Telenor: Europe Falling Behind US in Telecoms

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Telenor: Europe Falling Behind US in Telecoms


Category: AmCham News

European fourth-generation (4G) network frequencies are too expensive, the investment cost is high and operators, particularly in countries affected by drawn out recessions, lack the pricing power to make the investment worthwhile, Chief Executive Jon Fredrik Baksaassaid in an interview. “Maybe regulators should be more concerned about incentives for the next layer of technology rather than being single-mindedly concerned about the next euro cent reduction in termination rates,” Baksaas said, referring to European regulators’ drive to cut costs for cash-strapped consumers.

Baksaas pointed to last week’s 4G license auction in the Netherlands, where the state raised a bigger-than-expected 3.8 billion euros ($5 billion), but market leader KPN immediately said it would cut dividends to meet the cost.

“The United States moved to 4G so much faster, basically overtaking Europe, and that is a result of national implementation in a big market,” he said, highlighting the competitive advantages the U.S. economy could get from rapidly adopting a technology which provides faster services and allows users to watch videos and surf the internet on the move.

“In Europe, you have Brussels setting the direction but you also have 27 (European Union) countries putting it in operation. If that could have been done in a simpler way, you could have geared up investments faster,” he said.

Telenor has been a unique success story in Europe this year, with its shares rising 17 percent against a 10 percent fall in industry index, thanks to its focus on relatively solid Nordic economies and Asia’s growth markets.

Indeed, revenues will rise over 3 percent this year, even as others struggle with a shrinking top line, and the company has one of the highest valuations in Europe with a 2012 enterprise value to core earnings (EBITDA) ratio of around 6, above the sector’s average of around 4.8, according to analysts.

Telenor, with about 150 million customers, has recorded unexpectedly quick profit growth so far this year as it managed to raise prices for some of its data services to compensate for weak voice and text revenue.

Source: Reuters

Published: June 24, 2024