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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.




TELENOR  (TELN:NYSE) 2006-04-25

This company could be the best Telemedia play around at the moment.

A frenzy of takeover speculation has hit the Telecom sector, both sides of the Atlantic lately.
Telecom companies are scrambling to offer bundled services in price wars with cable companies and mobile providers. Companies like AT&T, Verizon, Comcast, BT and Vodafone really don't interest us.
The growth in fixed line and mobile phones useage in their traditional markets is almost over.
Of course, people will upgrade and replace their existing phones, but we dont think the growth is there.
In fact, penetration is almost up to 100%.

However; there are a few lesser known Telecom companies that do interest us. 
One of these is Norway's Telenor. A virtual unknown as far as telecom companies go. The company was founded in 1885 and is headquartered in Fornebu, Norway. It had revenue of $11.18 billion in 2005, so it is not a small cap company.
It has a fixed line business, two mobile concerns, a satellite operation and is  the leading cable TV player in its home country.
The company's mobile communication services include mobile voice, roaming, and data services; mobile Internet/Intranet and video telephony; wholesale mobile network services; interconnection services; and voice services using voice over Internet protocol.
As of December 31, 2005, Telenor had 2.731 million subscriptions in Norway and 41.4 million
mobile subscriptions internationally.
Telenor's fixed network telecommunications services include analogue and digital telephony,
broadband, Internet access, data services, and leased lines to residential, business and
wholesale customers.
At the beginning of 2006 it had approximately 1.089 million analogue subscriptions in the
residential and business markets; approximately 509,000 digital or integrated services
digital network subscriptions; and approximately 475,000 digital subscriber lines subscriptions.

The company also provides broadcasting services in the Nordic region through satellite dish,
cable television networks, and small antenna television networks systems.
Telenor had approximately 3 million subscribers to its television services.
In addition, it offers satellite-based communications networks and services to governmental,
intergovernmental, and commercial organizations. 
Further, the company provides software solutions, software services, and computer operations
to companies in banking and finance, telecommunications, and the public and trade and
industry sectors in the Nordic region. 
Telenor distributes its services through a direct sales force, retail stores, the Internet and independent distributors.
The company also has high exposure to emerging markets growth. Telenor operates in Denmark,
Hungary, Ukraine, Thailand, Malaysia, Bangladesh, Pakistan,Montenegro, and Sweden.
This is the ace up its sleeve.
In the emerging markets, cheaper hand sets and voice calls mean mobile telephony has become a mass market phenomenon overnight.

Telenor has a healthy balance sheet and a good operating margin of 18.2%.
Revenue growth was 25.5% in 2005 and Gross profit was $6.04 billion.
With a P/E ratio of just 11 for 2006 and with a yield around 4% it looks like a good
investment in a hated sector.

Buy Telenor (TELN:NYSE)  up to US$38. This could be a good call.


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.