Early on in 2021, it has been a quiet and steady start for Telenor Pakistan. And quiet may be preferable when there is a lot of disquiet all around, thanks to the wave after wave of Covid-19. Calculations based on the Jan-Mar results announced by Telenor Group earlier this week show that its Pakistani subsidiary grew its topline by 2 percent year-on-year to Rs26 billion and raised operating profits by 4 percent year-on-year to Rs5.6 billion.

While those nominal growth rates are actually negative growth rates in real terms (adjusting for inflation), the Jan-Mar results are still a better performance compared to what Telenor Pakistan achieved during the last year. During CY20, Telenor Pakistan had made a topline of Rs101 billion (down 5% YoY), EBITDA of Rs54 billion (up 1% YoY), and operating profit of Rs21 billion (down 11% YoY).

However, there is a deceleration in topline growth. Recall that the operator had scored total revenues of Rs25 billion topline, at a growth of 7 percent, during the Oct-Dec 2020 quarter. Now the slowdown in 1QCY21 topline growth is due to the ‘average revenue per user’ (ARPU) coming down to Rs174 per month, compared to Rs176 per month in the previous quarter and Rs177 per month in the same quarter last year. ARPU is under stress for other operators as well, as the purchasing power is under pressure.

As per the management, there is continued growth from data revenues, thanks to improved network management and targeted marketing. Telenor Pakistan added 1.3 million subscriptions to take the tally to 48.5 million as of March 2021 end. But it could do more, considering that market leader Jazz has been on a spree adding more than 10 million 4G users between March 2020 and March 2021. (For more on Jazz 1QCY21 financial results, please read: “Jazz: On song,” published May 3, 2021 in this space).

Compared to previous quarter, the growth in profitability has slowed for the second-ranked operator. Recall that the Oct-Dec 2020 quarter also had higher growth rates for EBITDA (up 9% YoY) and operating profit (up 35% YoY). Whereas EBITDA during 1QCY21 has declined by 2.4 percent year-on-year to Rs13.8 billion. Key reasons cited by the management include rising energy prices and increase in operations and maintenance costs.

While the first quarterly performance of Telenor Pakistan was mildly positive, the results may not have cheered folks at the group level much. And it was not something that the local subsidiary had any control over. During the quarter under review, there was 12 percent year-on-year depreciation of Pakistani Rupee against the Norwegian Krone. This meant that the nominal increase in topline and operating profits in rupee terms were recorded in NOK terms as declines of 10 percent and 9 percent, respectively.

Let’s see what the next quarter holds.