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Telenor (TELNY) Continues to Focus on Cybersecurity Measures

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Telenor ASA (TELNY - Free Report) has concluded the first half of 2024 with impressive financial results across key markets in the Nordics and Asia. The company's strategic focus on technology investments and cybersecurity initiatives has laid a strong foundation for future growth.

In the second quarter, Telenor achieved service revenues of NOK 16.3 billion ($1.51 billion) compared with the year-ago quarter’s NOK 15.83 billion. The 4.5% organic increase was driven by the solid growth in Telenor Nordics (4%) and Telenor Asia (6%).

EBITDA before other items stood at NOK 8.8 billion on an organic basis. The organic growth of 3.8% was backed by improved service revenues in Nordics and Asia, partly offset by higher operational expenses, mainly in Asia.

For the first half of 2024, Telenor witnessed an EBITDA of NOK 17.3 billion. EBITDA before other items increased 5.3% on an organic basis and 2.7% on a reported basis. This growth was fueled by strong service revenues and focused cost management in the Nordics, partially offset by an increase in operating expenses in Asia.

In addition to financial achievements, Telenor has made significant strides in cybersecurity. The company has prevented over a billion digital crime attempts against its Norwegian customers this year. These attempts include blocking fraudulent websites, phishing scams, malware downloads, and fraudulent communications via phone calls and SMS. 

The establishment of Telenor Cyberdefence and the acquisition of Combitech AS this month further marked a significant step for Telenor to bolster its cyber defense offerings, aiming to strengthen its position in the cybersecurity sector. The company generated free cash flow before M&A of NOK 2.2 billion, adding up to a solid cash flow of NOK 5.5 billion in the first half of the year.
 
Technology remains pivotal to Telenor's strategy, enabling enhanced customer experiences and operational efficiencies. Earlier this year, Telenor inked a strategic partnership with Nvidia Corporation to improve its artificial intelligence capabilities. The investment in Skygard, a data center company, and the expanded partnership with Amazon Web Services further underscore Telenor's commitment to advancing its sovereign cloud solutions.

For 2024, Telenor expects low-to-mid single-digit organic growth in Nordic service revenues. Management expects a free cash flow before M&A of NOK 9-10 billion in 2024, based on the 2023-end foreign exchange rates. The company further anticipates mid-single-digit organic growth in Nordic EBITDA before other items and a Nordic capex-to-sales ratio of around 17% for 2024. 

Shares of Telenor have gained 11% over the past year against the industry’s decline of 3.6%.

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Zacks Rank and Key Picks

Telenor currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry have been discussed below.

Ooma, Inc. (OOMA - Free Report) offers cloud-based communications solutions, smart security and other connected services. The company’s smart software-as-a-service and unified-communications-as-a-service platforms serve as a hub for seamless communications and networking infrastructure applications. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It delivered a trailing four-quarter average earnings surprise of 8.90%. In the last reported quarter, Ooma delivered an earnings surprise of 27.27%.

Telephone and Data Systems, Inc. (TDS - Free Report) , sporting a Zacks Rank of 1 at present, provides wireless products and services, cable and wireline broadband, TV and voice services to approximately 6 million customers in Chicago. 

In the last reported quarter, TDS delivered an earnings surprise of 145.45%.

Motorola Solutions, Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Currently, Motorola holds a Zacks Rank #2 (Buy). 

It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.

Note: NOK1 = $0.0929675 (period average for Apr 1, 2024 to June 30, 2024)      

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