group

Group Members

Aimen Tanveer Asma Hameed Muntaha Tatheer Rahat Rafique

MBA 6th M1

Roll# 01 05 28 36

Introduction

Vertical Analysis I/S

Vertical Analysis I/S

Costs of materials and traffic charges

2011
23.1%

2012
28.69%

Increased by 5.59 % due to;

Increment in the operating lease expenses relating to the lease of dedicated network and satellite capacity

Vertical Analysis I/S

Other operating expenses

2011
30.08%

2012
28.51%

Decreased by 1.57 % due to; Decrease in the advertisement expenses

Decrease in marketing and sales commission

Decrease in consultancy fee

Vertical Analysis I/S

Other expenses (income)
Increased by 0.36 % due to; Expenses for workforce reductions o Restructuring of operations in Uninor, and o workforce Reductions mainly in Telenor Norway, Telenor Sweden, Telenor Denmark and Telenor ASA Decrease in the Gains on disposals of fixed assets and operations Increased Losses on disposals of fixed assets and operations

2011
0.49%

2012
0.85 %

Vertical Analysis I/S

Impairment loses

2011
4.40%

2012
7.69 %

increased by 3.29 % because;

consequence of the Indian Supreme Court ruling cancelling all 2G

licenses of Uniron. In Denmark due to fierce competitive environment in the Danish market.

Vertical Analysis I/S

Operating Profit

2011
10.54%

2012
9.49%

Decreased by 1.05 % because it was; Negatively affected by an impairment of goodwill in Denmark and goodwill plus licenses in Uninor

Vertical Analysis I/S

Share of income from associated Companies

2011
2.14%

2012
3.97%

Increased by 1.83 % due to; The gain of NOK 1.6 billion related to share of interest in VimpelCom

Vertical Analysis I/S

Financial Income

2011
0.82%

2012
0.59%

Decreased by 0.23 % due to; Decrease in the interest rates on cash and cash equivalents.

Vertical Analysis I/S

Financial Expense

2011
2.24%

2012
2.76%

Increased by 0.52 % due to;

A higher level of interest-bearing debt

More funding activities license payments

Vertical Analysis I/S

Net Currency Losses

2011
0.28%

2012
0.15%

Decreased by 0.13 %;

Currency loss of NOK 350 million from the initial investment in

Uninor that was previously recorded in equity

Vertical Analysis I/S

Net Financial Expense (income)

2011
1.61%

2012
1.65%

Increased by 0.04 % due to;

Effects of higher debt offset

Installment paid for licensing of 3G in Thailand

Vertical Analysis I/S

Profit before tax

2011
12.76%

2012
11.81%

Decreased by 0.95 % as;

Expenses are increased

Less financial incomes

Vertical Analysis I/S

Income tax

2011
5.43%

2012
1.70 %

Decreased by 3.73 % due to; Associated companies is recognized on an after tax basis Tax losses in Uninor will not be transferred. Recognition of deferred tax asset of NOK 1.0 billion based on unused tax losses in Telenor Pakistan.

Vertical Analysis I/S

Net Income

2011
7.32%

2012
10.11 %

Increased by 2.79 % due to; The main reason for increase in the net income is less income tax.

Vertical Analysis B/S

Vertical Analysis B/S

Non Current Assets

2011
79.36%

2012
82.32 %

Increased by 2.96 %; Although Good will is decreased Increased intangible assets Increased share of associated Companies

Vertical Analysis B/S

Current Assets

2011
20.63%

2012
17.67 %

Decreased by 2.96 %; Decreased cash and cash equivalent low gain from sale of assets installment paid for 2G licensing.

Vertical Analysis B/S

Equity attributed to equity holders

2011
50.49%

2012
43.79 %

Decreased by 2.96 %; Decrease in Equity Cancellation of 48,245,807 shares Reduction of the share capital to maintain its ownership interest

Vertical Analysis B/S

Non Current Liabilities

2011
19.14%

2012
28.24 %

Increased by 9.10 %; Increased Pension Obligations Uninors interest bearing borrowings Coupon payments on bonds issued under Telenor ASAs EMTN programme during the last 5 years range

Vertical Analysis B/S

Current Liabilities

2011
28.60%

2012
25.97 %

Decreased by 2.63 %; Decrease in bank loans Dividend payable in 2011 was paid in 2012

Horizontal Analysis I/S

Horizontal Analysis I/S

Revenue
There is 3.25%increase

Reasons
large part of the increased revenue is gathered from mobile communication and customers equipment. Customer equipment includes mainly sale of mobile devices. The revenue growth was mainly the result of continued growth in our Asian and Norwegian operations in addition to strong handset sales.

Horizontal Analysis I/S

Operating profit
The operating profit of the company decreased BY -7.03

Reasons
Operating profit in 2011 was negatively affected by an impairment of goodwill and licenses in Uninor of NO K 4.1 billion. Operating profit in 2012 was negatively affected by an impairment of tangible fixed assets in Uninor of NO K 3.9 billion and NO K 4.0 billion related to goodwill in Telenor Denmark.

Horizontal Analysis I/S

Net financial expense
5.65 % increase in net financial expenses shows bad sign for the company.

Reasons
The debts are being paid Decrease in financial income in 2012 compared with 2011 is mainly due to decreased interest rates on cash and cash equivalents. Interest rates have been falling continuously throughout the entire year Increase in financial expenses in 2012 compared with 2011 is mainly due to a higher level of interest-bearing debt, more funding activities and interest expense on deferred license payments.

Horizontal Analysis I/S

Profit before tax
-4.30% negative percentage of profit before tax

Reasons
less earnings more expenses

Horizontal Analysis I/S

Net income
Net income is increases 42.52% as compared to based year

Reasons
the company paid less amount of tax in 2012. Income tax ratio is in negative in 2012 as compared to 2011 which is in favor of company.

Horizontal Analysis B/S

Total non-current assets 5.61% Increased percentage in total non-current assets Reasons:
Intangible assets of the company increased Associated companies ratio also increased

Horizontal Analysis B/S

Total current assets: -12.75 Decrease in total current assets Reasons:
Due to decrease in cash and cash equivalents Asset held for sale is not present in the balance sheet of this year.

Horizontal Analysis B/S

Total assets: 1.82% Increase in total assets

Reasons:
Geographical Expansions of business in different countries Investments in new technology.

Horizontal Analysis B/S

Equity and liabilities: Total equity -11.12% Decrease in total equity Reasons:
The reason for decrease percentage is that the company is bought back its treasury shares from Norwegian government.

Horizontal Analysis B/S

Non-current liabilities: 51.33% Favorable in terms of technological advancement yielding high returns.
Unfavorable in term of that if liabilities increases their interest expense is also increases

Reasons:
Due to workforce reduction such as from retirement of the employees companies pension expenses is increases

Horizontal Analysis B/S

Total current liabilities: -7.68% Decreases in companys total current Reasons:
Provisions and obligations are also increased the Company pay off their short term liabilities.

Ratio Analysis

Ratio Analysis

Liquidity Ratio

1. Liquidity Ratios:

2011 0.66

0.72

2012

0.68 0.69 0.63 0.64 0.65 0.66 0.67 0.68 0.69 0.7 0.71 0.72 0.73

current ratio

quick ratio

Ratio Analysis
Current Ratio
Decrease in current ratio is unfavorable
Reasons
Decrease in inventory levels Cash pool maintained out side the firm has decreased Quick ratio increased because major item in current ratio is inventory

Ratio Analysis

Leverage Ratio

Debt Ratio:

2011 0.48

2012

0.54
0.45 0.46 0.47 0.48 0.49 0.5 0.51 0.52 0.53 0.54 0.55

Ratio Analysis
Debt Ratio
Debt financing increased.

Reasons
Long term loans with bank increased. Pension obligation increased because of reduction in employees. Highly favorable; yielding high returns

DebtEquity Ratio:

2011

0.91

2012

1.2

0.2

0.4

0.6

0.8

1.2

1.4

Ratio Analysis
Debt Equity Ratio
Favorable Reasons increase in long term debts Share holders Equity decreased; treasury shares buy back from Norwegian state Cancellation of treasury shares

Ratio Analysis

Profitability Ratio

Net Profit Margin Ratio:

2011 0.073

2012

0.1
0 0.02 0.04 0.06 0.08 0.1 0.12

Ratio Analysis
Net Profit Margin Ratio
Favorable Reasons Increase in net earnings

Increased technology advancements

Increased innovations generate high returns More focus on business operations

Total assets turnover ratio:

2011 0.58

2012 0.61 0.565 0.57 0.575 0.58 0.585 0.59 0.595 0.6 0.605 0.61 0.615

Ratio Analysis
Total Asset turn-over Ratio
Favorable Reasons Assets utilization at maximum capacity Technological developments Increased asset due to expansion

Return On Equity:

2011 0.08

2012

0.125
0 0.02 0.04 0.06 0.08 0.1 0.12 0.14

Ratio Analysis
Return on Equity
Favorable Reasons Increase in net earnings Increased operations world wide Improvements and innovations

Ratio Analysis

Coverage Ratio

Interest Coverage Ratio:

2011 5.3

2012

4.23
0 1 2 3 4 5 6

Ratio Analysis
Interest Coverage Ratio
Unfavorable Reasons

Increase in Interest expense

Increase in long term interest bearing liabilities as compared to last year Changes in interest rates affect the fair value of assets and liabilities.

Ratio Analysis

Investors Ratio Analysis

Earning Per Share:

2011 4.45

2012

6.43
0 1 2 3 4 5 6 7

Ratio Analysis
Earning per share
Favorable Reasons Increase in net earnings

Cancelation of treasury shares

Efficient management of funds

Percentage of retained earnings

2011

2012

0.05

0.1

0.15

0.2

0.25

Ratio Analysis
Percentage of retained earnings
Favorable Reasons Increased income Better management of funds

SWOT Analysis

SWOT Analysis
Strengths
State of art technology State of art technology State of art technology Superior customer care

Vast coverage

SWOT Analysis
Strengths
Financial strength
Customer diversity Network quality and design Free roaming facility provider

SWOT Analysis
Weaknesses
Less time in market Less coverage comparatively Relatively low market share
in initial years

SWOT Analysis
Weaknesses
Low switching cost Less differentiation Negative cash flows in initial years

SWOT Analysis
Opportunities
Investment opportunities
Market size Inefficiency and poor network service of other networks

SWOT Analysis
Opportunities
Product line expansion Mobile number portability Cost discount strategies cash flows in initial years

SWOT Analysis
Threats
Mobile number portability Monopoly of PTA

Intensive competition
Propaganda by religious forces

Recommendations

Recommendations
Employee exchange program

Introduction of employees stock options to

enhance the motivation level Has to pay attention to the rural areas of Pakistan

Recommendations
Focus on the business customers by giving them benefits in post-paid packages Introduce latest technology in Pakistan

Thank You!!