Telenor's star dims slightly after guidance cut
By Balazs Koranyi and Joachim Dagenborg
OSLO (Reuters) - Mobile phone operator Telenor cut its 2013 revenue guidance on Thursday on weakness in some key Nordic markets, sending its shares down 4.5 percent from an all-time high, as the sector's star performer delivered a rare negative surprise.
Norway-based Telenor, which has around a 150 million subscribers across Europe and Asia, now expects revenues to rise just 1 to 2 percent this year, below an earlier target for 2 to 4 percent, disappointing investors who were already sceptical and expected a figure closer to 2 percent.
Delayed sales of Apple's iPhones also contributed to the disappointment as did Thailand, where revenues came short of forecasts, the firm said.
Telenor has been among the top performing European telecom stocks in recent years because of its focus on the relatively healthy economies of the Nordics and southeast Asia, and as it successfully boosted earnings from rising data traffic.
But the stock was the worst performed among Europe's major telecom stocks as investors started to price out its premium and adjusted for more modest growth, beating down a stock that has hit several new record highs this month.
"Despite the weaker revenue guidance, the third quarter result provides good evidence that Telenor is delivering EBITDA and cash flow growth well beyond its incumbent peer group," Nomura said.
The stock trades at a 2013 enterprise value to EBITDA ratio of around 7, ahead of European peers' 5.2, according to Thomson Reuters data. The stock is up 9 percent over the past three months, underperforming a 16 percent gain by the European telecom index. But its among the top performer over the past year with gains of more than 30 percent.
State controlled Telenor added that its third quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 9 percent to 9.62 billion crowns (1.02 billion pounds), coming ahead of forecasts for 9.54 billion crowns.
"Even though the revenues came in somewhat lower than expected, the underlying trends remain strong. But our ambitions were higher then what we were able to deliver, especially in Norway and Sweden," Chief Financial Office Ricard Aa said.
But Telenor said its costs, already seen as tightly controlled, would be held down and its EBITDA margin would hit its 34 percent target as planned.
"Telenor's operating performance still belongs to the best of class in the telecom sector given at least some top-line growth and still strongly improving profitability," UniCredit said.
Continuing its expansion, Telenor said it planned to finalise its license in Myanmar before the end of the year and plans to start up operation in mid-2014.
(Reporting by Balazs Koranyi, editing by Elizabeth Piper)
