Telenor Q1 profit drops 36 percent on weak Asian, Central European markets

Telenor reports 36 pct drop in Q1 profit

OSLO — Norwegian telecommunications group Telenor ASA reported Wednesday a 36 percent drop in first-quarter profits, due to a weak performance in Asian and Central European markets.

Net profit for the quarter slipped to 1.04 billion kroner ($172.5 million), from 1.62 billion kroner a year earlier. Revenues for the January-March period also slipped — to 24 billion kroner from 24.6 billion kroner in 2009.

Telenor shares closed down 0.6 percent, at 81.05 kroner ($13.39), on the Oslo Stock Exchange.

Strong Scandinavian markets failed to offset a slump in Telenor subscription rates and mobile phone traffic across the company’s operations in Asia and Central Europe, where the global financial crunch has depressed the telecoms market.

Telenor Chief Executive Officer Jon Fredrik Baksaas nevertheless called the quarter “strong,” adding that depressed Asian markets appeared to be on the verge of recovery.

He gave a positive outlook, saying Scandinavian and Asian operations were on course to produce “slightly stronger” profits than previously expected for the remainder of 2010.

Espen Torgersen, an analyst at Carnegie, said Telenor “performed in most of the important areas in line or a lot better than expected,” pointing in particular to Telenor’s robust Scandinavian operations and improving Asian markets.

Baksaas also noted that the withdrawal, in April, of a prolonged and costly legal battle in Russia related to Telenor’s Russian and Ukrainian operations boded well for the future of the group’s investments in Eastern Europe.

The lawsuit — brought by a fellow shareholder in Russia’s No. 2 mobile operator, Vimpelcom — threatened to deprive Telenor of its 30 percent share in the company. The case’s resolution was a key step in Telenor and Russian conglomerate Alfa Group’s plan to end a long-standing power struggle over control of Vimpelcom by consolidating their Russian and Ukranian holdings.

Telenor employs more than 40,000 people in 14 countries and claims 179 million subscribers worldwide.

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