The Telenor Group's operating profit for the 1st quarter of 1999 was NOK 810 million, an increase of NOK 36 million compared to the same period in 1998. Compared to the 1st quarter of 1998, the growth in turnover was just over 14 per cent and came primarily from network-based services such as fixed and mobile telephony and satellites.
A large part of the increase in turnover came from products with low profit margins, such as customer equipment and international wholesale telephony activities. The profit before taxes was NOK 445 million. This is NOK 48 million lower than in the same period last year, and is due to associated companies that are in a start-up or early operating phase.
Turnover in the 1st quarter of 1999 amounted to NOK 7,747 million, an increase of NOK 971 million compared to the same period last year. NOK 600 million of this increase came from network-based services, including satellite and mobile telephony. Sales of customer equipment, installation activity, and IT operations and service also contributed to the increase in turnover.
In the case of domestic telephony, particularly internet traffic and traffic to the mobile networks contributed to the growth. Telenor’s internet traffic accounts for 23 per cent of Telenor’s local traffic in the quarter compared to 15 per cent in the same period last year. Compared to the 1st quarter of 1998, there was a 13 per cent rise in the number of generated traffic minutes over the fixed network. By way of comparison, a rise of 16 per cent was registered for 1998 as a whole. The increase in mobile-generated turnover is due to a rise in the number of subscribers and the number of minutes called per subscriber compared to the 1st quarter of 1998.
A 4 per cent cut in mobile and fixed telephony prices reduced revenue in the 1st quarter by NOK 160 million compared to the same period last year.
At the end of the 1st quarter the number of GSM subscribers was 1,399,000. The net increase so far this year is 139,000, of which 119,000 subscribed to the prepaid service. At the end of the 1st quarter of 1999, the number of internet subscribers in the private market had reached 300,000, an increase of 40,000 since the turn of the year. There were also a large number of conversions from PSTN to ISDN during the 1st quarter of 1999. The number of PSTN lines fell by 74,000, while the number of ISDN lines increased by 139,000.
In the 1st quarter of 1999, associated companies had accounting losses of NOK 377 million, compared to losses of NOK 291 million in the 1st quarter of 1998. This reflects the fact that Telenor now is engaged in several major internationaloperations, the majority of which are linked to mobile operations that are in a start-up or early operating phase. The Group’s investments in fixed assets, long term shares and satellite organisations amounted to NOK 3.3 billion, which is NOK 1.3 billion higher than in the same period last year. Investments in development/upgrading of the domestic telecommunications network totalled NOK 0.8 billion.
Other domestic investments aggregated NOK 0.5 billion. Investments outside of Norway totalled NOK 2 billion. These were mainly investment in the Russian mobile company Vimpel Communications, made subject to approval by the Russian authorities, as well as capital contributions to the satellite organisations.
“Telenor expects growth in the future as well, despite pressure on margins and a tougher battle for market shares”, says Torstein Moland, Executive Vice President and Chief Financial Officer. “Increased competition implies greater uncertainty with regard to the financial result. Nevertheless, development in the domestic market, together with a higher level of activity in Telenor’s international associated companies shows that Telenor is keeping up a good pace and is well posited to meet new challenges as competition becomes increasing global and independent of traditional boundaries. This positive development will reduce prices on fixed network services”, says Moland.