Telenor ASA Earnings Call: Strong Core, Cautious Outlook

Telenor ASA (ADR) ((TELNY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Telenor ASA’s Earnings Call Signals Solid Progress Despite Asia Drag

Telenor ASA’s latest earnings call struck a broadly upbeat tone, underscoring that the group has effectively delivered on its 2025 outlook ahead of schedule. Management highlighted strong adjusted EBITDA growth, robust free cash flow, improved returns on capital and a firmer balance sheet, enabling both a higher dividend and a sizeable share buyback. Nordic operations and the Amp/IoT portfolio stood out as key profit engines, while the sale of the True stake unlocked significant value for shareholders. At the same time, executives were candid about headwinds in Asia, rising competition in some Nordic markets and the impact of one-off accounting and timing effects, tempering expectations for 2026.

Delivered on 2025 Outlook and Strategic Execution

Telenor confirmed that it has delivered on all parameters of its 2025 outlook, marking a milestone in its multi‑year transformation agenda. The company noted strong operational momentum across both the Nordic and Asian operations, combined with disciplined strategic execution. This included “clean exits” from Pakistan and Allente, as well as the agreed sale of its stake in True in Thailand. These moves simplify the portfolio, reduce risk exposure in challenging markets and free up capital for higher-return opportunities in core geographies and infrastructure.

Adjusted EBITDA Growth Beats Targets

Profitability improved meaningfully in the quarter and for the full year. Adjusted EBITDA rose 11.7% year-on-year in Q4 to NOK 8.6 billion on a reported basis. Management clarified that about 3.2 percentage points of this growth stemmed from accounting and timing effects, implying underlying EBITDA growth closer to 8.5%. For the full year, group EBITDA growth was 5.8% (excluding Pakistan), slightly ahead of the 5–6% range previously guided. The company framed this as evidence of both commercial momentum and ongoing efficiency gains in its core operations.

Revenue and EPS Show Healthy Upside

Top and bottom lines both advanced in Q4. Group service revenues reached NOK 15.3 billion, up 2.6% compared with the same period last year, driven mainly by the Nordic segment. Adjusted EPS jumped to NOK 2.21 in the quarter, an 89% increase year-on-year, and rose 24% for the full year. The sharp EPS improvement reflects higher operating earnings, lower leverage-related pressure and a cleaner portfolio after divestments, despite some one-off negative items that weighed on reported net income.

Strong Free Cash Flow Fuels Rising Capital Returns

Cash generation was another bright spot. Free cash flow before M&A reached NOK 12.9 billion for the year, essentially in line with guidance of around NOK 13 billion, while Q4 free cash flow before M&A climbed 33% year-on-year to NOK 4.1 billion. On the back of this, Telenor proposed an ordinary dividend of NOK 9.7 per share, marking the 16th consecutive annual increase, underscoring management’s confidence in the cash profile of the business. In addition, the company announced a NOK 15 billion share buyback program, to be funded from the proceeds of the True sale, signalling a clear commitment to returning excess capital to shareholders.

Leverage Back in Target Range and Returns Improving

Balance sheet metrics improved noticeably over the year. Net leverage ended at 2.2x, comfortably within Telenor’s target range of 1.8–2.3x and down thanks to strong free cash generation and the deconsolidation of Telenor Pakistan’s net debt of about NOK 1.8 billion. Return on capital employed over the last 12 months rose to 9.2%, an increase of 1 percentage point; excluding associates, ROCE was a more robust 13.6%. These figures suggest that the reshaped portfolio is more capital-efficient and that recent strategic moves are beginning to translate into better shareholder returns.

Nordics: Pricing Power and Margin Strength

The Nordic region remained the growth engine for the group. Nordic operations delivered 2.8% organic service revenue growth in Q4 and an 8.7% increase in EBITDA. Mobile service revenues grew around 4%, supported by higher average revenue per user (ARPU). In Norway, mobile ARPU rose 5% and fixed broadband ARPU 6%, reflecting successful price adjustments and upselling to higher-value plans. Sweden added about 45,000 mobile subscribers during the quarter and reached an EBITDA margin of roughly 40% on a last‑twelve‑months basis, a key profitability milestone that management highlighted as evidence of strong execution in a competitive market.

Amp and IoT Portfolio Continues to Add Value

Telenor’s Amp and IoT assets delivered another solid quarter, reinforcing the strategic role of these growth platforms. Amp benefited from strong contributions from KNL, driven by defense communications contracts, which materially supported both revenue and EBITDA. Connexion, the global IoT unit, posted 9% organic revenue growth and a 24% year-on-year increase in its global SIM base. Management emphasized that this performance supports continued net asset value uplift in the Amp portfolio, positioning these units as important contributors to future value creation beyond the traditional mobile and fixed businesses.

True Exit Unlocks Significant Value for Shareholders

The announced sale of Telenor’s stake in True in Thailand was framed as a major value-creation event. Management noted that the exit price represents more than three times the NOK 12 billion market value that had previously been implied in the context of the dtac/True merger. From the first tranche of proceeds, Telenor plans to allocate NOK 15 billion to the new share buyback, NOK 11.5 billion to repay a EUR 1 billion bond, and NOK 6 billion to finance the acquisition of GlobalConnect’s Norwegian consumer fiber business. This deployment strategy blends immediate shareholder returns with deleveraging and selective reinvestment in strategic infrastructure assets.

Operational Efficiency and CapEx Discipline

The company continued to stress its focus on cost discipline and efficient investment. The group’s CapEx-to-sales ratio was 15.5% in Q4, about 4 percentage points lower than a year earlier, reflecting a more measured investment pace. In the Nordics, CapEx-to-sales stood at 17.2% in the quarter and 14.3% for the full year. Management pointed to “relentless” cost focus and ongoing transformation programs that have helped reduce operating expenses; OpEx declined close to 2% in Q4 and was broadly flat on an adjusted basis excluding specific items. These efficiency gains are key to supporting EBITDA growth and funding higher shareholder distributions without compromising network quality.

Asia: Currency and Demand Headwinds, Especially in Bangladesh

While the Nordics delivered, Asia remained a more challenging region. Grameenphone in Bangladesh reported 3.4% organic service revenue growth in local terms in Q4, but the weakening of the Bangladeshi taka—down 14%—meant that revenues and EBITDA translated into Norwegian kroner were broadly flat year-on-year. Management highlighted subdued consumer spending and tough price competition as constraints on growth, and they kept expectations for Bangladesh modest in the near term. These factors, combined with currency volatility, are likely to remain a drag on reported Asian earnings.

EBITDA Boosted by Timing and Accounting Effects

Management was explicit that not all of the robust EBITDA growth is structurally repeatable. The 11.7% reported EBITDA increase in Q4 included about 3.2 percentage points of uplift from accounting adjustments, reversals and the timing of internal cost allocations—particularly between the Asia headquarters and the “Other” segment. Stripping out these items leaves underlying EBITDA growth at roughly 8.5%. Investors were reminded to take these timing effects into account when assessing the sustainability of the current earnings run rate and when modelling future quarters.

One-Off Losses and Special Items Weigh on Reported Results

Despite the strong adjusted metrics, reported earnings were affected by a series of special items. In Q4, Telenor booked a NOK 3.0 billion loss on discontinued operations, reflecting portfolio reshaping. There was also a NOK 0.4 billion tax expense linked to the divestment of Telenor Pakistan and a NOK 0.5 billion negative swing in net financial items from fair value changes related to the True stake. Additional other income and expense items stemmed from IT equipment scrapping and workforce reductions. While these items are largely non-recurring, they underscore that the ongoing transformation still carries financial cleanup costs.

Nordic Competition Intensifies, Churn on the Rise

The earnings call also flagged rising competitive pressure in some Nordic markets. Management reported higher churn across the region and particularly tough price competition in Finland, where new MVNO activity and aggressive promotions have sharpened the battle for customers. Norway and Finland together saw net postpaid outflows of roughly 24,000 subscribers in the quarter, a typical promotional season but nonetheless a signal that defending market share may require more targeted offers. These dynamics could limit pricing power in certain segments, even as Telenor seeks to maintain ARPU growth.

Transformation and OpEx Pressures to Peak Around 2026

Although the group is delivering cost savings overall, some areas are seeing higher operating expenses tied to transformation. In Norway, OpEx increased 3.4% year-on-year, driven by higher activity for network “robustification,” ongoing transformation initiatives and repairs from Storm Amy. Management flagged that 2026 is expected to be near the peak year for implementation costs related to key programs, such as a major BSS (business support system) project in Denmark. This implies continued near-term OpEx pressure even as the company targets long-term structural savings and simplification.

Asia EBITDA Contraction and Associated Company Risks

EBITDA in the Asian segment contracted on a year-on-year basis, partly due to timing factors but also reflecting operational headwinds. Some of Telenor’s associated companies are under strain. DNB, the associated 5G infrastructure company, was described as financially distressed, raising questions about future contributions or potential impairment risk. CelcomDigi, another associate, had previously reported an EBITDA decline driven by higher data costs and increased bad debt, although recent quarters have shown some recovery at the top line. These challenges add another layer of uncertainty to Telenor’s Asian exposure and associated earnings.

Future Tower Revenues Exposed to Network Sharing in Norway

Telenor also addressed potential headwinds to its tower business. The Telia/Ice RAN consolidation in Norway, a network-sharing joint venture between competitors, is expected to reduce demand for Telenor’s tower services over time. Management estimated a potential negative impact of NOK 120–160 million, equivalent to about 4–5% of its tower external revenue, with effects unlikely before 2027 at the earliest. While this gives the company time to adapt, it highlights that infrastructure revenues are not entirely immune to industry consolidation and new network-sharing arrangements.

Free Cash Flow Outlook Steps Down From 2025 Level

Looking ahead, Telenor guided to a lower free cash flow level than in 2025. Management forecasts free cash flow before M&A, excluding dividends from associates and incremental spectrum, in the range of NOK 10–11 billion for 2026, compared with NOK 12.9 billion achieved in 2025. The outlook reflects a more conservative stance amid transformation costs, Asian headwinds and some fading one-off benefits. Importantly, the company expects the cash generation to be back-end loaded through the year, indicating weaker early quarters before improvements later on.

Guidance: Moderate Growth, Strong Capital Returns, and Controlled Leverage

For 2026, Telenor expects low single‑digit Nordic service revenue growth and mid‑single‑digit Nordic EBITDA growth, signalling steady but not spectacular expansion in its core region. Nordic CapEx-to-sales (excluding leases) is guided at around 14%, maintaining disciplined investment while supporting network quality. At group level, adjusted EBITDA is expected to grow in the low‑to‑mid single‑digit range, while free cash flow before M&A should come in at NOK 10–11 billion, with significant quarter-to-quarter variability and tougher comparables in Q2. Management noted that roughly NOK 550 million of national roaming wholesale revenue booked in 2025 is likely to be similar in 2026 but then fade by 2027. The leverage target remains at 1.8–2.3x, broadly in line with the current 2.2x. Capital allocation priorities are clear: a proposed ordinary dividend of NOK 9.7 per share, a NOK 15 billion buyback to be executed over three years (subject to annual confirmation), and a detailed plan for deploying the first NOK 32 billion of True proceeds among buybacks, bond repayment and the GlobalConnect Norway consumer fiber acquisition, with a remaining NOK 7 billion from a second tranche yet to be allocated.

In summary, Telenor’s earnings call painted a picture of a telecom group that is executing well on its strategy, delivering above-guided EBITDA and strong cash flow while returning more capital to shareholders and strengthening its balance sheet. The Nordics continue to underpin growth through pricing power and margin expansion, and the Amp/IoT portfolio is steadily adding value. However, currency and competitive pressures in Asia, intensifying rivalry and rising churn in parts of the Nordic market, and temporary boosts from accounting and timing factors argue for a measured outlook. For investors, the story is one of solid operational progress and generous capital returns, balanced against clear regional and structural risks that could shape performance beyond 2026.