Telenor Q3 gets surprise boost from one-off gain in Pakistan

Updated: Oct 26, 2022, 06:20 UTC

OSLO (Reuters) - Norwegian telecoms operator Telenor on Wednesday reported third-quarter core earnings above forecasts thanks to a one-off gain in Pakistan and reiterated that its full-year profit was expected to be in line with last year.

Illustration shows Telenor logo

OSLO (Reuters) -Telenor’s third-quarter core earnings came in higher than estimated due to a one-off gain in Pakistan, the Norwegian telecoms operator said on Wednesday, and also reiterated that it expects its full-year profit to be in line with 2021 levels.

Dented by soaring inflation and intense competition, the company’s shares have lost 35% year-to-date, closing at a 10-year low on Tuesday.

The operator, which has about 175 million customers in eight countries across the Nordic region and Asia, issued a profit warning for 2022 last month, citing spiralling energy costs.

“For the group, high energy prices, especially in Norway, Denmark and Pakistan, continue to be a headwind,” Chief Executive Officer Sigve Brekke said in a statement on Wednesday.

“However, the negative effects are, this quarter, countered by a reversal of SIM tax provision in Pakistan.”

The gain of 600 million crowns ($57.79 million) in Pakistan, one of Telenor’s four Asian markets, was linked to a court decision on the applicability of tax on mobile phone SIM cards for the period from 2014 to 2020.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for July-September rose 1.6% year-on-year to 13.06 billion crowns, while analysts on average had expected 12.51 billion crowns.

The one-off gain could help Telenor meet its annual goal of unchanged profit versus last year, it said.

The group maintained its investment forecast for the year, predicting capital expenditure would amount to 16-17% of sales, and reiterated that service revenue would see “low single-digit growth”.

“We see positive trends for mobile service revenue in the Nordic region, with a growth of 4% in the third quarter,” Brekke said.

Last month, the company announced a restructuring of its Nordic business and a potential listing of its Asian unit.

($1 = 10.3828 Norwegian crowns)

(Reporting by Victoria Klesty and Terje Solsvik; Editing by Stine Jacobsen and Sherry Jacob-Phillips)

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