Norway's Telenor warns on Q2 profit after error at Grameenphone

Credit: REUTERS/MARKO DJURICA

Norwegian telecoms group Telenor said its second-quarter earnings would take a hit from "errors" discovered at Grameenphone, its Bangladeshi telecoms division.

By Victoria Klesty

OSLO, July 15 (Reuters) - Norwegian telecoms group Telenor TEL.OL said its second-quarter earnings would take a hit from "errors" discovered at Grameenphone GRAE.DH, its Bangladeshi telecoms division.

"Grameenphone has discovered some erroneous omissions with regards to sales, marketing and commission payments and associated costs relating to non-deductible expenses for prior periods," Grameenphone said in is second-quarter earnings statement on Sunday.

"As a consequence, its sales, marketing and commission expenses and associated non-deductible costs were understated," it added.

Telenor said this would mean taking a one-off loss in the second quarter of 2019 for the group as a whole, with its expectations for earnings before interest, tax, debt and amortisation (EBITDA) lowered by 299 million crowns ($35.05 million).

Net profit guidance would be lowered by 622 million crowns ($72.91 million) in the quarter, Telenor added.

The company declined to comment further on Monday.

Telenor shares traded 0.4% lower at 0908 GMT while the Oslo benchmark index .OSEBX was down 0.2%.

"That one-off cost is not important, but it raises new questions - why did this happen, is there a risk that there could be more of this coming, or a risk that this could happen in other markets and so on," said Stefan Billing, analyst at Kepler Cheuvreux. "This creates a bit of uncertainty."

The Norwegian firm holds a 55.8% stake in Grameenphone, while Grameen Telecom holds 34.2%.

Telenor will publish its second-quarter results on Tuesday.

($1 = 8.5306 Norwegian crowns)

(Reporting by Gwladys Fouche and Victoria Klesty; Editing by Jan Harvey and Emelia Sithole-Matarise)

((gwladys.fouche@tr.com; +47 23 31 65 94; Reuters Messaging: gwladys.fouche.reuters.com@reuters.net; Twitter handle: @gfouche))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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