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Annual Report Annual Report 2012 2012 in brief A solid year 148 million subscribers, NOK 102 billion in revenues, 5% organic revenue growth, EBITDA before other items of NOK 33 billion and operating cash flow of NOK 20 billion 1). Strong performance in Norway Data usage increases, strong customer uptake on bundled tariffs and revenue increases. Investments into fixed and mobile networks continue at rapid pace, to ensure superior coverage and user experiences now and in the future. Data drives growth Contents DTAC granted 3G licence in Thailand. Norway enters a 4G era. Dear Shareholder /01/ Smartphones are in demand globally, and Telenor brings mobile Report from the Board of Directors 2012 /02/ Internet to the masses in Asia. With modernised networks and service offerings, Telenor is well-positioned to capture data growth. Financial Statements Telenor Group Consolidated Income Statement /20/ Moving forward in India Consolidated Statement of Telenor secured new spectrum and is now operational in six Comprehensive Income /21/ telecom circles in India – on track for operating cash flow break- Consolidated Statement of Financial Position /22/ even towards the end of 2013. Consolidated Statement of Cash Flows /23/ Consolidated Statement of Investing in VimpelCom Changes in Equity /24/ During the year, Telenor restored its ownership stake in Notes to the Consolidated VimpelCom. VimpelCom showed improved operational perform- Financial Statements /25/ ance and dividend pay-out was resumed towards the end of the year. Telenor ASA Income Statement /94/ Sustainability leader Statement of Comprehensive Income /95/ For the 11th year running, Telenor Group continues to rank as Statement of Financial Position /96/ one of the top sustainability leaders in the telecommunications Statement of Cash Flows /97/ section on the Dow Jones Sustainability Index. Statement of Changes in Equity /98/ Notes to the Financial Statements /99/ Responsibility Statement /115/ Auditor’s Report for 2012 /116/ Statement from the Corporate Assembly of Telenor ASA /118/ Financial Calendar 2013 /118/ Key Figures /119/ Telenor Group’s operations /120/ 1) EBITDA before other items less capex excluding investments in licences and spectrum. /PAGE 01/ TELENOR ANNUAL REPOrt 2012 Dear shareholder, In 2012, Telenor Group outperformed its peers and delivered one of its best years ever. While much of our and the world’s attention throughout the year was on India, the company also had a strong operational and financial story. Telenor had a solid operating cash flow of more than NOK 20 billion 1), a strong balance sheet and an addition of 7.3 million mobile subscriptions. Telenor’s two main ambitions are to be also saw several changes in the From our experiences in India this year, preferred by customers and be a cost- ownership structure of the company in we have proven our ability to weather efficient operator. Financially, our 2012, which confirmed Alfa Group’s uncertain times. ambitions for 2015 are to maintain a position as the current largest revenue growth ahead of our peers and shareholder. Going forward, we will Telenor is built around people. We see deliver an annual operational cash flow continue to contribute to the industrial that we are making an impact on the of NOK 28-30 billion. and sustainable development of lives of our customers and in the VimpelCom. societies where we operate, and I am Following the Indian Supreme Court’s confident that we will continue to create decision in February 2012 to quash all Telenor views sustainable development value for our shareholders and licences granted in 2008, we are as critical to our long-term success. customers in the years to come. pleased to have secured new licences in This year we have expanded the Board six telecom circles, consisting of more of Directors Report to include more than 50% of India’s population, for a information on social and environmental period of 20 years. At the same time, we performance, in addition to our financial experienced solid operational progress information. Telenor also publishes an with the first circle reaching EBITDA annual Sustainability Report, with more break-even in November. Our Indian comprehensive information on Jon Fredrik Baksaas operation is on track to reach the target sustainability in Telenor. President & CEO of Telenor Group of operating cash flow break-even towards the end of 2013. For more than a decade our company has evolved from a domestic, VimpelCom continues to be an Norwegian incumbent to a leading important investment for Telenor Group. global mobile operator. I believe that By year-end, the Russian court had the coming years will be just as dismissed claims brought against impressive, as we grow our global Telenor by the Russian Federal operations, develop new services and Antimonopoly Service (FAS) and lifted innovate in new areas. Today, Telenor injunctions, enabling dividends to once has a solid position, a unique work again be paid to the shareholders. We culture and highly capable employees. 1) EBITDA before other items less capex excluding investments in licences and spectrum. /PAGE 02/ TELENOR ANNUAL REPOrt 2012 Report from the Board of Directors 2012 Report from the Board of Directors 2012 From left: Sally Davis / Board member Barbara Milian Thoralfsson / Board member Bjørn Andre Anderssen / Board member, employee representative Frank Dangeard / Board member Brit Østby Fredriksen / Board member, employee representative Burckhard Bergmann / Board member Svein Aaser / Chairman Dag J. Opedal / Board member Liselott Kilaas / Deputy Chairman Hallvard Bakke / Board member Harald Stavn / Board member, employee representative It was a year of growth and a year of achievement. Telenor delivered on its goals, all the while performing beyond the industry average. In 2012, Telenor stayed on course, continuing to capture market share, roll out next generation networks and innovate for the customer. I look forward to another great year of innovation and expansion in 2013. Svein Aaser, Chairman of the Board /PAGE 03/ TELENOR ANNUAL REPOrt 2012 Report from the Board of Directors 2012 Key figures 2012 • 5% organic revenue growth • 7.3 million new subscribers • EBITDA before other items of NOK 33 billion • Operating cash flow of NOK 20 billion 1) • Proposed dividend of NOK 6.00 per share 2012 was a year unlike any other for the Telenor Group. Telenor experienced continued growth above industry peers and improved operational efficiency. Investing in Norway growth in data traffic fuelled by quashing and re-auctioning of Telenor continues to perform well in smartphones and other Internet-ready spectrum. Norway, where it serves as the leading devices. Telenor believes that these mobile provider of mobile, broadband network investments are important for Telenor secured the continuation of its and TV services in the country. Norway the long-term growth of the company, operations in India by acquiring is an important part of the Telenor and its ability to serve the ever-growing spectrum in six circles in the 2G auction Group and as such, the company data needs of customers. To support in November 2012. The company continues to make significant invest- the transition from voice to data, achieved its first EBITDA break-even ments into the network. In 2012, Telenor Telenor continues to optimally and circle in Uttar Pradesh East in late 2012, launched 4G in several major Norwegian proactively exploit available and and has a target of operating cash flow cities. expected technology advances. In break-even for the entire operation by 2012, DTAC was granted 3G spectrum the end of 2013. In December 2012, the EFTA Surveil- licence in Thailand, while 4G was rolled lance Authority (ESA) and the out in more than 10 cities and towns in In 2012, Telenor settled a legal dispute Norwegian Competition Authority Norway towards the end of the year. with its previous partner Unitech Ltd. initiated two separate - but coordinated Telenor Denmark, DiGi in Malaysia and Telenor also entered into an accord with - investigations towards Telenor Norge Telenor Hungary plan to introduce 4G in a new partner, whereby Telenor will own AS. The scope of the investigations 2013. 74% of the entity, and Lakshdeep seems to be related to possible abuse of Investments will own the remaining a dominant market position and/or India shares. possible anti-competitive practices. Throughout the year, Telenor The investigations are ongoing and demonstrated its willingness to succeed A year of innovation Telenor is cooperating with the in the Indian mobile market. After being Telenor Group has now completed its authorities. operational in India for three years, first full year with the new units Group Uninor’s 22 cellular phone licences Industrial Development and Digital Enabling the data traffic explosion (granted by government in 2008) were Services in place and operational. Telenor continued its network moderni- cancelled by India’s Supreme Court in These units were established in 2011, to sation initiatives across the Group, with February 2012. A period of great help Telenor become a more cost- investments in 3G/4G coverage and uncertainty followed, regarding efficient operation and the most capacity to prepare for the tremendous conditions and timeline for the licence preferred operator for customers. 1) EBITDA before other items less capex excluding investments in licences and spectrum. /PAGE 04/ TELENOR ANNUAL REPOrt 2012 Report from the Board of Directors 2012 In 2012, Telenor Digital Services to shareholders and from engaging in FinanciaLS focused on delivering new services to any kind of financial transaction with Revenues in 2012 were NOK 101.7 strengthen the Telenor core offering VimpelCom Russia. When Altimo later billion, a reported growth of 3% and create new revenue streams. raised their stake in VimpelCom Ltd., the compared to NOK 98.5 billion in 2011. During the year, Digital Services FAS eventually withdrew the lawsuits The organic revenue growth of 5% was launched the Comoyo TV and film and lifted all injunctions.
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