Pre Q1 2013 estimates

Things to be aware of in connection with the pre Q1 2013 estimates:

Norway

The MTR was reduced by 20% (from NOK 0.20 to NOK 0.16) from 1 January. The previous MTR cut took place on 1 July 2012, with ARPU effect of NOK -5 in Q3 and Q4 2012.

Sweden

In March, Telenor Sweden announced a reorganisation implying outsourcing of customer service. A restructuring cost, estimated to NOK 15-20 million, will be booked in Q1 2013.

Denmark

The MTR was reduced by 65% (from DKK 0.23 to DKK 0.08) from 1 January 2013. The previous MTR cut took place on 1 March 2012. In Q4 2012 Telenor Denmark’s interconnect revenues amounted to DKK 150 million, 17% of total mobile service revenues.
A reorganisation was announced in March 2013, implying workforce reductions of 138 FTEs by April. Restructuring costs of approximately DKK 70 million will be booked as “other item” in Q1. In addition, 38 FTEs will be outsourced during 2013. Telenor Denmark also expects to reduce workforce by another 150 positions during the year by not re-hiring vacant positions. In total this implies a workforce reduction of around 13% during 2013.

Hungary

In the second half 2012, the EBITDA margin was impacted by two telecom taxes. The initial telecom tax introduced in December 2010 was removed on 1 January 2013. The new tax introduced in July 2012 was slightly increased from 1 January 2013, as some temporary caps have been removed.
The MTR was reduced by 25% from 1 January 2013. In Q4 2012 Telenor Hungary’s interconnect revenues amounted to HUF 5.9 billion, 16% of total mobile service revenues.
On 26 February 2013, the Supreme Court upheld the decision of the Budapest Court to cancel the EGSM 900 auction that took place in January 2012. The licences won and the amount paid for the spectrum will have to be returned (Telenor Hungary paid close to NOK 200m for 1.8 MHz paired spectrum). Final terms are not clarified.

Grameenphone

According to subscriber numbers from the regulator BTRC, Grameenphone gained 315k subscribers in January and 660k in February.
BTRC’s directive on 10 second billing (previous 1 minute) and removal of call set-up charges was implemented mid-September 2012. In Q4 2012 this was estimated to have around 3-4 pp negative effect on service revenues.

Pakistan

Telenor Pakistan lost 389k subscribers in January, according to subscriber numbers from the regulator PTA. Total sector declined by 1.1 million subscribers. The decline is explained by the temporary restriction on SIM sale through retail channels. As explained in Q4 2012, PTA directed all operators to establish a combined database to ensure maximum 5 SIM cards per CNIC (Computerized National Identity Card). This directive was implemented on 25 November. Sale of new SIM cards through retail outlets has been suspended until improved CNIC verification solutions are in place.
On four occasions in January, the Pakistani authorities ordered all mobile operators to block their networks in major parts of the country, for national security reasons.
In November 2012, Pakistani authorities introduced an International Clearing House (ICH) for international traffic. All international traffic has to go through this exchange. In Telenor Pakistan’s financial reporting for Q4 2012, this change resulted in reduced interconnect revenues and increased non-mobile revenues. As people are becoming increasingly aware of the price increase resulting from this change, this is expected to result in lower volumes.

India

The operation in Mumbai was shut down on 17 February. The shut-down costs are estimated at around NOK 50 million, and will be booked as “other item” in Q1 2013
According to subscriber numbers published by COAI, our remaining 6 circles saw a subscriber growth of 280k in January and 122k in February. Please keep in mind that these numbers are based on 60 days definition of active subscribers, whereas our financial reporting for the Indian operation applies a 30 days definition of active subscribers.
The new regulation on registration and activation of new SIM cards was implemented from November 2012
Investments will be booked as capex in 2013 (ie not expensed as in most of 2012)

Associated companies

On 6 March, VimpelCom reported its results for Q4 2012. The net income of USD 801 million included impairment (Wind Canada) of USD -328 million and adjustment of fair value (Euroset) of USD +606 million. The impairment and fair value adjustment have already been included in Telenor’s audited full-year results for 2012, as announced on 21 March. Hence, in Telenor’s Q1 2013 income statement, we will include our proportionate (35.7%) share of VimpelCom’s reported Q4 2012 net income, adjusted for the above mentioned items.

Tax

In Sweden, the corporate tax rate has been cut from 26.3% to 22% from 1 January 2013.
In Serbia, the corporate tax rate has increased from 10% to 15% from 1 January 2013.
In Thailand, the corporate tax rate was cut from 23% in 2012 to 20% in 2013
The expected effective tax rate for the Telenor Group in 2013 is around 26%

Net debt

In January, VimpelCom Ltd paid out a dividend of USD 0.80 per share, of which USD 0.35 was the final 2011 dividend and USD 0.45 the interim 2012 dividend. For Telenor this implied a total payout of USD 460 million (around NOK 2.6 bn).
During Q1, around 4.5 million own shares were repurchased at a total cost of around NOK 540 million.
DiGi and Grameenphone have paid out dividends of approx NOK 350 million and NOK 480 million, respectively (both on 100% basis).

Upcoming spectrum auctions (expected/indicated timelines):

800 MHz in Norway: Auction is estimated to take place in 2H 2013. In total 2×30 MHz will be auctioned, with spectrum cap of 2×10 MHz per operator. The 800 MHz auction will most likely be carried out in parallel with auction of 900 MHz and 1800 MHz spectrum.
3G on 2.1 GHz in Bangladesh: Licencing guidelines were published on 14 February. The date of licence application and auction has been set on 12 May 2013 and 24 June 2013, respectively. The winning operators will get minimum 5MHz and maximum 15 MHz spectrum. The reserve price will be USD 20 million per MHz.

MTR development

Norway

Sweden

SEK	Jul 10-Jun 11	Jul 11-Jun 12	Jul 12-Jun 13	Jul 13 -
	0.27	0.21	0.15	0.09

Denmark

DKK	May 11 -	1 March – 31 Dec 12	Jan 13 -
	0.33	0.23	0.08

Hungary

HUF	Dec 10-Dec 11	Jan 12-Dec 12	Jan 13-
	11.86	9.46	7.06

Malaysia

MYR		Jul 10-Dec 12	Jan 13-
		0.50	0.463

Other things…

Our silent period starts on 12 April.
DiGi and DTAC will report their Q1 2013 results on 23 April and 24 April, respectively. Grameenphone is expected to report its Q1 results on 25 April.