Telenor said its underlying sales growth slow in the second quarter but maintained its full-year outlook for growth. On an organic basis, subscription and traffic revenues increased by 0.4 percent in Q2, compared to 1 percent growth in Q1 and a full-year forecast for 1-2 percent growth. Total reported revenues were still down 3 percent to NOK 27.485 billion, hurt by negative currency effects.
Telenor said it saw improved growth in Bangladesh, Malaysia and Pakistan in Q2, offset by a decline in Thailand. Year to date, organic subscription and traffic revenues grew by 0.7 percent. The results exclude its activities in India and eastern Europe which are up for sale.
Adjusted EBITDA fell 2.6 percent to NOK 11.300 billion, but grew 0.5 percent on an organic basis. Telenor still expects organic growth in adjusted EBITDA of 2-3 percent over the full year 2018. The EBITDA margin was up slightly to 41.1 percent from 41.0 a year ago, after a NOK 0.5 billion reduction in operating costs in Q2. Cost reductions reached NOK 1.2 billion in the year to date, led by efficiency efforts in Thailand and Scandinavia.
The net result moved to a profit of NOK 2.628 billion from a loss of NOK 167 million a year ago. Adjusted for effects last year related to the sale of shares in Veon and the disposal of online classifieds assets in Latin America, net profit fell by NOK 1.3 billion, primarily due to forex losses during the quarter.
The same one-time items, as well as higher tax payments, led to a drop in free cash flow to NOK 3.012 billion from NOK 9.947 billion a year ago. Telenor also continued its share buyback during Q2, spending NOK 2.7 billion to buy back over 16 million shares held by the Norwegian state.
Capital expenditure, excluding licences, totaled NOK 3.4 billion, dropping to 12.4 percent of revenue from 14.6 percent a year ago. Telenor maintained its adjusted capex budget for the full year at NOK 17-18 billion.
The company added 2 million new mobile subscriptions during the quarter, raising the total subscription base to 172 million. The main contributors to the subscription growth were Bangladesh and Pakistan, adding 1.7 million and 0.6 million respectively. This was partly offset by losses of 0.2 million in Thailand and 0.1 million in Malaysia. The share of active data users in the subscription base increased to 54 percent. – Telecompaper