Telenor third quarter 1998

Press release
5 minute read
The Telenor Group's operating income at the end of the third quarter of 1998 amounted to NOK 20,697, which is a good 12 per cent more than in the same period last year. Profit before taxes at the end of the third quarter amounted to NOK 1,963 million, or NOK 324 million more than in the same period in 1997. "Continued strong growth in the market for network-based services, including satellite operations and mobile telephony, contributed to higher operating income. We expect this growth to continue throughout the remainder of the year and into 1999", says Torstein Moland, E.V.P. and Chief Financial Officer.
Consolidated operating income in the first three quarters of 1998 rose by NOK 2,258 million compared to the same period in 1997. This increase first and foremost reflects the positive development in network-based services. Income growth has been lower than the growth in volume. This is due to price reductions and the fact that a larger proportion of the traffic has been generated at reduced rates. In all, the price of mobile and fixed network telephony has been reduced so far this year by the equivalent of NOK 400 million compared to the same period last year. Fixed network prices will be reduced even more from 1 November. These reductions will have an estimated annual effect equivalent to NOK 300 million. The price pr minute of long distance calls in Norway will be cut by 20 per cent, while the cost of calls to some countries, such as USA, Sweden, and the United Kingdom will be reduced by up to 22 per cent.

The Telenor Group's profit before taxes amounted to NOK 1,963 million, which is NOK 324 million more than in the same period last year. This result includes sales gains of approximately NOK 380 million. So far this year, associated companies have contributed a consolidated accounting loss of NOK 1,074 million, reflecting the fact that Telenor is now involved in several major international operations that are in a start-up or early operating phase. Five new mobile networks were opened this year, two of them, Viag Intercom in Germany and Connect Austria, in October.

The number of traffic minutes for telephony/ISDN continues to rise. In the first nine months of the year, traffic rose by more than 16 per cent compared to the same period last year. This growth more than compensated for the effect of falling market shares in the fixed network resulting from increased competition. Local traffic and traffic to mobile operators grew most. The Internet accounted for 17 per cent of local telephone traffic at the end of the third quarter.

The mobile area continues its positive development. Traffic in the mobile network is increasing both as a result of a growing number of subscribers and a rise in the number of minutes called per customer. At the end of the third quarter, Telenor Mobil had 1,467,000 mobile telephone subscribers, 1,134,00 of them with GSM subscriptions.

The positive development of Telenor Bedrift continues, with rising operating income from network-based services and IT-related activities.

In the first nine months of 1998, the Group invested NOK 6.3 billion, which is on a par with the preceding year. NOK 2.5 billion has been invested in developing/upgrading the domestic telecommunications network, while other domestic investments so far this year total NOK 0.8 billion. Investments abroad were first and foremost in the acquisition of ownership interests in and capital contributions to foreign mobile operations, and in satellites (Thor III)