Telenor is developing profitable mobile operations Telenor is developing profitable mobile operations

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  • Telenor is developing profitable

    mobile operations in international

    growth areas, while maintaining

    its position as market leader in

    Norway.

    Annual Report 2004

  • KEY FIGURES (NOK in millions except net income per share)

    PROFIT AND LOSS 2004 2003 2002 2001 2000

    Revenues 60,752 52,889 48,668 40,604 36,530

    Gains on disposal of fixed assets and operations 550 232 158 5,436 1,042

    Total revenues 61,302 53,121 48,826 46,040 37,572

    Operating expenses 54,700 45,561 49,146 42,863 33,943

    Operating profit (loss) 6,602 7,560 (320) 3,177 3,629

    Associated companies 718 1,231 (2,450) 8 237 (692)

    Net income (loss) 5,358 4,560 (4,298) 7,079 1,076

    Net income (loss) per share in NOK – basic 3,07 2,57 (2,42) 3,99 0,75

    US GAAP

    Revenues 67,801 52,826 47,879 40,581 36,481

    Net income (loss) 5,639 5,036 (3,658) 7,004 1, 082

    Net income (loss) per share in NOK – basic 3.22 2.84 (2.06) 3.95 0.76

    BALANCE AT 31 DECEMBER 2004 2003 2002 2001 2000

    Total fixed assets 71,359 68,346 74,162 66,095 80,881

    Total current assets 16,735 17,764 15,296 16,528 12,804

    Total assets 88,094 86,110 89,458 82,623 93,685

    Shareholders equity 37,594 37,237 33,685 42,144 35,474

    Minority interests 4,074 3,646 3,603 3,539 2,706

    Total equity and minority interests 41,668 40,883 37,288 45,683 38,180

    Total long-term liabilities and provisions 24,294 25,102 26,772 15,866 15,285

    Total short-term liabilities 22,132 20,125 25,398 21,074 40,220

    Total liabilities 46,426 45,227 52,170 36,940 55,505

    Total equity and liabilities 88,094 86 110 89,458 82,623 93,685

    US GAAP

    Total assets 101,171 101,088 97,511 90,129 99,776

    Total long-term liabilities 34,882 39,255 33,957 24,758 46,972

    Total equity and minority interests 42,430 42,535 35,799 42,944 36,304

    CASH FLOW AND OTHER KEY FIGURES 2004 2003 2002 2001 2000

    Net cash flow from operating activities 18,991 13,676 12,858 6,993 5,915

    Net cash flow from investment activities (13,031) (3,454) (21,727) 20,891 (47,308)

    Net cash flow from financing activities (8,255) (7,887) 8,641 (24,366) 41,558

    Investments:

    - Capex 1) 12,745 6,454 8,889 11,634 10,421

    - Investments in activities 2) 5,809 563 12,411 7,212 40,251

    EBITDA 3) 20,821 18,302 13,469 14,250 9,563

    RECONCILIATIONS 2004 2003 2002 2001 2000

    Net income (loss) 5,358 4,560 (4,298) 7,079 1,076

    Minority interests 1,244 490 (358) (721) 66

    Taxes 2,244 2,376 (480) 3,897 861

    Net financial items (1,526) 1,365 2,366 1,159 934

    Associated companies (718) (1,231) 2,450 (8,237) 692

    Depreciation and amortization 11,623 10,597 10,236 7,251 5,821

    Write-downs 2,596 145 3,553 3,822 113

    EBITDA 20,821 18,302 13,469 14,250 9,563

    1) Capex is investments in tangible and intangible assets 2) Consists of aquisitions of shares and paticipations including aquisition of subsidiaries and businesses not organized as separate companies 3) Operating profit before depreciation, amortization and write-downs

    12% Other units

    9% Broadcast

    28% Fixed

    DISTRIBUTION EXTERNAL REVENUES 2004

    19% Europe (ex. Nordic region)

    11% Asia/ other countries

    55% Norway

    15% Nordic region (ex. Norway)

    DISTRIBUTION EXTERNAL REVENUES 2004

    51% Mobile operations

  • The world is getting smaller

  • Finland

    Broadcast (Canal Digital)

    Norway

    Telenor Mobil, Fixed, Broadcast, EDB Business Partner, Satellite Services

    Sweden

    Telenor Mobile Sweden, Broadcast (Canal Digital)

    Russia

    VimpelCom 29.9%, Golden Telecom 20.3%

    Denmark

    Sonofon 100%, Broadcast (Canal Digital)

    Ukraine

    Kyivstar GSM 56.5%

    Austria

    ONE 17.5%

    Hungary

    Pannon GSM 100%

    Montenegro

    Promonte GSM 100%

    Pakistan

    Telenor Pakistan 100%

    Bangladesh

    GrameenPhone 62%*

    Thailand

    DTAC 40.3%*

    Malaysia

    Digi.Com 61%

    * Includes Telenor’s direct ownership of DTAC and Telenor’s indirect ownership through Telenor’s ownership of UCOM.

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    Telenor’s market value as at 31 March 2005 was NOK 100 billion. Telenor is the third largest company listed on the Oslo Stock Exchange.

    At year-end 2004, the Telenor Group had 21,750 employees, 9,750 of them were employed outside Norway.

    Telenor is Norway’s largest telecommunica- tions provider.

    In 2004, Telenor registered record- high customer growth in several markets.

    Telenor has substantial international operations.

    Telenor is listed on the Oslo Stock Exchange and Nasdaq.

    Contents: This is Telenor 1 CEO Jon Fredrik Baksaas 4 Telenor in 2004 and 2005 6 Telenor’s operations 8 The Nordic region 12 Europe 20 Asia 26

    Group Management 34 Corporate Governance 35 Information to shareholders 42 Report of the Board of Directors 45 Financial Review 54 Accounts Telenor Group 82 Accounts Telenor ASA 134

    Auditor’s Report 146 Implementation of International Financial Reporting Standards (IFRS) 147 Telenor – 150 years 152 Memorandum and articles of association of Telenor ASA 153 Elected Officers and Management 154

  • Telenor is becoming increasingly international. The company’s strong position in Norway will remain an important platform in Telenor’s future development.

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  • A pioneering nation Telenor’s history in Norway is a story of receiving technological impulses from the outside world, and developing them within the framework of distinctly Norwegian con- ditions. Building telecommunications net- works in Norway involved overcoming sig- nificant challenges. Equally significant were the gains made with respect to industrial development and improved welfare.

    A look back on Telenor’s 150 years in tele- communications provides ample examples of Norwegians pioneering and being quick to adopt new services. In 1880, Telenor introduced commercial telephony, making Norway one of the first countries to provide such services. Due to the challenging geo- graphical characteristics of our country the telephone quickly became an important tool with respect to strengthening social ties and commercial development. In 1906, Telenor became the first company in Europe to connect remote island commu- nities with the mainland via radiotelephony. This provided fishermen in the villages of Northern Norway with a means of direct communication with the exporters on the mainland – an event that contributed significantly to the rapid development of Norwegian fish exports, which today are among the largest in the world. In recent years we have seen that Norwegian fish exporters have been equally quick to take up the Internet in their operations.

    In 1976, we opened the first satellite con- nection between the Norwegian mainland and the oil installations in the North Sea – a significant step in the development of the Norwegian oil industry. In 1981, Telenor launched Europe’s first fully automatic mobile network, soon to be followed by the introduction of GSM technology. Norwegian customers were quick to take up the new services, and Telenor exported the experi-

    ence and skills gained in the Norwegian telecommunications market to our partners in Europe and later in Asia.

    From monopoly to competition In Norway, as in other countries, the telecommunications industry came to be dominated by national monopolies. The stable and comprehensive frameworks of the monopoly era secured nationwide networks and reliable services.

    Over the last 20 years, profound changes have taken place in the telecommunica- tions industry. The monopolies have been dissolved, and together with technological development, new opportunities for inno- vation, growth, and improved welfare have emerged. It is striking to see how such opportunities are being created through a combination of global impulses and national initiatives.

    Today, the telecommunications industry is exposed to fierce competition. National and geographical borders no longer coin- cide with those of telecommunications. The same products and services are developed and offered in a number of different coun- tries. Another example is how telecommu- nications solutions are managed and pro- vided across borders. In our international commitments we have been able to draw on our experience and expertise, and this has given us a solid basis for extracting synergies relating to innovation and new development.

    Telenor is becoming a truly international company. In 2003 we joined the GSM Association, an organisation made up of the world’s twelve largest mobile operators.

    The road ahead Telenor’s continued growth during 2004 provides us with a good platform for further

    improvement. By focusing on cost-control we will counter rising costs rel