Telenor still sees promising future with DTAC

The investment write-down by Norway’s Telenor in Total Access Communications (DTAC) will have no impact on Telenor’s long-term relationship with the Thai cell-phone operator, according to the report published in The Nation on February 19.
Telenor said the earlier week that it had written down its investment in DTAC and the latter’s parent firm, United Communication Industry (Ucom), by a combined Bt5.6 billion (900 million kroner) in the last quarter.
     The report raised the question of whether Telenor still viewed DTAC as a high-yielding investment.
     “The write-down is just a normal financial clean-up and has nothing to do with our long-term commitment in DTAC,” said Sigve Brekke, DTAC’s co-chief executive.
Brekke, who has also served as managing director of Telenor Asia, represents the Norwegian telecom giant within DTAC’s management.
     Telenor acquired a 30-per-cent stake in DTAC and a 24.9-per-cent stake in Ucom two years ago in a deal worth US$720 million (Bt31 billion). The Norwegian firm has stakes in 12 mobile-phone companies outside Norway, a near-saturated market. DTAC has the most subscribers of them. The Thai cell-phone operator has around 5.5 million users, a 32-per-cent market share, which makes it the second-largest in the country.
     In the first nine months of last year DTAC and Ucom recorded revenue of Bt25.6 billion and Bt5.5 billion respectively.
     Brekke said that DTAC’s future is very promising and there is still ample room for DTAC to grow. He declined to reveal DTAC’s total investment this year, and would only say that it would be funded by DTAC alone.
     DTAC, in mid of February this year, launched a nationwide multimedia messaging service (MMS) to enable its subscribers to send and receive integrated text, voice and animated pictures on their MMS-enabled handsets. The following week, the company kicked off its mobile Internet service through partnerships with IT firms Microsoft and Hewlett-Packard to serve the corporate market.
     Sunti Medhaviklu, post-paid service director of DTAC, said that DTAC’s revenue from the corporate market this year is expected to grow 100 per cent from last year’s Bt800 million.
     “Our policy now is to break the market into segments and tailor-make our applications to fit their specific demands,” Brekke said.
     Telenor ASA is Norway’s biggest telecom group and the most aggressive of the Nordics in seeking to expand into markets like Russia and Portugal, where growth potential is higher. This expansion led to the hefty charges of 6.2-billion-kroner in total in the last quarter, from write-downs, losses on sales and costs tied to staff cuts. The write-downs came mainly from Telenor Mobile, including 2.1 billion kroner in its holdings in DiGi.com in Malaysia, one billion in Sonofon in Denmark and the 900 million in DTAC/Ucom.
     However, Telenor pleased the market with forecasts of higher earnings and turnover, despite reporting the huge write-downs that swung its fourth quarter to a loss.
     “Telenor expects continued growth, especially from our international mobile companies,” chief executive Jon Fredrik Baksaas told a news conference after unveiling October-December results that generally beat market expectations.
The company posted a pre-tax loss of 5.3 billion kroner from a 708-million-kroner profit a year earlier.
     Fourth-quarter revenues fell to 13.04 billion kroner from 15.92 billion, though they still beat forecasts of 12.93 billion.
     The company reported a net loss of 4.2 billion kroner, or 2.37 kroner per share, for last year, against a profit of 7.1 billion for 2001. Even so, it proposed a dividend of 0.45 of a kron against 0.35 for 2001.

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