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Unformatted text preview: m smartphones. MAIN EVENTS IN 2011 A changing industry The telecom industry is undergoing significant changes to its ecosystem of customers, operators, device vendors and service providers. Telenor Group’s strategy is based on two main pillars: being preferred by customers and becoming a more cost efficient operator through a combination of crossborder and market specific efficiency measures. To achieve these goals Telenor established the two new units, Digital Services and Group Industrial Development, in 2011. Digital S ervices was established to strengthen Telenor’s ability to differentiate through innovation and partnerships, and to create future revenues by launching new services . Industrial Development will leverage the combined strength of Telenor’s global footprint and technological leadership to drive industrialisation and the company’s relentless focus on operational excellence. Network odernisation across all markets Telenor is preparing all business units for next generation services through the launch of mobile broadband, delivered at sustainable cost levels by strategic sourcing across markets. To prepare for the massive growth in data communication and traffic driven by smartphones and other mobile broadband devices, Telenor Group has initiated network modernisation programs across the Telenor Group. This is in response to the need for modern technology and new sustainable, cost efficient business models for sourcing, building and operating mobile networks for the future. During 2011, Telenor’s operations in Montenegro, Sweden, Denmark, Norway, Hungary, Serbia and Bangladesh completed their network modernisations. Furthermore, the operations in Thailand, Malaysia and Pakistan have entered into agreements and are currently in the process of modernising their networks to prepare for the next generation mobile broadband services. The infrastructure modernisations will significantly improve efficiency and benefit both customers and the environment. Outages In June 2011, Telenor Norway experienced two serious mobile network outages. During the first and most severe one, that occurred on June 10th, customers were without connectivity for 11 hours. The outages were caused by increased signalling traffic from smartphones and a faulty software component. Following these incidents, Telenor has taken a number of measures to dimension the networks to the increase in data volumes. Increased smartphone signalling is a universal challenge for the telecom industry as a whole. In December, DTAC in Thailand also experienced several network outages. Its most serious outage was caused by a software component failure in connection with the network upgrade. /page 04/ telenor annual report 2011 report from the board of directors 2011 India In 2011, Uninor demonstrated its ability to build momentum and position itself as a credible player in the Indian mobile market. The introduction of the ultra low cost model and relentless focus on operational excellence have proven successful and Uninor have been able to substantially grow its subscription base to a reported 28 million subscriptions by the end of 2011. In parallel, Telenor Group worked to secure the long-term funding of Uninor. The regulatory unclarity remained challenging. Both Uninor and our partner Unitech Ltd. have been charged in the so-called 2G case which was high on management’s agenda throughout the year. On 2 February 2012 the Indian Supreme Court delivered its judgment on a public interest petition seeking cancellation of 122 cellular phone licences granted by the Government of India in 2008, including 22 licences to Unitech Wireless (Uninor). For more information, please refer to the section “Events after the reporting period”. Bangladesh 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. This is the case for all four operators in Bangladesh that have licences and spectrum up for renewal. Thus, the final conditions for renewal are still unclear. ) VimpelCom Ltd. In April 2011, VimpelCom Ltd. completed the acquisition of Wind Telecom. As a result, Telenor’s economic stake was diluted from 39.6% to 31.7% and the voting stake from 36.03% to 25.01%. Telenor commenced arbitration against Altimo and VimpelCom Ltd in order to protect its pre-emptive rights in connection with the issuance of new VimpelCom shares, and the arbitration ruling was expected to be finalised during spring 2012. On 15th February 2012, Telenor acquired 234 million VimpelCom preferred shares from Weather Investments, thereby increasing Telenor’s voting stake to 36.36%. At the same time Telenor withdrew its arbitration claims against Altimo and VimpelCom Ltd. FINANCIALS Revenues in 2011 were NOK 98.5 billion, a reported growth of 4% compared to NOK 94.8 billion in 2010. The organic revenue growth of 7% was mainly the result of...
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