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Q2 revenues (+3% yoy) were in line with our expectations but the EBITDA (up by 4% yoy) is no longer lagging revenue growth – something which had been the case owing to the increase in energy costs. Telenor’s secure dividend yield still stands undeservedly well above the average of its best-in-class peers at 7.5%. We maintain our strong Buy on the stock.
Companies: TELENOR (TEL:STO)Telenor ASA (TEL:OSL)
AlphaValue
Q1 revenues (+4% yoy) were in line with our expectations as was the EBITDA, (up by only 2% yoy and still lagging revenue growth due to the increase in energy costs). The main point regarding Telenor is that, with the completion of the mergers in Thailand and Malaysia, dtac and Digi are now de-consolidated. Telenor’s secure dividend yield still stands undeservedly above the average of its best-in-class peers at 7.5%. We maintain our Add on the stock.
The outlook for 2022 finally remains unchanged as the significant increase in energy prices weighing on the EBITDA (a 3% impact) was offset in Q3 by a positive one-time effect in Pakistan. We are not expecting a dividend increase for 2022 but neither should there be a dividend cut. So with a current dividend yield of 10.3% and a share buyback representing 2/2.5% of the market cap it is now clearly time to buy Telenor.
Telcos have had 2 difficult months in the stock market as, despite being considered defensive, their dividend yields have proven too… low in this period of rising rates. Telenor will neither increase (nor decrease) its dividend for 2022 but should proceed with a 2% share buyback. With a 9.5% dividend yield and this share buyback program it’s now time to take another look at telcos like Telenor which seem to be offering a very secure and high dividend yield.
The group still expects EBITDA growth to lag revenue growth for a few quarters while, in Asia, the outlook for 2022 remains uncertain. Short term, with zero EBITDA growth and with capex still at a high level, a dividend increase for 2022 should not be expected. We maintain our Buy opinion because things could improve greatly in future in Asia with the major deals announced over the past year.
Companies: Telenor ASA (0G8C:LON)Telenor ASA (TEL:OSL)
The Q1 was slightly disappointing with revenues up by only 0.5% yoy and lfl while the EBITDA was down by 2.5%. Although the group still remains affected by the drop in tourism in Asia and particularly in Thailand, 2022 could be better than the poor outlook suggests but above all 2023 should be a year of solid growth. And, given the solid expansion via the mergers expected in Asia over the coming years, we maintain our Buy on the stock.
Although Q4 revenues were in line with expectations, EBITDA was however disappointing. In 2022, EBITDA should be around the 2021 level or slightly higher: this guidance is more cautious than expected. Although the group still remains affected by the pandemic and the drop in tourism in Asia, 2022 could be better than the poor outlook suggests. And, given the solid expansion in Asia expected over the coming years, we believe that buying Telenor today offers a good risk reward.
Telenor has agreed with Charoen Pokphand Group to explore the combination of Telenor’s DTAC and True in Thailand. The new company could have c.55m mobile customers and revenues of c.€6bn. This deal should allow Telenor to strengthen its position in Thailand, a country where mobile activities should experience strong growth in 2022-23 if the recovery in tourism is there. However, Thailand is a three-player market and the deal could be stopped by the regulator. We maintain our opinion at Buy.
Quite a solid performance for the group in Q2 with revenues and EBITDA up respectively by 3.3% and 3.6% yoy and lfl. The stock has just recovered from its pre-COVID-19 level and we maintain our positive stance on Telenor. The group still remains affected by the pandemic and the drop in tourism in Asia but 2022 is taking a good shape (with also the sale of the Myanmar activities and a merger with Axiata in Malaysia).
Q1 performance was globally in line with expectations and quite similar to those of the two previous quarters excluding Myanmar whose overall situation remains difficult. The business continues, however, to be impacted by the COVID-19 pandemic, in particular in Asia and through the reduction in roaming revenues. We maintain our Buy on the stock.
Like in the previous quarters, the good news is that the revenue decline due to a continued roaming shortfall, in particular in Asia, was more than compensated by an opex reduction of 7%, resulting in a flat EBITDA. The stock is still down by 12.5% compared to its pre-COVID-19 level, while the dividend is rising by 3%. We maintain our opinion at Buy on the stock.
Companies: Telenor ASA
Launches a 5G version of FWA (broadband) – no impact on estimates M&A speculation in Europe: Vodaphone and Masmovil (once again) Recent EU ruling on 02/Hutchinson a catalyst for European consolidation?
Arctic Securities
The awaited Swedish spectrum auction today is delayed The authority is reviewing the validity of the Huawei restriction 1H/21 auctions in Scandinavia likely not material, Asia main uncertainty
Telia announces an unlimited subscription – following Telenor Norway Spectrum auctions in Sweden next week: do not expect it to be material 1H/21 auctions in Norway/Denmark likely not material, Asia uncertainty Capacity increased through both spectrum and increased efficiency on 5G
The Q3 EBITDA was even more clearly better than expected than in Q2, rising by 4% yoy despite a 2% decline in revenues. We maintain our positive stance on the stock with near-20% upside. The group offers a 5.75% dividend yield which is below its peers, while the dividend is in no danger given the control over capex.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Telenor ASA. We currently have 142 research reports from 5 professional analysts.
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