Annual Report 2016

Download Annual Report 2016

Letter from the CEO

Value creation in changing times

Looking back at 2016, I am pleased to see what we have accomplished at a time when our industry is undergoing a fundamental shift to adapt to a digital world. We continued to grow revenues and delivered a record high EBITDA in 2016. We also made significant progress on network deployment throughout the year, supporting our customers’ increasing data usage spanning from Bangladesh and Pakistan to Sweden and Malaysia.

Digital services have become a core part of the lives of people everywhere in the world. In all of our markets, our customers spend multiple hours per day on their mobile handsets. They expect the mobile network to keep them constantly connected. We also observe how our customers, from Myanmar to Norway, are more similar than different in how they consume and leverage digital content and tools. Increased digitisation also entails an opportunity to review our cost base, through among others increased use of automation and analytics.

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Sigve Brekke, CEO

We have a solid foundation with a good mix of assets, solid market positions and scale we can leverage going forward, in a globalized and digital future. This world represents new opportunities as mentioned above and also includes growth opportunities in digital areas adjacent to the core telecom business. We have set out our direction towards 2020 and we will focus on executing on it.

Summary of the year

Highlights 2016

Letter from the Chair

To Empower Societies

Telenor has adopted a powerful vision: to empower societies. The internet is the platform upon which the world can integrate and advance the way we live, work, learn, share and solve global challenges for this generation, the next generation and the generations to follow. We aim to secure this future for the many, and not only the few.

This vision can only be achieved if we deliver great customer experiences, create value for shareholders, develop our employees and support societies, all through sustainable business conduct. In 2016, Telenor took important steps toward our vision by refining our strategy and making difficult prioritisations, while also strengthening Telenor’s governance and compliance framework.

2016 was also a year when challenging issues were dealt with and brought to conclusions – with learnings taken.

I would like to express my thanks to the employees of Telenor for significant efforts and achievements in a challenging 2016.

In 2016, Telenor took important steps toward our vision by refining our strategy and making difficult prioritisations, while also strengthening Telenor’s governance and compliance framework.

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Gunn Wærsted, Chair

Financial Achievements

Key Figures

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(NOK in billions) 2014 2015 2016
Revenues 111.4 128.2 131.4
Organic revenue growth (%) 3% 5% 1%
EBITDA before other income and other expenses 38.5 44.2 46.5
EBITDA before other income and other expenses/Revenues (%) 34.5% 34.5% 35.4%
Profit after tax and non-controlling interest 9.1 3.4 2.8
Capex excl. licences and spectrum/Revenues (%) 15.6% 18.4% 17.3%
Capex/Revenues (%) 20.7% 19.7% 20.0%
Mobile subscriptions – total (mill.) 182 203 214

Telenor’s Impact on the Economy and Society

Our Global Impact

In 2016, Telenor commissioned KPMG United Kingdom Plc (KPMG) to conduct an independent study assessing a number of the economic and social impacts we have across our 13 markets in which Telenor directly operates. The report “Telenor’s Global Impact” was published in December 2016, reflecting figures from 2015. Below are some of the highlights from the report.

Research & Innovation

Innovation that makes a difference

Telenor spent NOK 2.8 billion in 2016 on innovation in new infrastructure, services and processes, of which NOK 0.6 billion were costs related to research and development. The acquisition of Tapad strengthened Telenor’s innovation activities within services in 2016. In comparison, the total spend on innovation was NOK 3.4 billion in 2015, of which NOK 0.5 billion were costs related to research and development.

Artificial IntelligenceTelenor launched the Digitise Norway initiative in 2016 to support entrepreneurship and competence building in Norway. In collaboration with the Norwegian University of Science and Technology (NTNU), Telenor will establish a lab within Artificial Intelligence (AI) and Big Data at NTNU in Trondheim. Telenor will also roll out a dedicated, nextgeneration IoT network in selected Norwegian cities. Startups and students will get cost-free access to this network. Telenor also became a core member of Digital Norway – Toppindustrisenteret AS, a new arena for cooperation.

Joint Innovation and Strategic CollaborationTelenor continued to explore and verify solutions for improved customer experience and better efficiency, through joint innovation and strategic collaborations. These
included: emerging mobile technologies such as spectrum efficient mechanisms, advanced antenna/coverage, small cell utilisation, flexible high-capacity backhaul, cloud/virtualisation, Internet of Things, and 5G preparedness.During 2016, Telenor continued to build relationships with world leading institutions, including Harvard, Massachusetts Institute of Technology (MIT) and the EU through the Horizon 2020 programme. Read more