Markets
- The Nordic region
THE mobile market
Telenor in Norway
Telenor’s wholly owned Norwegian mobile operation is the country’s leading provider
of mobile communications services. Telenor offers a broad range of digital services
to the Norwegian corporate and consumer markets and has extensive experience
from providing mobile services and operating mobile communication networks in
Norway.
Telenor currently holds three GSM licenses in Norway (two GSM 900 licenses and one GSM 1800 license). As Nordic Mobile Telephone - 450 (NMT-450) was shut down on 31 December 2004, Telenor increased its GSM coverage along the Norwegian coast and in certain mountainous regions by utilising extended cell technology, which more than doubles the range of coverage. Telenor’s GSM network currently covers 99.8 per cent of Norway’s population.
Telenor first launched UMTS services in Norway on 1 December 2004. As from 1 March 2006, Telenor’s UMTS coverage extended to approximately 70.6 per cent of the population. Pursuant to instructions from the Norwegian regulator, Telenor is required to provide UMTS services to approximately 3.75 million people (approximately 80.9 per cent of the population) in Norway by 1 March 2007.
Telenor is Norway’s leading provider of digital mobile telephony services, and although Telenor will continue to develop its non-voice services, it is anticipated that the bulk of Telenor’s revenues will continue to come from voice services. Telenor is therefore committed to improve the quality of existing services as well as develop new voice services to meet the needs of retail customers in all segments.
The Norwegian mobile market is highly developed and competitive. Following the introduction of mobile number portability in November 2001, the mobile market has seen increased levels of churn, consolidation among service providers, and many players have stepped up their marketing efforts. In recent years, Telenor’s marketing and distribution efforts have become increasingly segment-oriented. During 2005, Telenor continued to focus on reducing churn, with special emphasis on its most valuable customers, implementing various ‘‘hold-back’’ and ‘‘win-back’’ activities such as price reductions and simplified mobile subscription plans. Other marketing initiatives have focused on improving network quality and customer service.
Sonofon in Denmark
Telenor’s wholly owned subsidiary, Sonofon, is Denmark’s number-two operator,
with an estimated market share of 26.6 per cent. Sonofon currently holds three
GSM licenses, and in December 2005, it also acquired a UMTS license at a price
of NOK 574 million. Under the terms of the UMTS license, network coverage must
exceed 30 per cent of the Danish population by 2009, and 80 per cent of the
population by 2013.
Sonofon offers regular voice services as well as value-added non-voice services to the consumer and business markets. Non-voice services include SMS and MMS, mobile Internet access via WAP, as well as various content services. Content provided exclusively to Sonofon subscribers, pursuant to arrangements with partners, is an important point of differentiation between Sonofon and its competitors. Sonofon plans to launch 3G services to business consumers in a number of Danish key cities during 2006.
Sonofon will defend its position as Denmark’s number-two mobile operator by offering a range of simple and user-friendly products and services. During 2005, the company stepped up its efforts to increase monthly average revenue per user (ARPU) as well as monthly average minutes per user (AMPU), and reduce churn. Sonofon’s initiatives, including packaged offers and flat-rate products have contributed to significant growth in traffic during 2005.
The Danish youth segment is becoming increasingly important to Sonofon. Emphasis is on marketing competitive web-based products and services. At the outset of 2006, Sonofon introduced several special package solutions aimed at the youth segment.
Telenor in Sweden
Following the acquisition of Vodafone’s Swedish mobile operation, Telenor is
now the third largest mobile operator in Sweden, with 1.7 million subscriptions
and a market share of approximately 17 per cent. Vodafone Sweden was acquired
on 31 October 2005, at a price of NOK 8,170 million including assumed debt,
and the acquisition was completed on 5 January 2006. Telenor expects to achieve
full integration of Vodafone Sweden and Telenor Mobile Sweden during the first
half of 2006.
The acquisition has increased Telenor’s Scandinavian mobile customer base by approximately 39 per cent, bringing the total number of subscriptions up to 5.7 million by year-end 2005. The acquisition also strengthens Telenor’s presence in the business segment, and Telenor registers an increasing demand from key business customers demanding seamless communications solutions across the Nordic countries. Under an agreement between Telenor and Vodafone Sweden, Telenor’s customers will enjoy access to various Vodafone products and services in the Swedish market.
Telenor Mobile Sweden is positioned as an innovative, quality operator providing simple and user-friendly products and services at a low cost. In addition to voice services, Telenor Mobile Sweden offers data services such as SMS and MMS, as well as content services based on premium SMS, and Internet access via WAP.
At year-end 2005, Telenor Mobile Sweden had approximately 95,000 subscriptions (a reduction from approximately 105,000 subscriptions at year-end 2004). Telenor Mobile Sweden estimates that its overall market share, at year-end 2005, was one per cent. Vodafone Sweden had approximately 1.6 million subscriptions and a market share of approximately 16 per cent at year-end 2005.
The fixed network market
Fixed Norway – Residential
Telenor provides voice services on a traditional public switched telephone network
(PSTN), an integrated services digital network (ISDN) and via broadband Voice
over Internet Protocol (VoIP). Telenor also provides narrowband (PSTN/ISDN)
and broadband (xDSL) Internet access and services to households across Norway.
At year-end 2005, Telenor had approximately 922,000 PSTN subscriptions, 286,000
ISDN basic rate access subscriptions, and 24,000 VoIP subscriptions for telephony
services. Telenor also had 579,000 Internet access subscriptions in the residential
market, comprising 165,000 narrowband (ISDN/PSTN) subscriptions and 414,000
broadband (xDSL) subscriptions.
Fixed Norway – Business
Telenor provides its business customers, which include a number of public sector
entities, with PSTN, ISDN and VoIP telephony services, Internet access via xDSL
and leased lines services. At year-end 2005, Telenor had approximately 167,000
PSTN subscriptions, 216,000 basic rate and 7,000 primary rate ISDN subscriptions
as well as 1,600 VoIP subscriptions for telephony services. Telenor also had
61,000 subscriptions for Internet access via xDSL in this market. In addition,
Telenor provides integrated voice and data communications solutions, access
and network services to the Norwegian business market.
Fixed Norway – Wholesale
Telenor provides a range of interconnection and capacity services, including
leased lines, in the Norwegian market. Telenor’s interconnection and capacity
services allow other network operators, Internet service providers and other
service providers to connect to our network or use our infrastructure in order
to facilitate their own service offerings. Telenor also offers unbundled telephony
access (PSTN and ISDN) and xDSL access to other operators and service providers.
Further, Telenor provides local loop unbundling (LLUB) and shared access to
the local loop, which enables other operators to provide end-users with broadband.
Fixed Sweden
Telenor provides telephony, IP-based and data communication services and advanced
network services to the business and wholesale markets in Sweden through the
group’s wholly owned Swedish subsidiary Utfors AB. As from July 2005, Telenor
provides high-speed Internet, VoIP, IP-TV and add-on broadband services to the
Swedish residential market through the wholly owned subsidiary Bredbandsbolaget,
which had approximately 369,000 subscriptions (a 20 per cent market share),
at year-end 2005.
Fixed Denmark
As from July 2005, Telenor provides broadband solutions and network-based products,
such as security and VPN products for residential and business customers, through
its Danish broadband provider Cybercity. Cybercity serves small, medium and
large business customers as well as residential customers. As year-end 2005,
Cybercity had approximately 122,000 xDSL customers.
The TV market
Telenor is the leading provider of television and broadcasting services to consumers
and enterprises in the Nordic region. Telenor also operates the national terrestrial
broadcast network in Norway and is the leading provider of satellite broadcasting
services in the Nordic region, utilising three geostationary satellites. Telenor’s
key objective is to further strengthen Broadcast’s position in the Nordic region.
In June 2005, Canal Digital, in partnership with the Norwegian broadcaster TV2, acquired the rights to distribute Norwegian elite football on TV, broadband Internet and 3G mobile, at a price of NOK 1 billion.
At year-end 2005, Telenor had more than three million subscribers to its different television services, consisting of 906,000 pay-TV subscribers and 222,000 basic tier households on DTH, 681,000 cable TV subscribers, 33,000 DTT pay-TV subscribers and 1,177,000 households in SMATV networks. During 2005, Telenor’s distribution activities generated external revenues of NOK 4.6 billion. More than 50 per cent of Telenor Broadcast’s Nordic distribution revenues are currently generated outside Norway.
In Sweden, the government commenced the shutdown of analogue terrestrial TV in September 2005. Between 100,000 and 200,000 households were directly affected by this shutdown in 2005. As affected households migrate from analogue TV reception to digital reception via cable, DTH or DTT, the major operators in the Swedish market expect a surge in subscriber growth.
In Norway, Norges Televisjon (NTV), which is jointly owned by Telenor and the Norwegian broadcasters NRK and TV2, is the only applicant for a DTT license. The rollout of the DTT network is planned to commence within six months after such license is awarded. If, as expected, a licence is awarded during 2006, final shutdown of the analogue terrestrial network in Norway is expected towards the end of 2008.
Telenor also provides transmission services for broadcasters through Telenor Satellite Broadcasting and Norkring. Telenor Satellite Broadcasting owns and operates satellite transmission capacity on the satellite position 1-degree west, and is the largest Nordic provider of commercial satellite services for transmission of television and radio programmes.
In the third quarter of 2005, Telenor Satellite Broadcasting entered into an agree ment for the acquisition of a new satellite to replace the Thor II satellite, at a price of NOK 1.2 billion. Telenor will take possession of the new satellite towards the end of 2007.
Telenor’s wholly owned subsidiary Norkring owns and operates analogue and digital terrestrial radio and television transmission systems in Norway. Norkring provides analogue services to two nationwide television broadcasters, the national broadcaster NRK and the commercial channel TV2, several national radio broadcasters and a number of local television and radio stations.
Telenor’s wholly owned subsidiary Conax offers conditional access systems that enable broadcasters and content providers to encrypt their digital services. At yearend 2005, Conax had sales and support staff in India, Singapore, China, Brazil and Germany, and customers in more than 40 countries.