Norway’s Telenor Warns On Second Quarter Profit After Error At Grameenphone

Norwegian telecoms group Telenor said its second-quarter earnings would take a hit from “errors” discovered at Grameenphone GRAE.DH, its Bangladeshi telecoms division.

“Grameenphone has discovered some erroneous omissions with regards to sales, marketing and commission payments and associated costs relating to non-deductible expenses for prior periods,” Grameenphone said in is second-quarter earnings statement on Sunday.

“As a consequence, its sales, marketing and commission expenses and associated non-deductible costs were understated,” it added.

Telenor said this would mean taking a one-off loss in the second quarter of 2019 for the group as a whole, with its expectations for earnings before interest, tax, debt and amortization (EBITDA) lowered by 299 million crowns ($35.05 million).

Net profit guidance would be lowered by 622 million crowns ($72.91 million) in the quarter, Telenor added.

The company declined to comment further on Monday.

Telenor shares traded 0.4% lower at 0908 GMT while the Oslo benchmark index .OSEBX was down 0.2%.

“That one-off cost is not important, but it raises new questions – why did this happen, is there a risk that there could be more of this coming, or a risk that this could happen in other markets and so on,” said Stefan Billing, analyst at Kepler Cheuvreux. “This creates a bit of uncertainty.”

The Norwegian firm holds a 55.8% stake in Grameenphone, while Grameen Telecom holds 34.2%.

Telenor will publish its second-quarter results on Tuesday.―Reuters