Telenor posts strong 2010, upbeat on 2011

OSLO: Norwegian telecoms operator Telenor on Tuesday reported soaring profits for 2010, despite a slight dip in the fourth quarter, and said it expects the good results to continue this year.

For 2010, Telenor's net net profit jumped 65.7 percent to 14.3 billion kroner (1.8 billion euros, $2.47 billion) on sales of 94.8 billion kroner, up from 90.7 billion kroner in 2009.

The company said its earning before interest, taxes, depreciation, and amortisation (EBITDA) margin, or the level of gross profit compared to turnover, stood at 31 percent last year and would remain at around that level in 2011.

Telenor said its organic growth, which excludes acquisitions, was six percent in 2010 and would be "more than five percent" this year.

Despite a slight drop in the fourth quarter's net profit to 2.1 billion kroner from to 2.2 billion kroner a year earlier, chief executive Jon Fredrik Baksaas praised the results, calling Telenor "one of Europe's fastest growing" telecom companies.

Last year, the Norwegian company gained some 23 million new subscribers, for a new total of some 203 million worldwide.

The company's growth was particularly strong in Asia, where sales jumped 13 percent in the last quarter of 2010.

Telenor however said its earnings on the continent would be slowed this year by its controversial expansion into the highly competitive Indian market through its Uninor subsidiary, which launched at the end of 2009.

Uninor, in which the Norwegian company holds 67.25 percent, is set to drag down Telenor's EBITDA by four billion kroner in 2011 after 4.2 billion last year.

Baksaas described the company's performance last year in northern, central and eastern Europe as "satisfactory," but cautioned that going forward, "increased competition in some of the markets requires innovative market approaches and further cost measures."

In Russia, Telenor is involved in a dispute with its Altimo partner, the telecoms branch of the Alfa conglomerate, concerning their Vimpelcom joint venture.

Unlike Altimo, Telenor staunchly objects to Vimpelcom's plans to buy Wind Telecom, a 6.5-billion-dollar move that would reduce Telenor's share in Vimpelcom, now at 39.6 percent in ordinary shares and 36 percent in voting rights.

Telenor has a asked the London Court of International Arbitration to issue an injunction to avoid dilution of its stake in the company.

"At this stage, we believe it is essential that Vimpelcom focus on regaining a loss of momentum in the Russian market," Baksaas said.