
desiretohavethematerialexposuretotheRussianmarket?Thankyou.
JonFredrikBaksaas: I think thatwhole situationbetweenUkraineandRussia is a veryunfortunate
onenotonly fromaneconomicand investmentpointofviewbutalso fromahumanpointof
view,soIreallyhopethatpartisthere,cangettotermsandgettothetable.Fromabusiness
perspectiveweareinVimpelComandwearewhereweareandrightnowwehavetoposition
the companyonoperatingaspects ineachandeverymarket thatVimpelComhas. I think the
VimpelCommanagement is exactly doing that. It’s far too early to speculate onwhat kind of
developmentpotentialsanctionscanhaveonthisoperationallinall.Generallyspeakingthough
telecoms as an industry also is a needed infrastructure and needed service under all
Page 18
Telenor ASA Q1 2014 Results
Page | 18 Ref 7880881 7 May 2014
circumstancessofromthatperspectivetheoperationassuchwillmoveon,butofcoursehow
deeppotentialsanctionswillgo,thatremainstobeseenand I reallyhopethatthosekindsof
escalationscanbeavoided.
JakobBluestone: Thankyouverymuch.
MeeraBhatia: Thankyou.Nextquestionplease.
Operator: OurnextquestioncomesfromJamesBrittonofNomura.Pleasegoahead.
JamesBritton: Goodmorning. IhadsomequestionsaroundthenewMobilplans.Canyou justdetail
how these plans are likely to drive forward your revenue growth in the Norwegian mobile
market? How quickly do you expect the customers to actually move over toMobil and U21
plans?Isthisgoingtobeamatterofyearsorcanyouactuallyacceleratethetransition?Thanks.
JonFredrikBaksaas: ThankyouJames.Ithinkifyoulookatourreportingforthefourthquarterand
thefirstquarterwehadalotoffocusonupsellingtohigherpriceplansandthathasbeenquite
successful, so now we have changed the portfolios a lot for new subscribers and we have
increasedtheentryfeestoget intovariousexcellentnetworks,sothelowestpackageyouget
forNOK199yougetafairly limiteddatavolumeandthenyoupaymorelogicallyforhowyou
increasethedatavolume.Maybemostimportantlyisthenewpricepointwhichweintroduced
at349becausewefelt thestepfrom299to399wasmaybetoobig forsomeconsumersand
nowwehaveagoodpackagetoupsellfrom299to349andat349youget4gigabytesincluded,
so with these adjustments and also simplifying our overall portfolio structure we have a
structurethatnowstartstolookmorelikewehaveseenintheSwedishmarket.Wehavealso
takenawayalotofthekindofmovevoice-centricplansandintroducedasimplevoicepackage
which also has some additional benefits around at NOK 119. It will take some time tomove
customersoverbecausethis isfornewcustomersonly,butwehaveafairlygoodtrackrecord
onthisnowandIwouldespeciallyinawaysaluteourcustomerserviceactivitiesthathavebeen
verystrongonupsellingandgivingcustomersgoodadviceonwhatkindofpackagetheyshould
usewhichisawin-winbothforthecustomerandTelenor.
Page 19
Telenor ASA Q1 2014 Results
Page | 19 Ref 7880881 7 May 2014
MeeraBhatia: We’lltakeafewmorequestionsduetothetechnicalmishapearlieron,sonextquestion
please.
Operator: OurnextquestioncomesfromUlrichRathefromJefferies.Pleasegoahead.
UlrichRathe: Thankyouverymuch.Inthebigpicturewherewouldyoucurrentlyputtheemphasis,if
you had the freedom as the year unfolds tomaybe stimulate growth a bitmore or to try to
reportbettermargins,wherewouldtheemphasisbeandinparticularinthiscontexthowwold
thisbalance look foryou inNorwaygiventhat theheadcountcutswillcontribute in termsof
cost savings only from the secondquarter? You have very strong growth already.Would you
then re-invest the potential upside to really sort of keep themomentum up or is this really
somethingmoreonthemargin,ifthere’sasimpleanswertothat?Thankyou.
JonFredrikBaksaas: Thereisasimpleanswer:inTelenorwealwaysthinklongtermandthatmeans
that ifashorttermexerciseordecision looksstupidthenwewouldn’tdo it.Thatdependson
themarketsituationandwewillprepareforthefutureatanypointofthedecision-making.
MeeraBhatia: Nextquestionplease.
Operator: OurnextquestioncomesfromThomasHeathfromHandelsbanken.Pleasegoahead.
ThomasHeath: Thank you.Aquestion first on India. Could youupdateusperhaps a littlebit on the
roomforconsolidationtheregiventhattheregulatoryclimatehaschangedalittlebitfromtime
to time and if you see any opportunities to grow size non-organically? Secondly there are
reportsofquitea significant loss in your jointonlineventures today. Is thereany cap tohow
muchmoneyyou’rewillingtoinjectintothoseventures?Thankyou.
JonFredrikBaksaas: Consolidation in India,of courseweareaplayer in India.Thatmeans thatwe
followwhat goes on in India and as usual Indiawill be full of speculations and rumours and
headlines,sowhatcanbesaidonthatscore?Weare followingandweare inawaytryingto
havearadarscreenandseewhatwindowstheremightbe,sothatisageneralkindofanswer.
Anylossmakingonbusinessinitiativeslikeclassifiedswillhaveastart-upperiodandthisoneis
Page 20
Telenor ASA Q1 2014 Results
Page | 20 Ref 7880881 7 May 2014
noexemption. Yes, there is amaximumkindof investment limit thathasbeendiscussedand
agreedbetweenthepartners,sothewayweseethisdevelopforthetimebeingisthatmostof
themarketsareinreallyspeedydevelopmentintoclassifiedsandwebelievethatthistrendwill
followinAsiancountriesaswe’veseenitinEurope,aswecanseeitinBrazilthesedaysandwe
alsoreckonthattherelationshipbetweenthemobilebusinessmodelandtheclassifiedmodelis
aninterestingmodeltotrytofindoutnewdynamicsanddeploytheminthemarketplace.
MeeraBhatia: NextquestionpleaseandcouldIkindlyaskyouonceagainjusttolimityourselftoone
question.Thankyou.
Operator: OurnextquestioncomesfromMauricePatrickofBarclays.Pleasegoahead.
MauricePatrick: Higuys,it’sMauricehere.SoyoutalkedaboutdatagrowthinIndia.Youhaven’t
gotthatmuchspectruminyourcirclesandIguessI’dlovetogetyourthoughtsintermsofhow
longyouthinkthecurrentspectrumallocationyouhavewillsuffice?Thanks.
JonFredrikBaksaas: Yes,goodmorningPatrick.Weacquiredsomemorespectruminthelastauction
thatwillcarryusfurther,butIthinkmaybemoreimportantlyishowtodothegotomarketand
thetotalendtoendplanningofthisbecausewearedoingthisdifferentlythanwehavedonein
any other market where we introduce this on light usage services, for example Facebook
withoutvideoandhighresolutionpicturesconsumesverylittledata;andweusethelateston
compressiontechnologyandUninorisworldclassanditisalsoutilisingthenetworkassets.So
thecombinationofall thesethreethingsmakesusthink it’sviabletocontinueonan internet
strategyatleastforthenext2,3,4yearsandUninorhasbrokenbarrierscontinuouslyonthisto
packagethisthisway.ThiswillalsohaveanopportunitytogothroughindetailwithUninoron
6thJuneonourinternetseminar.Justaremark,thisisthewaytosell internetinverylowcost
spectrumsmarket–thenyouhavetodoitcompletelydifferentlythanwe’vedoneitinEurope
and that’s where we see Telenor now in the front and where we see a big value creation
opportunityforTelenorgoingforward,soreallyforyoutounderstandthis Iencourageyouto
cometoourseminarinLondon.
MauricePatrick: Great,thankyou.
Page 21
Telenor ASA Q1 2014 Results
Page | 21 Ref 7880881 7 May 2014
MeeraBhatia: Timefortwomorequestionsplease.
Operator: OurnextquestioncomesfromAllanNicholsofMorningstar.Pleasegoahead.
AllanNichols: Hi.Malaysia, your subscribernumbersdeclined in thequarter. Is thatpurely just that
you have a lot of churn in the first quarter and you expect things to continue to grow going
forwardorwhatexactlyareyourexpectationsforMalaysiagoingforward?Thankyou.
RichardOlavAa: Firstquarterit’spurelyseasonal.ThetrendsinDiGiareverysteady,nochange.
AllanNichols: Thankyou.
MeeraBhatia: Nextquestionplease.
Operator: ThenextquestioncomesfromSasuRistimakifromMerrillLynch.Pleasegoahead.
SasuRistimaki: Yes,thanks.IwantedtoraiseorfocusontheNorwegianfixedlinesituationthatyouare
seeing quite a lot of increased competition from basically fibre providers and I was just
wondering how do you see that affecting the broadband pricing and do you have a specific
objectiveintermsofwhatshouldyourkindoffibreretailsharebein2015withyourinvestment
programme? Then tied into that at the moment you’re still seeing pretty strong ARPU
development on the TV product and again do you see any pressures on the pricing situation
there?Thanks.
JonFredrikBaksaas: You’re right that the main competitor comes out of the utility side, the
electricity sector and as the market stands there now we can roughly say all in all 340,000
roughlyhomesconnectedintheelectricitysectorandroughly90,000connectedonfibreinthe
Telenorspace,plusofcoursethatwehavearound600,000onConaxalready,sowearealready
veryvisible inbroadbandtothehomeandbroadbandtothebusinessandofcoursewearea
playerthatwillconsiderthisasanaturalinvestmentareaforus.Ifyouthencombinethethree
platformshere,theDSLwhichwillbegraduallyreducingbutstillnotdisappearingcompletely;
Page 22
Telenor ASA Q1 2014 Results
Page | 22 Ref 7880881 7 May 2014
andthenweaddonwithlowfrequency,thelowfrequencybrandinmobile,theConaxandthe
fibre deploymentwewill be a significantmarket player in broadband to everyone inNorway
longterm.Fromapriceperspectiveon fibrespecifically it’snotapricecompetitionreally, it’s
moreageographicalbuild-outcompetition.Whoiswherewhenageographyisreadytoreceive
this and as you know the geography in this country is fairly distributed, so some of this
geographyisverychallengingfromacostpointofviewtodowithbothfibreorConaxandthat’s
whytheoldDSLwillsurviveforaperiodoftimebutgraduallyalsobeingcompensatedbylower
frequencymobileserviceofferings.
MeeraBhatia: Thank you Fredrik. This was actually our final question so this concludes our session
today.Thankyouforyourparticipationandapologiesforthelittletechnicalmishapearlieron.
Thankyou.