Norwegian telecoms operator Telenor ASA expects heavy investment in data traffic to drive its growth for years and is banking on unique low-cost offerings in key Asian markets like Bangladesh and India, it said on Wednesday.
Telenor, which has 172 million customers across Europe and Asia, sees growth opportunities since only a fifth of its customers are so far using the Internet, and sees Thailand - already its second-biggest territory by revenue after Norway - as a future star of data growth, providing a model for many of its Asian markets.
Telenor, once a favourite among investors for its exposure to the relatively healthy economies of the Nordic countries and Asia, had fallen out of favour in recent months because of a slowdown in growth and its activities in Russia and Ukraine.
Yet Chief Executive Jon Fredrik Baksaas said Telenor would stick with its investment in Russia-focused Vimpelcom, in which it holds a 43 percent stake, even though its view of Russia had changed because of the conflict in Ukraine.
"If you started from scratch, it would be hard to see a western company like Telenor would do a significant investment in Russia right now," Baksaas told Reuters.
"We are where we are and right now we have to position the company ... in each and every market that we have," he said, noting the impact of Western sanctions against Russia was not yet clear. "It's far too early to speculate on what kind of development potential sanctions can have on this operation ... Generally speaking, telecoms ... is a needed infrastructure."
Elsewhere, Telenor has rolled out a slimmed-down version of Facebook in India, offering content without videos and high-resolution pictures, giving a bigger customer base access.
"We are doing this differently than in any other market," Chief Financial Officer Richard Aa told an investor conference. "This is the way to sell Internet in very low-cost, spectrum-scarce markets ... We see a big value-creation opportunity."
Many European telecom companies have struggled to cash in on surging data traffic, making it hard to justify heavy investment, but Telenor, which has 154 million users in Asia, has stood out because of the relatively strong returns it has achieved.
It is also offering financial services such as money transfer in Pakistan and has invested in classified advertising, expecting the market to move to mobile platforms.
"What we have done in some Asian markets is give customers very small data packets to enjoy, see and learn what Facebook is about," Baksaas told Reuters. "This is to get people on board, then we work to keep them there."
Baksaas said the Thai unit could offer the best potential growth prospects in Asia, looking beyond short-term political uncertainties linked to months of sometimes deadly anti-government protests.
In the first quarter, Telenor's Asian operations, particularly in Pakistan, Bangladesh and India, drove profit growth, more than offsetting weakness in places like Denmark and central Europe.