Telenor ASA Alert : Telenor drops speed caps in Norway until 2017. Negative.

September 2, 2016 · Deutsche Bank

*Telenor drops speed caps in Norway. Sign that the market is a little tougher? Telenor yesterday followed Telia in dropping speed caps on its Norwegian wireless tariffs until year-end. As the chart below shows, Telenor used to try and encourage customers to move up the data curve by offering more data and higher speeds, but the maximum speed will now be offered across all tariffs until the end of the year. This could be designed to encourage consumers to use their devices more but equally, it could be an indication that some of the competition at the low-end is beginning to bit (ICE offers 1GB of data with 50Mbit/s for NOK 99 per month, Telenor was offering 500MB at 10Mbit/s for NOK 249). We maintain our cautious stance on Telenor: see our recent downgrade to Sell (current share price NOK 144) ‘A premium valuation but no premium growth, Downgrade to Sell, 29 July 2016’ . *A surprising move ahead of an iPhone quarter The iPhone launch is usually important for the Nordic operators as this is usually when they get many customers to upgrade to newer handsets and on a higher service plan. Telenor could find this upsell to be more difficult as (i) there is no speed advantage on the larger buckets and (ii) existing ARPUs are already high – Telenor already generates a post VAT ARPU of NOK 446. *AINMT reported Q2 results this week with some commentary on ICE AINMT Scandinavia, which controls ICE, this week reported Q2 results. In Q1, the company said it added 50k subscribers in April and May and in the Q2 report, the company says ‘we are very pleased that the sales rate has been maintained at very favourable levels throughout the entire summer period and into August’. We believe the combination of high pricing, a high ARPU and 90% of the market in the hands of two players does leave Telenor exposed.

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