Operating profit at Grameenphone dropped 85 percent, hurt by lower prices and a provision related to a possible violation of international call termination rates.

Norway's telecoms company Telenor that owns a 62 percent stake in GP posted a surprise 1.5 percent fall on Wednesday in second-quarter core earnings and cut its 2008 revenue growth target due to a strong crown and inflation which is crimping spending on telephony.
 
Increased costs of living in Pakistan, Bangladesh and Thailand and the rising Norwegian currency prompted Telenor to lower its 2008 revenue growth forecast to 3 percent from 5 percent. The company relies on eastern Europe and Asia for growth as Nordic markets reach saturation and traditional phone usage decreases.
 
In local currency terms, Telenor's average revenue per user, or ARPU, slumped by 14 percent year-on-year in Pakistan, 17 percent in Thailand and 24 percent in Bangladesh, reflecting a drop in spending money due to fast rising commodity prices.
 
Shares in Telenor fell 4.4 percent to 81.80 crowns by 0839 GMT—the lowest level since October 2006—and lagged a 1.8 percent rise on the DJ Stoxx Telecoms index.
 
Telenor, which has 153 million mobile clients in Europe and Asia, said soaring food and energy costs have squeezed consumers' budgets particularly in relatively poor countries such as Bangladesh, Pakistan and Thailand.
 
Earnings before interest, tax, depreciation and amortisation (EBITDA) at Telenor fell to 7.21 billion crowns ($1.43 billion) in April-June from 7.32 billion in the year-ago period.
 
The result missed all 16 forecasts from a Reuters poll of analysts, whose predictions had ranged from 7.31 billion to 7.64 billion crowns and averaged at 7.5 billion.
 
Telenor cut its 2008 revenue growth target to around 3 percent from 5 percent, but said strong performance of deconsolidated Ukrainian unit Kyivstar would keep the group's underlying revenue growth unchanged at around 6 percent.
 
"Given the adverse economic environment affecting the company's emerging market exposure we cut our rating from 'Add' to 'Neutral'," Dexia Bank said in a note to clients.
 
"We do not believe these problems are short-term ... as they are fundamentally linked to adverse economic conditions which are difficult to escape for both Bangladesh and Pakistan, two of the main growth drivers of the company," it added.
 
Telenor's results follow gloomy news on Tuesday from giant Vodafone, although smaller rival Tele2's second quarter EBITDA beat forecasts on Wednesday.
 
According to Bloomberg, revenue rose 2.9 percent to 23.84 billion kroner. Operating profit at Bangladesh's Grameenphone dropped 85 percent, hurt by lower prices and a provision related to a possible violation of international call termination rates. Average revenue per user also dropped in Pakistan, Telenor said.
 
Telenor's operating revenues grew 2.9 percent to 23.84 billion crowns in the second quarter and met the average forecast from a Reuters survey.
 
"Based on the increased challenges linked to macroeconomic conditions, we have adjusted our reported revenue outlook for 2008 slightly," Telenor said in a statement.
 
Telenor maintained its 2008 EBITDA margin goal at above 31 percent and capital expenditure at 20 percent of revenues.
 
Telenor's EBITDA margin stood at 30.2 percent in the second quarter not including Kyivstar, which had a 59 percent margin.
 
Telenor said the Norwegian crown had strengthened by 21 year-on-year percent against the Pakistani rupee, 16 percent against the Bangladeshi taka, 14 percent against the Ukrainian hryvnia, 10 percent against the Thai baht and 9 percent against Malaysia's ringgit.

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