Committed cash flows in foreign currencies equivalent

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Unformatted text preview: done by issuing debt in foreign currency or using financial instruments in the relevant currencies when appropriate. The most significant debt currencies for Telenor Group are Euros, US dollars, Swedish Krona, Malaysian Ringgits, Pakistani Rupees, Indian Rupees and Thai Baht. Committed cash flows in foreign currencies equivalent to NOK 50 million or more are hedged using currency forwards contracts. Committed cash flow in foreign currencies of amounts less than NOK 50 million and uncommitted foreign currency exposure 12 months forward may also be hedged. Only the net currency exposure is hedged. Telenor Group is exposed to interest risk through funding and liquidity management activities. The interest rate risk is managed using both fixed and floating rate debt as well as interest rate derivatives. The Group’s treasury policy states that the interest rate duration on the debt portfolio shall be in the interval from 0.0 years to 2.5 years. The duration was 1.3 years as of 31 December 2011 (1.4 years as of 31 December 2010). /page 13/ telenor annual report 2011 report from the board of directors 2011 regulatory risk Telenor Group’s operations are subject to extensive regulatory requirements. Unfavourable regulatory developments and regulatory uncertainty could adversely affect the Group’s results and business prospects. In several of the countries where Telenor Group operates, the government has imposed sector specific taxes and levies, as a measure to improve state finances. The introduction of, or increase in, sector specific taxes and levies may adversely impact the Group’s business. Telenor Group depends on licences, access to spectrum and numbering resources in order to provide telecommunications services. Spectrum processes, including renewal of existing spectrum licences in some markets, are expected over the next 2–3 years. If the Group is not successful in acquiring spectrum licences or is required to pay higher rates than expected, this might impact the Group’s business strategy, and/or the Group could be required to make additional investments to maximise the utilisation of existing spectrum. In many countries where the Group operates, the regulator has reduced, or plans to reduce, the regulated price of terminating mobile calls in our and our competitors’ networks. A dramatic reduction of the mobile termination rate (MTR) could significantly reduce the revenue from mobile voice traffic. Furthermore, the transition from voice to data services is influenced by a number of regulatory levers, e.g. MTR levels and net neutrality provisions. In India , there is a substantial risk that Uninor will not be able to continue its operation. This will be the case if the auctions are not held before the licences are quashed and if the new conditions are not financially viable. A proposed National Telecom Policy was presented by the Government in February 2012. The draft policy covers a range of issues such as licencing, M&A-guidelines and spectrum sharing which are highly important to the sector. Thus, key elements of the regulatory regime are still under consideration by the authorities and changes could have a major impact on Uninor’s ability to continue its operation. Operational/Industry risk The introduction of new business models in the telecom sector may lead to structural changes within the industry. Failure to anticipate and respond to industry dynamics, and to drive a change agenda to meet mature and developing demands in the marketplace, has the potential to impact the Group’s position in the value chain, service offerings and customer relationships. This may adversely impact the Group’s results of operations. In Bangladesh, Grameenphone’s 2G licence and spectrum expired in November 2011. The renewal decision has not been finalised as some issues around the licence renewal are pending before the court. Thus, the final conditions for renewal are still unclear. Competition across the Group’s portfolio of markets revolves around four main drivers: price, network coverage, quality of product and customer relationship management. Revenue growth is partly dependent on the development and marketing of new applications and services. If a new service is not technically or commercially successful, or if limitations in existing services affect the customer experience, Telenor Group’s ability to attract or retain customers may be impaired. In Thailand, the new Frequency Act paves the way for a more level playing field between the state-owned licencees and DTAC. The first step was to establish a new regulatory body (NBTC). Before NBTC can proceed with the 3G auction (scheduled for Q3 2012) it has to put in place the National Frequency Plan and the National Frequency Table. Thus, there is a risk of further delay in this process. The quality and reliability of Telenor Group’s telecommunications services depends on the stability of its network and the networks of other service providers with which it interconnects. These networks are vulnerable to damage or service interruptions. Repeated, prolonged or catastrophic network or systems failures could damage the...
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This document was uploaded on 03/21/2014.

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