What does the company do?
Telenor is the former State owned incumbent provider of fixed and mobile telecommunication, data and media services in Norway. The Norwegian state still retains a fifty four percent stake in the company. Telenor now operates in thirteen markets across the Nordic region and Asia. It has used the sizeable and stable cash flows from its dominant domestic market share to invest in overseas markets including Malaysia, Myanmar, Thailand, Bangladesh and Pakistan. The company has recently cleaned up its portfolio of assets by retreating from more problematic markets in Bulgaria, Hungary and India. This retrenchment has left the business in a far stronger position, focused more on its key assets, and allowed capital to be returned to shareholders from the asset disposals.
Why do we like the investment?
Some view the telecommunications industry as being unattractive, with regulators keen to limit the returns earned. The Manager believes that Telenor has the opportunity to use its dominant domestic position, where the regulator has not been overly punitive and where competition is limited, to focus on delivering impressive cost reductions. It has also strengthened its balance sheet, while advancing into more attractive growth markets in a sensible manner. While perhaps not the most exciting area of the market the Manager is attracted by the straightforward business model, strength of free cash flows and commitment to modest year on year dividend growth.
In which year did we first invest?
Where is their head office?