Norwegian telecom group Telenor reported a 13-percent gain in net earnings for 2007 on Wednesday but fell short of market expectations for 2008. Shares in the company, the says it is seventh-biggest mobile phone operator in the world, had fallen 5.72 percent by early afternoon on an overall Oslo market that was 1.0 percent weaker.
The company said that in 2008 it expected a 5.0 percent rise in sales and an operating margin above 31 percent after 31.3 percent in 2007 and 36.2 percent in 2007. The 2008 projection was below market expectations. Telenor has suffered from stepped-up competition in Norway, where it lost a contract with the virtual telecom operator Tele 2.
"The current cost structure is not viable on so competitive a market and measures to cut costs will be taken in 2008," said Telenor managing director Jon Fredrik Baksaas. Last year, Telenor made a net profit of 18 billion kroner (2.25 billion euros (3.3 billion dollars) after 15.9 billion in 2006.
But its underlying profit, earnings before interest, taxation, depreciation and amortisation, fell 10.5 percent to 29.3 billion kroner from sales that edged up 1.5 percent to 92.5 billion kroner.
The results do not take account of Kievstar, a Ukrainian subsidiary in which Telenor has a 56.5 percent stake. But its inclusion in Telenor accounts was delayed because of a dispute on strategy with the other shareholder, Alfa Group of Russia.