Annual Report 2006 2006 Was Telenor’S Best Year Ever
Total Page:16
File Type:pdf, Size:1020Kb
Annual report 2006 2006 was Telenor’s best year ever. Our operations generated an overall revenue growth of 37 per cent. At year-end Telenor provided mobile communications to more than 115 million customers in 13 countries. We fully expect the underlying growth to continue in 2007. CONTENTS President and CEO Jon Fredrik Baksaas 3 Report of the Board of Directors 4 FINANCIAL STATEMENTS Telenor Group Consolidated Income Statement 8 Consolidated Balance Sheet 9 Consolidated Cash Flow Statement 10 Consolidated Statements of Changes in Equity 11 Non-controlling (minority) interests 12 Notes to the Financial Statements 21 Telenor ASA Income Statement 82 Balance Sheet 83 Cash Flow Statement 84 Statements of Changes in Equity 85 Notes to the Financial Statements 86 Auditor’s Report 95 Telenor aims to reduce its consumption of resources and overall impact on the environment. In an effort to keep paper consumption at a minimum, we limit the scope of our printed annual report. However, we do not limit the amount of information we issue about our company. The Telenor Investor Relations website provides extensive information about the year 2006 and our current activities: www.telenor.com/ir ANNUAL REPORT 2006 – PAGE 1 PAGE 2 – ANNUAL REPORT 2006 OUR DRIVE FOR CHANGE 2006 was another outstanding year for Telenor. Our operations generated an overall revenue growth of 37 per cent. During the year we added 32 million new mobile subscriptions, and at year-end Telenor provided mobile communications to more than 115 million customers in 13 countries. We fully expect the underlying growth to continue in 2007. The launch of the new Telenor brand was one of the highlights technology. Also, the interactive HealthLine service enables of 2006. The iconic visual identity has now been adopted customers in Bangladesh to consult licensed physicians about by ten operations in eight countries. The new brand is based any health-related issue over the mobile phone. This service on our solid platform of vision and values that we developed was awarded “Best use of Mobile for Social and Economic in 2005. We now observe that the new brand is making us Development” at this year’s 3GSM conference in Barcelona. more effective in each local market while it also builds strength at group level. New technology brings opportunities as well as challenges. The migration from traditional fi xed-line to voice over IP Our relentless efforts to coordinate activities across national and mobile will accelerate. We are confi dent that the mobile operations enable us to leverage scale and scope as we phone will be the main communication enabler in the future. continue to make the most of our strong local positions. We are working hard to empower customers – enabling Each team player has different qualities, and as we go forward them to perform previously time-consuming tasks quickly we will continue to combine local understanding and know- and effi ciently on their mobiles. To be successful, we must how with the joint strengths that make us a global force in not only stay abreast of developments; we must understand the telecommunications industry. what people really want and drive the changes ourselves. At our Swedish operation, acquired in 2005, cost levels are now signifi cantly down and successful retention efforts have reduced churn and raised profi tability. Once again, we have proven we are capable of turning businesses around fast. On 1 September 2006, we completed the acquisition of Serbia’s number-two mobile operator. In a matter of weeks the operation was re-branded, relocated to new premises, and a dedicated new management was in place. In 2006, we took further steps to bring value added services to new customers, including the fi nancially constrained. In Bangladesh, where only a small percentage of the population enjoys access to regular banking, Grameenphone’s BillPay allows customers to pay their electricity bills using mobile Jon Fredrik Baksaas President and CEO ANNUAL REPORT 2006 – PAGE 3 REPORT OF THE BOARD OF DIRECTORS Telenor commands a strong fi nancial position, and the Group delivered its best result ever in 2006. This strong performance was the result of rapid growth in Telenor’s international mobile business and targeted efforts to strengthen its position in the Nordic market. The Company exceeded 115 million mobile subscriptions during the year, confi rming its position as a leading international mobile operator. Subsidiaries of Alfa Group (Storm and Alpren) have taken legal action in the Group’s growth profi le. Telenor acquired the mobile operations Vodafone Ukraine to have Kyivstar’s choice of auditor disallowed. To date, this has Sweden and Mobi63 in Serbia, both of which have changed their brand to resulted in temporary injunctions preventing Kyivstar from sharing fi nancial Telenor and introduced the Group’s new visual profi le and logo. information with its auditor and shareholders. As far as Telenor’s consolidated annual fi nancial statements are concerned, this means that the results from In the Nordic operations, efforts have been focused on creating a customer- Kyivstar are based on estimates. Although Telenor contests the decisions oriented business and on improving cash fl ow and earnings. The Nordic preventing Kyivstar from providing fi nancial information to its auditor and markets were driven by the migration of voice traffi c from traditional fi xed-line shareholders, the Board has decided to deconsolidate Kyivstar temporarily telephony to mobile and broadband telephony. In the Norwegian market, with effect from 29 December 2006, as the prevailing conditions prevent Telenor focused on retaining its market share in mobile and broadband, Telenor from controlling or exercising signifi cant infl uence over Kyivstar. and on increasing its market share in broadband telephony. At year-end, Management is working hard to have these temporary injunctions lifted. Telenor had 55% of the mobile market and 57% of the broadband market, which is comparable with the situation at the end of 2005. In June, Telenor Telenor is changing. A growing percentage of the Group’s earnings is launched second-generation broadband (ADSL 2+) in Norway. Telenor generated by operations outside the Nordic region. In 2006, the Board became market leader in broadband telephony in 2006, with a market continued to pursue the adopted strategy of developing Telenor as an share of 28% at year-end. The Norwegian fi xed-line operation is generating international mobile operator with a strong growth profi le. Telenor has decreasing revenues. Constant efforts to reduce costs are undertaken to also retained its leading position in the Nordic region with respect to both stabilise the annual cash fl ow in the fi xed-line operation. mobile and broadband services as well as TV distribution. In the Swedish market, Telenor looked to strengthen its mobile operation In the Telenor model, each company builds local competitiveness through through the acquisition of Vodafone. With the takeover of broadband provider cooperation and competence-sharing between operations, countries and Glocalnet in February 2006, Telenor also gained a stronger presence in the regions. A common management structure has been introduced for the Swedish broadband market. With its position in the low-cost segment, Group’s mobile operations. In February 2006, the Telenor Group presented Glocalnet is a good supplement to Bredbandsbolaget. Telenor now offers its new logo and common visual profi le. This makes Telenor a more powerful broadband services to all market segments. industry player and enables the Company to stand out from the growing international competition. Most of Telenor’s operations have now introduced In Denmark, work on coordinating the mobile operation Sonofon and the the new logo, while local brand names have been retained. The new logo is broadband operation Cybercity continued, and a common transmission a symbol of Telenor changing and signals the ongoing effort to strengthen network for use by both operations was completed. Sonofon opened its customer focus in every part of the business. It also contributes to profi ling UMTS network for commercial use in September, nine months after it was Telenor as a group of companies. awarded a UMTS licence. Telenor saw very strong customer growth within mobile in 2006, and is Broadcast retained its leading position in the Nordic market for distribution currently the world’s 12th largest mobile operator. The number of mobile of TV services in 2006. Through a jointly-owned company – Norges televisjon subscriptions within companies in which Telenor has ownership interests (NTV) – Telenor, TV2 Gruppen and the Norwegian Broadcasting Corporation grew by 32 million to 115 million during the year. Total revenues grew by 37%, were awarded a licence in June 2006 for development and operation of driven primarily by the international mobile operations’ strong customer a digital TV terrestrial network in Norway. Norkring will be responsible for growth. The Board has evaluated new markets and mobile operations in developing the transmitter network, and the outphasing of the analogue regions where Telenor is already represented, with the aim of maintaining network will commence in autumn 2007. PAGE 4 – ANNUAL REPORT 2006 The Board endeavours to simplify the Company’s organisation in order to Cash fl ow from operating activities grew by NOK 8.3 billion in 2005 to strengthen its core business. In 2006, Telenor opened a regional offi ce in NOK 30.6 billion in 2006. The increase is related to the growth in operating Bangkok for its Asian operations, entered into an agreement for the sale of revenues and the acquisition of Vodafone Sweden and Mobi63 in Serbia. Telenor Satellite Services, and sold its minority interests in Bravida and Inmarsat. In 2006, Telenor’s total investments amounted to NOK 41.2 billion, of which Telenor also stepped up its research and innovation efforts during the year.