Telenor sees modest growth, job cuts as 5G gathers speed

OSLO (Reuters) - Norway’s Telenor will see revenue growth of up to 2% annually until 2022, as it cuts costs further, rolls out 5G telecoms networks and increases dividends every year, the company said on Tuesday.

FILE PHOTO: Telenor's logo is seen in central Belgrade, Serbia, March 21, 2018. REUTERS/Marko Djurica/File Photo

Telenor has cut 22% of jobs since 2015, not counting acquisitions and divestment, and could cut a further 15% in the next three years, equivalent to around 3,000 full-time positions, the company said.

“Solid growth opportunities in emerging Asia, and the strong customer demand for adjacent services in the Nordics is expected to be supportive of revenue growth,” Chief Executive Officer Sigve Brekke said as Telenor laid out its 2020-2022 strategy.

The company’s shares rose 2.9% by 0815 GMT, in line with the Oslo benchmark stock index.

Job cuts, automation, shutting old copper networks and improving the efficiency of other technology will lead to a savings rate of between 3 billion-4 billion Norwegian crowns ($322 million-$430 million) per year by the end of 2022.

Revenue from subscriptions and telecoms traffic on Telenor networks is forecast to grow in a range of 0%-2% per year over this period, while net operating expenses will by reduced by 1%-3% annually, the Oslo-listed firm said.

Telenor, which has 186 million customers in nine countries across northern Europe and Asia, in the last three years sought to cut costs and boost its cash flow to allow the payment of bigger dividends.

The company will maintain a policy of increasing its dividend payout year by year, it added.

Telenor’s predicted cost cuts were ambitious, and could potentially offset the impact of relatively modest growth forecasts, analysts at J.P. Morgan wrote in a note to clients.

But the 5G network build-out should not increase its overall investment as a percentage of revenue, the company said as it maintained a goal of keeping capital expenditure at around 15% of sales.

Telenor in late January posted a bigger-than-expected rise in fourth-quarter profit and said its underlying earnings would grow by between 2% and 4% in 2020 after declining last year.

Reporting by Terje Solsvik; Editing by Tom Hogue, Uttaresh.V and Barbara Lewis