Telenor ASA (TELNF) Q2 2024 Earnings Call Highlights: Strong Revenue and EBITDA Growth Amidst ...

GuruFocus News
4 min read

In This Article:

  • Revenue Growth: Group service revenues grew by 4.5% in Q2.

  • EBITDA Growth: EBITDA increased by almost 4% in the second quarter.

  • Free Cash Flow: Generated NOK2.2 billion in Q2, totaling NOK5.5 billion year-to-date before M&A.

  • CapEx on Sales: Group CapEx on sales was 15%.

  • Operating Expenses: OpEx increased by 3.7% year-over-year, driven by energy cost increases in Asia.

  • Nordics OpEx: Delivered flat OpEx in the Nordics for the quarter.

  • Net Income: Earnings per share (EPS) was NOK1.83, more than three times higher than the same period last year.

  • Net Leverage Ratio: Stood at 2.3x with net interest-bearing debt at NOK83 billion.

  • Dividend Payments: Paid NOK6.9 billion in dividends and completed a share buyback program.

  • Service Revenue Outlook: Raised 2024 service revenue outlook to low to mid-single-digit growth.

Release Date: July 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Telenor ASA (TELNF) reported a 4.5% growth in group service revenues and nearly 4% growth in EBITDA for the second quarter.

  • The Nordic transformation is progressing well, with flat OpEx and expectations of a slight reduction by the end of the year.

  • In Asia, True in Thailand is showing strong growth and synergy realization, with expectations of dividend payments in 2025.

  • Telenor ASA (TELNF) has launched a new cybersecurity offering in Norway, strengthening its market position in digital security.

  • The company has a strong balance sheet with a net leverage ratio of 2.3x, maintaining financial stability.

Negative Points

  • Operating expenses increased by 3.7% year-over-year, primarily due to rising energy costs in Asia, particularly in Pakistan.

  • Inflation remains a challenge in Asian markets, impacting EBITDA growth in regions like Pakistan and Bangladesh.

  • The Amp business unit continues to face gross margin headwinds and growth costs, causing a drag on group-level growth.

  • There is uncertainty around the exact timing of the Pakistan divestment, which could extend into 2025.

  • Despite strong performance, there is increasing competition in the large enterprise and public segments in Scandinavia, leading to some ARPU erosion.

Q & A Highlights

Q: Can you provide an update on your strategy for Asian ownership and whether there are plans to shift ownership positions in 2024? A: Our main focus in Asia is on delivering synergy ambitions in Malaysia and Thailand, finalizing the exit in Pakistan, and capitalizing on data growth in Bangladesh. We are exploring structures to increase optionality, including potential partnerships and IPOs, but these discussions take time. We will update when there is concrete progress. - Sigve Brekke, CEO

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