1998 Preliminary results for the Telenor Group

Preliminary results for 1998, show operating income of NOK 28,380 million for the Telenor Group. This is approximately 11 per cent more than the previous year. Operating profits increased with NOK 1,081 million to NOK 3,847 million. Profit before taxes increased with NOK 592 million to a total of NOK 2,057 million. Senior Vice President Torstein Moland has commented that ” Telenor is satisfied with the net result for 1998. This result reflects a very strong increase in fixed network, mobile telephony as well as satellite communications. Our net result has also been affected by NOK 800 million in price reductions made by Telenor in 1998. “

Published: 22 February 1999 11:00

Fixed network-generated traffic increased by 16 per cent from 1997 to 1998. The greatest increases were in local traffic and mobile telephony. Increases in local traffic can be attributed by and large to internet based traffic. Toward the end of 1998, this internet traffic represented nearly 20 per cent of all local traffic. At the same time we have registered an increase in mobile telephony both as the result of increased number of subscribers and prolonged subscriber use of the telephone. Telenors satellite services have also made a strong contribution to the increase in operating income for 1998.

At year end Telenor Mobil had 1,260,000 GSM subscribers. This is an increase for 1998 of 389,000 subscribers. NMT subscribers on the other hand sank by 77,000 to a total of 311,000. A total of 260,000 internet subscribers represented a growth of 95,000 during 1998. More customers are converting from PSTN to ISDN. The total number of PSTN lines have decreased by 157,000, while ISDN lines have increased with 358,000.

Telenor had in 1998 an 11.7 per cent return on capital employed 1997 showed returns of 10.6 per cent on capital employed. The total interest-bearing debt was NOK 11.4 billion, which is NOK 2.2 billion more than the year before. The equity ratio was 44.2 per cent against 44.7 per cent at the end of 1997.

The dividends for 1997, paid out in 1998 amounted to NOK 570 million.

The national budget for 1999 has assumed NOK 675 million in dividends for 1998.

At the end of 1998, Telenor had registered a total of 20,200 man-years, against 19,600 for the previous year. Of this total, 2,500 were in service outside of Norway.

The Telenor Groups totalt investments for 1998 represented NOK 9.3 billion. This is NOK 0.4 million more than was invested in 1997. Of this total NOK 3.6 billion were invested outside of the Norway. Within the country a total of NOK 3.8 billion were put to work in further expansion and upgrading of the existing telephone network. Other investments in Norway accounted for NOK 1.9 billion.

Foreign activities

In 1998 investments outside of Norway were primarily in the areas of mobile telephony operations and the launch of a new satellite (THOR III). Associated companies showed in 1998 accounting losses of NOK 1,391 million, against losses of NOK 685 milllion in 1997. With the opening in 1998 of mobile telephony networks in Germany, Austria, Greece and the Ukraine Telenor now has 11 mobile operations at work outside of Norway.

At the turn of the year 1997/98, the HSBC Investment Bank made an estimate of the value of Telenor International and estimated the value of its operations to be somewhere between NOK 12 billion and NOK 18 billion, while the invested capital (paid-in share capital and interest-bearing debt) represented NOK 6.4 billion at the end of the year. Recently HSBC made a similar estimate at the turn of the year 1998/99 and now the value was estimated to be in the range of NOK 22 billion and NOK 35 billion, while invested capital at December 31, 1998 amounted to NOK 9 billion. This increase in estimated value is related to the market pricing of listed mobile companies, the fact that all mobile operations now have been commercially launched and that the development in several of the operations is more positive than previously assumed.