Telenor reports 39 pct fall in 3Q profits

OSLO, Norway - Norwegian telecommunications group Telenor ASA on Wednesday reported a 39 percent decline in net profits for the third quarter, citing slower revenue growth, tougher market conditions as well as higher taxes and costs than a year earlier.

The group, based on the outskirts of Oslo, also announced plans to buy a 60 percent stake in Unitech Wireless, the telecommunications unit of the Indian real estate group Unitech, for $1.07 billion.

Telenor said its net profit for the July through September quarter was just under 3 billion kroner ($428 million), down from 5.1 billion a year earlier, despite an increase in revenues to 27.6 billion kroner ($3.94 billion) from 26.5 billion kroner for the same period.

"Our business environment is currently more turbulent, and we foresee a period with lower global growth," said Telenor chief executive Jon Fredrik Baksaas "In Asia in particular, the revenue development continues to be affected by the macro economic development as well as strong competition."

He said the company's Pakistan unit was hit by reduced consumer spending, greater competition and higher taxes. He said the company faced higher costs, especially for financing, in many parts of the world.

Telenor shares fell 9.69 percent to 40.55 kroner ($5.79) in early trading on the Oslo stock exchange.

The company said that, pending regulatory approval, its planned investment in Unitech Wireless would give it an important foothold in India, the world's second largest mobile market.

"Entering the Indian mobile market gives Telenor a unique possibility to further enhance the Telenor Group's position as one of the leading emerging markets operators, and enables us to take part in the development and growth opportunities in one of the fastest growing telecom markets in the world," said Baksaas.

Unitech Wireless has pan-Indian telecommunications licenses and plans to launch its services in mid-2009. The company was established in 2007 and has over 250 employees.

Telenor operates worldwide, with about 150 million subscribers and a work force of about 38,000 people.

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