Norway’s embattled telecoms firm Telenor reported fourth-quarter results on Wednesday that were so “disappointing,” according to analysts, that its share price fell more than 7 percent by mid-morning. The company logged a large pre-tax loss after taking heavy writedowns on troubled operations in Denmark.
Telenor’s fourth quarter, the first under the command of new chief executive Sigve Brekke, was characterized by massive turbulence within the company. The company, one of Norway’s biggest and still majority owned by the Norwegian state, was harshly criticized over how it has handled serious charges of corruption at its partly owned Russian mobile phone firm VimpelCom. Its chairman resigned under pressure after the government minister in charge of business and trade, Monica Mæland, said she no longer had confidence in him.
Shortly after that, four other top executives were suspended pending investigations into the corruption charges, and then Brekke himself was accused of embellishing his resumé and failing to include more women in his new management team. Public debate had flown for months at the time over the fact that despite Norway’s image as an egalitarian country, most of its major companies are still run by middle-aged white men.
Brekke, who also turned his back on Telenor’s former and also highly criticized CEO Jon Fredrik Baksaas, had seemed to be trying to begin his term as Telenor top boss by wiping the slate clean. That applied not least to the VimpelCom investigation but also now, it seems, to the quarterly results. While the company logged gains in overall operating revenues and income, the latter dipped within Norway (to NOK 6.72 billion from NOK 6.73 billion in the fourth quarter of 2014) and Danish operations haven’t been able to keep up with competition. Thus the writedowns in Denmark that left the company as a whole with a bottom-line loss for the quarter (of NOK 2.12 billion) and a year-end profit (NOK 3.41 billion) that was roughly a third of the result in 2014.
For Telenor’s own report of its results, click here (external link to the company’s earnings release).
Brekke put the best possible spin on results, claiming that its “organic” revenue and operating profit growth showed underlying strength in the company. He noted, however, that Telenor faced increased competition, especially in Denmark. Because of that, the “impairment loss” of NOK 2.1 billion was taken in the fourth quarter.
The website for newspaper Dagens Næringsliv (DN) reported that Brekke is also putting more pressure on Telenor’s Norwegian operations, demanding that the company “must be best in our home market.” He still sees growth potential in Norway, even though the company expanded internationally on the theory that the mobile phone market in Norway was already saturated. Brekke believes there also is more growth potential in Myanmar and Bangladesh, while operations in Myanmar and Thailand will be “challenging” in 2016.