Edgar Filing: TELENOR ASA

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Date: 3^rd November, 2004, for 3^rd Quarter, 2004

TELENOR ASA
(Registrant’s Name)

Snarøyveien 30,
1331 Fornebu,
Norway
(Registrant’s Address)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

THIRD QUARTER OF 2004

The third quarter of 2004 showed a growth in revenues excluding gains for the Telenor Group of 15.9% to NOK 15.6 billion compared to the third quarter of 2003. Profit before taxes and minority interests increased to NOK 2.7 billion.

(TELENOR LOGO)

Telenor ASA third quarter of 2004

KEY POINTS FROM THE THIRD QUARTER OF 2004 COMPARED TO THE THIRD QUARTER OF 2003

•

Telenor’s revenues excluding gains increased by 15.9% to NOK 15,610 million. Adjusted for the effects of acquisitions and disposals of operations and currency fluctuations, the growth in revenues was just above 7%.

•

EBITDA increased by NOK 713 million to NOK 5,605 million. Telenor’s EBITDA margin adjusted for special items was 36.1% compared to 37.2%.

•

Telenor’s operating profit increased by NOK 300 million to NOK 2,600 million. Profit before taxes and minority interests increased by NOK 659 million to NOK 2,664 million. Net income per share increased by NOK 0.10 to NOK 0.82.

•

In Mobile, the number of subscriptions in consolidated operations increased by 2.2 million compared to 0.6 million in the same quarter last year. Revenues increased by NOK 2,559 million to NOK 8,881 million. EBITDA increased by NOK 811 million to NOK 3,412 million.

•

In Fixed – Norway, revenues adjusted for disposal of operations and special items were reduced by 3.3%. Correspondingly, adjusted EBITDA margin was 36.1% compared to 36.7% in the third quarter of 2003. The operating profit was in line with the same quarter last year.

•

In Broadcast, at the end of the third quarter of 2004 the number of subscribers with satellite dish exceeded 800,000 in the Nordic area. EBITDA increased by NOK 105 million to NOK 424 million.

•

In the third quarter of 2004, Telenor Mobil – Norway increased the number of GSM subscriptions by 114,000. Telenor’s estimated market share for mobile services in Norway was 56% measured in number of subscriptions. The market share for fixed line telephony in Norway measured in traffic minutes was sustained from previous quarters at 69%.

•

Capital expenditure was NOK 3,140 million compared with NOK 1,460 million in the third quarter of 2003 mainly as a consequence of increased network investments in Mobile due to strong subscriber growth and the purchase of an ownership interest in a satellite in Broadcast.

•

Net interest-bearing liabilities were NOK 20.6 billion, a reduction of NOK 1.4 billion from the second quarter of 2004.

•

In the third quarter of 2004 Telenor purchased 3,000,000 own shares in the market for NOK 145 million. So far in 2004, Telenor has purchased shares for NOK 2.85 billion, including shares, which according to an agreement, have been or will be purchased from the Kingdom of Norway.

•

The Intelsat AGM has approved the agreement involving today’s shareholders selling their shares to private investors for $18.75 a share. Telenor has approximately 6.9 million shares in Intelsat. The sale will give Telenor a book profit of around NOK 400 million. The settlement for the shares will be in cash, and is expected to be concluded around year-end 2004.

KEY FIGURES


	3rd quarter				First three quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Revenues		15,681		13,491		45,589		39,320		53,121
Revenues excluding gains		15,610		13,469		45,144		39,218		52,889
Revenues excluding gains – growth (%)		15.9		10.3		15.1		10.0		8.7
EBITDA ¹⁾		5,605		4,892		16,302		13,419		18,302
EBITDA/Revenues (%)		35.7		36.3		35.8		34.1		34.5
EBITDA excluding gains and losses ²⁾		5,586		4,886		15,938		13,518		18,299
Operating profit		2,600		2,300		7,621		5,387		7,560
Operating profit/Revenues (%)		16.6		17.0		16.7		13.7		14.2
Associated companies		292		62		636		1,410		1,231
Profit before taxes and minority interests		2,664		2,005		10,000		5,542		7,426
Net income		1,399		1,281		5,610		3,561		4,560
Net interest-bearing liabilities						20,596		21,584		17,817
Investments:
– Capex ³⁾		3,140		1,460		8,623		4,004		6,454
– Investments in businesses ⁴⁾		644		9		4,687		300		563

¹⁾		For a definition and reconciliation of EBITDA, see table at the end of this report.

²⁾		See table “special items” at the end of this report for further details.

³⁾		Capex is investments in tangible and intangible assets.

⁴⁾		Consists of acquisition of shares and participations including acquisition of subsidiaries and businesses not organized as separate companies.

The table below shows key figures adjusted for special items (gains and losses on disposal, expenses for workforce reductions, loss contracts, exit from activities and write-downs)¹⁾


	3rd quarter							First three quarters								Year
(NOK in millions)	2004		2003		Growth			2004		2003			Growth			2003			Growth
Revenues		15,610		13,469		15.9	%		45,144		39,218			15.1	%		52,889			8.7	%
EBITDA		5,628		5,004		12.5	%		16,168		13,722			17.8	%		18,586			28.1	%
EBITDA/Revenues (%)		36.1		37.2					35.8		35.0						35.1
Operating profit		2,665		2,425		9.9	%		7,533		5,766			30.6	%		7,989			87.1	%
Operating profit/Revenues (%)		17.1		18.0					16.7		14.7						15.1
Associated companies		284		62		358.1	%		619		(87	)	nm				(251	)	nm
Profit before taxes and minority interests		2,699		2,168		24.5	%		7,264		4,552			59.6	%		6,300			153.2	%

¹⁾

See table “special items” at the end of the report for further details.

KEY FIGURES FOR THE BUSINESS AREAS

Revenues


	3rd quarter									First three quarters									Year
(NOK in millions)	2004			2003			Growth			2004			2003			Growth			2003			Growth
Mobile		8,881			6,322			40.5	%		24,297			17,499			38.8	%		23,810			17.0	%
Fixed		4,665			5,152			(9.5	%)		14,473			15,334			(5.6	%)		20,509			2.4	%
Broadcast		1,330			1,203			10.6	%		3,972			3,510			13.2	%		4,820			33.7	%
Other activities		2,423			2,495			(2.9	%)		7,747			8,014			(3.3	%)		10,811			(7.1	%)
Eliminations		(1,618	)		(1,681	)		(3.7	%)		(4,900	)		(5,037	)		(2.7	%)		(6,829	)		0.6	%
Total revenues		15,681			13,491			16.2	%		45,589			39,320			15.9	%		53,121			8.8	%

EBITDA


	3rd quarter											First three quarters											Year
(NOK in millions)	2004			Margin ¹⁾			2003		Margin ¹⁾			2004			Margin ¹⁾			2003		Margin ¹⁾			2003		Margin ¹⁾
Mobile		3,412			38.4	%		2,601		41.1	%		9,279			38.2	%		7,073		40.4	%		9,567		40.2	%
Fixed		1,504			32.2	%		1,761		34.2	%		4,725			32.6	%		5,043		32.9	%		6,665		32.5	%
Broadcast		424			31.9	%		319		26.5	%		1,162			29.3	%		850		24.2	%		1,229		25.5	%
Other activities		266			11.0	%		186		7.5	%		1,110			14.3	%		453		5.7	%		830		7.7	%
Eliminations		(1	)	nm				25	nm				26		nm				—	nm				11	nm
Total EBITDA		5,605			35.7	%		4,892		36.3	%		16,302			35.8	%		13,419		34.1	%		18,302		34.5	%

Special items ²⁾		23		nm				112	nm				(134	)	nm				303	nm				284	nm
EBITDA adjusted for special items ³⁾		5,628			36.1	%		5,004		37.2	%		16,168			35.8	%		13,722		35.0	%		18,586		35.1	%

¹⁾		EBITDA as a percentage of total revenues.

²⁾		Gains, losses, expenses for workforce reductions, loss contracts and exit from activities. See table “special items” at the end of the report for further details.

³⁾		Margin is EBITDA adjusted for special items as a percentage of revenues excluding gains.

Operating profit (loss)


	3rd quarter												First three quarters											Year
(NOK in millions)	2004			Margin ¹⁾			2003			Margin ¹⁾			2004		Margin ¹⁾			2003			Margin ¹⁾			2003			Margin ¹⁾
Mobile		1,802			20.3	%		1,507			23.8	%		4,816		19.8	%		3,792			21.7	%		5,224			21.9	%
Fixed		674			14.4	%		792			15.4	%		2,095		14.5	%		1,963			12.8	%		2,531			12.3	%
Broadcast		205			15.4	%		63			5.2	%		488		12.3	%		49			1.4	%		181			3.8	%
Other activities		(59	)	nm				(121	)	nm				201		2.6	%		(482	)	nm				(488	)	nm
Eliminations		(22	)	nm				59		nm				21	nm				65		nm				112		nm
Total operating profit		2,600			16.6	%		2,300			17.0	%		7,621		16.7	%		5,387			13.7	%		7,560			14.2	%

¹⁾

Operating profit as a percentage of total revenues.

BUSINESS AREAS

MOBILE


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
External revenues
Telenor Mobil – Norway		2,694		2,511		7,818		7,288		9,639
Sonofon – Denmark		1,269		—		3,180		—		—
Telenor Mobile Sweden		34		35		100		82		109
Pannon GSM – Hungary		1,515		1,408		4,361		3,904		5,368
DiGi.Com – Malaysia		1,046		825		2,948		2,290		3,170
Kyivstar – Ukraine		1,281		760		3,111		1,833		2,634
GrameenPhone – Bangladesh		601		424		1,629		1,102		1,535
ProMonte GSM – Montenegro		82		—		82		—		—
Other		6		3		14		21		28
Total external revenues		8,528		5,966		23,243		16,520		22,483

Internal revenues		351		356		1,051		979		1,327
Gains on disposal		2		—		3		—		—
Total revenues		8,881		6,322		24,297		17,499		23,810

EBITDA		3,412		2,601		9,279		7,073		9,567
Depreciation and amortization		1,607		1,092		4,459		3,252		4,308
Write-downs		3		2		4		29		35
Operating profit		1,802		1,507		4,816		3,792		5,224

EBITDA/Total revenues (%)		38.4		41.1		38.2		40.4		40.2
Operating profit/Total revenues (%)		20.3		23.8		19.8		21.7		21.9
Investments:
– Capex		1,913		881		6,228		2,246		3,667
– Investments in businesses		540		—		4,384		5		95

•

Revenues increased by 40.5% compared to the third quarter of 2003 due to underlying growth and the consolidation of Sonofon and ProMonte. Adjusted for the effects of acquisitions and disposals of operations and currency fluctuations, the growth in revenues was 16.5%.

•

EBITDA increased by 31.2% for the same reasons. However, the EBITDA margin decreased compared to the third quarter of 2003, mainly due to the consolidation of Sonofon and increased sales and marketing costs due to a strong customer growth in Telenor Mobil – Norway.

•

In the third quarter of 2004, capital expenditure included increased network investments, in particular in Kyivstar and GrameenPhone, to meet the strong subscriber growth.

•

Investments in businesses in the third quarter of 2004 consisted of the purchase of the remaining 55.9% of the shares in ProMonte in Montenegro.

TELENOR MOBIL – NORWAY


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Subscriptions and connections		377		289		1,096		911		1,216
Traffic		1,488		1,434		4,183		4,071		5,329
SMS, MMS and content services		402		402		1,179		1,215		1,599
Customer equipment, service providers and other		427		386		1,360		1,091		1,495
Total external revenues		2,694		2,511		7,818		7,288		9,639

Internal revenues		310		323		936		952		1,270
Total revenues		3,004		2,834		8,754		8,240		10,909

EBITDA		1,100		1,157		3,174		3,280		4,262
Depreciation and amortization		267		284		777		871		1,147
Write-downs		3		—		4		—		—
Operating profit		830		873		2,393		2,409		3,115

EBITDA/Total revenues (%)		36.6		40.8		36.3		39.8		39.1
Operating profit/Total revenues (%)		27.6		30.8		27.3		29.2		28.6
Capex		332		79		801		264		500
ARPU (GSM) – monthly (NOK)		345		354		342		343		339
No. of subscriptions (in thousand)						2,562		2,364		2,364

•

The estimated market share for GSM measured in number of subscriptions was approximately 56% at the end of the third quarter of 2004 and in line with the second quarter of 2004. Mobile penetration was estimated at 99%, up from 95% in the second quarter of 2004.

•

In the third quarter of 2004 Telenor Mobil had a net increase of 114,000 GSM subscriptions, of which 54,000 were contract subscriptions.

•

ARPU in this quarter decreased by NOK 9 compared with the third quarter of 2003, in spite of an increase in the number of average traffic minutes per subscription. The decrease in ARPU was mainly due to reduced average prices on voice and SMS.

•

Compared with the third quarter of 2003 revenues increased primarily as a result of higher sales of traffic and subscriptions on a wholesale basis. External traffic revenues increased due to increased traffic per subscription and increase in the number of subscriptions, partly offset by price reductions. External subscription revenues increased as a consequence of the growth in the number of subscriptions.

•

The decrease in EBITDA margin compared with the third quarter of 2003 was due to increased costs associated with sales and marketing activities and price reductions.

•

Depreciation and amortization decreased compared to the third quarter of 2003, primarily due to reduced capital expenditure in recent years.

•

Increased capital expenditure compared to the third quarter of 2003 was primarily due to investments in new technology.

•

On 24 September 2004 Telenor Mobil launched the possibility of faster data transfer by using EDGE technology. Shortly, the largest cities and communities in Norway will have access to EDGE.

SONOFON – DENMARK


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		998		—		2,433		—		—
Other revenues		292		—		780		—		—
Total revenues		1,290		—		3,213		—		—

EBITDA		258		—		660		—		—
Depreciation and amortization		210		—		520		—		—
Operating profit		48		—		140		—		—

EBITDA/Total revenues (%)		20.0		—		20.5		—		—
Operating profit/Total revenues (%)		3.7		—		4.4		—		—
Capex		102		—		312		—		—
ARPU (GSM) – monthly (NOK)		242		—		242		—		—
No. of subscriptions (in thousand)						1,263		—		—

Telenor’s ownership interest in Sonofon was 100% at the end of the third quarter of 2004. The Norwegian Krone depreciated against the Danish Krone by approximately 1% in the third quarter of 2004 compared to the second quarter of 2004. The preceding table shows figures included in the accounts for Telenor from 12 February 2004, the date of consolidation of Sonofon. ARPU for the first three quarters in the table is for the period 1 January– 30 September 2004.

•

Sonofon’s estimated market share was 27% at the end of the third quarter of 2004, an increase of 1 percentage point from the previous quarter. The number of subscriptions in Sonofon increased by 51,000 from the previous quarter. The estimated mobile penetration in Denmark was 90% at the end of the third quarter of 2004 compared to 89% at the end of the second quarter of 2004.

•

ARPU decreased compared to the end of the second quarter, measured in local currency, primarily as a result of the consolidation of CBB, previously a service provider on Sonofon’s network, and price reductions. The interconnection charges were reduced by 10% as from 1 July 2004.

•

Revenues and the EBITDA margin for the first three quarters of 2004 were NOK 3,747 million and 21%, respectively. Increased revenues in this quarter of 2004 compared to the previous quarter were due to seasonal effects. The EBITDA margin was affected by lower prices and costs related to customer acquisitions.

TELENOR MOBILE SWEDEN


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Total revenues		61			36			162			83			127

EBITDA		(44	)		(34	)		(106	)		(78	)		(114	)
Depreciation and amortization		8			7			23			17			24
Operating (loss)		(52	)		(41	)		(129	)		(95	)		(138	)

Capex		3			10			11			75			79
ARPU (GSM) – monthly (NOK)		218			207			203			161			171
No. of subscriptions (in thousand)								96			65			81

The Norwegian Krone depreciated against the Swedish Krone by approximately 2% in the third quarter of 2004 compared to the third quarter of 2003.

•

Revenues increased as a result of more subscriptions and increased ARPU.

•

The increase in ARPU was due to changes in the subscription composition, with 80,000 MVNO subscriptions at the end of the third quarter of 2004. These subscriptions have a higher ARPU than service provider subscriptions, partly due to termination revenues being included in the revenue basis.

•

Reduced EBITDA compared to the third quarter of 2003 was due to increased costs of materials and traffic charges.

•

As from 1 July 2004 Telenor Mobile Sweden reduced the interconnection charges by approximately 20% to 0.76 SEK.

PANNON GSM – HUNGARY


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		1,439		1,308		4,115		3,679		5,005
Other revenues		78		101		252		227		365
Total revenues		1,517		1,409		4,367		3,906		5,370

EBITDA		561		508		1,673		1,489		1,924
Depreciation and amortization		235		230		714		658		889
Write-downs		—		—		—		6		10
Operating profit		326		278		959		825		1,025

EBITDA/Total revenues (%)		37.0		36.1		38.3		38.1		35.8
Operating profit/Total revenues (%)		21.5		19.7		22.0		21.1		19.1
Capex		121		195		346		444		644
ARPU (GSM) – monthly (NOK)		184		170		176		163		165
No. of subscriptions (in thousand)						2,595		2,564		2,618

Telenor’s ownership interest in Pannon GSM is 100%. The Norwegian Krone depreciated against the Hungarian Forint by approximately 7% in the third quarter of 2004 compared to the third quarter of 2003.

•

In a market affected by strong competition Pannon GSM, for the first time this year, increased the number of subscriptions during this quarter. The number of contract subscriptions increased by 57,000 from the second quarter of 2004.

•

Pannon GSM’s estimated market share decreased by 1 percentage point from the previous quarter, to approximately 33% at the end of the third quarter of 2004. Compared to the end of the second quarter of 2004, the estimated mobile penetration in Hungary increased from 81% to 83%.

•

ARPU measured in local currency increased by 2% compared to the third quarter of 2003, mainly due to an increased number of contract subscriptions and an increased usage per subscription, partly offset by price reductions.

•

The increased number of subscriptions and increased ARPU contributed to a 3% increase in mobile related revenues measured in local currency compared to the third quarter of 2003.

•

Increased EBITDA margin compared to the third quarter of 2003 was mainly due to reduced subsidising of handsets.

DIGI.COM – MALAYSIA


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		912		707		2,543		1,961		2,713
Other revenues		135		119		408		333		463
Total revenues		1,047		826		2,951		2,294		3,176

EBITDA		454		319		1,290		909		1,295
Depreciation and amortization		213		202		631		579		780
Write-downs		—		5		—		15		18
Operating profit		241		112		659		315		497

EBITDA/Total revenues (%)		43.4		38.6		43.7		39.6		40.8
Operating profit/Total revenues (%)		23.0		13.6		22.3		13.7		15.6
Capex		228		240		493		513		1,043
ARPU (GSM) – monthly (NOK)		112		117		113		117		117
No. of subscriptions (100% in thousand)						2,806		2,055		2,207

Telenor’s ownership interest in DiGi.Com was 61.0% at the end of the third quarter of 2004. The Norwegian Krone appreciated against the Malayan Ringgit by approximately 5% in the third quarter of 2004 compared to the third quarter of 2003.

•

At the end of the third quarter of 2004, DiGi.Com sustained the estimated market share from the previous quarter at 21%. The estimated mobile penetration in Malaysia was 52% at the end of the third quarter of 2004, an increase from 49% at the end of the second quarter of 2004.

•

The number of subscriptions increased by 221,000 in the third quarter of 2004.

•

ARPU measured in local currency was in line with the third quarter of 2003.

•

Revenues increased by 33% compared to the third quarter of 2003, when measured in local currency, mainly due to the increase in the number of subscriptions.

•

The increase in EBITDA margin was due to increased revenues without corresponding increases in costs of materials and traffic charges. Measured in local currency, EBITDA increased by 49% compared to the third quarter of 2003.

•

Compared to the third quarter of 2003, depreciation and amortization increased as a result of high capital expenditure in the intervening periods.

•

Increased capital expenditure compared to the third quarter of 2003 was due to investments in networks resulting from increased coverage and a larger customer base.

•

The mobile operators in Malaysia are required to provide national coverage by the end of 2005. Final conditions have not yet been set.

KYIVSTAR – UKRAINE


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		1,262		744		3,065		1,783		2,569
Other revenues		20		16		47		50		65
Total revenues		1,282		760		3,112		1,833		2,634

EBITDA		772		465		1,868		1,066		1,573
Depreciation and amortization		121		90		326		248		343
Operating profit		651		375		1,542		818		1,230

EBITDA/Total revenues (%)		60.2		61.2		60.0		58.2		59.7
Operating profit/Total revenues (%)		50.8		49.3		49.6		44.6		46.7
Capex		687		290		1,584		720		979
ARPU (GSM) – monthly (NOK)		103		106		96		93		94
No. of subscriptions (100% in thousand)						4,856		2,512		3,037

Telenor’s ownership interest at the end of the third quarter of 2004 was 56.51%. The functional currency for Kyivstar is the US dollar. The Norwegian Krone appreciated against the US dollar by approximately 5% in the third quarter of 2004 compared to the third quarter of 2003.

•

Kyivstar’s estimated market share increased by 3 percentage points from the previous quarter and was 46% at the end of the third quarter of 2004. The increased market share in this quarter was due to Kyivstar’s focus in the market and was achieved in spite of the strong

competition within the prepaid segment. Compared to the second quarter of 2004, the estimated mobile penetration in Ukraine increased from 18% to 22%.

•

The number of subscriptions increased by more than 1.2 million in this quarter and by more than 2.3 million compared to the third quarter of 2003.

•

ARPU measured in US dollars increased by 3% compared to the third quarter of 2003. This was largely due to the increased number of average traffic minutes per subscription, primarily due to the introduction of a calling party pays regime from 19 September 2003, competitive price structure and a general increase in purchase power.

•

The increase in the number of subscriptions and ARPU contributed to a revenue increase of 76% measured in US dollars compared to the third quarter of 2003.

•

Measured in US dollars, EBITDA increased by 72% compared to the third quarter of 2003, mainly due to increased revenues. Reduced EBITDA margin reflects reduced gross margin (revenues less costs of materials and traffic charges as a percentage of revenues) as a consequence of the introduction of the calling party pays regime.

•

Compared to the third quarter of 2003, depreciation and amortization increased as a result of increased capital expenditure in the subsequent quarters.

•

Increased capital expenditure compared to the third quarter of 2003 was due to network investments resulting from the large increase in the customer base.

GRAMEENPHONE – BANGLADESH


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		599		424		1,621		1,097		1,529
Other revenues		2		—		8		6		7
Total revenues		601		424		1,629		1,103		1,536

EBITDA		383		274		975		692		1,001
Depreciation and amortization		58		43		143		117		158
Write-downs		—		—		—		—		—
Operating profit		325		231		832		575		843

EBITDA/Total revenues (%)		63.7		64.6		59.9		62.7		65.2
Operating profit/Total revenues (%)		54.1		54.5		51.1		52.1		54.9
Capex		418		77		836		240		429
ARPU (GSM) – monthly (NOK)		104		143		112		137		136
No. of subscriptions (100% in thousand)						2,024		1,047		1,141

Telenor’s ownership interest at the end of the third quarter of 2004 was 51.0%. The Norwegian Krone appreciated against the Bangladeshi Takka by approximately 7% in the third quarter of 2004 compared to the third quarter of 2003.

•

On 26 October, 2004 Telenor increased its ownership interest in GrameenPhone by 4.5% to 55.5% for a consideration of USD 9.7 million.

•

GrameenPhone’s estimated market share increased by 1 percentage point from the previous quarter to 63% at the end of the third quarter of 2004. The estimated mobile penetration in Bangladesh increased from the previous quarter to 2.4% at the end of the third quarter of 2004.

•

Compared to the end of the second quarter of 2004 the number of subscriptions in GrameenPhone increased by 13% to more than 2 million, while the increase from the third quarter of 2003 was close to 1 million.

•

Measured in local currency, ARPU declined by 22% compared to the third quarter of 2003. This was mainly due to a higher portion of prepaid subscriptions and price reductions, including free call time.

•

The increase in the number of subscriptions contributed to an increase in revenues of 51% measured in local currency compared to the third quarter of 2003.

•

Measured in local currency, EBITDA increased by 49% compared to the third quarter of 2003, primarily due to increased revenues. However, the EBITDA margin declined compared to the third quarter of 2003 due to increased costs in connection with sales and marketing activities related to the large increase in the sale of new subscriptions.

•

Compared to the third quarter of 2003, depreciation and amortization increased as a result of increased capital expenditure in the subsequent quarters.

•

Compared to the third quarter of 2003, capital expenditure increased as a result of increased need for network investment to increase coverage and due to the significant growth in the number of subscriptions.

PROMONTE GSM – MONTENEGRO


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Mobile related revenues		80		—		80		—		—
Other revenues		2		—		2		—		—
Total revenues		82		—		82		—		—

EBITDA		45		—		45		—		—
Depreciation and amortization		12		—		12		—		—
Operating profit		33		—		33		—		—

EBITDA/Total revenues (%)		54.9		—		54.9		—		—
Operating profit/ Total revenues (%)		40.2		—		40.2		—		—
Capex		3		—		3		—		—
ARPU (GSM) – monthly (NOK)		176		—		150		—		—
No. of subscriptions (in thousand)						340		—		—

Telenor’s ownership interest in ProMonte was 100% at the end of the third quarter of 2004. The preceding table shows figures included in the accounts for Telenor from 12 August 2004, the date of consolidation of ProMonte. ARPU for the 3rd quarter and for the first three quarters in the table is for the period 1 July–30 September 2004 and 1 January–30 September 2004, respectively.

•

In the third quarter of 2004 Telenor acquired the remaining 55.9% of the shares in ProMonte, the leading Montenegrin mobile operator, for NOK 532 million.

•

At the end of the third quarter of 2004 ProMonte’s estimated market share was 57%.

•

The number of subscriptions increased by 39,000 compared to the third quarter of 2003.

•

Measured in local currency, ARPU was in line with the third quarter of 2003.

•

Revenues and the EBITDA margin for the first three quarters of 2004 were NOK 374 million and 54%, respectively. Due to the tourist season, the third quarter represents the quarter with the highest revenues.

OTHER UNITS IN MOBILE
(including eliminations and amortization and write-downs of net excess values)


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
EBITDA		(117	)		(88	)		(300	)		(285	)		(374	)
Depreciation and amortization ¹⁾		483			236			1,313			762			967
Write-downs		—			(3	)		—			8			7
Operating (loss)		(600	)		(321	)		(1,613	)		(1,055	)		(1,348	)

¹⁾ Includes amortization of Telenor’s net excess values by *)		501			239			1,335			713			911
Capex		19			(10	)		1,842			(10	)		(7	)

Net excess values are the difference between Telenor’s acquisition cost and Telenor’s share of equity at acquisition of subsidiaries.

•

Other units in Mobile include the greenfield operation in Pakistan, costs related to the management and administration of Telenor’s international mobile operations, as well as amortization and write-downs of Telenor’s net excess values on consolidated mobile companies.

•

Increased EBITDA loss compared to the third quarter of 2003 was due to operating costs related to the operations in Pakistan. The EBITDA loss in Pakistan in the second and third quarter of 2004 was NOK 13 million and NOK 25 million, respectively.

•

Increased amortization of net excess values compared to the third quarter of 2003 was due to amortization of excess values related to Sonofon.

•

In the third quarter of 2004 the reported capital expenditure related to the greenfield operation in Pakistan were low, primarily due to network components not being taken over from the suppliers.

ASSOCIATED COMPANIES AND JOINT VENTURES IN MOBILE


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Telenor’s share of ¹⁾
Net income after taxes		297			252			794			533			608
Amortization of Telenor’s net excess values ²⁾		(27	)		(157	)		(138	)		(457	)		(534	)
Write-downs of Telenor’s excess values		—			—			—			—			(15	)
Gains (losses) on disposal of ownership interests		—			—			—			1,580			1,580
Net result from associated companies		270			95			656			1,656			1,639

¹⁾		The figures are partly based on management’s estimates in connection with the preparation of the consolidated financial statements. The consolidated profit and loss statement contains only the line “net result from associated companies”. The table includes Telenor’s share of the results in Sonofon until 12 February 2004. Effective from this date Sonofon was consolidated as a subsidiary. Cosmote was included as an associated company through April 2003.

²⁾		Net excess values are the differences between Telenor’s acquisition cost and Telenor’s share of equity at acquisition of associated companies.

•

Telenor’s ownership interest in VimpelCom in Russia was 29% at the end of the third quarter of 2004. The value of Telenor’s share of the company based on the quoted share price as at 30 September 2004 was NOK 11.4 billion. Telenor also holds a 14.9% ownership interest in VimpelCom – Region, a subsidiary of VimpelCom. At the end of the third quarter of 2004 VimpelCom and VimpelCom – Region had approximately 20 million number of subscriptions according to local counting principles.

•

Telenor’s direct and indirect ownership interest in DTAC in Thailand was 40.3% at the end of the third quarter of 2004. The value of Telenor’s share of the company based on quoted share price as at 19 October 2004 was NOK 4.4 billion. The number of subscriptions in DTAC at the end of August 2004 was 7.6 million.

•

Reduced amortization of Telenor’s net excess values on associated companies compared to the third quarter of 2003 was primarily due to the consolidation of Sonofon as of 12 February 2004.

FIXED


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
External revenues
Norway		3,837			4,087			11,849			12,349			16,409
Sweden		357			393			1,178			1,086			1,517
Russia		—			204			—			556			701
Other countries		43			40			129			118			160
Total external revenues		4,237			4,724			13,156			14,109			18,787

Internal revenues		427			428			1,316			1,224			1,713
Gains on disposal		1			—			1			1			9
Total revenues		4,665			5,152			14,473			15,334			20,509

EBITDA		1,504			1,761			4,725			5,043			6,665
Depreciation and amortization ¹⁾		830			969			2,630			3,073			4,110
Write-downs		—			—			—			7			24
Operating profit		674			792			2,095			1,963			2,531

¹⁾ Includes amortization of Telenor’s net excess values by		(26	)		(74	)		(77	)		(52	)		(76	)
EBITDA/Total revenues (%)		32.2			34.2			32.6			32.9			32.5
Operating profit/Total revenues (%)		14.4			15.4			14.5			12.8			12.3
Investments:
– Capex		419			438			1,182			1,283			1,867
– Investments in businesses		1			1			97			218			294

•

Compared to the third quarter of 2003, the results were affected by the sale of Comincom/Combellga to Golden Telecom on 1 December 2003, and that Telenor, as part of the efficiency improvements of operations, transferred parts of the Operating services business from Fixed to EDB Business Partner with effect from 1 May 2004. The transferred business provided services in connection with the operation of the IT systems to other Telenor companies and to external customers. The business was included in the results for Fixed until 1 May 2004.

•

Adjusted for the sale of Comincom/Combellga, the transfer of parts of the Operating services to EDB Business Partner and special items, revenues decreased by 3.4% and the EBITDA margin decreased by 0.8 percentage points compared to the third quarter of 2003. Correspondingly, adjusted operating profit margin decreased by 1.2 percentage points.

FIXED – NORWAY


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Retail revenues
Subscriptions and connections – PSTN/ISDN		908		1,069		2,819		3,269		4,300
Subscriptions and connections – ADSL/Internet		349		277		951		766		1,041
Internet traffic		88		126		315		432		561
Other traffic		1,032		1,204		3,371		3,837		5,062
Total PSTN/ISDN, ADSL and Internet		2,377		2,676		7,456		8,304		10,964

Leased lines		82		88		230		249		329
Data communication (frame relay, atm, lan-lan, datapak)		217		209		641		618		836
Managed services		80		168		360		535		726
Other retail products		196		115		408		303		377
Total other retail revenues		575		580		1,639		1,705		2,268

Total retail revenues		2,952		3,256		9,095		10,009		13,232

Wholesale revenues
Sales to service providers and operators		174		78		539		152		249
Domestic interconnect		143		149		457		483		643
International interconnect		76		94		238		255		339
Transit traffic		255		275		765		778		1,038
Leased lines		138		158		471		474		631
Other wholesale revenues		99		77		284		198		277
Total wholesale revenues		885		831		2,754		2,340		3,177

Total external revenues		3,837		4,087		11,849		12,349		16,409

Internal revenues		429		446		1,323		1,279		1,776
Gains on disposal		—		—		—		1		4
Total revenues – Norway		4,266		4,533		13,172		13,629		18,189

EBITDA		1,512		1,677		4,708		4,904		6,512
Depreciation and amortization ¹⁾		776		940		2,472		2,811		3,773
Write-downs		—		—		—		—		19
Operating profit		736		737		2,236		2,093		2,720

¹⁾ Includes amortization of Telenor’s net excess values by		—		6		1		7		9


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
EBITDA/Total revenues (%)		35.4		37.0		35.7		36.0		35.8
Operating profit/ Total revenues (%)		17.3		16.3		17.0		15.4		15.0
Investments:
– Capex		346		365		1,016		1,086		1,568
– Investments in businesses		—		—		1		—		1

•

Adjusted for the transfer of the Operating services business to EDB Business Partner, revenues decreased by 3.3% compared to the third quarter of 2003, due to the decrease in retail revenues not being fully offset by the increase in wholesale revenues. This is due to a decrease in revenues from international interconnect, transit traffic and leased lines on a wholesale basis. Adjusted for the transfer of the Operating services business to EDB Business Partner, and special items, the EBITDA margin decreased by 0.6 percentage points and the operating profit margin decreased by 0.5 percentage points.

•

External revenues from “Subscriptions and connections – PSTN/ISDN” decreased compared to the third quarter of 2003 due to the transition to sales of access lines on a wholesale basis and a decrease in the number of subscriptions in the market as a whole.

•

Increased external revenues from “ Subscriptions and connections – ADSL/Internet” were due to the increase in the number of ADSL subscriptions. The number of ADSL subscriptions (residential and business) was 270,000 at the end of the third quarter of 2004, an increase of 120,000 from the third quarter 2003 and 35,000 compared to the end of the second quarter 2004. Telenor’s estimated market share for ADSL subscriptions (residential and business) was 57% at the end of the third quarter of 2004, an increase by 1 percentage point from the end of second quarter of 2004.

•

The reduction in external traffic revenues in the retail market compared to the third quarter of 2003 was mainly due to a 15% decline in total traffic measured in minutes in Telenors’s network. The reduction in total traffic was due to the migration of voice traffic from fixed telephony to mobile telephony and data traffic from dial-up Internet to ADSL.

•

Telenor’s market share measured in traffic minutes was 69% at the end of the third quarter of 2004, in line with the end of the third quarter of 2003 and the second quarter of 2004.

•

Increased revenues from “Data communication” were mainly due to growth in IP-based services and payment solutions.

•

External revenues from “Managed services” decreased compared to the third quarter of 2003 due to the transfer of parts of this operation to EDB Business Partner.

•

Increased revenues from “Other retail products” compared to the third quarter of 2003, were mainly due to revenues from new contracts.

•

Increased revenues from “Sales to service providers and operators” were due to increased sales of access lines on a wholesale basis (PSTN, ISDN and ADSL). The number of PSTN/ISDN lines sold on a wholesale basis was 414,000 at the end of third quarter 2004, an increase of 320,000 compared to the third quarter of 2003 and 29,000 compared to the end of the second quarter of 2004. The number of ADSL

subscriptions sold on a wholesale basis was 90,000 at the end of the third quarter of 2004, an increase of 49,000 compared to the third quarter of 2003 and 4,000 compared to the end of the second quarter of 2004.

•

Reduced external revenues from “International interconnect” and “Transit traffic” were due to fall in market prices and a reduced market as a result of more operators sending the traffic within their own network.

•

Reduced external revenues from “Leased lines” on a wholesale basis were mainly due to the migration of several data services to DSL technology.

•

The increase in external “Other wholesale revenues” was mainly due to increased sales of local loop unbundled subscriptions, co-localisation services and contractor services. The number of local loop unbundled subscriptions sold at the end of the third quarter of 2004 was 123,000, an increase of 55,000 compared to the end of the third quarter of 2003 and 15,000 compared to the end of the second quarter of 2004.

•

Reduced EBITDA compared to the third quarter of 2003 was due to reduction in revenues and the transfer of parts of the Operating services business to EDB Business Partner. In the third quarter of 2004 NOK 29 million was expensed due to losses on disposal and workforce reduction, while in the third quarter of 2003 provisions for workforce reduction initiated in 2002 of NOK 28 million were reversed.

•

Depreciation and amortization decreased compared to the third quarter of 2003 mainly due to lower investment activity in recent years, and as a consequence of the transfer of parts of the business in Operating services to EDB Business Partner.

•

The reduction in capital expenditure compared to the third quarter of 2003 was mainly due to lower ADSL investments.

FIXED – SWEDEN


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
External revenues		357			393			1,178			1,086			1,517
Internal revenues		26			19			75			62			81
Gains on disposal		1			—			1			—			5
Total revenues		384			412			1,254			1,148			1,603

EBITDA		(10	)		14			11			(48	)		(56	)
Depreciation and amortization ¹⁾		42			(25	)		120			105			141
Write-downs		—			—			—			4			1
Operating profit (loss)		(52	)		39			(109	)		(157	)		(198	)

¹⁾ Includes amortization of Telenor’s net excess values by		(26	)		(97	)		(78	)		(108	)		(143	)
Investments:
– Capex		67			7			145			26			85
– Investments in businesses		—			—			87			—			13

•

Reduced revenues compared to the third quarter of 2003 were primarily due to termination of volume contracts related to international interconnect and reduced sales of telephony services on a wholesale basis.

•

Reduced EBITDA compared to the third quarter of 2003 was due to reduced revenues on a wholesale basis and increased expenses due to the rollout of ADSL.

•

Increased depreciation and amortization compared to the third quarter of 2003, was due to the effect of the final allocation of net excess values in the third quarter of 2003 related to the acquisition of Utfors AB, when negative goodwill was included in depreciation and amortization in the third quarter of 2003.

•

Increased capital expenditure compared to the third quarter of 2003, was mainly due to rollout of ADSL.

FIXED – RUSSIA


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Total revenues		—		204		—		558		703
EBITDA		—		79		—		207		215
Operating profit ¹⁾		—		37		—		89		71

¹⁾ Includes amortization of Telenor’s net excess values by		—		17		—		49		58
Investments:
– Capex		—		55		—		141		173
– Investments in businesses		—		1		—		218		280

•

Telenor’s shareholding in Comincom/Combellga was sold on 1 December 2003 in exchange for shares in the listed company Golden Telecom. Comincom/Combellga was consolidated as a subsidiary up until 1 December 2003. Golden Telecom is accounted for as an associated company from this date.

FIXED – OTHER COUNTRIES

•

The activities in Fixed – Other Countries consist of activities in the Czech Republic and Slovakia. EBITDA in this quarter was NOK 3 million, which was an improvement of NOK 3 million compared to the third quarter of 2003, due to increased revenues.

BROADCAST


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
External revenues
Distribution		1,070		945		3,190		2,728		3,761
Transmission		196		202		600		609		816
Other		30		8		80		31		64
Total external revenues		1,296		1,155		3,870		3,368		4,641

Internal revenues		34		39		102		122		159
Gains on disposal		—		9		—		20		20
Total revenues		1,330		1,203		3,972		3,510		4,820

EBITDA		424		319		1,162		850		1,229
Depreciation and amortization ¹⁾		219		251		674		792		1,030
Write-downs		—		5		—		9		18
Operating profit		205		63		488		49		181

¹⁾ Includes amortization of Telenor’s net excess values by		60		67		187		194		256
EBITDA/Total revenues (%)		31,9		26,5		29,3		24,2		25,5
Operating profit/ Total revenues (%)		15,4		5,2		12,3		1,4		3,8
Investments:
– Capex		716		56		809		119		252
– Investments in businesses		—		4		—		14		14

•		At the end of the third quarter of 2004 the number of subscribers with satellite dish in Broadcast exceeded 800,000 in the Nordic area.

•		In September 2004, Broadcast acquired an ownership interest in a new satellite, Intelsat 10-02, to replace former leased satellite capacity.

•

Revenues increased in the third quarter of 2004 compared to the third quarter of 2003, mainly due to growth in the number of subscribers and price increases.

•

The increase in the EBITDA margin compared to the third quarter of 2003 was mainly due to increased revenues and reduced costs on the leasing of satellite capacity.

•

Reduced depreciation and amortization compared to the third quarter of 2003 was due to fully depreciated fixed assets in Distribution.

BROADCAST – DISTRIBUTION


						First three
	3rd quarter					quarters					Year
(NOK in millions)	2004		2003			2004		2003			2003
External revenues
Satellite dish		720		636			2,167		1,826			2,528
Cable-TV		248		226			729		655			888
Small antenna TV-networks		98		83			285		241			335
Other		4		—			9		6			10
Total external revenues		1,070		945			3,190		2,728			3,761

Internal revenues		3		3			8		9			13
Gains on disposal		—		9			—		20			20
Total revenues		1,073		957			3,198		2,757			3,794

EBITDA		212		174			622		458			686
Depreciation and amortization ¹⁾		141		189			457		578			754
Write-downs		—		—			—		2			8
Operating profit (loss)		71		(15	)		165		(122	)		(76	)

¹⁾ Includes amortization of Telenor’s net excess values by		60		67			187		194			255
EBITDA/Total revenues (%)		19.8		18.2			19.4		16.6			18.1
Operating profit/Total revenues (%)		6.6	nm				5.2	nm			nm
Investments:
– Capex		39		20			94		54			112

•

Revenues in Distribution increased compared to the third quarter of 2003 due to an increase in the number of subscribers and price increases for “Satellite dish”.

•

The EBITDA margin in the third quarter of 2004 was in line with the third quarter of 2003 adjusted for gains on disposal and accruals between the quarters in 2003.

•

Reduced depreciation and amortization was a result of fully depreciated fixed assets within “Satellite dish”.

•

Increased capital expenditure was due to upgrades of cable TV networks in Norway.

BROADCAST – TRANSMISSION


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
External revenues		196		202		600		609		816
Internal revenues		107		111		316		351		461
Total revenues		303		313		916		960		1,277

EBITDA		183		144		495		410		554
Depreciation and amortization		73		60		205		206		266
Write-downs		—		5		—		5		7
Operating profit		110		79		290		199		281

EBITDA/Total revenues (%)		60.4		46.0		54.0		42.7		43.4
Operating profit/ Total revenues (%)		36.3		25.2		31.7		20.7		22.0
Investments:
– Capex		671		25		701		51		116

•

External revenues decreased in Transmission compared to the third quarter of 2003 as a result of decreased revenues within satellite due to transition to digital distribution that demands less capacity.

•

Increased EBITDA margin compared to the third quarter of 2003 was mainly due to reduced prices for the leasing of satellite capacity and Telenor’s termination of a satellite capacity lease from August 2004.

•

Increased depreciation and amortization was mainly due to the acquisition of an ownership interest in a new satellite in the third quarter of 2004 and increased capital expenditure in the fourth quarter of 2003.

BROADCAST – OTHER

•

Increased revenues and EBITDA in Broadcast – Other compared to the third quarter of 2003 was due in part to increased sales of smart cards and services related to access control for Pay TV.

OTHER ACTIVITIES

EDB BUSINESS PARTNER


						First three
	3rd quarter					quarters					Year
(NOK in millions)	2004		2003			2004		2003			2003
External revenues		774		768			2,409		2,380			3,210
Internal revenues		244		240			688		777			1,060
Gains on disposal		—		—			301		19			19
Total revenues		1,018		1,008			3,398		3,176			4,289

EBITDA		167		11			751		222			399
Depreciation and amortization		107		96			293		277			375
Write-downs		—		6			—		17			28
Operating profit (loss)		60		(91	)		458		(72	)		(4	)

EBITDA/Total revenues (%)		16.4		1.1			22.1		7.0			9.3
Operating profit/ Total revenues (%)		5.9	nm				13.5	nm			nm
Investments:
– Capex		52		17			117		145			210
– Investments in businesses		—		—			402		95			95

Telenor’s ownership interest in EDB Business Partner was 51.8% at the end of the third quarter of 2004.

•

EDB Business Partner has entered into an agreement to take over IBM’s activities in the area of IT operations and application services for Norwegian customers in the local public sector, distribution and industry sectors for a price of NOK 468 million. The business to be acquired generates annual turnover of approximately NOK 500 million. The contract is conditional on gaining the necessary approvals in respect of the Competition Act and other normal terms.

•

Adjusted for the disposal of operations, revenues, excluding gains, increased by 11% compared to the third quarter of 2003. Revenues from IT Operations and Banking & Finance increased by 13% and 6%, respectively, while revenues in Telecom declined by 8%. The increase in IT Operations was due mainly to the transfer of Operation services business in Telenor in the second quarter of 2004.

•

In the third quarter of 2003 EBITDA was affected by NOK 142 million in provisions made for costs related to workforce reductions and tenancy agreements compared to NOK 18 million in the third quarter of 2004. Adjusted for these provisions EBITDA increased by 36%,

mainly due to the increase in revenues from IT Operations and Banking & Finance and to cost savings related to the restructuring of Banking & Finance.

•

Depreciation and amortization increased compared to the third quarter of 2003, primarily due to taking over fixed assets in connection with the acquisition of operations, including Operating services business from Telenor.

•

Capital expenditure increased compared to the third quarter of 2003 and was mainly related to customer contracts.

OTHER BUSINESS UNITS

Revenues


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Satellite Services		595			633			1,812			1,937			2,540
Teleservice		140			175			407			538			725
Nextra International		—			3			—			256			256
Software Services		3			13			60			48			121
Other		98			133			370			364			515
Eliminations		—			(1	)		(2	)		(2	)		(3	)
Revenues		836			956			2,647			3,141			4,154

Gains on disposal		65			2			70			16			51
Total revenues		901			958			2,717			3,157			4,205

EBITDA		97			111			358			176			408
Depreciation and amortization ¹⁾		83			108			287			344			491
Write-downs ¹⁾		36			—			39			14			37
Operating profit (loss)		(22	)		3			32			(182	)		(120	)

¹⁾ Includes amortization and write-downs of Telenor’s net excess values by		9			9			27			29			40

Operating profit (loss)


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Satellite Services		11			60			90			176			234
Teleservice		10			(12	)		9			(2	)		(43	)
Nextra International		—			(15	)		—			(254	)		(220	)
Software Services		(39	)		(25	)		(50	)		(83	)		(86	)
Other		31			(5	)		18			(19	)		(5	)
Total operating profit (loss)		13			3			67			(182	)		(120	)

Investments:
– Capex		39			39			124			139			233
– Investments in businesses		105			1			125			17			30

Satellite Services

•

The decrease in revenues in Satellite Services compared to the third quarter of 2003 was primarily due to downward adjusted project revenues and the effect of the strengthening of the Norwegian Krone against the US dollar, partly offset by the net effect of the acquisition and disposal of operations.

•

Due to the same reasons, in addition to a reduction in the margins of Satellite Services based on Inmarsat and VSAT, the operating profit decreased compared to the third quarter of 2003.

Teleservice

•

Decreased revenues in Teleservice compared to the third quarter of 2003 were primarily due to the disposal of operations.

•

The increase in operating profit compared to the third quarter of 2003 was primarily due to provisions of NOK 24 million made for costs related to workforce reductions in the third quarter 2003.

Software Services

•

In connection with the termination of Software Services, the agreement with Computer Associate was transferred to EDB Business Partner and the operations were discontinued, resulting in an operating loss in the third quarter of 2004.

Other

•

Other business includes primarily operations within Venture and International Business. The operating profit in the third quarter 2004 and the decrease in revenues compared to the third quarter of 2003 were primarily due to the sale of subsidiaries.

Gains on disposal

•

Gains on disposal in the third quarter of 2004 were primarily connected to the sale of Securinet AS in Venture.

Investments in businesses

•

Investments in businesses in the third quarter of 2004 were primarily related to Satellite Services’ purchase of GMPCS Personal Communications Inc.

CORPORATE FUNCTIONS AND GROUP ACTIVITIES


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
External revenues		55			46			188			158			229
Internal revenues		446			472			1,374			1,477			1,955
Gains on disposal		3			11			70			46			133
Total revenues		504			529			1,632			1,681			2,317

EBITDA		2			64			1			55			23
Depreciation and amortization		96			97			287			283			384
Write-downs		3			—			3			—			3
Operating (loss)		(97	)		(33	)		(289	)		(228	)		(364	)

Investments:
– Capex		8			36			185			91			253
– Investments in businesses		—			4			18			10			93

•

The decrease in EBITDA compared to the third quarter of 2003 was primarily due to reduced leases of properties, gains on disposal in 2003 and costs related to the transfer of Telenor’s IT-operations in Norway to EDB Business Partner in the second quarter of 2004.

OTHER PROFIT AND LOSS ITEMS FOR THE GROUP

Depreciation, amortization and write-downs


					First three
	3rd quarter				quarters				Year
(NOK in millions)	2004		2003		2004		2003		2003
Depreciation of tangible assets		2,045		1,995		5,958		6,030		7,986
Amortization of goodwill ^*)		248		119		706		524		686
Amortization of other intangible assets ^*)		670		465		1,971		1,402		1,925
Total depreciation and amortization		2,963		2,579		8,635		7,956		10,597

Write-downs of tangible and other intangible assets		6		1		8		46		104
Write-downs of goodwill		1		6		3		16		16
Write-downs of other intangible assets		35		6		35		14		25
Total write-downs		42		13		46		76		145

Total depreciation, amortization and write-downs		3,005		2,592		8,681		8,032		10,742

^*)		See specification below.

•		Write-downs of other intangible assets in the third quarter of 2004 were due to the winding up of the operations in Software Services in Other Business Units.

^*)

Specification of amortization of goodwill and other intangible assets (including amortization of Telenor’s net excess values)


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Amortization of goodwill
Sonofon		78			—			197			—			—
DiGi.Com		12			12			35			36			48
Pannon GSM		82			78			244			231			308
Kyivstar		10			10			29			30			39
ProMonte GSM		1			—			1			—			—
Other Mobile		—			—			—			5			5
Total Mobile		183			100			506			302			400

Fixed		(26	)		(79	)		(77	)		(68	)		(95	)
Broadcast		48			54			147			157			197
EDB Business Partner		41			37			117			110			151
Other units		2			7			13			23			33
Total amortization of goodwill		248			119			706			524			686

Amortization of other intangible assets
Sonofon		209			—			543			—			—
DiGi.Com		21			22			61			63			83
Pannon GSM		153			150			460			441			564
Kyivstar		66			55			189			156			213
ProMonte GSM		12			—			12			—
Other Mobile		68			82			240			293			374
Total Mobile		529			309			1,505			953			1,234

Fixed		77			111			291			321			431
Broadcast		22			16			65			47			78
EDB Business Partner		—			3			—			5			1
Other units		42			26			110			76			181
Total amortization of other intangible assets		670			465			1,971			1,402			1,925

•

Amortization of goodwill in Fixed in 2003 and 2004 was an income due to amortization of the negative goodwill related to Utfors AB. In the third quarter of 2003, the negative goodwill was taken to income in connection with the completion of the allocation of net excess values of Utfors AB.

Associated companies


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Telenor’s share of ¹⁾
Net income after taxes		312			222			802			394			329
Amortization of Telenor’s net excess values		(28	)		(160	)		(183	)		(481	)		(579	)
Write-downs of Telenor’s excess values		—			—			—			(11	)		(26	)
Gains on disposal of ownership interests		8			—			17			1,508			1,507
Net result from associated companies		292			62			636			1,410			1,231

¹⁾

The figures are partly based on management’s estimates in connection with the preparation of the consolidated financial statements. The consolidated profit and loss statement contains only the line “Net result from associated companies”.

•

Increased net income after taxes from associated companies compared to the third quarter of 2003 was primarily due to improved profitability in some associated mobile companies and improvements in the operations of Bravida. This was partially offset by the shortfall of net income from companies, which are no longer associated companies.

•

The decrease in amortization of Telenor’s net excess values compared to the third quarter of 2003 was mainly due to the shortfall of amortization on companies, which are no longer associated companies, mainly Sonofon.

Financial items


							First three
	3rd quarter						quarters						Year
(NOK in millions)	2004			2003			2004			2003			2003
Financial income		119			84			343			413			586
Financial expenses		(381	)		(444	)		(1,204	)		(1,595	)		(2,023	)
Net forreign currency gain (loss)		12			41			(27	)		55			(1	)
Net gains (losses) and write-downs		22			(38	)		2,631			(128	)		73
Net financial items		(228	)		(357	)		1,743			(1,255	)		(1,365	)

Gross interest expenses		(399	)		(437	)		(1,223	)		(1,593	)		(2,033	)
Net interest expenses		(287	)		(342	)		(912	)		(1,258	)		(1,549	)

•

The increase in financial income compared to the third quarter of 2003 was mainly due to a higher level of liquid assets, partially offset by a decline in interest rates.

•

The decrease in average interest-bearing liabilities and average interest rates contributed to the decrease in financial expenses compared to the third quarter of 2003.

Taxes

•

The tax rate in Norway is 28%. The effective tax rate for the Telenor group for 2004 is estimated to be 34% of profit before taxes and minority interests. The estimated effective tax rate for Telenor for 2004 is higher than 28% mainly due to tax related to companies outside Norway, including the effect of recording deferred taxes on retained earnings in certain companies and amortization of goodwill, on which deferred tax assets have not been recognized. The actual effective tax rate for 2004 may deviate from the estimated rate.

•

In connection with the draft national budget for 2005, the Norwegian Government also proposed certain changes to the tax legislation (Ot.prp.nr. 1 2004 – 05). These proposed tax law changes are consistent with the principles already set forth in the Consultation Paper of 26 March 2004. The main proposals relating to the taxation of companies provide for a tax exemption on dividend income and a tax exemption on capital gains deriving from the disposal of shares. As a result of such exemptions, capital losses deriving from disposals of shares would not be tax deductible. The exemption related to dividends income would apply to all dividends that would otherwise have been subject to corporate income tax in 2004. Further, the capital gains tax exemption on shares with the corresponding non-recognition of capital losses would apply to transactions completed on or after 26 March 2004. However, some transitional rules have been suggested. If the proposed legislation is enacted by Parliament (as drafted) before the end of 2004, Telenor’s preliminary assessment is that deferred tax asset of approximately NOK 600 million recorded by our subsidiary EDB Business Partner ASA will have to be expensed. These deferred tax assets are related to the liquidation of subsidiaries, which had not been completed by 26 March 2004.

Balance sheet and cash flow

•

Total assets decreased by NOK 2.0 billion compared to the end of the second quarter of 2004, primarily due to payment of instalments on interest-bearing liabilities in the quarter. The increase in tangible assets was due to the consolidation of ProMonte and high capital expenditures in Kyivstar and GrameenPhone in the third quarter of 2004.

•

Net interest-bearing liabilities decreased by NOK 1.4 billion from the end of the second quarter of 2004 to NOK 20.6 billion at the end of the third quarter of 2004. The reduction was primarily due to net cash flow from operations exceeding capital expenditures and investments in businesses.

•

In the third quarter of 2004 Telenor purchased own shares in the market amounting to NOK 145 million. If the general meeting of Telenor’s shareholders in 2005 approves to redeem shares owned by the Kingdom of Norway corresponding to Telenor’s repurchase of own shares in the market in the second and third quarter of 2004, in such a way that the Kingdom of Norway’s ownership interest remains unchanged, shareholders equity will be reduced by an additional NOK 0.8 billion at the time of the general meeting.

•

Minority interests in the balance sheet increased compared to the end of the second quarter of 2004, primarily due to net income from Kyivstar, GrameenPhone and DiGi.Com, partially offset by dividends paid by Kyivstar and GrameenPhone and effects of currency fluctuations.

DISPUTES

•

In November 2003, Sense Communication International AS initiated legal proceedings against Telenor, based on allegations that Telenor prices in the service provider agreement for the period 2000 until 2003 had been excessive and not in accordance with the requirements for cost oriented pricing. The claim has now been extended to also include 2003 and is limited upward to NOK 255 million plus interest from January 2004 until payment occurs, and legal expenses. The Asker og Baerum District Court heard the case in October 2004 and is expected to issue a decision during the fourth quarter of 2004.

•

Please refer to note 24 to Telenor’s annual report for 2003 and previous quarterly reports in 2004 for more information about legal proceedings.

US GAAP

•

Telenor had net income in accordance with Generally Accepted Accounting Principles in the United States (US GAAP) of NOK 1,649 million in the second quarter of 2004 compared to net income in accordance with Norwegian accounting principles of NOK 1,399 million. The main reason for the difference is that goodwill is not amortized according to US GAAP, but is subject to an annual impairment test.

OUTLOOK FOR 2004

•

Telenor confirms its expectations for 2004 as presented in Telenor’s report for the second quarter of 2004 of a continued positive development in Telenor’s results compared to 2003. This also applies to the fourth quarter of 2004.

•

Continued growth in revenues is expected, in particular driven by the international mobile operations, where we experience a strong growth in the customer base in several markets.

•

The EBITDA margin for 2004 is expected to be in line with 2003, excluding special items. This includes the consolidation of Sonofon and the establishment of mobile operations in Pakistan. This expectation is based on, among other factors, the effects of increased marketing efforts to secure growth in several of our mobile operations.

•

Capital expenditure in the fourth quarter is expected to be higher than in the fourth quarter of 2003 due to expectations of continued high network investments in Telenor’s international mobile operations.

The unaudited interim consolidated financial statements according to Norwegian accounting principles have been prepared on a basis consistent with Telenor’s financial statements as of year-end 2003, and in accordance with the Norwegian accounting standard for interim reporting.

The accounts submitted with the report have not been audited. This report contains statements regarding the future in connection with Telenor’s growth initiatives, profit figures, outlook, strategies and objectives. In particular, the section “Outlook for 2004” contains forward-looking statements regarding the group’s expectations. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements. These factors include the risk factors relating to Telenor’s activities described in Telenor’s Annual Report 2003 on Form 20-F filed with the Securities and Exchange Commission in the USA under the headings “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” (available at www.telenor.com/ir/).

Oslo, 26 October 2004
The Board of Directors of Telenor ASA

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Telenor ASA
By:	/s/ Torstein Moland
	Name:	Torstein Moland (sign.)
	Title:	CFO

Date: 3^rd November, 2004