April 24, 2018 / 6:20 AM / 10 months ago

UPDATE 2-Shares in Norway's Telenor drop as Asian revenues disappoint

* Q1 organic revenue growth 1 pct year-on-year

* Q1 adjusted EBITDA NOK 11.3 bln vs poll NOK 11 bln

* Shares down 2.6 pct

* Graphic: reut.rs/2K4UjwS (Updates with CEO, analyst comments, share price move)

By Joachim Dagenborg and Gwladys Fouche

OSLO, April 24 (Reuters) - Shares in Norway’s biggest telecoms operator Telenor fell on Tuesday as investors fretted about falling revenues in South Asian markets, even though its first-quarter results overall beat expectations.

Telenor, Norway’s most valuable company after Statoil , reported organic revenue growth of just one percent year-on-year in the quarter, as solid performances in Scandinavia only just managed to offset declining revenues in Bangladesh, Pakistan and Myanmar - markets the company is counting on for growth.

Telenor benefited from cuts in operating expenses, which helped lift its adjusted quarterly profit before interest, tax, depreciation, amortisation and other items to 11.3 billion crowns ($1.4 billion), from 10.5 billion a year ago.

Analysts had expected a profit of 11 billion crowns.

Telenor’s operations have been spread across Scandinavia, eastern Europe and Asia but it is quitting eastern Europe and India to focus on Scandinavia and emerging Asian markets that are growing more quickly than mature markets.

It maintained its previous forecast for revenue growth of 1-2 percent this year, but nudged up its organic EBITDA growth guidance to 2-3 percent, against an earlier view of 1-3 percent, to reflect the already agreed sale of its central and eastern European assets.

Still, Telenor shares were down 2.6 percent at 0829 GMT, underperforming a 0.3 percent decline in the European telecoms index.

“EBITDA is strong again on aggressive cost cutting, and management narrows the EBITDA growth outlook towards the top of the prior range,” said Jefferies in a note to clients.

“This is obviously supportive to near-term consensus, but we also note a slowdown of overall revenue momentum ... with softening momentum in Pakistan, Bangladesh and Myanmar,” it added.

“We reiterate our concern that much of the cost cutting comes from sales and marketing budgets,” Jefferies said.

Telenor CEO Sigve Brekke said that despite a soft start to the year, growth was “not over” in Pakistan and Bangladesh and that revenues would improve.

“I don’t think the efficiency programme is hampering our growth. This is something we are closely following. But there is no link between the growth and sales efficiency,” he told a meeting with reporters and analysts.

Telenor said capital expenditure, excluding licenses and spectrum, is expected to be 17 billion-18 billion crowns this year against previous guidance of 18 billion-19 billion crowns.

Over the past year, the firm’s shares have risen 24 percent after it boosted profits, raised its dividend and bought back shares, outperforming the European telecoms index which has fallen 8 percent.

($1 = 0.8185 euros)

($1 = 7.8797 Norwegian crowns)

Editing by Terje Solsvik and Susan Fenton

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