Telenor third quarter: Restructuring and cost reductions

Telenor's revenues in the third quarter were NOK 12,210 million, which is an increase of 21 per cent or NOK 2,146 million compared to the same period in 2001. Revenues increased in the first nine months by NOK 5,664 million, or 19 per cent, to NOK 35,784 million compared to the same period last year.

Despite the increase in revenues, Telenor reports a loss before taxes and minority interests of NOK 105 million in the third quarter. This figure includes write-downs of NOK 738 million, which are primarily related to the restructuring of managed services in Telenor Business Solutions. For the first nine months the profit before taxes and minority interests was NOK 309 million.

Telenor's third quarter results for 2002 are characterised by restructuring and a focus on cost reductions as a result of the decline in the domestic growth. The group programme Delta 4, of which the aim is to reduce the cost base by NOK 4 billion gross by the end of 2004 compared to 2001, is proceeding according to plan. Total savings of approximately NOK 700 million had been achieved by the end of the third quarter and by the end of the year the cost reductions will be around NOK 1 billion. Notice has been given of workforce reductions of approximately 1,500 man-years in 2002 (not counting EDB Business Partner).

EBITDA (operating profit before depreciation, amortization and write-downs) increased in the third quarter by 79 per cent to NOK 3,767 million. For the first nine months, EBITDA was NOK 9,879, which is an increase of NOK 2,977 million or 43 per cent compared to the same period last year.

The operating profit increased in the third quarter by NOK 2, 400 million to NOK 488 million compared to the same period in 2001. So far this year, the operating profit has increased by NOK 3,016 million to NOK 1,781 million compared to the same period in 2001.

Net interest-bearing liabilities at the end of the third quarter was NOK 27.6 billion. This figure includes NOK 2.4 billion in tax liabilities concerning Sonofon.

The business area Telenor Mobile had a total EBITDA in the third quarter of NOK 2,107 million, which is an increase of 83 per cent compared to the same period in 2001. At the end of the third quarter Telenor's pro rata share of mobile subscriptions, including Norway, was 11.6 million. The EBITDA margin in the Norwegian mobile operations increased by three percentage points to 44.1 per cent. The average revenue per user (ARPU) in Norway increased to NOK 359 in the third quarter this year.

Telenor Networks had an EBITDA margin excluding gains and losses of 36.6 per cent in the third quarter, which is an increase of 1.6 percentage points compared to the same period in 2001. A continued weak market for IT-related activities has affected the result for Telenor Business Solutions. In Telenor Plus, Broadcast showed a positive development compared to the third quarter in 2001, while costs primarily linked to ADSL have affected the result. Canal Digital was consolidated from 30 June, 2002.

"In a phase where the growth in the domestic market is flattening off and the increase in costs in 2001 was stronger than the revenue growth, it is necessary for Telenor to adapt to the market in order to remain competitive. We have therefore strengthened our focus on cost reductions in order to improve profitability and increase our margins. This is why we are undertaking workforce reductions for the whole year of more than 1,500 man-years not counting EDB Business Partner," said President and CEO Jon Fredrik Baksaas.

Full report and presentations are available at www.telenor.com