Telenor kicks off sale of $1bn Pakistan business

Oslo: Telenor is pushing ahead with plans to sell its operations in Pakistan, which could be valued at about $1 billion, people familiar with the matter told Bloomberg news wire.

The Norwegian telecommunications operator is working with Citigroup Inc. and will invite first round bids for the business later this month, the people said, asking not to be identified discussing confidential information.

Telenor said in July that it would conduct a strategic review of its Pakistan unit after posting a 2.5 billion-krone ($244 million) impairment on operations in the emerging economy.

Strategic buyers in the Middle East and Asia with existing operations in Pakistan are expected to show interest, according to the people. Deliberations are ongoing and there’s no certainty they’ll result in a transaction, they said. Representatives for Citigroup and Telenor declined to comment.

Shares in Telenor rose as much as 2.4% on Wednesday. The stock was up 1.8 percent in Oslo, giving the company a market value of $13 billion.

In October, Telenor said underlying earnings in Pakistan fell 22 percent in the third quarter, in part because of rising energy prices in the country. The impact of this was offset by a gain from the reversal of a SIM tax in Pakistan.

The gain of 600 million crowns ($57.79 million) in Pakistan, one of Telenor's four Asian markets, was linked to a court decision on the applicability of tax on mobile phone SIM cards for the period from 2014 to 2020.

Telenor, which has 175 million customers in eight countries across the Nordic region and Asia, in recent years sought to cut costs and boost its cash flow to make room for higher dividends and 5G investments. The company's biggest moves to date include plans to consolidate markets in South-East Asia, with a $15 billion merger to form a telecoms leader in Malaysia and an $8.6 billion deal in Thailand.

Both units are run by Telenor Asia, which also operates the company's business in Pakistan and Bangladesh.

Telenor Pakistan’s revenue declined by around 8 percent in Norwegian Kroner terms, while appreciated 4 percent in rupee terms during the first three quarters of 2022 and remained NOK 3.390 billion (Rs82.57 billion) compared to NOK 4.270 billion (Rs 79.36 billion) during the same period of 2021.

Telenor Pakistan reported a total of NOK 1.320 billion (Rs 29.53 billion) in revenues during the third quarter of 2022 compared to NKO 1.425 billion (Rs 26.68 billion) during the same period of last year i.e. 2021 and registered around 7.5 percent decline in NOK terms and 10 percent increase in rupee.

The Group’s Pakistan business was affected by unprecedented flooding during the quarter. The situation impacted the spending power of consumers and also caused network outages along with increasing cost.