Telenor: Halfway through 2019, strategic direction confirmed

(Fornebu, 16 July 2019) "The strategic agenda we initiated two years ago continued to bear fruit in the second quarter. Although organic subscription and traffic revenues declined by 1 percent, the EBITDA margin was 40 percent and we saw positive revenue development and effects from efficiency and modernisation programmes. Our underlying financial performance remains stable.

Across our markets, results show that the momentum set at the start of the year continues. In Norway, we see mobile ARPU growth of 2 percent. Preparations for 5G are ongoing through pilots and network upgrades. There is good traction on fibre rollout and copper infrastructure replacement, which will enable customers to connect faster and more reliably.

In Thailand and Myanmar, we have seen improved revenue growth during the year. Investments made in Thailand are showing results, building a foundation for future growth. Subscription and traffic revenue growth in Bangladesh was 13 percent. During the quarter, 2.3 million new customers joined our networks globally.

Our acquisition of a majority stake in Finland's DNA has been approved by the European Commission, and we expect completion of the deal in August. Following completion, we will launch a mandatory tender offer for the remaining shares in the company. In Asia, we continue to work on the potential combination with Axiata, with the aim to finalise an agreement within the third quarter of 2019.

Throughout the remaining half of the year, we will maintain operational momentum, continue to modernise our networks and create value for customers and shareholders," said Sigve Brekke, President and CEO, Telenor Group.

Key figures for Telenor Group

Key figures (NOK in millions)	Second quarter 2019	Second quarter 2018	First half year 2019	First half year 2018	Year 2018	First half year 2019 IFRS16
Revenues	28 027	27 503	55 737	54 653	110 362	55 607
Organic revenue growth (%)	0.6	-1.0	0.5	-1.2	-0.6
Subscription and traffic revenues	21 526	21 337	42 969	42 353	84 825	42 969
Organic subscription and traffic revenues growth (%)	-0.7	0.4	-0.4	0.7	0.2
EBITDA before other income and expenses	11 087	11 337	22 262	22 677	45 451	24 736
Organic EBITDA growth (%)	-3.8	0.5	-3.7	5.0	3.2
EBITDA before other income and expenses/Revenues (%)	39.6	41.2	39.9	41.5	41.2	44.5
Net income attributable to equity holders of Telenor ASA	3 095	2 645	6 977	7 637	14 731	6 705
Capex excluding licenses and spectrum	4 102	3 420	8 145	6 489	16 776
Total capex	4 109	3 666	8 151	8 352	31 245
Free cash flow	(891)	3 012	1 562	5 587	31 989
Mobile subscriptions - change in quarter /total (mill)	2.3	2.1	178	172	174

Second quarter 2019 summary¹

• Total reported revenues were NOK 28.0 billion, which is an increase of 2%. Subscription and traffic revenues decreased by 1% on an organic basis in the second quarter.
• Currency adjusted gross profit declined by NOK 0.2 billion in the quarter, while reported gross profit increased by NOK 0.1 billion.
• Currency adjusted opex decreased by NOK 0.1 billion or 1%, excluding a provision in Bangladesh. Reported opex increased by NOK 0.3 billion or 3%.
• EBITDA before other items was NOK 11.1 billion with an EBITDA margin of 40%. When adjusting for the provision in Bangladesh, EBITDA decreased by 1% on an organic basis.
• Net income attributable to equity holders of Telenor ASA was NOK 3.1 billion.
• Capex excluding licences and spectrum was NOK 4.1 billion, resulting in a capex to sales ratio of 15%.
• Free cash flow in the quarter was negative NOK 0.9 billion, affected by capex phasing and CAT settlement payments.
• In the second quarter, we paid out dividends of NOK 6.4 billion to our shareholders and bought back shares of in total NOK 0.8 billion.

Outlook for 2019²

As previously communicated, dtac in Thailand is now included in the full-year guidance. In addition, the guidance takes into account an adjusted outlook from Digi as well as a provision in Bangladesh. Based on this and on the results so far this year, we expect subscription and traffic revenues at around the 2018 level and a low single digit EBITDA decline. Capex excluding licences and spectrum is still expected to be in the range of NOK 16-17 billion.

Media Contact

Jonathan Higgins, mobile:

Investor Relations Contacts

Marianne Moe, mobile:
Håkon Hatlevik, mobile

Presentation of Q2 results:

• Presentation for analysts and media - webcast and telephone, 16 June 09:00 CET
• Press meeting at Telenor Expo, Fornebu, 16 June 11:00 CET

Q2 presentation - WEBCAST AND TELECONFERENCE ONLY

In connection with the publication of the financial results, a live streamfor analysts, investors and journalists will be held on Tuesday 16 July at 09:00 hrs Norwegian time/CET. The presentation will be broadcast live via webcast only. CEO Sigve Brekke and CFO Jørgen C. Arentz Rostrup will present the results. The presentation will be held in English.

You may also call in and listen to the presentation over the phone. This service allows you to ask questions during the Q&A session at the end of the presentation. To participate in the conference call, dial:

• + 47 2100 2610 (local Norway)
• [phone] (local Sweden)
• [phone] (local UK)
• [phone] (local US)

Please state confirmation code 5507845, your name and company to the operator

For the Q&A session: to queue up for questions please press *1

Press meeting at Telenor Fornebu: 11:00 CET

At 11:00 hrs Norwegian time/CET, Telenor Group CEO Sigve Brekke, CFO Jørgen C. Arentz Rostrup and Telenor Norway CEO Petter-Børre Furberg will host a 60-minute media presentation and Q&A. This will be held in person in Norway Lounge, Telenor Expo Visitor Centre at Fornebu, near Oslo.

Material

The quarterly report and the presentation are available here: https://www.telenor.com/investors/reports/2019/telenor-groups-results-for-the-2nd-quarter-2019/

---

¹ The key figures and summary for the second quarter of 2019 as well as the forward-looking statements are based on current Group structure and accounting standards as of 31 December 2018 unless otherwise stated. Please refer to Definitions on page 30 of the Q2 2019 Report for descriptions of alternative performance measures.

² The outlook for 2019 is based on Group structure as of 30 June 2019 and excluding M&A costs related to the acquisition of DNA and the planned merger with Axiata in Asia.