Comments on: Telenor Earnings for Q2 2007 – Earnings Up But Operating Losses Remain

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By: Telenor Earnings for Q2 2007 Up, Losses Narrow : Green & White

Telenor Earnings for Q2 2007 Up, Losses Narrow : Green & White — Tue, 31 Jul 2007 20:56:02 +0000

[...] is a brief overview of how Telenor did in Pakistan for second quarter of 2007 – it is based on the original version at State of Telecom in Pakistan . I’ve included an extract from the reports available at [...]

By: Telenor Earnings Up « Pakistan Uncut !

Telenor Earnings Up « Pakistan Uncut ! — Mon, 30 Jul 2007 14:27:10 +0000

[...] For more details please see the original post. [...]

By: Babar Bhatti

Babar Bhatti — Wed, 25 Jul 2007 20:04:54 +0000

@ Tee Emm – I have been reading about the hoardings .. the carelessness is shocking. Glad that at least Telenor followed some safety standards and showed business foresight.

By: Babar Bhatti

Babar Bhatti — Wed, 25 Jul 2007 19:59:22 +0000

@Atif – agreed, the losses are normal for the first few years of a capital-intensive industry.

Here’s some text from Business Standard about India’s highly profitable telecom firms:
“A report by Merrill Lynch says that the Indian telecom industry’s EBIDTA margin stands at 37.5 per cent, ahead of the US (32), the UK (25.6), Japan (26), France (35.6), Australia (30.5), Switzerland (37.3), Germany (34.9), the Netherlands (31.2) and Finland (25).

Most observers agree that Indian telecom companies’ efficiency is chiefly because of better cost management, higher usage and rapid growth. “

By: Tee Emm

Tee Emm — Wed, 25 Jul 2007 04:30:14 +0000

If you move around in Karachi these days, Telenor’s branding and marketing efforts will catch you attention beyond any doubt.

The recent rainstorm in Karachi played havoc with the huge, non-standard, dangerous outdoor advertisement hoardings that mar the Karachi landscape. After the tragic death of a number of citizen due to these fragile, ill-engineered killer boards, the government has been swiftly removing them (at least for now – many fear they’ll make an uglier comeback soon). This has affected the overall advertisement thrust of all the cellular companies – except Telenor. Reason is that they had been smarter than others in terms of diversifying their outdoor advertisement options. With most of the competition gone, one finds Telenor as the only standing brand these days in Karachi.

By: Atif Tahir

Atif Tahir — Tue, 24 Jul 2007 19:14:31 +0000

Hi,

I suppose increase in revenue and market share is identifying growth for Telenor. Operating losses and negative cash flows in startup years is obvious in almost all capital intensive industries and this situation usually lasts for first 3 to 5 years.There is stiff competition and entry barriers are high due to capital intensity, huge operational expenses and continuous investment on infrastructure and network maintenance. Further in this type of market situation, companies usually adopt market penetration strategy by keeping prices lower and spending aggressively on marketing communication. This marketing communication/advertisement and channel management cost is cost of sales and thus affects the net revenue. On the other hand OPEX and CAPEX keep on incresing which further dilute the revenues.
Telenor has consistently allocated huge budget for marketing & sales in both ATL (Above the line) & BTL (Below the line categories). Besides, they have been upgrading and expanding their network and coverage much aggressively than any other new entrant. At present they own second largest GSM network with almost 1500 base stations (PTA Report March 2007) in comparison to Warid who entered the same time and currently owns 117 base stations only.
I believe Telenor is progressing with long term startegy.