* EBITDA 9.30 bln crowns vs 9.14 bln forecast
* Sees low single-digit revenue growth in 2014
* Sees Thailand as model for data revenue growth
* Shares up 1 percent
(Adds CEO, CFO, analyst, share, Russia comment)
By Balazs Koranyi
OSLO, May 7 Norwegian telecoms operator Telenor
ASA expects heavy investment in data traffic to drive
its growth for years and is banking on unique low-cost offerings
in key Asian markets like Bangladesh and India, it said on
Telenor, which has 172 million customers across Europe and
Asia, sees growth opportunities since only a fifth of its
customers are so far using the Internet, and sees Thailand -
already its second-biggest territory by revenue after Norway -
as a future star of data growth, providing a model for many of
its Asian markets.
Telenor, once a favourite among investors for its exposure
to the relatively healthy economies of the Nordic countries and
Asia, had fallen out of favour in recent months because of a
slowdown in growth and its activities in Russia and Ukraine.
Yet Chief Executive Jon Fredrik Baksaas said Telenor would
stick with its investment in Russia-focused Vimpelcom,
in which it holds a 43 percent stake, even though its view of
Russia had changed because of the conflict in Ukraine.
"If you started from scratch, it would be hard to see a
western company like Telenor would do a significant investment
in Russia right now," Baksaas told Reuters.
"We are where we are and right now we have to position the
company ... in each and every market that we have," he said,
noting the impact of Western sanctions against Russia was not
yet clear. "It's far too early to speculate on what kind of
development potential sanctions can have on this operation ...
Generally speaking, telecoms ... is a needed infrastructure."
Elsewhere, Telenor has rolled out a slimmed-down version of
Facebook in India, offering content without videos and
high-resolution pictures, giving a bigger customer base access.
"We are doing this differently than in any other market,"
Chief Financial Officer Richard Aa told an investor conference.
"This is the way to sell Internet in very low-cost,
spectrum-scarce markets ... We see a big value-creation
Many European telecom companies have struggled to cash in on
surging data traffic, making it hard to justify heavy
investment, but Telenor, which has 154 million users in Asia,
has stood out because of the relatively strong returns it has
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It is also offering financial services such as money
transfer in Pakistan and has invested in classified advertising,
expecting the market to move to mobile platforms.
"What we have done in some Asian markets is give customers
very small data packets to enjoy, see and learn what Facebook is
about," Baksaas told Reuters. "This is to get people on board,
then we work to keep them there."
Baksaas said the Thai unit could offer the best potential
growth prospects in Asia, looking beyond short-term political
uncertainties linked to months of sometimes deadly
In the first quarter, Telenor's Asian operations,
particularly in Pakistan, Bangladesh and India, drove profit
growth, more than offsetting weakness in places like Denmark and
"The main positives were a strengthened revenue trend in
Norway and further margin improvements in Sweden," said a note
from Pareto Securities, which has a "buy" recommendation on the
stock with a target of 147 Norwegian crowns. "In addition, the
margin trends in both Bangladesh and Thailand strengthened in
the first quarter."
Still, Baksaas noted the firm needed to improve revenue in
Thailand, where political unrest impacted the figures, and also
needed better margins in Norway to justify past investment.
Telenor shares, which have bounced back from an eight-month
low set in March, were up 1 percent by 0908 GMT, outperforming a
0.2 percent fall in the European telecom index.
Goldman Sachs estimates the stock trades at a 11.5 times
expected 2015 enterprise value against net profit, a 20 percent
discount to peers on an average ratio of 14.5 times. The
investment bank sees it as one of the cheapest growth
opportunities in the sector.
The group said first-quarter adjusted earnings before
interest, taxes, depreciation (EBITDA) rose 10.4 percent to 9.30
billion crowns ($3.4 billion), beating expectations for 9.14
billion in a Reuters poll. For 2014, Telenor expects low
single-digit organic revenue growth and unchanged margins.
(Editing by David Holmes)