Telenor shares have jumped to the highest level in 18 months after the Norwegian telecoms company beat expectations in the second quarter and unveiled a new share buyback. The company, which owns telecoms companies in Scandinavia, Eastern Europe and emerging markets including Thailand and Bangladesh, said that revenue for the second quarter increased to NKr31.4bn ($3.84bn) from NKr30.9bn.
Its earnings before interest, taxation, depreciation and amortisation increased to NKr13bn from NKr11bn, an 18 per cent rise, as cost cutting boosted profitability. That pushed the share price 8 per cent higher in early trading to NKr15.6, the highest level since late 2015.
The recovery signals the end of a tough period for Telenor. Its finance director and general counsel resigned last year amid a corruption scandal related to its stake in a Russian rival.
Telenor has since sold down its holding in Veon, previously called VimpelCom, which has funded the new share buyback equivalent to 2 per cent of its stock. Telenor, which is 59 per cent owned by the Norwegian state, was also forced to abandon a merger in Denmark with Swedish rival TeliaSonera in 2015 due to opposition from European competition regulators. It also exited the Indian market this year after selling its assets to Bharti Airtel.
The company said that further cost cutting would be necessary in the coming years. Sigve Brekke, chief executive of Telenor, said:“With rapid changes in customer behaviour and technology advances, continued cost reductions will be necessary in the coming years.”
Ulrich Rathe, an analyst with Jefferies, said:
Telenor delivers visible cost benefits in second quarter, earlier than we would have expected. There are areas of uncertainty into 2H such as the changing cost structure in Thailand and the impact of roam-like-home on Nordic operations. Still, an 8 per cent underlying beat to second quarter EBITDA consensus is a show of strength.