Telenor AS Annual Report 1997 Contents
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Seksjon0.3-2.qxd 27.05.98 10:33 Side 3 Seksjon0.3-2.qxd 27.05.98 10:33 Side 4 Telenor AS Annual Report 1997 Contents Highlights 6 Key figures 7 Introducing Telenor 8 Report of the Board of Directors 14 Profit and loss account Telenor Group 26 Balance sheet Telenor Group 27 Cash flow statement Telenor Group 28 Accounting principles 29 Notes to the consolidated account Telenor Group 33 Profit and loss accounts Telenor AS 52 Balance sheet Telenor AS 53 Cash flow statement Telenor AS 54 Notes to the accounts Telenor AS 55 Auditors’ report 60 Value addes accounts 61 Report from the President and CEO 66 Regulatory matters 67 Analytic information and development characteristics 69 The Year 2000 Issue 72 Telenor International 78 Telenor Bedrift 82 Telenor Privat 86 Telenor Mobil 88 Telenor Plus 90 Telenor Nextel 94 Telenor Nett 96 Telenor Installasjon 100 Telenor R&D 102 Telenor Capital og Finance 104 Elected officers and management 110 Glossary 111 Adresses 112 4 Seksjon0.3-2.qxd 27.05.98 10:33 Side 5 Arena for the world’s most advanced telecommunications? Norway is one of the first countries in the world with a telecommunications network based 100 per cent on the digital technology of the future. We are very much to the fore with regard to mobile telephone and Internet density. Why is that? Partly because we have developed the telecom- munications in a country that presents major challenges, geographically and meteorologically. Partly because Norwegians actually have tradi- tionally been open to technical and technological innovations. Partly because we are a relatively egalitarian society, where education is justly distributed, and where most people have had a share of the welfare and growth. And partly because Telenor, the entire nation’s company, has been willing to learn from others, and had the ability to look to the future when developing its services. 5 Seksjon0.3-2.qxd 27.05.98 10:33 Side 6 Highlights 1997 The digitalisation programme for the Norwegian telecommunications network was completed by 1 December 1997. It was started in 1966, when the first digital elements were built into the transmission net- work. Digitalisation of the central network and the exchanges started in 1986. The internationalisation programme was continued and escalated, with major investments in mo- bile licences in Germany, Austria, and Greece. The Installation activities were organised in one business area, Telenor Installasjon AS, these were previously organised under Telenor Privat, Telenor Nett, and Telenor Bedrift. This was a success, and ensured a positive contribution to the Group’s result. Prices were rebalanced, with a strong shift toward cost-based prices. All in all, the trend of signifi- cant price reductions continued. The internet commitment was strengthened by the establishing of a new business area, Telenor Nextel AS, which has overall responsibility for its own results and operations. At the end of the year, internet accounted for about 15 per cent of the local traffic over the Norwegian telecommunications network. Telenor’s localisation strategy was determined and there will be principal regional centres and nation- wide presence, in order to ensure that fundamental ser- vices are delivered to everybody. Telenor’s second communications satellite, An agreement was signed regarding the Thor II, was launched from Cape Canaveral In Florida, purchase of land at Fornebu for the building of a future- and placed at the strategic position «one degree west». orientated head office and cost-effective co-location of Simultaneously, satellite number three, Thor III, was or- the activities in the Oslo area. Similar efforts were made dered. to co-locate in Bergen and in Trondheim. A proposal was presented to the owner that As the first company in the world, Telenor the equity should be increased by NOK 3 billion in order started to offer digital TV services within an open stan- to ensure the Group’s financial strength and capital ade- dard, and the first step in the direction of integrating TV quacy. The Storting (Parliament) later provided NOK 2 and computer technology for the mass market was billion in new equity. made. 6 Seksjon0.3-2.qxd 27.05.98 10:33 Side 7 Key figures The Telenor Group Amounts in NOK million 1997 1996 1995 Operating income 25,518 22,170 19,859 Operating expenses excl. depreciation 18,682 15,670 13,723 Ordinary depreciation 4,070 3,887 3,562 Operating profit 2,766 2,613 2,574 Profit before taxes 1,915 2,354 2,103 Current assets 7,533 6,474 5,910 Fixed assets 26,095 23,106 21,568 Total assets 33,628 29,580 27,478 Interest-bearing debt 9,224 5,860 6,906 Equity 15,026 14,671 11,721 Cash flow from operating activities 5,496 4,827 6,284 Investments1) 8,891 5,528 4,555 Profit margin2) 7.5% 10.6% 10.6% Return on capital employed3) 10.6% 14.3% 14.3% Return on equity4) 12.9% 17.8% 18.5% No. of employees 20,848 19,221 18,480 No. of man-years 19,598 18,113 17,406 Profit for the year 1,200 1,910 1,481 Dividend 570 950 550 Earnings per share (in NOK)5) 1,667 2,894 2,468 Equity per share in NOK5) 20,869 22,229 19,535 Definitions: 1) Investments in fixed assets, long-term investments in shares, and capital subscribed in satellite organisations. 2) Profit before taxes/Total operating income. 3) Profit before taxes + financial expenses/Average (total assets – non interest-bearing debt). The return for 1996 and 1995 has been adjusted, in that interest regarding the provision for redundancies (TNM) and early retirements has not been added as a financial expense. This has reduced the calculated re- turn by 0.5 percentage points in both years. 4) Profit before taxes/Average equity. 5) Adjusted for increase in equity in 1996. 7 Seksjon0.3-2.qxd 27.05.98 10:33 Side 8 Introducing Telenor The Telenor Group comprises the parent company, Telenor develop into a multinational telecommunications/IT group. AS, and its subsidiaries. All the shares are owned by the Telenor is strategically seeking to integrate telecommunica- Norwegian State. With 20,848 employees, and an annual tions and data. income of NOK 25.5 billion in 1997, Telenor is one of the lar- gest companies in Norway, and one of the companies that The Group builds its activities on the basic values of respon- adds most value. Telenor’s range of products and services in sibility, reliability, and involvement. The current management the field of data and telecommunications comprises every- of the Group’s operations is based on demands relating to thing for the simple telephone subscription, be it fixed or customer orientation, adding value and renewal. mobile, to installation and operation of complete IT systems, global satellite communication, transmission and distribution Telenor considers a good reputation to be an important of broadcasting signals, value added services, Internet servi- competitive factor. It will ensure that Telenor is attractive to ces, and the production and distribution of directories. customers, and creates financial values for the owner. Telenor shall be an attractive place to work, and the Group Telenor is Norway’s market leader in the fields of shall be innovative both with respect to technology and to telecommunications and the supply of IT services. In the market. Europe, Telenor is the third largest in the field of satellite communications, and one of the ten largest mobile tele- The Group shall contribute to a positive development of the phone operators. society in general, be trustworthy, and have good business morals. Telenor has ownership interests in more than 40 operative subsidiaries and associated companies in 25 countries out- side Norway. This forms the platform on which Telenor will Telenor AS Group centre (Group management and staffs) Telenor Capital Telenor Telenor Telenor Telenor Telenor and Finance R&D Nett AS Bedrift AS Privat AS Mobil AS Telenor Network Production Communication Customer Product Group solutions Division and equipment and delivery Division Finance • Sales centre Service Infrastructure • Product Division Network Telenor development Division • Customer and Division Eiendom supply centre Product IT-development Tele Services and Market Market Telenor Division IT-service Division Division Finans AS Consultancy Data Services Software Pay Sales Division Telenor Division • Telenor Novit Phone Inkasso AS Division • Telenor Allianse Telehuset AS Marketing • Telenor Telenor Division Infomedica Telenor Venture AS • Telenor Direkte AS Partly owned Maritime Financial chains Services Systems and Radio Division 8 Seksjon0.3-2.qxd 27.05.98 10:33 Side 9 Telenor’s Group Management. From the left: Peter Pay, SVP (Business Development and New Services), Torstein Moland, SVP (Economy and Finance), Ole Petter Håkonsen, EVP (Technological Selection and Concentration), Tormod Hermansen, President and C.E.O., Marit Eliasbeth Døving, SVP (Corporate Communication), Jon Fredrik Baksaas, EVP (Operations in Norway) and Terje Thon, EVP (International Operations), Magnus Dokset, SVP (Regulatory matters and internal IT strategy) was not present when the photo was taken. Telenor Telenor Telenor Telenor Other Plus AS Nextel AS International AS Installasjon AS Companies Telenor Market Telenor Telenor Telenor Media AS Section Global Geomatikk AS Instrument AS Services AS Telenor Technical Telenor Telenor Avidi AS Section Security AS Telenor Renhold og Kantine AS Telenor Business Satellite Telenor Services AS CTV AS Development Security AB Telenor Section Miljø AS Telenor Telenor Consult AS Conax AS Telenor Telenor ISV Corp Svalbard AS Telenor (USA) Mobility Link AS Scandinavia Telenor Online AS POS AS (34,2% stake) Scandinavia Online AB (34% stake) As at 1 April 1998 9 Seksjon0.3-2.qxd 27.05.98 10:33 Side 12 One degree 12 Seksjon0.3-2.qxd 27.05.98 10:33 Side 13 Some names are inextricably connected to space adventures and to satellites.