Telenor Q2 net profit down on impairment losses - Telecom

Norwegian telecom operator Telenor ASA Thursday said second-quarter net profit fell on heavy impairment losses, but Ebitda improved, indicating a solid performance in core markets despite the economic downturn. "The trends from the first quarter of 2009 continued into this quarter, with a challenging business environment also affecting the telecom sector," Chief Executive Jon Fredrik Baksaas said. "In spite of pressure on the top line development our operations are improving their performance, resulting in a record high operating cash flow," he said. Telenor posted a 1.38 billion Norwegian kroner ($220 million) net profit for the three months to June 30, down from NOK3.54 billion the year before and below analysts' expectations for NOK2.15 billion. The result was hit by impairment losses of NOK1.97 billion on goodwill in Telenor Serbia. However, the closely-watched earnings before interest, taxes, depreciation and amortization, or Ebitda, increased to NOK7.82 billion from NOK7.33 billion, ahead of expectations for NOK7.54 billion. "Grameenphone in Bangladesh and Mobile Norway are delivering a particularly strong quarter, both in terms of revenue growth and margins," Telenor said. Telenor provides voice, data, content and other communication services in 13 countries across Europe and Asia. The report comes after Telenor's Swedish rival Tele2 AB Wednesday posted a consensus-beating second-quarter result, boosted by strong sales growth and customer intake on the Russian market. Telenor said it expects 2009 organic revenue in line with 2008, although "on the negative side". It previously guided for revenue in line with 2008. It cut its outlook for capital expenditure as a proportion of revenue to 13%-15% from 15%-17%, in line with peers who are trimming costs to preserve cashflow. Second-quarter sales increased 3% to NOK24.51 billion, marginally missing expectations for NOK24.77 billion. Operating profit fell to NOK1.96 billion from NOK4.0 billion. Net cash flow from operating activities came in at NOK8.87 billion, up from NOK5.88 billion the year before. Profit from associate companies was NOK1.57 billion, down from NOK1.85 billion a year ago. The first-half result from associated companies was hit by foreign-exchange losses on the loan portfolio of Russian mobile operator Vimpel Communications, Telenor said. Telenor said it expects Unitech Wireless, meanwhile, to launch services in five circles in India. Source totaltele.com