Telenor ASA: Burmese Days

Among the businesses we were able to meet in Oslo was Telenor ASA, a company we have had on and off engagement with for around 15 years. Telenor is the incumbent, integrated telecommunications firm in Norway, with segments in mobile and fixed, broadband, B2B and other digital services such as cloud, serving 114m subscribers.  

The company was originally founded in 1855 as the state-owned provider of telegraph services, these days it connects customers across four Nordic territories (Norway, Sweden, Denmark and Finland), and has continuing operations in three Asian territories. Telenor has taken a 100% active ownership model of its network across Scandinavia, and has leading positions in Sweden (#3), Denmark (#2) and Finland (#2), providing market competition and diversification. All these markets, including its leading #1 position in Norway are accretive, despite some headwinds in terms of customer retention and price discounting – notably in Denmark.

The bulk of Telenor’s revenues are service revenues (82% of Group total in Q1)¹, and Telenor reported NOK9.4bn of profit before tax on revenues of NOK 18.1bn. Leverage is a modest 1.2x, with Telenor having a progressive (bi-annual) dividend policy with an attractive expected forward yield of 6.7%. With free cash flow of over NOK31.9bn, Telenor has announced a NOK15bn share buy-back program commencing Q2 26, subject to shareholder approval. For WHITEFRIARS, Telenor has characteristics that stand-out; territorial diversification with common brand identity across four key Nordic markets, strong asset-based ownership model, progressive dividend, reducing leverage and strongly resilient free cash-flow. Not surprisingly, the Nordic countries are among the most digitally advanced, which presents in a reducing capex year on year to stand as a ratio to sales of 12.5% in Q126. The share price has performed well over three years, but has been more subdued over the longer term, making the shares at this price an attractive entry-point that capitalises on the buy-back and dividend.

Telenor’s ongoing headwinds arise from its adventures in Asia. Its initial entry in the 1990s saw Telenor establish a major presence in Bangladesh (Grameenphone), followed by rapid expansion across south-east Asia including Thailand, India, Malaysia, Pakistan and Myanmar, becoming a significant regional mobile player. The company has subsequently undergone considerable change since entering Asia with such optimistic flourish nearly 30 years ago. At our meeting, we were told an ordered exit from Asia is the strategy of new management, with the number of markets now reduced to operations in Malaysia, Bangladesh and Thailand. Some of these exits had been messy (India) and others (Myanmar) continue to rock Telenor’s foundations. Asia represents a relatively modest 18% of group revenues, with the majority sale of true, its Thai operations, announced in Q1 26. Looking forward (2025-2030) the company is doubling down on costs, tapering capex, (with most 5G now rolled out), a further doubling of cashflow, coupled with an expanding RoCE based on efficiencies and the use of AI. For WHITEFRIARS this is a positive outlook with strong focus on delivering superior shareholder returns. However, Myanmar remains a potential headwind.

Our engagement with Telenor began in 2012 at the time the company indicated its intention to bid to build and roll out the 4G mobile network in Myanmar, a country deeply underserved in terms of fixed line and mobile telecommunications. At the time, we assessed the ability of their being able to operate with integrity and transparency in Myanmar as potentially compromised, given the country’s sectarian conflicts and ongoing human rights challenges. The reassurances we received, not least optimism surrounding a peaceful transition to civil government after decades of military diktat, did not entirely assuage our concerns, which were soon to be realised. The military coup in 2021 made operating ‘normally’ for Telenor almost impossible with lawful intercept and trace demands, although common everywhere, having a specifically sinister aspect in the context of Myanmar’s crackdown on activist opposition. The company announced it would exit in 2021 owing to ‘untenable’ legal and safety risks to subscribers and staff. The sale to Lebanon’s M1 was viewed as controversial at the time. In hindsight, our concerns of 2012-2013 were painfully realised; Telenor’s unusual missteps perhaps reflecting an all too confident business model of expansion across its chosen international region. Unfortunately, bad decisions can haunt much changed businesses for years, if not decades thereafter.

The Observer’s three-page exposé on 28 June² reported a class action being brought against Telenor which alleged the transfer of data to the junta, had led to the arrest, torture and even execution of opposition activists. Telenor, caught between its natural corporate responsibility and the harshest of regimes showed how badly Western companies can get it wrong. We were told that the situation had presented unparalleled challenges which it had tried to navigate responsibly; they contested the nub of the class action and will defend their position. The Observer’s searching report makes for intensely troubling reading, and Telenor’s actions in Myanmar will reverberate for years to come as the legal action plays out. At stake, ultimately, is Telenor’s reputation for ethical business; new management clearly want a quieter life focused on Nordic telecoms, which we applaud.

There is much to like about Telenor as an investment thesis and new management have seized control of a once sprawling group to focus on what it does best – exercising capital and operational efficiency in highly regulated markets to deliver superior shareholder returns. However, it can’t quite escape its Burmese Days, where once bright optimism curdled so swiftly into every CEO’s worst nightmare.

Notes

¹ All figures Telenor ASA www.telenor.com 

² The Observer – ‘Myanmar demanded data from a Norwegian telecoms firm. Months later an activist was dead’. Isabell Coles 28^th June 2026