Operating income in the first half of 1998 rose by NOK 1,665 million compared to the first half of 1997. This increase first and foremost reflects the positive development in network-based services. Price cuts for mobile and fixed network-based telephony are estimated to have reduced operating income by almost NOK 300 million in the first half of 1998 compared to the first half of 1997.
The Telenor Group's profit before taxes amounted to NOK 1,296 million, which is NOK 331 million more than in the same period last year. Associated companies contributed accounting losses of NOK 642 million. This reflects the fact that Telenor is now involved in several major international operations that are in a start-up or early operating phase. These engagements will, as previously assumed, generate accounting losses in the first years. According to independent valuations carried out by Elcon Securities and Kleinwort Benson, the international commitments, seen as a whole, have increased their value significantly.
In the first half of the year, the number of traffic minutes (telephony/ISDN) rose by 16 per cent compared to the same period last year. This more than compensated for the effect of falling market shares in the fixed network resulting from the growth in competition. Local traffic and traffic to mobile operators rose sharply. The Internet traffic growth rate is stable and this traffic now accounts for 16 per cent of local telephone traffic.
The mobile area continues to grow sharply, and the number of GSM customers rose by 167,000 in the first half of the year. At the end of the period, Telenor Mobil had 1,391,000 mobile subscribers, of which 1,038,000 were GSM customers. In addition to the sharp increase in the number of GSM subscriptions, the increase in the number of minutes called per customers also contributed to the positive development in the mobile area.
The reorganisation of Telenor Bedrift, aimed at improving cost-effectiveness and increasing profitability, is moving along as planned. Network-based services and IT-related activity contributed to higher income.
Telenor's directory business continues its positive development, with sales rising both at home and abroad. Traditional installation work also generated higher operating income.
In the first half of 1998, the Group invested NOK 4.3 billion, compared to NOK 4 billion in the same period last year. So far this year, NOK 1.8 billion has been invested in developing/upgrading the domestic telecommunications network, while other domestic investments totalled NOK 0.5 billion. Investments abroad totalled NOK 2 billion, first and foremost in the acquisition of ownership interests and in capital contributions to foreign mobile operations such as the German VIAG Interkom, the Austrian Connect Austria, and the Ukrainian Kyivstar.