Telenor ASA Reports Strong Nordic Growth Amid Asian Headwinds

Telenor ASA, the Norwegian telecommunications group, announced a robust performance in the Nordic region for the third quarter, while highlighting ongoing challenges in its Asian operations, particularly in Malaysia. The company’s adjusted EBITDA and service revenue increased, driven primarily by expansion in its core Scandinavian markets. However, escalating 5G deployment costs in Malaysia have moderated earnings expectations, prompting a modest downward revision of the fiscal 2025 outlook.

Nordic Performance Outpaces Expectations

In the third quarter, Telenor reported a rise in adjusted EBITDA and service revenues, underscoring the effectiveness of its customer‑acquisition and retention strategies. The Nordic segment continues to benefit from a mature and highly competitive market that has proven resilient to macroeconomic volatility. Key drivers include:

  • Subscription Growth: Incremental increases in mobile and fixed‑line subscribers, particularly in Norway and Sweden, have bolstered revenue streams.
  • Bundling and Digital Services: Expansion of value‑added services—cloud storage, streaming, and IoT solutions—has improved average revenue per user (ARPU).
  • Cost Discipline: Continued focus on operational efficiency has helped control service‑related expenditures, supporting margin expansion.

These factors collectively contributed to a solid EBITDA performance, surpassing analysts’ consensus estimates for the quarter.

Asian Operations Face Cost‑Pressure

While the Nordic markets provide a stable foundation, Telenor’s Asian operations are experiencing significant cost pressures. Malaysia, a pivotal market in the group’s Southeast Asian portfolio, has seen a sharp rise in 5G infrastructure costs, including spectrum acquisition, network equipment, and site‑lease expenses. The result is a modest erosion of profitability in the region:

  • Higher Capital Expenditure: 5G rollout requires substantial capital outlay, which has not yet been offset by corresponding revenue gains.
  • Competitive Pricing: Local rivals have leveraged lower cost structures to maintain pricing pressure, limiting Telenor’s ability to pass on costs to consumers.
  • Regulatory Environment: Uncertain regulatory approvals and spectrum licensing processes have delayed network rollouts, impacting revenue timelines.

These headwinds have led Telenor to tighten its fiscal 2025 outlook, reflecting the uncertainty in the Asian segment. The company remains cautious about revising its long‑term growth trajectory until cost dynamics stabilize.

Market Reaction and Analyst Sentiment

On the Oslo Stock Exchange, Telenor’s shares fell by approximately 3.6%, trading below its 52‑week high. Despite the short‑term decline, sentiment among analysts remains mixed:

  • Neutral Rating: One research firm lowered its rating to neutral, citing the cost‑heavy Malaysian market but preserving a target price of around NOK 170.
  • Optimistic Outlook: Other analysts emphasize the company’s strong Nordic performance and strategic investments in digital services, which could offset regional headwinds over the long term.

Investor focus is therefore split between the company’s proven strengths in Scandinavia and its ongoing challenges in Southeast Asia.

Broader Implications for the Telecom Sector

Telenor’s experience highlights several sector‑wide trends:

  • 5G Deployment Costs: Telecom operators globally face significant capital expenditures to roll out next‑generation networks, often resulting in short‑term earnings pressure.
  • Digital Monetization: Revenue diversification through content, cloud, and IoT services is increasingly critical for sustaining profitability in mature markets.
  • Geographic Risk Allocation: Firms with a concentrated presence in a single region (e.g., the Nordic markets) may be more vulnerable to localized regulatory or competitive shifts than those with a diversified global footprint.

The company’s ability to navigate these dynamics—particularly by managing 5G costs in Malaysia while maintaining growth in its core markets—will be a key determinant of investor confidence moving forward.

Conclusion

Telenor ASA has demonstrated resilience in its Nordic operations, delivering solid adjusted EBITDA and service revenue growth in the third quarter. However, the escalating cost base associated with 5G expansion in Malaysia has tempered overall earnings and prompted a more cautious fiscal outlook for 2025. While the company’s stock price has dipped, analysts remain divided, reflecting the broader uncertainty surrounding telecommunications investments in the region. Investors will continue to monitor Telenor’s performance closely, especially its capacity to translate Nordic momentum into a sustainable, global growth trajectory.