Investing.com -- Shares of Telenor (OL:TEL) edged up 1.5% after the company reported mixed financial results, with service revenues in the Nordics falling slightly short of expectations, but overall earnings before interest, taxes, depreciation, and amortization (EBITDA) aligned with consensus when excluding one-off items. The company’s free cash flow (FCF) exceeded analyst estimates, bolstered by efficient working capital management.
In the first quarter, Telenor saw its group and Nordic service revenues grow by 1.1% and 2.3% YoY, reaching NOK 16.3 billion and NOK 11.2 billion, respectively. However, Nordic service revenues came in 2-3% below both the company’s and consensus estimates, particularly impacted by performance in Sweden.
Adjusted EBITDA for the group and the Nordics increased by 2.0% and 6.0% YoY to NOK 8.48 billion and NOK 5.90 billion, respectively. The Nordic figures were again below estimates by NOK 100 million and NOK 139 million. Negative one-offs totaling NOK 170 million, primarily from the Nordics and Grameen, affected the results. Excluding these one-offs, organic growth was reported at 4.1% for the group and 7.4% for the Nordics, which is broadly in line with the consensus of 4.2% and 6.0%.
The company’s FCF stood at NOK 3.1 billion, a significant beat compared to the NOK 1.6 billion consensus and analyst estimates, thanks to favorable working capital movements. Looking ahead to 2025, Telenor has set guidance for low single-digit growth in Nordic services, slightly above the consensus of 2.4%, and mid single-digit growth in adjusted EBITDA, modestly surpassing the consensus of 4.4%.
Capital expenditures to sales ratio is expected to be around 14%, consistent with forecasts, while group FCF is projected to be approximately NOK 13 billion, covering the anticipated dividend of NOK 9.6 per share and aligning with the consensus of NOK 12.6 billion. The company anticipates group EBITDA to grow at a low to mid single-digit rate, which is in line with the consensus estimate of 4.5%.
Barclays (LON:BARC) commented on the company’s future, stating, "There will be a strategy update in October 2025, leaving many questions for now, but management has indicated commitment to dividend growth, and ROCE – which we see as supportive."
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