2021
Telenor
Annual Report
Table of
Contents
Telenor at a glance
3
Letter from the CEO
4
Group Executive Management
5
Letter from the Chair of the Board
6
Board of Directors' report
7
Telenor's purpose
8
Creating stakeholder value
9
Strategy and performance review
11
How we performed
13
Going concern
15
Remuneration report
16
Risk overview
17
Other mandated filings
20
Governance report
22
Sustainability report
33
About the report
34
Sustainability governance
35
Overview of sustainability
strategy and direction
36
Creating economic value to society
42
Responsible business performance
43
Key ESG figures
71
Reporting framework and
verification
73
Financial statements
75
Consolidated financial statements
75
Notes to the consolidated financial
statements
80
Financial statements Telenor ASA
148
Notes to the financial statements of
Telenor ASA
153
Responsibility Statement
167
Statement from the Corporate
Assembly
168
Auditor's report
169
Definitions
175
Telenor Pakistan
Entry: 2004
Subscribers: 49.1 million
Market position: 2
Market position is based on revenue market share in Nordics, Thailand, Malaysia and Bangladesh, and subscription market share in the others.
*Subscription figures represent mobile subscriptions and exclude Telenor Myanmar.
**Telenor Myanmar subscriber numbers are based on first quarter 2021 figures. With effect from the second quarter of 2021, Telenor Myanmar
has given final regulatory approval to the sale of Telenor Myanmar to M1 Group, see notes 4 and 38.
Telenor Denmark
Entry: 2009
Subscribers: 1.7 million
Market position: 2
Telenor Norway
Established: 1855
Subscribers: 2.8 million
Market position: 1
Grameenphone
Entry: 1996
Subscribers: 83.2 million
Market position: 1
9
172
16 000
employees
Digi
Entry: 1999
Subscribers: 10.3 million
Market position: 2
dtac
Entry: 2000
Subscribers: 19.6 million
Market position: 3
Telenor Myanmar
Entry: 2013
Subscribers: 18.2 million**
Market position: 1
DNA
Entry: 2019
Subscribers: 2.7 million
Market position: 3
Telenor Sweden
Entry: 2001
Subscribers: 2.8 million
Market position: 3
Telenor Group is a leading telecommunications company
across the Nordics and Asia. In Telenor, we are
committed to responsible business conduct and driven
by the ambition of empowering societies. Connectivity
has been Telenor’s domain for more than 165 years, and
our purpose is to empower societies and connect our
customers to what matters most.
Telenor at a glance
million subscribers*
countries
110
billion
Letter from
the CEO
In 2018 the number of devices connected to the web was 7 billion.
By 2025, it's believed to be more than 75 billion. Digitalisation is
changing the world fundamentally, and it will just accelerate in the
coming decade, transforming societies and our everyday life. At the
same time, the world around us quivers. After two years of a
pandemic, we now face new and uncertain times after the Russian
invasion of Ukraine, and in Myanmar the military still has the power
one year after the takeover. The UNs Intergovernmental Panel on
Climate Change (IPCC) has issued a "code red for humanity", and
many of us wonder what kind of earth we are leaving behind for our
children and grandchildren.
As we navigate this shifting world, I'm certain businesses and
private actors need to step up and take responsibility. It means
being a force for good, driven by values and principles in uncertain
and challenging times - brought on by the climate crisis or by
conflict. It also means taking responsibility to unleash the potential
for millions of people, by providing new solutions and opportunities
through digitalisation and new technologies. For Telenor, it means
being a trusted partner for our customers and the societies where
we operate.
Telenor believes connectivity is something fundamentally good.
Throughout the pandemic, it enabled millions of children to learn
virtually and ensured that we could work safely and socially
distanced. Access to open and transparent communication
services is key to any free democracy, and if we put our minds to
the task, new and green technology can be a way out of the climate
crisis. We also believe digitalisation can provide fantastic
opportunities for people and businesses. As digitalisation
accelerates, and 5G and new technologies come together, we want
our customers to share in the value creation. That's why in 2021 we
took the first steps beyond connectivity. Delivering world-class
connectivity is still at the core of what we do. But to serve our
customers even better, we believe we can add services and value.
For example, in the Nordics we have started rolling out safe services
that help protect against fraud, dangerous websites and ID theft.
Our business customers need a partner to navigate new
possibilities coming from 5G, IoT and AI, and we believe we can help
them navigate these complex technologies to work seamlessly and
reliably together. For example, in Malaysia, where we deliver port
operations with 5G and AI. We believe this shift to be a growth
opportunity for us as a company - both in delivering connectivity as
a service and to meet new customer demand with services beyond
connectivity. We are not alone in going beyond connectivity. This
past year we've entered partnerships with Google Cloud, Amazon
Web Services and renewed our partnership with Cisco, all to be able
to add value for our customers.
In recent years, we have prepared well, modernising our
infrastructure, our organisation and the way we work. To further
deliver for our customers in a digitalised world, we also need to
become fully digital ourselves. That's why we have taken leaps in
fast-forwarding our digital transformation in setting new and
ambitious targets for automating our operations and working
towards self-service enabled customer interaction.
I'm a firm believer that companies of the future are sustainable and
responsible. In 2021, together with other ICT companies, we started
an initiative to work for more clean energy in countries that today
rely too heavily on fossil fuels. Last year, we increased focus on
emissions from our supply chain, stating that nearly 70 per cent of
our suppliers shall set science-based targets within 2025. I believe
this is the way forward. We can create green synergies by cutting
our emissions and demanding that the people we do business with
do the same.
To be a trusted partner for our customers in a new digital decade,
we need muscles. That's why we entered two mergers in Asia last
year. The new companies in Thailand and Malaysia will have the
power and scale to unleash new opportunities for our customers in
the tremendous digital transformation happening in the region.
I believe values and principles guide a trusted partner. In a complex
world, that doesn't come without dilemmas. In 2021, Telenor faced
its most difficult challenge ever following the military takeover in
Myanmar. The deteriorating situation and conflict with our values,
Norwegian law and international law made Telenor’s continued
presence in Myanmar impossible. I am proud of the impact we have
created through delivering communication services to the people
of Myanmar and devastated that the story has ended here. Our
thoughts are with the people of Myanmar.
The employees are Telenor’s most valuable resource. They are the
ones ensuring innovation as we move beyond connectivity and the
ones meeting our customers every day. That's why we will continue
our focus on up-skilling and re-skilling our digital skillset. Telenor’s
vision is to empower societies and connect you to what matters
most. Doing it will look different in the next decade than in the past.
We believe the shifting world around us needs companies to step
up and take responsibility. For Telenor, that means being a partner
you can trust. We want to make the digital shift green, safe, and for
everyone - all while advancing societies around us with new
services and world-class connectivity to give you, as our customer,
more value in your digital life.
Sigve Brekke, President & CEO Telenor Group
Sigve Brekke, President & CEO
Telenor Group
Telenor Group Executive
Management
Sigve Brekke
President and Chief
Executive
Officer (CEO)
Tone Hegland Bachke
EVP and Chief Financial
Officer (CFO)
Cecilie Blydt Heuch
EVP and Chief People &
Sustainability Officer
Ruza Sabanovic
EVP and Chief Technology
Officer
Rita Skjærvik
EVP Strategy and External
Relations
Jørgen C. Arentz Rostrup
EVP and Head of Telenor
Asia
Petter-Børre Furberg
EVP and CEO of Telenor
Norway
Jukka Leinonen
EVP Head of Nordics
Letter from
the Chair
Dear Reader
Last year, I began my letter by asking the question: Who could have
imagined the changes 2020 would bring? The same question is
equally relevant now. Not because of the pandemic, which is still
with us despite most restrictions being lifted, but rather the
challenges we are facing that were unthinkable just a short while
ago. Russia's invasion of Ukraine has created war in Europe, and we
can already see that 2022 will be a year marked by major upheavals
in security policy priorities, global financial markets, international
trade, politics, global value chains and economic growth.
In recent years, the Board of Directors in Telenor has focused
strongly on sustainable development. It is becoming increasingly
important for companies like Telenor to place high demands on
responsible business operations and contribute to positive
development in the societies where we operate. This is a
prerequisite for creating value for customers and shareholders, and
it also meets the expectations of Telenor’s stakeholders. This is the
only way we can ensure our ability to deliver long-term value for
shareholders.
In 2021 Telenor's Board of Directors and management spent a lot of
time dealing with the very difficult situation deriving from the
military coup in Myanmar. Since the entry into Myanmar in 2014,
Telenor has provided communication services and critical
infrastructure to the country's citizens. Telenor – strongly
supported by Norwegian politicians – was an important contributor
to the opening up of the society of Myanmar by providing
affordable and accessible communication services. When the
military took power in February 2021, the situation suddenly
changed. It quickly became clear that it was no longer possible to
continue operations while at the same time complying with
Norwegian and international laws, sanctions regulations and
Telenor's own responsible business commitments. Combined with
concerns about human rights and employee safety, this formed the
reason for Telenor's decision to sell.
Despite the sad end, Telenor's years in Myanmar were proof of the
opportunities inherent in connecting people and things using
communication services. Telenor will keep providing such
opportunities across all our markets. The telecommunications
industry is in the midst of a rapid development with the
establishment of 5G networks, opportunities beyond connectivity
and the emergence of new value chains and services. At the heart
of Telenor’s priorities are the customer’s need. Every innovation is
meant to ultimately add value to customers.
New opportunities in the business-to-business market and the use
of 5G will renew both our service offering and the way we work. The
services offered to the consumer market will also be affected.
Building partnerships will be important in the effort to gather the
best expertise and technology needed to win the battle for
customers.
We believe that benefits of scale and strong market positions will be
even more important going forward. This was the reason why
Telenor announced new types of partnerships during 2021 by
merging its operations in Malaysia and Thailand with Celcom and
True, respectively. We have high expectations of the benefits this
will bring and believe that the two new companies will put Telenor in
an even better position to manage market opportunities and risks
within each market and across the region. The ambition is to create
two leading players that will provide value for customers and
shareholders, and drive digitalisation by becoming an even stronger
digital partner for consumers, businesses and the broader society.
The pandemic has created changes in how companies are run and
how organisations work. Our employees work differently, our
customers use us in a different way – and we all have to adapt. The
Board has had most board meetings on video also in 2021. Drawing
on good experiences with video meetings, we will continue to hold
board meetings digitally going forward however ensuring there is a
healthy and good balance between digital and physical meetings.
There are several advantages that physical meetings provide for
relationship building and delving deep into specific topics.
I will conclude my letter by thanking all Telenor employees who have
worked hard to keep our operations running and making sure that
the infrastructure we all depend so heavily on in our daily work is
available. That's our most important task. You are the reason why
we can look back on 2021 as a year in which Telenor stood firm and
handled very demanding challenges in a way we can be proud of.
And at the same time created the best possible foundation for
further development of Telenor as a customer-oriented company
with the most sought-after services.
Thank you to employees, thank you to customers and thank you to
shareholders.
Gunn Wærsted, Chair of the Board
Gunn Wærsted, Chair of the Board
Telenor ASA
| Board of Directors’ Report | Annual Report 2021 | 7
Board of
Report
Telenor’s purpose
8
Creating stakeholder value
9
Strategy
11
How we performed in 2021
13
Going concern, allocation
of results
15
Executive compensation
and Equal pay reports
16
Risk overview
17
Other mandated filings
20
| Board of Directors’ Report | Annual Report 2021 | 8
Telenor's purpose
Telenor’s purpose is to empower societies by connecting
customers to what matters most. Across all our markets we are
relentless in driving modernisation and doing our business
responsibly. As a responsible and efficient telecommunications
company, we provide our customers with reliable services that help
them take advantage of the opportunities that connectivity
presents and enable societies to thrive. That is also the platform
that allows us to navigate through uncertainty and capture
opportunities for value-creating growth going forward.
As societies and our customers have accelerated digitalisation to
combat ever increasing challenges, our purpose to empower
societies and connect our customers to what matters has become
even more important – and the acceleration will continue. This
transformation represents new opportunities for our customers to
further improve, as it does for us. We experience customers turning
to us for advice and enablement of safe and reliable connectivity,
and they turn to us for services beyond connectivity to explore the
opportunities of digitalisation. This trend of digitalisation represents
new opportunities to provide more value to our customers and
societies, and new opportunities for growth.
01
| Board of Directors’ Report | Annual Report 2021 | 9
Creating stakeholder value
The pandemic has changed our everyday life and
accelerated several trends. Connectivity creates
opportunities for people, businesses and societies, and
secure, reliable, and efficient connectivity has become a
fundamental need for people, businesses and societies.
Trust is therefore essential to build deeper and longer
relationships with customers, while great customer
experiences must be personalised, seamless and
engaging. No company will be able to meet these changing
demands of the customers by themselves, so to unlock
the transformational potential of technologies we believe
partnerships will be crucial for innovation going forward.
We believe new technology continues to change the world
at an accelerated pace, bringing new opportunities.
Through an ecosystem of partners, we will bring these
new opportunities to our customers, businesses, and to
societies.
Telenor offers investors a diversified portfolio of telecom
assets with strong market positions and solid profitability.
The company differs from other European operators by
serving both digital leading telecom markets in the Nordics
and cost-efficient mass markets in Asia. Telenor is led by
an experienced management team committed to driving
value creation through continuous improvement of
operational performance and a focused portfolio
development. This has enabled a strong and consistent
shareholder remuneration. The current dividend policy
aims at a year-on-year growth in ordinary dividend per
share. In addition, we have run several share buy-back
programmes in recent years. Telenor’s strong operating
model is enabling us to have a solid governance model and
transparent financial communication across all markets
where we are present. We believe in good corporate
governance as a prerequisite for trustworthiness, value
creation and access to capital.
In recent years, we have embarked on a significant
modernisation journey in Telenor. This has enabled us to
materially reduce the operating expenditures. We believe
continued modernisation and digitalisation in the coming
years will enable further operational efficiency. We believe
in revenue growth from increased data usage and further
penetration in Asia, and accretive upselling from 5G and
adjacent services in the Nordic markets. In combination
with a global procurement scale and our responsible
business framework, Telenor is committed to driving value
creation for our customers, shareholders, partners, and
the societies where we operate.
Connecting customers to what matters most will be more
complex in the future. Connectivity will still be the core
service, and in addition Telenor will go beyond
connectivity to meet changing customer needs. Together
with partners we will develop new services to create value
from the digital opportunities facing customers,
businesses, and societies. We have started to build an
ecosystem of partners to deliver on the digitalisation
opportunities, and during 2021 Telenor partnered with
Amazon Web Services and Google Cloud and entered an
additional partnership with Cisco in 2022. These
partnerships will support our ambition to stay at the
forefront of the industry in terms of modernisation and
efficiency and will enable us to deliver new products and
services to meet customers’ changing needs in a new way.
02
| Board of Directors’ Report | Annual Report 2021 | 10
Telenor’s ambition is to explore the full value of a strategic
partnership to accelerate digital transformations for the
business-to-business market through an aggregator role
by jointly exploring the full breadth of opportunities across
joint business building, reselling, analytics, and workload
migration. The partnerships will aspire to be known not
digital business growth, not only mobile networks and
cloud, and invest to build new services and go-to-market
channels by jointly exploring and creating new use-cases.
We will expect to work with a wide range of partners to
fulfil the needs of our customers going forward.
At our Capital Markets Day in 2020, we laid out our
strategic direction for the following three years, and these
three components have been the focus of our
performance:
Deliver
growth
and position ourselves for future
growth through clear brand positions, strong
distribution and focused customer offerings serving
the growing need for connectivity and related
services.
Continue to innovate on our core business and be a
leader in
modernisation
, from how we run our
networks to the way we engage with customers. For
Telenor, modernisation is a platform for future and
long-term growth.
Reinforce our strong foundation of
responsible
business
through the way we raise business
standards and contribute by providing skills for an
accelerated digital future.
| Board of Directors’ Report | Annual Report 2021 | 11
Strategy
Telenor has delivered on its strategy for the previous years
and has built a solid platform for further modernisation
and a strengthened growth agenda while adhering to the
core belief in doing business responsibly.
As the markets recover from the pandemic, Telenor
believes there are significant opportunities where we can
build on our modernised telecommunications capabilities
to meet new customer demands and grow our business,
both within communication revenues and adjacent
services.
Telenor’s strategy has delivered on the three ambitions
from Capital Markets Day in 2020 to create shareholder
value: growth, modernisation and responsible business.
The Group Strategic Action Plan forms the foundation for
succeeding with Telenor’s longer-term priorities.
Growth
In Asia, we see rapidly advancing digital societies with
increasing demand for connectivity. To further develop the
potential in Asia and to create a longer-term sustainable
position, we need sufficient scale in our markets and
across the region.
In Thailand and Malaysia, Telenor has during 2021 taken
steps towards creating leading digital telecommunication
companies to drive digitalisation and capture
opportunities from growing digitalisation and growing
business-to-business segments. In both markets,
transactions are subject to necessary approvals and the
latest developments will be communicated on Telenor’s
corporate web site.
In Bangladesh, Grameenphone has maintained a strong
premium brand position and subscription and traffic
revenue growth throughout 2021. To maintain this growth,
investments in connectivity will further improve the data
experience and organisational modernisation will reduce
complexity and ensure focused resource allocation.
We believe both accelerated digitalisation and service
development will benefit from scale in new ways, and scale
also improves our influence and ability to impact our
business environment.
In the Nordics, we are investing in 5G across all markets
with the ambition to defend and continue to monetise our
premium network positions in Norway and DNA. In 2021,
we saw the first wave of monetisation of 5G in mobile
subscriptions, with further opportunities to come in
hotspots and B2B services. The development in services
on top of connectivity in Norway was an important growth
driver in 2021, and we have started seeing uptake of these
services also in other Nordic countries.
Telenor will further develop the regional position in the
Nordics, including taking regional service positions that
will enable the creation of a repeatable model for scaling
services across the region.
Developing the two regional positions will focus our
operation, while still pursuing global scale benefits in areas
such as procurement and standardisation and maintaining
our common approach to responsible business conduct.
Modernisation
Telenor’s ambitious modernisation journey is a foundation
for the strategic agenda and has laid the foundation for
becoming a digital telecommunications company.
To ensure scalability, efficiency and customer experience,
our operations and delivery will be touch-free and self-
service enabled. We have high focus on our customer
experience, and to remain trusted and relevant we
continuously address feedback from our customers. In
2021 we had a global network Net Promoter Score of 21.3.
In 2021, our technology operations have achieved 58
percent automation coverage, with 65 percent of network
functions on Cloud and near 50 per cent of IT applications
on Cloud across our markets.
Across our operations, our greatest strength is our people.
Telenor has a highly competent and engaged workforce.
We are performance oriented and have a learning culture
and growth mindset, which have allowed us to adapt and
execute well in previous years. When taking the next steps
03
| Board of Directors’ Report | Annual Report 2021 | 12
towards our new priorities, Telenor will ensure sufficient
engagement on the new priorities, while not taking away
focus from delivering in the market every day.
Modernisation of the network to enable 5G is one of the
key investments in the Nordic business units. In Finland,
DNA is well into the modernisation with 34 percent of sites
enabled with 5G, while the 5G modernisation in Sweden
and Denmark has started in 2021. Overall, 15 percent of
Nordic sites are now modernised. In Norway, the
modernisation of the fixed and mobile network is being
done at a high pace in the 5G rollout and mobile network
modernisation, high roll-out of fibre and fixed wireless
access to provide alternative customer solutions before
Telenor decommissions the copper network. Telenor
Norway continues to modernise both its IT infrastructure
and the operating model to further improve service
delivery for customers.
Responsible business
We focus on responsible business practices across all our
markets and work to continually improve our approach.
Guided by international standards and our operational
experience, we work systematically to address risks and to
maximise the positive impact of our business whether
socially, environmentally or economically. Because of the
different challenges and opportunities, our responsible
business agenda is broad. It covers Health, Safety, People
Security & Wellbeing, Human Rights, Supply Chain
Sustainability, Climate & Environment, Digital Skills,
Diversity & Inclusion, Anti-Corruption, Data Privacy
Compliance and Cyber Security. We have a risk-based
approach to ensure we prioritise resources where we can
have the highest impact on our business environment.
Health, Safety and Security across the entire value chain
will continue to be a regional priority in Asia, with
systematic work and follow-up through our Asia Hub
established in 2020. Continued focus on identifying and
managing Human Rights impact will also be important in
our Asian BUs.
Telenor’s Responsible Business agenda and delivery on
ESG (Environment, Social and Governance) areas are
further elaborated on in the Sustainability Report.
| Board of Directors’ Report | Annual Report 2021 | 13
How we performed in 2021
Revenues
Revenues in 2021 were NOK 110.2 billion, 5 per cent below
the reported revenues of NOK 115.8 billion the previous
year, driven by FX as currency adjusted revenues
increased by 1%. For the full year 2021, organic
subscription and traffic revenues were stable. Legacy
revenues as well as positive development in Finland,
Denmark, Bangladesh and Pakistan almost offset the
decline in Thailand, Malaysia, Sweden and fixed legacy
revenues in Norway.
Operating expenses
In 2021, operating expenses (opex) decreased by NOK 2.6
billion to NOK 31.9 billion. Opex decreased by NOK 0.6
billion or 2%, on a currency adjusted basis. Significant
effects from our structural efficiency agenda and
modernisation efforts resulted in lower operating
expenses within most cost categories compared to last
year.
EBITDA before other income and
other expenses
Reported EBITDA before other income and other expenses
decreased by NOK 3.2 billion to NOK 49.2 billion, primarily
driven by negative currency effects. For the full year 2021,
EBITDA remained stable on an organic basis. With stable
organic subscription and traffic revenues, the negative
effect from higher energy prices was fully offset by solid
opex reductions within other areas.
EBITDA
EBITDA decreased by NOK 6.9 billion to NOK 47.4 billion
due to gains realised on disposals last year and the NCA
fine in Norway this year of NOK 0.8 billion.
Net income
The net income to equity holders of Telenor ASA in 2021
was NOK 1.5 billion, or NOK 1.09 per share, a decrease of
NOK 15.8 billion. The decrease is primarily a result of a full
write down of the operation in Myanmar of in total NOK 7.5
billion and gain on disposals last year of NOK 4.4 billion.
Capital expenses
Total investments in 2021 amounted to NOK 22.3 billion.
Reported capex excluding leases, licences and spectrum
increased by NOK 2.1 billion to NOK 17.9 billion. Capex was
driven by network modernisation in several of our
markets, including fibre and 5G rollout in Norway, 5G
rollout in Finland and network capacity and coverage
expansion in Thailand. Capex for spectrum and licences
amounted to NOK 4.4 billion in 2021 and was primarily
related to Pakistan and Bangladesh. Capex as a proportion
of revenues, excluding licences and spectrum, was 16 per
cent, compared to 14 per cent in 2020.
Free cash flow
Free cash flow before mergers and acquisitions (M&A) in
2021 was NOK 11.0 billion, which is a decrease of NOK 1.5
billion compared to 2020. The reduction was primarily a
result of lower reported EBITDA because of FX.
Total free cash flow for 2021 was NOK 12.7 billion, a
decrease of NOK 8.2 billion compared to 2020. This was
primarily because of proceeds from disposal of assets in
2020, and lower reported EBITDA in 2021.
Net cash inflow from operating activities during 2021 was
NOK 42.3 billion, a decrease of NOK 1.5 billion compared to
2020.
Net cash outflow to investment activities during 2021 was
NOK 17.2 billion. Net cash outflow from financing activities
during 2021 was NOK 27.9 billion. This was mainly a
consequence of net outflow to repayment of borrowings
of NOK 3.0 billion and repayments of lease obligations of
04
| Board of Directors’ Report | Annual Report 2021 | 14
NOK 8.8 billion. Total Telenor ASA shareholder
remuneration was NOK 12.6 billion and dividend paid to
non-controlling interests was NOK 3.6 billion. Cash and
cash equivalents in continuing operations decreased by
NOK 5.0 billion during the year to NOK 15.1 billion as of 31
December 2021.
Financial position
Total assets decreased by NOK 30.8 billion to NOK 225.7
billion in 2021. Net debt decreased by NOK 9.7 billion to
NOK 100.8 billion. Interest-bearing liabilities excluding
licence obligations decreased by NOK 8.8 billion, while
cash and cash equivalents decreased by NOK 5.0 billion.
Total equity decreased by NOK 12.4 billion to NOK 31.5
billion.
| Board of Directors’ Report | Annual Report 2021 | 15
Going concern, allocation of
results
Going concern
In the view of the Board, Telenor Group has a solid
financial position. In accordance with Section 3-3a of the
Norwegian Accounting Act, the Board confirms that the
prerequisites for the going-concern assumption exist and
that the financial statements have been prepared based
on a going-concern basis.
Outlook for 2022
Entering 2022, we will maintain our focus on returning to
growth, the opportunities we see from also going beyond
connectivity, creating leading operators through
partnerships in Asia and further developing our
infrastructure position in the Nordics. For the full year 2022
and excluding Digi in Malaysia, we expect low single digit
growth in service revenues, EBITDA around 2021 level or
slightly higher and capex to sales ratio of 16-17%.
Allocation of 2021 results
Telenor ASA is the holding company and contains the
Group Management, Corporate Functions, Research and
Development and the Group’s internal bank. Revenues are
mainly sale of Group services to other Group companies,
sale of research and development services and sale of
other consultancy services. Purchases from other Group
companies consist mainly of consultancy fees in strategic
Group projects, property lease, IT-operations and
maintenance. Telenor ASA conducts the main part of the
external debt financing in the Group, and provides loan
and guarantees to, and receives deposits from Group
companies.
For 2021, Telenor ASA recorded revenues of NOK 895
million, down from NOK 911 million in 2020, while the total
operating expenses were reduced by NOK 13 million to
NOK 1,539 million.
During the year the external interest-bearing liabilities
decreased from NOK 79,781 million to NOK 72,349 million,
of which NOK 3.7 billion is related to currency gains. Please
refer to note 12 in the financial statements.
million, after receipt of a group contribution and dividends
of NOK 14,903 million.
The Board proposes the following allocation: NOK 23,845
million transferred to retained earnings. After this
allocation, and after the deduction of share capital,
Telenor ASA has equity of NOK 103,668 million.
Telenor’s shareholder remuneration policy is to aim for a
year-on-year growth in dividend per share, where annual
dividends are paid in two instalments. Telenor use buy-
back of own shares or extraordinary dividend pay-outs as
a tool to optimise the capital structure and this is
evaluated on a case-by-case basis. To maintain financial
flexibility and ensure cost-efficient funding, Telenor aims
to maintain a solid balance sheet by maintaining net
debt/EBITDA between 1.8 to 2.3x. As of 31 December 2020,
the reported net debt ratio was 2.05x.
Shareholder remuneration
Based on the performance during the year, the Board of
Directors proposes an ordinary dividend of NOK 13.0 billion
corresponding to NOK 9.30 per share for 2021, to be
declared by the Annual General Meeting on 11 May 2022.
The proposed dividend shall be split into two tranches of
NOK 5.00 and NOK 4.30 per share, to be paid in May and
October 2022 respectively, and represents a three per
cent increase per share compared to 2021.
05
| Board of Directors’ Report | Annual Report 2021 | 16
Executive compensation and
Equal pay reports
Executive compensation report
The Board of Directors’ guidelines for compensation of
senior executives ("compensation policy") was presented
to the Annual General Meeting (AGM) on 27 May 2021.
Telenor Group’s Executive Compensation Report for 2021
is published as a separate document, available on
Telenor.com/investors.
Equality & equal pay
Telenor is an equal opportunity employer who considers
diversity to be imperative to the way we do business. Equal
pay is critical for Telenor to be able to attract, retain and
engage employees across all markets. Furthermore, as a
responsible business it is important that Telenor also
within the compensation area sets high standards and
implements robust and sustainable practices. As such,
Telenor applies compensation practices that are
transparent, objective, and fair. In 2020, new regulatory
requirements related to equality and gender pay were
introduced in Norway. Although there is no legal
requirement to implement the Norwegian reporting
requirements globally, this topic is important to Telenor in
all countries where the company operates, and as such the
Equality & Gender Pay reporting [link] is reported for all the
core telecommunications business units and Telenor
Group, in addition to the seven companies with more than
50 employees in Norway.
06
| Board of Directors’ Report | Annual Report 2021 | 17
Risk overview
Risk management is a continuous process
and an integrated part of business
throughout all entities in Telenor Group. All
managers are required to assume
responsibility for risk management within
their areas of responsibility and ensure that
risk management is embedded in day-to-day
business processes. When operating across
multiple markets, Telenor Group is exposed
to a range of risks that may affect its
business. Telenor aims to earn competitive
returns at acceptable risk levels. Below are
some key risks areas discussed and
described. For more information, see
Governance Report (page 22).
Operational
Cyber security
Cyber-attacks on Telenor could lead to service disruption
or theft of sensitive information, which may have a severe
impact on our reputation and financial performance. As
the amount, severity and sophistication of attacks has
increased over the years, Telenor has made considerable
efforts in countering this risk by strengthening the ability
to detect and handle cyber security incidents to protect
customers, assets and services. This includes improving
the cyber security capabilities and competences in both
technology, people and processes including working with
the partners and the ecosystem, improving our defensive
capabilities, detecting and preventing the cyber risk to our
assets and customers.
Telenor considers the conflict in Ukraine and the resulting
sanctions on Russia and Belarus to increase the likelihood
of cyber-attacks on western countries and critical
infrastructure, where Telenor may be subject to both
direct cyber-attacks and collateral damage. We are
following the situation closely and are increasing readiness
for potential attacks.
People safety
Employees and suppliers involved in our operations remain
exposed to health and safety incidents. Risks related to
traffic, work on network, rollout projects in remote
locations, terror, natural disasters and social unrest
remain relevant particular in our Asian markets. Risk
related to stress and prolonged working from home due to
COVID-19 has become relevant during 2021.
We are committed to raise health, safety and people
security awareness and culture among employees and
suppliers. For Asian business units, we have initiated a
program that will focus on identifying areas for
improvement within health and safety competence,
culture and leadership focus.
Telenor’s ambition is zero injuries to employees and
business partners and having health, safety and people
security fully embedded in the business. Regretfully,
Telenor experienced two fatalities in our Asian operations
in 2021, both related to road transport. For more
information, see the Sustainability Report (page 33).
Privacy
The privacy risk relates to the compliance risks of
customer data protection as regulated by relevant privacy
laws and regulations. Data processing in breach of privacy
laws may be subject to substantial fines. Examples of such
risks are lack of customer consent where needed, lack of
privacy impact assessments, lack of data processing
agreements, privacy risks related to authority requests, or
lack of adequate technical and organisational measures to
ensure information security.
The risk responses from Telenor Group include
implementation of continuous vendor monitoring
dialogue, facilitation of knowledge sharing across
subsidiaries and in-depth monitoring of security and
privacy maturity levels across subsidiaries with follow-up
dialogues. Our internal processes for handling all authority
directives are guided by international frameworks such as
the UN Guiding Principles on Business and Human Rights.
07
| Board of Directors’ Report | Annual Report 2021 | 18
Vendor and Business Partner risk
Telenor Group depends on key suppliers and third-party
providers for the supply and maintenance of equipment
and services. Supply chain disruptions, such as bans or
sanctions on vendors due to increasing geopolitical
tension, may lead to confidentiality and integrity breaches,
reputational impact and can have potential impact on
Telenor’s innovation and competitive ability.
Telenor has a multi-vendor strategy, which includes supply
of products and services from European, USA-based and
Chinese suppliers. Our multi-vendor strategy limits the
downside of being dependent on only one vendor. Telenor
is increasing the focus on supplier due diligence and
follow-up, especially for critical contracts.
Global pandemics
The spread of cross-border diseases such as COVID-19
may have an operational effect on Telenor Group. It may
impact the health and safety of our employees, and due to
lockdown measures and pandemic responses it may
cause significant changes in consumption,
macroeconomic developments, commercial activity,
usage patterns, potential disruptions in the supply chain of
hardware and handsets, maintenance of infrastructure
and access to resources. During 2021, the pandemic
receded following an increased level of vaccination, and
economies gradually reopening.
Technology
Introduction of new technologies, digitalisation and
changing consumer behaviours in the telecom sector
opens up opportunities for new business models leading
to structural changes and increased industry dynamics.
Failure to respond to and meet the demands developing in
the marketplace could have a negative impact on
customer relationships, value chain position and service
offerings.
Telenor has embarked on a vital modernisation agenda to
adapt accordingly, including investing in upskilling the
organisation and modernising our networks.
Network
The quality and reliability of Telenor Group’s
telecommunications services depend on the resilience and
stability of its network, including the networks of other
service providers with which it interconnects. These
networks are vulnerable to, service interruptions, damage
or data breaches coming from targeted and advanced
cyberattacks. Repeated, prolonged or major network or IT
system failure could damage Telenor Group’s reputation
and financial performance, including its ability to attract
and retain subscribers.
New technologies are more robust in response to
cybersecurity attacks. Telenor ensures continued increase
in network quality by investing in increased redundancy
and resilience of systems and modernisation of equipment
and technology, extending the lifetime of our networks.
ESG (Environment, Social,
Governance) risk
Responsible business
Telenor strives for high standards and continuous
improvement in responsible business both within its
operations and throughout the supply chain. Telenor
operates in some emerging markets that have potentially
complex and sensitive political and social contexts.
Strengthening awareness, accountability and
transparency will remain key to securing our licence to
operate and ensuring ethical and responsible business
practices. For more information about responsible
business, see the Sustainability Report (page 33).
Climate and environment
For Telenor, climate-related physical risks include
potential damage to vital infrastructure and utilities
through the impact of more extreme weather events and
rising sea levels. Climate-related regulatory risks include
potentially higher operational costs due to increasing
carbon taxes, energy and fuel taxes, as well as risks of
higher capital costs due to a required transition towards
the use of renewable energy solutions. Telenor’s climate
goal is to become carbon neutral in the Nordic operations
and a 50 percent reduction of carbon emissions in the
Asian operation by 2030. For more information, see the
Sustainability Report (page 33).
Human rights
Telenor’s most salient group-wide human rights risks
remains ensuring the right to privacy and freedom of
expression, compliance with labour standards in the
supply chain, preventing child labour, ensuring online
safety, preventing discrimination and respecting land
rights. Following internal processes based on international
frameworks such as the UN Guiding Principles on Business
and Human Rights is the first step towards mitigating
these risks. Other mitigating actions, such as engagement
with stakeholders, training and capacity-building, are in
place to mitigate these risks. For more information, see
the Sustainability Report (page 33).
Corruption risk
Corruption is a threat to our business and the societies in
which we operate. We know that it can undermine
legitimate business activities, distort competition, damage
reputations and expose individuals to risk. Corruption-
related risk includes bribery and trading in influence. A
risk-based Anti-Corruption Compliance Programme to
prevent, detect and remedy corruption risk is
implemented in all subsidiaries directly or indirectly
controlled by Telenor Group. For more information, see
the Sustainability Report (page 33).
Business environment risk
Regulatory risk
Telenor Group’s operations are subject to requirements
through sector-specific laws, regulations and national
licences. Regulatory developments and uncertainty could
| Board of Directors’ Report | Annual Report 2021 | 19
affect the Group’s results and business prospects. Telenor
Group depends on licences and access to spectrum and
numbering resources in order to provide
telecommunications. Unforeseen events could cause
disruption in rollout plans and result in the risk of not
meeting mobile license obligations. The risk is particularly
high in some Asian markets with issues related to high
spectrum prices, tax disputes, renewal of licenses and
general unpredictability in the business environment.
The regulatory risk exposure is mainly related to our
mobile operations in Grameenphone and Telenor Pakistan.
In Bangladesh, Grameenphone faces regulatory scrutiny of
its operations and have several pending and unresolved
regulatory and legal cases. These risks can lead to
limitations on the commercial freedom of Grameenphone,
combined with financial burden and loss of reputation. In
Pakistan, Telenor Pakistan continuous to be subject to
arbitrary assessments and unpredictable application of tax
legislation.
We are committed to working towards securing modern
regulatory frameworks and tax regimes, ensuring that
everyone can derive the full benefit of a digital society. For
more information, see the the Sustainability Report (page
33).
Spectrum
There is a risk in timing of spectrum acquisitions, their
price levels, and their impact on our market positions and
value creation in the Asian markets. Spectrum related risk
may have significant financial impact and creates
uncertainty and challenges for network investments.
There is a low risk associated with spectrum in the
Nordics.
Specific spectrum risk responses are developed on a
case-by-case basis. Telenor supports efficient use of radio
spectrum resources for the increasing demands for
mobile broadband capacity.
Myanmar
On 1 February 2021, a state of emergency was declared
under military leadership in Myanmar. Due to worsening of
the economic and business environment outlook and a
deteriorating security and human rights situation, Telenor
saw limited prospects of improvement going forward. As
announced on 8 July 2021, Telenor Group has entered into
an agreement with M1 Group to sell 100 percent of its
mobile operations in Myanmar. On 17 March 2022, Telenor
Group was informed that the Myanmar Investment
Commission has given final regulatory approval to the sale
of Telenor Myanmar to M1 Group, see notes 4 and 38. With
effect from the second quarter 2021, Telenor Myanmar has
been classified as assets held for sale and discontinued
operations.
Geopolitical environment
Telenor operates in markets that are subject to
geopolitical risks with potential negative impacts. The
most prominent risks include supply chain disruption due
to escalating trade tension and sanctions. Furthermore,
post-COVID-19 macroeconomic instability may increase
the risk of governments in Telenor’s Asian markets
enforcing additional financial, regulatory and tax
requirements. There is an increased risk due to Russia’s
recent invasion of Ukraine resulting in geopolitical
uncertainty and volatility in the region. The resulting
impact could be higher inflation, potential disruption to
financial market and increased cyber threats amongst
other things. These risks require close and continuous
monitoring and are being closely followed up at both local
and Group level.
Financial
Currency risk
Approximately 77 per cent of Group revenues are derived
from operations with a functional currency other than the
Norwegian krone. Currency fluctuations affect the value of
investment in foreign operations when translating financial
statements into Norwegian kroner. Telenor Group seeks to
hedge its net investment in foreign operations by
allocating currency debt on the basis of relevant market
values and market capabilities. The most significant debt
currencies for Telenor Group are euros, US dollars,
Swedish krona, Thai baht and Malaysian ringgit. Currency
risk exists when Telenor ASA or any of its subsidiaries
enter into transactions or hold monetary items in foreign
currencies. Committed cash flows in foreign currencies
equivalent to NOK 300 million or more shall be considered
for hedging, if feasible.
Credit risk
Telenor Group’s exposure to credit risk mainly relates to
trade receivables, deposits with financial institutions and
financial derivatives. Credit risk related to trade
receivables is assessed to be limited due to the high
number of customers in the Group’s customer base.
Credit risk arising from financial derivatives and cash
deposits is managed through diversification, internal risk
assessment and credit scoring, as well as credit risk
mitigation tools. In 2021 Telenor Group had no credit
losses due to default of financial institutions.
Liquidity
Liquidity risk is low and financial flexibility is maintained
through a diversified set of funding sources. Telenor
Group emphasises financial flexibility and minimises
liquidity risk through ensuring access to a diversified set of
funding sources, this includes committed and
uncommitted sources of funding. According to Group
Treasury Policy, Telenor ASA shall have sufficient sources
of liquidity to cover expected operational liquidity needs
for the next 12 months.
Interest rate risk
Telenor Group is exposed to fluctuations in interest rates
through funding and liquidity management activities. The
Group treasury policy states that the portion of the fixed
rate shall be between 30% to 70% of external debt. The
portion of fixed rate of Group’s debt was 50% as of 31
December 2021. The risk is managed using both fixed and
floating rate debt, often through interest rate derivatives.
| Board of Directors’ Report | Annual Report 2021 | 20
Other mandated filings
The Directors’ & Officers’ liability
insurance
The Directors’ & Officers’ liability insurance covers pure
financial loss resulting from a claim made against an
insured person resulting from a wrongful act committed or
allegedly committed in a position as a director or officer,
member of the supervisory board or management board
or an employee acting in a managerial or supervisory
capacity. The liability is personal.
08
| Board of Directors Report | Annual Report 2021 | 21
| Board of Directors Report | Annual Report 2021 | 22
Corporate governance report
1.
IMPLEMENTATION AND
REPORTING ON CORPORATE
GOVERNANCE
Board Statement on Corporate Governance
The Board of Directors of Telenor ASA (the Board) is
responsible for the administration of the Telenor Group
and for safeguarding proper organisation of its operations.
The Board believes that sound corporate governance is
vital to ensure the greatest possible sustainable value
creation over time in the best interests of Telenor’s
shareholders, employees and other stakeholders. The
Board is committed to maintaining a high standard of
corporate governance across Telenor Group, in line with
Norwegian and international laws and generally accepted
rules and practices, including the Norwegian Code of
Practice for Corporate Governance (the NCGB Code of
Practice) in its latest edition of 14 October 2021, issued by
the Norwegian Corporate Governance Board (NCGB).
Telenor’s principles and practices for Corporate
Governance are subject to regular discussions and annual
review by the Board and the Board’s People and
Governance Committee. The Board commit to such
standards in its own work and decision-making.
Telenor ASA is a public limited liability company
established under Norwegian law. Telenor is subject to
specific rules and regulations in all countries where the
Telenor Group conducts business. Telenor’s shares are
listed on the Oslo Stock Exchange (Oslo Børs). As an issuer
of listed shares, Telenor complies with and operates in
accordance with rules governing the Oslo Stock Exchange,
including the at any time applicable Issuer Rules and Rule
Books for Oslo Børs.
The corporate governance principles and practices as
required by the Accounting Act Section 3-3b and the
details of how Telenor complies with the NCGB Code of
Practice are accounted for in this Report on Corporate
Governance.
The NCGB Code of Practice covers 15 topics. The structure
of this Report on Corporate Governance is aligned with the
structure of the NCGB Code of Practice. Links to relevant
information on Telenor’s website are included in this
Report on Corporate Governance.
Deviations from the NCGB Code of Practice Section 1:
None.
2.
BUSINESS
Business Activity Clause
The business activity in which Telenor is engaged is clearly
set out in the Articles of Association for Telenor ASA,
Clause 3.
“The object of the company is to engage in
telecommunications and other related activities. These
activities may be conducted by the company itself, by
subsidiaries or through participation in other companies
or in cooperation with others.”
Objectives and Strategies
Telenor’s Board of Directors has established clear
objectives and strategic ambitions guided by the purpose:
"Empowering societies. Connecting you to what matters
most". Customers rely on us providing secure and resilient
networks so they can connect with each other. Customers
want individual and prudent guidance in choosing the right
solutions. This increasingly also includes solutions beyond
connectivity. Finally, customers increasingly want support
and advice from a local, trusted partner who can help
them digitalise. To deliver on this and to create value to
our shareholders we build on our continued modernisation
efforts. Our past and continued efforts allow us to be at
the forefront of our industry in terms of digitalisation of
core operations and efficiency. In addition, it provides us
with a solid platform from which to grow by delivering on
constantly changing customer needs. And as we conduct
business responsibly wherever we are, we differentiate
and raise business standards. This is what matters most to
our customers and how we create value, and it serves as
the driver for our strategy.
For more information on strategy, please see the Board of
Directors Report under the heading Strategy Deep Dive &
Performance Review on page 11.
Telenor updates the market through investor
presentations, press releases and other information made
available online:
www.telenor.com/investors
.
Telenor’s Corporate Governance Framework Telenor
Group’s corporate governance principles and practices
are the framework by which Telenor Group governs and
controls its business. It is the role and responsibility of the
Board to ensure that Telenor adheres to generally
accepted principles for the effective control of company
activities, and to provide the necessary guidelines for such
activities and corporate management. The Board shall
furthermore adhere to such standards in its own work and
decision-making. The Board shall also ensure that Telenor
protects its reputation in relation to owners, employees,
customers, the public and the capital market effectively.
Sound corporate governance, in line with Norwegian and
international laws and generally accepted rules and
recommendations, is critical to Telenor’s business
| Board of Directors Report | Annual Report 2021 | 23
integrity and for ensuring the greatest possible value
creation over time. Implementing high ethical standards
across Telenor Group continues to be a strong focus of
the Board. Telenor’s Code of Conduct highlights the core
values and ethical principles and represents an important
foundation for Telenor’s corporate governance in
maintaining a healthy corporate culture. The Code of
Conduct is owned and approved by the Board, and all
employees are required to sign it yearly. An annually
updated eLearning programme with dilemma training
must be completed to sign the Code of Conduct. In 2021,
16,925 employees completed the eLearning programme
and signed the Code of Conduct, representing 100 % of
the workforce for Telenor Group.
The Board places high emphasis on transparency and
trustful cooperation between parties and stakeholders
involved in the Telenor Group: the owners, the Corporate
Assembly, the Board and Group Executive Management,
partners, employees, customers, suppliers, creditors,
public authorities, and society in general.
Telenor works continuously to improve its governance
framework and to ensure that policies, training, and
control mechanisms are current and adequate to ensure
that considerations related to its stakeholders are taken
into account in the decision-making processes. The
Governance Work Programme (GWP) is the annual
process for updating/developing, implementing, and
monitoring the Group Governing Documents.
Telenor Group’s Governing Principles describe the key
governing bodies in Telenor ASA, the interaction between
Telenor ASA and the Business Units and non-controlled
entities, and core global processes like strategy, financial
reporting, forecasting and reviews.
A robust governance model requires both appropriate
design and effective implementation. Telenor has adopted
a governance framework, including the Telenor Code of
Conduct and a set of policies and manuals, processes and
systems on monitoring and reporting. The governing
documents set one single standard which shall govern all
business activities, regardless of where such activities
take place.
Telenor’s governing documents are implemented in
Telenor ASA and in all subsidiaries directly or indirectly
controlled by Telenor and as defined in Telenor’s
Governing Principles. The Governing Principles were
updated and approved in September 2020.
Companies which are separately listed shall take due
account of the requirements for listed companies in the
relevant jurisdiction. In case of conflict between Telenor’s
governing principles and such local laws and regulations,
the latter shall prevail.
Telenor is committed to the disclosure of its performance
on material sustainability issues in line with stakeholder
expectations. Telenor publishes a Sustainability Report
(page 33) in accordance with legal requirements such as
Norwegian Accounting Act § 3-3c and EU Non-financial
reporting directive.
Deviations from the NCGB Code of Practice Section 2:
None.
3.
EQUITY AND DIVIDENDS
Share capital
The share capital of Telenor is stated in the Articles of
Association, Clause 4. The company’s share capital at
year-end 2021 is NOK 8,396,748,198 divided into
1,399,458,033 shares, each with a par value of NOK 6.00.
Equity
Telenor regards its consolidated equity to be at an
appropriate level considering the company’s objectives,
strategy, and risk profile. Telenor’s objective is to create
value for its owners and stakeholders and involves a
continuous focus on ensuring that the company’s equity is
adapted to the company’s objectives, strategy, and risk
profile.
The Board has established a dividend policy that forms the
basis for the proposals on dividend payments presented
to the General Meeting. The Board believes that it is in the
best interests of Telenor to draw up a long-term and
predictable dividend policy. This corresponds with the
objective of providing its shareholders with a return on
their investments at least equal to alternative investments
with similar risk profiles. Such a return should come in the
form of cash dividends and/or share buyback if applicable,
and increased share value.
Telenor’s dividend policy is to aim for year-on-year growth
in ordinary dividends per share. Telenor pays semi-annual
dividends. In addition, acquisition of treasury shares
and/or extraordinary dividends will be evaluated on a
case-by-case basis. The Public Limited Companies Act
provides for dividend payments to be resolved by the
Board pursuant to authorisation from the General Meeting.
Such authorisation may only be provided until the next
ordinary General Meeting and dividends may only be
resolved based on the company’s latest approved annual
accounts.
The General Meeting following the proposal from the
Board adopts a resolution on the distribution of the
dividend. The General Meeting on 27 May 2021 approved an
ordinary dividend of in total NOK 9.00 per share,
representing an increase of 3 percent per share over the
previous year.
The Telenor Board of Directors will propose a total
dividend of NOK 9.30 per share for the financial year 2021
to the Annual General Meeting in May 2022. The dividend
will be split into two tranches of NOK 5.00 and NOK 4.30
per share to be paid in May and October 2022,
respectively. The two tranches will have separate ex.
dividend and record dates. The proposed dividend per
share is 3 % higher than the dividend per share paid out in
2021.
Deviations from the NCGB Code of Practice Section 3:
None.
| Board of Directors Report | Annual Report 2021 | 24
4.
EQUAL TREATMENT OF
SHAREHOLDERS
One class of shares, equal rights
The Board endorses the principles of transparency and
equal treatment of all shareholders. Telenor has only one
class of shares. The Articles of Association have no
restrictions on voting rights. All shareholders have the
same rights.
The General Meeting may authorise the Board to purchase
treasury shares. Previously, under such authorisation, the
Board has been free to decide if and how the acquisition of
shares shall take place within the framework of applicable
law and shall ensure compliance with general principles of
equal treatment of shareholders.
The Norwegian State as the main shareholder The
Norwegian State is the main shareholder in Telenor, with a
holding of 53.97 % of the Telenor
shares as of 31 December 2021. The Ministry of Trade,
Industry and Fisheries manage the ownership interest. The
Norwegian State emphasises that partly state- owned
companies should comply with principles for good
corporate governance. The State’s active exercising of its
ownership policy is governed by the Norwegian legislation
for companies and by accepted principles for exercising
good ownership. This means that the Board is responsible
for evaluating the expectations that the shareholders and
others have towards the company, and for accomplishing
the commercial targets which the Board deems
appropriate. More information about administration of the
Norwegian State’s ownership interests and the
Government’s Ownership Policies can be found on the
Government’s web pages.
Increase in share capital
Telenor practices the principle that any decision to waive
the pre-emption rights of existing shareholders to
subscribe for shares in the event of an increase in share
capital should be justified. Where the Board resolves to
carry out an increase in share capital and waive the pre-
emption rights of existing shareholders based on a
mandate granted to the Board, the justification should be
publicly disclosed in a stock exchange announcement
issued in connection with the increase in share capital.
Transactions with close associates
In relation to its ordinary business, Telenor has regular
transactions with certain entities in which Telenor has
ownership interests. Such transactions are carried out on
an arm’s length basis; cf. also the Public Limited Liability
Companies Act, Sections 3-8 and 3-9. For material
transactions with related parties, Telenor has a practice to
obtain an independent valuation to ensure compliance
with the arm’s lengths principle.
Transactions with related parties, including transactions
with associated companies, are accounted for in note 33
to the financial statements for Telenor Group for 2021 in
this Annual Report.
Deviations from the NCGB Code of Practice Section 4:
None.
5.
SHARES AND NEGOTIABILITY
Telenor shares are listed on the Oslo Stock Exchange and
are freely negotiable. Telenor has one class of shares, and
each share equals one vote at the General Meeting. The
shares have no trading restrictions in the form of Board
consent or ownership limitations.
The Articles of Association of Telenor ASA contain no
restrictions on negotiability or voting rights and all shares
have equal rights.
Deviations from the NCGB Code of Practice Section 5:
None.
6.
GENERAL MEETINGS
The annual general meeting (“AGM”) is the company’s
supreme governing body. The general meeting adopts
Telenor’s Articles of Association (the “AoA”) and serves as
the main meeting place between shareholders, elected
officers, and management.
Telenor encourages all shareholders to exercise their
rights by voting at the general meeting. Notice of the
meeting together with all relevant documents are
published on Telenor’s website no later than 21 days prior
to the date of the general meeting. The notice includes
voting procedures and instructions to shareholders
wishing to propose resolutions. To allow shareholders to
form a view on all matters to be considered at the AGM,
the draft resolutions and supporting information shall be
detailed and comprehensive. According to the AoA,
documents relating to the items on the agenda, including
documents that according to law shall be included in the
notice, are not required to be sent to the shareholders if
the documents are available on Telenor’s website. A
shareholder may request, however, that such documents
are sent to him/her. Shareholders can vote separately on
each item of the agenda and on each candidate nominated
for election to the company’s bodies.
According to the AoA, the AGM shall be held once a year
before the end of June. The AGM shall deal with the
following matters, as stipulated in the AoA, article 8:
●
Approval of the financial statements and annual
report, including distribution of dividends.
●
Any other matters that shall be dealt with by the AGM
by law or pursuant to the Articles of Association.
Shareholders who wish to attend the AGM must notify
Telenor no later than five days prior to the AGM in
accordance with the Board’s detailed instructions, as
stated in the AoA, article 8, third paragraph.
| Board of Directors Report | Annual Report 2021 | 25
Shareholders who do not attend may vote by proxy or in
advance by paper votes or electronic means. The notice
includes instructions on how to vote by proxy.
The Board may provide guidelines for advance voting.
Such guidelines shall be included in the notice.
The 2021 AGM of Telenor ASA was held on 27 May 2021. In
accordance with Norwegian temporary legislation
exempting companies from physical meeting
requirements to reduce Covid-19 risk, the AGM was held
as a digital meeting only, with no physical attendance for
shareholders. Shareholders who did not have the
opportunity to participate at the digital meeting could
either opt to be represented through proxy or vote in
advance. Shareholders also had the opportunity to submit
questions in advance of the AGM to Telenor’s Investor
Relations unit.
Shareholders were encouraged to grant any proxy to
either the Chair of the Board of Directors or the Chair of
the AGM. They could follow the meeting live either via a
webcast on Telenor’s website or an interactive stream
where shareholders could vote and ask questions live in a
chat during the AGM. The AGM was chaired by the Chair of
the Corporate Assembly in accordance with article 8 of
the AoA.
In addition to the Chair of the AGM, who is also Chair of the
Corporate Assembly and the Nomination Committee, the
Chair of the Board of Directors, the President and CEO, the
Chief Financial Officer and the company’s auditor
attended the meeting physically.
The Board, the Corporate Assembly or the Chair of the
Corporate Assembly can convene an extraordinary
general meeting (the “EGM”). If the company’s auditor or
shareholders representing at least 5 % of the share capital
demands in writing that an EGM is convened to deal with a
specific matter, the Board must ensure that an EGM is held
within one month of when the demand was submitted.
The minutes of general meetings, together with voting
results, attendance, shareholder representation and pre-
meeting documents are made available online at:
www.telenor.com/investors/general-meeting
.
Deviation from the NCGB Code of Practice section 6:
●
The NCGB Code of Practice recommends that all
Board members attend the AGM. Telenor has not
deemed it necessary to require the presence of all
Board members. The Chair of the Board, the Chair of
the Nomination Committee and the Corporate
Assembly, the President and CEO and other relevant
members of management are present at the AGM.
●
The NCGB Code of Practice recommends that the
general meeting is able to elect an independent
chairman for the general meeting. Article 8 of the AoA
provides that the general meeting shall be chaired by
the Chair of the Corporate Assembly.
7.
NOMINATION COMMITTEE
The Nomination Committee of Telenor ASA is established
and works pursuant to Telenor ASA's Articles of
Association, Clause 9.
The Nomination Committee consists of four members that
shall be shareholders or representatives of shareholders
and shall be independent of the Board and the Executive
Management. The members are elected by the General
Meeting, however, the Chair of the Corporate Assembly
shall be elected as the Chair of the Nomination Committee.
When appointing members to the Nomination Committee,
the interest of the company and board shareholders
interest shall be taken into consideration.
The Nomination Committee of Telenor nominates
shareholder representatives to the Corporate Assembly
and Board, as well as the Nomination Committee including
proposal for the compensation of these. The Nomination
Committee makes recommendations to the General
Meeting for the election and compensation of members of
the Nomination Committee.
MEMBERS OF THE NOMINATION COMMITTEE AT YEAR-
END 2021
Bjørn Erik Næss
Chair
Elected from the Corporate Assembly: Elected Chair 7 May
2019, re-elected 27 May 2021
Lars Tronsgaard
Member
Re-elected by the Annual General Meeting
11
May 2020
Jan Tore Føsund
Member
Elected by the Annual General Meeting 7 May 2019, re-elected 27
May 2021
Heidi Algarheim
Member
Elected by the Annual General Meeting
11
May 2020
The Nomination Committee consults with shareholders,
the Board, including with individual Board members, and
executive personnel (and with members of the Corporate
Assembly, where appropriate) as part of its work on
monitoring the composition of the Board, the Corporate
Assembly, and the Nomination Committee. Further
information about the members of the Nomination
Committee and how to submit proposals is available at:
https://www.telenor.com/about-us/corporate-
governance/nomination-committee
.
The General Meeting has adopted instructions for the
Nomination Committee. The Nomination Committee held
34 meetings in 2021. Average attendance over the year at
the Nomination Committee meetings was
97.8 %.
Deviations from the NCGB Code of Practice Section 7:
None.
| Board of Directors Report | Annual Report 2021 | 26
8.
BOARD OF DIRECTORS
COMPOSITION AND
INDEPENDENCE
Telenor has a Corporate Assembly and a Board of
Directors, as required by Norwegian law. The Corporate
Assembly is a Norwegian body, regulated by the Public
Limited Liability Companies Act, Sections 6- 35 to 6-40
and Telenor's Articles of Association Section 7. The
Corporate Assembly has adopted instructions for the
Corporate Assembly.
Composition and work of the Corporate Assembly The
composition of the Corporate Assembly is determined
with a view to ensure that it represents a broad cross-
section of Telenor shareholders. The Corporate Assembly
consists of 15 members and 2 observers, elected for a
term of two years. Ten members and three deputies are
elected by the General Meeting. Five members and two
observers, with deputies, are elected by and from the
employees pursuant to the rules in the regulations relating
to the provisions of the Norwegian Public Limited Liability
Companies Act concerning the employees’ right to
representation on the board of directors, corporate
assembly, etc.
The Corporate Assembly is primarily a supervisory body,
which supervises the Board's and the President and CEO's
administration of the company. The Corporate Assembly
elects the Board of Directors and the Chair of the Board
and decides the board compensation. The General
Meeting cannot influence, change, or reverse the
Corporate Assembly’s decisions regarding the elections.
In order to exercise its supervisory function, members or
observers may propose that specific matters are
discussed and demand information on Telenor’s affairs to
the extent they consider necessary. The Corporate
Assembly may also undertake investigations on its own or
through a committee.
The Corporate Assembly shall issue a resolution to the
General Meeting as to whether the Board’s proposal for
Telenor ASA’s income statement and balance sheet and
Telenor Group’s consolidated income statement and
balance sheet should be approved, and on the Board’s
proposal for the allocation of profit or coverage of loss.
At the proposal of the Board, the Corporate Assembly may
adopt resolutions in matters that concern investments
that are substantial in relation to the company’s resources
and rationalisation or restructuring of the operations,
which will result in a major change in or reorganization of
the workforce.
The Corporate Assembly may adopt recommendations to
the Board or the management on any matter. The
Corporate Assembly has some other specific tasks set out
in the Public Limited Liability Companies Act.
In 2021, the Corporate Assembly conducted three ordinary
meetings, which is in line with the requirements set out in
the instructions. The Chair of the Board and the President
and CEO attended all meetings. Due to the coronavirus
pandemic, two of the three Corporate Assembly meetings
in 2021 have been conducted by video conference, in
accordance with the regulation on exemptions from the
rules regarding physical meetings etc. in the Public Limited
Liability Companies Act (the "Corona Regulation") of 27
March 2020 and subsequent regulations. The average
attendance for members of the Corporate Assembly in
2021 was 96,07 percent. Deputies have attended when
members have not been able to participate. Further
information about the members of the Corporate
Assembly is published at: www.telenor.com/about-
us/corporate-governance/corporate-assembly.
Composition and independence of the Board According to
Telenor’s Articles of Association Section 5, the Telenor
ASA Board of Directors shall consist of a minimum of 5
and a maximum of 13 members. The members are elected
for a term of up to two years. By 31 December 2021, the
Board consisted of ten Board Members, of which three are
employee-elected members as required by Norwegian
company law.
27 May 2021, the Corporate Assembly re-elected the Chair
of the Board and two shareholder elected members. One
shareholder elected member resigned and was replaced
by a new shareholder elected member. Two new employee
elected members were elected, and one employee elected
member was re-elected. Two of the other employee
elected members resigned.
The Board shall have a diverse composition and expertise
tailored to meet the company’s needs. There are four
women in the board and six men. Three of the board
members are non-Norwegian citizens. None of the Board
members, apart from the employee representatives, is an
employee of Telenor or has carried out work for Telenor
not covered by the general board and committee
compensation. The management is not represented on the
Board, and all shareholder representatives on the Board
are independent. Information regarding the background,
education and other board positions of each Board
member is available on Telenor’s website.
The members of the Board are encouraged to own shares
in the company, an overview of their share ownership is
available in the Executive Compensation report at page 16.
Deviations from the NCGB Code of Practice Section 8:
None.
9.
THE WORK OF THE BOARD OF
DIRECTORS
Role and responsibility of the Board
The Board of Telenor ASA is responsible for the
administration of the Telenor Group and for safeguarding
the proper organisation of the business. The Board shall
supervise the day-to-day management and Telenor’s
| Board of Directors Report | Annual Report 2021 | 27
business in general. The Board makes decisions and in
certain cases grants authority to make decisions on
issues, which, due to the nature of the business, are
unusual, or of major significance to the company.
The Board draws up plans and financial as well as non-
financial frames and goals for the activities of Telenor. The
Board keeps itself informed of Telenor’s financial position
and ensures that its activities, accounts, and asset
management are subject to adequate control. The Board
ensures that Telenor has adequate internal controls with
respect to the rules and regulations that apply to the
Telenor Group. The Board initiates those examinations it
finds necessary for the performance of its duties and if
demanded by one or more of the members of the Board.
The Board adopts a plan for its work, with special
emphasis on objectives, strategy, and implementation,
once a year. The Board shall, to the degree necessary,
approve strategies, business plans and financial targets
for the activities of Telenor Group. Telenor’s strategy is
described in the Board of Directors report page 11.
The Board emphasises the importance of gaining valuable
insights and being well informed on relevant areas such as
operational, technological, regulatory and market
developments. In 2021 the planned visit for Board
members to local Business Units were cancelled due to the
coronavirus pandemic.
The Board issues instructions for its own work as well as
for the President and CEO, with particular emphasis on
clear internal allocation of responsibilities and duties. The
Board evaluates the instructions for the Board and the
instructions for the President and CEO on a yearly basis.
The Board has also adopted procedures to secure
awareness of conflict-of-interest issues.
Board meetings in 2021
The Board shall normally hold eight Board meetings during
the calendar year, but the minimum is four. Individual
Board members and the President and CEO may, at any
given time, request a Board meeting to be held to discuss
specific matters. The minutes from the Board meetings
are shared with selected members of management, the
Head of Group Internal Audit and Investigations and
Telenor’s external Auditor.
Where the Chair of the Board finds it appropriate, Board
members may attend a meeting remotely. The annual
financial statement and annual report, as well as the
compensation of the President and CEO and other
members of the executive management (if appointed by
the Board), shall be dealt with in a physical meeting.
The Board held 14 Board meetings in 2021. Due to the
pandemic all but one meeting was held as video
conferences, including the meeting in which the annual
financial statement, annual report and the compensation
of the President and CEO was dealt with. The average
attendance over the year at the Board meetings was
97,40%. For the employee elected Board members,
designated deputies are invited if a Board member is
unable to attend.
Board self-assessment
The Board systematically evaluates its performance,
activities, and expertise by undertaking a yearly self-
assessment. External resources are used to facilitate the
self-assessment and the evaluation, as recommended by
the NCGB Code of Practice. The Board’s self-assessment
for 2021 has been reviewed in the Board meeting on 31
January 2022.
Working committees of the Board
In order to help ensure thorough preparation of specific
issues, the Board has appointed four preparatory working
committees of the Board: The Risk and Audit Committee,
the People and Governance Committee, the Sustainability
and Compliance Committee and the Transformation &
Innovation Committee.
The Committees have no independent, decision- making
authority, except where expressly granted by the Board on
a case-by-case basis or by law. The Committees' roles are
to prepare matters for consideration and/or decision by
the Board. The Board evaluates the charters for the
Committees on a yearly basis and adopted revised
charters in June 2021. The Committees report to the Board
and all Board members have access to all working
documents, including the minutes, from the committee
meetings.
The Risk and Audit Committee
Risk and Audit Committee (RAC)
Conducted nine meetings in 2021 with 100% attendance
Jon Erik Reinhardsen
(Chair)
Pieter Cornelis Knook
(Member)
Jørgen Kildahl
(Member)
Jan Otto Eriksen
(Employee representative)
The Risk and Audit Committee is a preparatory committee
that supports the Board in fulfilling the Board’s responsibilities
with respect to financial reporting, internal controls, internal
and external audit, risk management and risk framework; and
is established in accordance with the
requirements of Audit
Committee in the Norwegian Public
Limited Liability Companies
Act. The Committee also monitors the formulation and
execution of Telenor’s security strategy.
| Board of Directors Report | Annual Report 2021 | 28
The People and Governance Committee
People and Governance Committee (PGC)
Conducted six meetings in 2021 with 100% attendance
Gunn Wærsted
(Chair)
Astrid Simonsen Joos
(Member)
Jon Erik Reinhardsen
(Member)
Roger Rønning
(Employee representative)
The People and Governance Committee is a preparatory
committee that supports the Board in fulfilling the Board’s
responsibilities with respect to corporate governance,
executive compensation, leadership, and culture
development. The committee also supports the Board on
succession planning.
The Sustainability and Compliance
Committee
Sustainability and Compliance Committee (SCC) Conducted
five meetings in 2021 with 100% attendance
Jørgen Kildahl
(Chair)
Gunn Wærsted
(Member)
Astrid Simonsen Joos
(Member)
Irene Vold
(Employee representative)
The Sustainability and Compliance Committee is a preparatory
committee that supports the Board in fulfilling its
responsibilities with respect to sustainability and compliance
issues. In conducting its work, the Committee is guided by
international conventions and standards, the Telenor Code of
Conduct, Group Policies and Manuals relevant to the scope of
the Committee. The Committee also supports the Board on its
responsibilities to specifically address climate and
environment, human rights, labour standards and anti-
corruption.
The Transformation and Innovation
Committee
Transformation and Innovation Committee (TIC)
Conducted five meetings in 2021 with 100% attendance
Jacob Aqraou
(Chair)
Elisabetta Ripa
(Member)
Pieter Cornelis Knook
(Member)
Irene Vold
(Employee representative)
The Transformation and Innovation Committee is a preparatory
committee that supports the Board in fulfilling the Board’s
responsibilities with respect to innovation and technology
development. This includes monitoring the overall progress of
Telenor’s transformation, following innovations and technology
developments that affects Telenor and monitoring brand and
customer centric initiatives.
The Chief Executive Officer (CEO)
The President and CEO is in charge of the day-to-day
management of operations at Telenor ASA and across the
Telenor Group and is responsible for ensuring that the
company and Group are organised, run and developed in
accordance with the law, Telenor’s Articles of Association
and decisions adopted by the Board, the Corporate
Assembly and the General Meeting.
The Board appoints the President and CEO and sets their
terms of employment based on recommendations by the
People and Governance Committee.
The Board has provided instructions for governance to the
President and CEO covering the management of the
Telenor Group, subsidiaries, ownership interests and other
companies in the Telenor Group, financial reporting, the
power of attorney, submission of proposals for decisions
for the Board and his responsibilities for reporting to the
Board.
Group Executive Management (GEM)
The Group Executive Management (GEM) of Telenor ASA is
an advisory management body for the President and CEO.
GEM consists of Executive Vice Presidents (EVPs) for
Group Units and Clusters and other EVP positions. The
GEM members report to the President and CEO.
A subsidiary’s relationship to Telenor ASA
The board of directors of a subsidiary in the Telenor Group
is obliged to provide the Board of Telenor ASA with any
information that is necessary for an evaluation of the
Telenor Group’s position and the result of the group’s
activities.
Telenor ASA notifies a subsidiary’s board of directors of
matters that may be of importance to the Telenor Group
as a whole. Telenor ASA also notifies the subsidiary’s
board of directors of decisions that may be of importance
to the subsidiary before a final decision is made.
To ensure implementation of good and efficient corporate
governance in Telenor’s subsidiaries, Telenor’s
governance framework is implemented in all Business
Units. The Business Unit’s board of directors adopts the
relevant governing documents and supervises its
implementation.
Deviations from the NCGB Code of Practice Section 9:
None.
10.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Board’s responsibility and objective for
Risk Management
Risk management and internal control are given high
priority at Telenor. Key aspects encompass embedding
risk management, designating risk ownership and
implementing risk responses throughout the organisation.
The Group Governing Principles set out key principles
related to Risk Management and Internal Control. All
foreseeable risks that may have an impact on Telenor’s
ambitions will be evaluated.
Telenor’s risk management objective is to earn
competitive returns from its various business activities at
acceptable risk levels and without compromising its vision,
values, and Code of Conduct. Risk management is
integrated within the Telenor Group’s annual strategy
| Board of Directors Report | Annual Report 2021 | 29
planning process, and top risks highlighted therein by
Business Units are tracked through various group review
processes. Business Units report their risks in their annual
strategy plan, based on a thorough risk assessment
process.
Group Enterprise Risk Management aggregates risks from
the Business Units, analyses other risks across the Telenor
Group in a Group Risk Forum and presents Telenor’s risks
and risk process to the Group Executive Management, the
Risk and Audit Committee and ultimately to the Board of
Directors. The Board of directors reviews the Group risk
picture biannually. Each Business Unit is responsible for
updating their company level risk register on a regular
basis.
Business Units provide quarterly updates and report risks
that have emerged, including the status of actions to
respond to the risks. Business Units are required to align
risk management processes closely with existing business
and management processes locally. All managers are
required to assume responsibility for risk management
within their areas of responsibility and ensure that risk
management is embedded in day-to-day business
processes.
The Board’s responsibility and objective for
Internal Control
Telenor has a strong focus on internal controls over
financial reporting (ICFR) and has established a process for
ensuring that sufficient internal controls are implemented
in Telenor’s financially significant business units
worldwide. The Group Governing Principles define the key
requirements and the expectations for the ICFR program
to be implemented in these business units. The Risk and
Audit Committee has delegated the ICFR program
coordination and overseeing responsibility to Group
Finance. The implementation of the ICFR program in the
financially significant Business Unit’s is the responsibility
of the local management. These Business Units provide
quarterly and annual ICFR status reports to Group Finance.
Management performs twice a year an evaluation of the
effectiveness of the ICFR program. The evaluation includes
identification and assessment of all material financial
reporting risks, as well as ensuring that relevant controls
to address these risks are implemented, executed, and
tested with a certain frequency throughout the year. For
controls that are not operationally effective, the potential
impact and financial exposure on the consolidated
financial statements are evaluated. Regular reviews are
performed to identify the most relevant financial reporting
risks and to improve Telenor’s ICFR best practices. These
reviews also ensure that identified risks are addressed by
sufficient controls at all times.
Telenor focuses on continuously improving its risk
management process. The purpose is to improve
assessment, monitoring and reporting of risks by linking
risks to relevant policies and ambitions, and increasing
control and follow-up.
Further information regarding risk management is
presented in the Board of Directors’ Report of this Annual
Report for 2021 (page 17).
Financial Reporting Standards
Telenor prepares its consolidated financial statements in
accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union. The
consolidated financial statements shall give a true and fair
view of the Company’s and the Telenor Group’s assets,
liabilities, financial position, and results of operations.
Telenor ASA is a holding company and contains the Group
Management, Corporate Functions, Research and
Development and Group Treasury. The financial
statements for Telenor ASA are prepared in accordance
with the Norwegian Accounting Act section 3-9 and
regulations regarding simplified
application of IFRS issued by the Ministry of Finance on 21
January 2008. Financial Reporting Standards and
accounting principles are further described in the notes to
the financial statements of this Annual Report for 2021.
The Disclosure Committee
The Disclosure Committee supports the company’s efforts
to meet the requirements for external financial reporting.
The Disclosure Committee reviews the quarterly and
annual reports of the Telenor Group and ensures that
external reporting requirements are met. The Committee
is chaired by the CFO and includes the following members:
Head of Group Legal, Head of Investor Relations, Group
Controller, Head of Group Accounting, Head of
Controlling, Planning and Analysis, Head of Group Tax and
Head of Group Communications. The Disclosure
Committee meets to review the Quarterly financial reports
and the Annual Report.
The Group Compliance Officer and the
Compliance function
The Group Compliance function in Telenor is responsible
for
●
Code of Conduct ownership on behalf of the Board;
●
Resolution of compliance cases;
●
Ownership and implementation of the Anti-
Corruption policy, Business Partner Management
policy and the Privacy policy;
●
Design, implementation and follow up of the
Compliance Management System; and
●
Leading the Governance Work Programme (GWP).
The Group Chief Compliance Officer (CCO) heads the
group compliance function and supports the President
and CEO and the Board in ensuring that the Code of
Conduct sets the appropriate standards, and that these
standards are implemented and enforced.
The CCO reports to the EVP Head of Group Strategy &
External Relations, facilitates, and acts as secretary for the
Group Compliance Committee and meets as relevant in
the Board of Telenor ASA. The CCO attends all meetings in
the Sustainability and Compliance Committee.
Correspondingly, the Telenor Business Unit Head of
| Board of Directors Report | Annual Report 2021 | 30
Compliance report functionally directly to the Business
Unit CEO. The Business Unit Head of Compliance also
reports regularly to the Business Unit Board of Directors
on compliance matters. In order to ensure alignment of
strategy, prioritisation and implementation of compliance
and governance related matters; the Business Unit Heads
of Compliance have a dotted functional reporting line to
the CCO.
Group Internal Audit and Investigation (GIAI)
Group Internal Audit and Investigation (GIAI) is an
independent investigation unit, creating business value
through independent fact-based assessments
to improve the operations of Telenor. The Head of GIAI
reports to the Board of Directors through the Risk and
Audit Committee. GIAI is a global function, empowered to
perform engagements in Telenor ASA and any subsidiary
in which Telenor ASA, directly or indirectly, owns more
than 50 % of the voting shares, or the power of control is
possessed and exercised by or on behalf of Telenor ASA.
Group Investment Committee (GIC)
The Group Investment Committee (GIC) provides
recommendations to the President and CEO and other
approval bodies regarding investments and other financial
commitments falling within the authority limits set out in
the Group Authority Matrix or deemed to be of special
interest or principle in nature. GIC is chaired by the CFO
and consists of members who have relevant expertise.
GIC secures agreement on the decision process and
strategic alignment of proposals and ensures quality and
completeness of assessments and standards for business
cases and risks. In addition, GIC performs post-investment
evaluations and enhances knowledge sharing.
Group Treasury
In order to ensure overall management and control of the
group's treasury activities, the Company has set up Group
Treasury as a central function. Group Treasury functions in
accordance with its mandate set out in the Group Policy
Treasury. Group Treasury reports to the Group CFO.
The purpose of the Group Policy Treasury is to mitigate
treasury risks in the Telenor Group and to secure efficient
management and control of treasury activities. It also
provides an overall framework for the management of
treasury risks, including liquidity risk, financial
counterparty credit risk, currency risk and interest rate
risk. Further, the Group Policy Treasury sets the main
principles for activities for the Group Treasury function as
well as Business Units related to capital structure, equity
and debt funding, cash management, bank relationship
management, treasury risk management, issuance of
guarantees and treasury reporting requirements.
Value Agenda meetings and Financial
Reviews
Value Agenda meetings, Financial Reviews and
Performance Reviews are conducted regularly. Value
Agenda meetings are normally held with the Business
Units three to four times a year and are chaired by the
President and CEO. The primary focus in the Value Agenda
meetings is to discuss important strategic and operational
and financial/non-financial (such as people, compliance
and regulatory) issues in more depth, and actions required
to reach defined milestones or ambitions. Once a year, the
focus is on long-term strategic aspirations as part of the
strategy process (referred to as Strategy Workshop).
The Financial Review is held with key Business Units on a
quarterly basis and is chaired by the Group CFO. The main
purpose of the Financial Review is to review the Business
Unit’s financial performance, internal control,
development of risks and regulatory issues as well as
forecasted financial performance for the coming quarters.
Business Unit performance reviews are conducted
regularly with each of the main Business Units in the
Telenor Group and are chaired by the Group CFO with
participation from other relevant functional EVPs. The
purpose of these meetings is to monitor and follow-up key
strategic priorities, financial and operational performance
relative to defined targets as well as other relevant topics
with reputational and/or strategic impact.
Deviations from the NCGB Code of Practice Section 10:
None.
11.
COMPENSATION TO THE BOARD
OF DIRECTORS AND THE
CORPORATE ASSEMBLY
The 2021 compensation to the Corporate Assembly and
the Board of Directors is covered under the 2021 Executive
Compensation Report available
here
.
Deviations from the Code of Practice Section 11: None.
12.
COMPENSATION TO THE GROUP
EXECUTIVE MANAGEMENT
Telenor Group’s Executive Compensation Report for 2021
is available
here
. The compensation policy applicable for
2022 and the 2021 compensation report are no longer
included in the governance report and will be presented as
separate documents on Telenor.com.
Deviations from the NCGB Code of Practice Section 12:
None.
13.
INFORMATION AND
COMMUNICATIONS
A regular flow of information from Telenor will help
shareholders and other investors to make informed
decisions on the purchase and sale of the company’s
shares, based on equal access to information.
The Board provides guidelines for the company’s
reporting of financial and other information based on
openness and transparency, and in accordance with
| Board of Directors Report | Annual Report 2021 | 31
requirements relating to equal treatment of players in the
share market. Each year, Telenor announces the dates of
important events, such as the General Meeting, the
publication of interim reports, public presentations, and
the payment date of any dividends.
Information sent to the company’s shareholders is made
available on the Telenor website at the same time as it is
sent to the shareholders. The Investor Relations function
at Telenor ensures that contact with the company’s
shareholders is maintained outside the General Meeting;
see: www.telenor.com/investors.
Deviations from the NCGB Code of Practice Section 13:
None.
14.
TAKE-OVERS
The Norwegian State owns 53.97 percent of Telenor. Any
reduction in the stake by the state requires a special
resolution of the Norwegian Parliament. For such reason,
the Board has not adopted any guiding principles as
recommended by the NCGB Code of
Practice since the process in Parliament will safeguard the
intentions set down in the NCGB principles.
In the event of a take-over bid, the Board will comply with
the NCGB principles on this issue.
Deviations from the NCGB Code of Practice Section 14:
Exception made with respect to the Norwegian State’s
ownership.
15.
AUDITOR
In accordance with Norwegian regulations, Telenor
complies with strict requirements for oversight of the
auditing and auditors, including the auditor’s
independence.
Telenor has a pre-approval policy and procedures in place
for approval of non-audit services performed by the
external auditor that have been established by the Board.
The external auditor provides the Risk and Audit
Committee with an annual written confirmation of
independence. The auditor presents to the Risk and Audit
Committee, on a bi-annual basis, a summary of all
services, in addition to the audit, provided by the external
auditor. The auditor also presents any threats to their
independence and documents measures implemented to
reduce these, as required by the Audit and Auditors Act
Section 5a-3 3.
The Company’s external auditor presents the main
features of the plan for the execution of the audit to the
Risk and Audit Committee and reports interim and final
results of the external auditor’s work to the Risk and Audit
Committee.
The external auditor attends all meetings of the Risk and
Audit Committee, the Board meeting that approves the
Annual Report and other meetings on request. The
external auditor presents the result of the audit to the Risk
and Audit Committee and the Board in the meeting
approving the Annual Report, including presentation of
any material changes in the company’s accounting
principles and significant accounting estimates, and
reports material matters on which there has been
disagreement between the auditor and Telenor’s
Executive Management, if any.
Each year the auditor presents to the Risk and Audit
Committee and the Board internal control weaknesses and
improvement opportunities, if any. The external auditor
meets with the Risk and Audit Committee and the Board at
least annually where neither the President and CEO nor
other members of management are present.
At the General Meeting, the Board gives an account of the
auditor’s remuneration divided into audit fees and other
services as disclosed in the Annual Report.
Deviations from the NCGB Code of Practice Section 15:
None.
| Board of Directors Report | Annual Report 2021 | 32
THE CORPORATE ASSEMBLY AT
YEAR- END 2021
TELENOR ASA BOARD OF
DIRECTORS BY YEAR-END 2021
MEMBERS ELECTED BY THE
SHAREHOLDERS:
Bjørn Erik Næss
Chair
Elected 2019 – re-elected 2021
MEMBERS ELECTED BY THE
EMPLOYEES:
May-Iren Arnøy
Elected deputy in 2007, re-elected
as member 2021
Gunn Wærsted
Chair of the Board
Appointed: 14 January 2016, re-elected 27 May
2021
Jørgen Kildahl
Deputy Chair
Appointed: 10 May 2017, re-elected 27 May
2021
Jacob Aqraou
Board Member
Appointed: 11 May 2016, re-elected 11 May
2020
Jon Erik Reinhardsen
Board Member
Appointed: 14 May 2014, re-elected 27 May
2021
Pieter Cornelis Knook
Board Member
Appointed: 11 May 2020
Astrid Simonsen Joos
Board Membe
r
Appointed: 11 May 2020
Elisabetta Ripa
Board Member
Appointed: 27 May 2021
Jan Otto Eriksen
Employee Representative
Appointed: 7 May 2019, re-elected 27 May 2021
Roger Rønning
Employee Representative
Appointed: 27 May
2021
Irene Vold
Employee Representative
Appointed: 27 May 2021
Kjetil Houg
Deputy Chair
Elected 2021
John Gordon Bernander
Elected 2013, re-elected 2021
Heidi Finskas
Elected 2018, re-elected 2021
Widar Salbuvik
Elected 2013, re-elected 2021
Silvija Seres
Elected 2011, re-elected 2021
Lisbet Karin Nærø
Elected 2019, re-elected 2021
Trine Sæther Romuld
Elected 2019, re-elected 2021
Marianne Bergmann Røren
Elected 2019, re-elected 2021
Maalfrid Brath
Elected deputy 2016, elected
member 2021
DEPUTY MEMBERS ELECTED BY
THE SHAREHOLDERS:
Elin Merete Myrmel-Johansen
First deputy, elected 2019, re-
elected 2021
Randi Marjamaa
Second deputy, elected 2019, re-
elected 2021
Lars Tronsgaard, Third deputy
Elected 2018, re-elected 2021
Hege Karita Ottesen
Elected 2015, re-elected 2021
Magnhild Øvsthus Hanssen
Elected 2007, re-elected 2021
Tom Westby
Elected 2017, re-elected 2021
Håkon Berdal
Elected 2021
OBSERVERS FOR THE
EMPLOYEES:
Mona Irene Børøen
Elected 2018, re-elected 2021
Camilla Skarsjø Grimnes
Elected 2021
DEPUTY MEMBERS ELECTED BY
THE EMPLOYEES:
Laila Fjelde Olsen
Daniel Eidsund
Hege Sletten
Gudrun Lanes
Pål Espen Bondestad
Sune Jakobsson
Knut Johannesen
Per Morten Schou
Vithya Ganeshan
Sten Tore Fagerhaug
Tormod Tørstad
| Sustainability Report | Annual Report 2021 | 33
Sustainability
Report
1.
About the Report
34
2.
Sustainability governance
35
3.
Overview of Sustainability strategy
and direction
36
Materiality assessment
39
Stakeholder engagement
41
4.
Creating Economic Value to Society
42
5.
Responsible Business Performance
43
Key highlights
43
Material issues:
43
“E” - Environmental
45
Climate
46
Environment
48
“S” – Social
50
Digital skills
51
Human rights
53
Diversity and inclusion
57
Health, safety, people security
and wellbeing
60
“G” – Governance
62
Supply chain sustainability
63
Anti-corruption
65
Data privacy compliance
67
Cyber Security
69
6.
Key ESG figures
71
Reporting frameworks and
Verification
73
| Sustainability Report | Annual Report 2021 | 34
About the report
Telenor publishes this Sustainability Report in accordance
with reporting requirements mandated by the Norwegian
Accounting Act §3-3c and the EU nonfinancial reporting
directive (EU NFRD 2014/95). This report follows the Oslo
Stock Exchange Euronext guidance on Environmental,
Social and Governance (ESG) reporting of January 2020.
See the Reporting Frameworks section for more
information on reporting boundaries and context.
The report covers material areas within Telenor’s
Responsible Business, details how Telenor manages its
most important impacts on those areas and how these are
linked to the business strategy, performance and the
relationship with stakeholders.
DNV has carried out an independent review of the
Sustainability Report 2021 to assess the accuracy of
claims. The engagement has been undertaken in
accordance with the requirements in the ISAE 3000
standard. DNV’s independent review certificate can be
found on Telenor.com.
Telenor believes in transparency, accountability and
integrity and these areas are an integrated part of the
company’s Code of Conduct. Telenor is working to ensure
that ESG issues are reported transparently, in line with
materiality assessments and in alignment with relevant
regulations and international guidance.
Expectations related to sustainability reporting from major
stakeholders continue to increase. Telenor firmly believes
that reporting will contribute to open discussions and to
building knowledge to help address challenging issues.
To ensure structured, transparent and relevant reporting
of sustainability performance, Telenor Group reports to
various external organisations, including UN Global
Compact, the Global Reporting Initiative (GRI), the
Sustainability Accounting Standards Board (SASB), and
Carbon Disclosure Project (CDP), and in line with the Task
Force on Climate-related Financial Disclosures (TCFD).
Telenor also supports the UN Sustainable Development
Goals (SDGs).
During 2021, Telenor performed a revised assessment of
its material topics, guided by the principle of double
materiality. Section 4 of this report covers the main
principles of the revised sustainability strategy and
describes the process for materiality assessment and
stakeholder engagement.
Further information about sustainability governance and
processes can be found on Telenor.com/sustainability.
01
| Sustainability Report | Annual Report 2021 | 35
Sustainability
governance
Sustainability is closely tied into Telenor’s
governance framework, providing
accountability and enabling the company to
clearly plan, implement and monitor
sustainability activities.
Board of Directors’ role
The Board of Directors approves Telenor’s strategy, which
includes Responsible Business as one of its three
prioritised areas. The Board of Directors has established
four committees of the Board, one of which is the
Sustainability and Compliance Committee (SCC). The SCC
is a preparatory working committee for sustainability and
compliance issues. This is established in the charter of the
SCC. The SCC receives regular updates on compliance
and sustainability-related matters and monitors the
sustainability performance of the company.
Management’s role
Telenor has delegated the overall responsibility for all
sustainability areas to the Chief People and Sustainability
Officer (CPSO). Responsibility for compliance, including
anti-corruption and data privacy compliance, lies with the
Executive Vice President Strategy and External Relations.
Both functions are members of the Group Executive
Management (GEM), which is an advisory body to the
Group’s Chief Executive Officer (CEO). The respective
executives regularly brief the SCC at Board level on
sustainability and compliance issues, including ambitions,
strategy and overall measures and initiatives.
Ambitions and target-setting
Targets for Telenor Group are defined annually by the
Board of Directors. The targets support the direction
defined in the Group Strategic Action Plan for both
financial and operational ambitions for the strategy period.
Group targets are cascaded to all business units and
performance relative to the targets is regularly tracked
through the financial and operational performance
management process. Status and mitigating actions are
discussed in the Value Agenda and Performance Review
meetings with the business units.
More information on Sustainability Governance can be
found in the Governance report (p. 22) and on the
Sustainability Governance pages on Telenor.com.
Key standards followed
The below table shows an overview of standards that are relevant in Telenor’s Responsible Business areas.
Area
Standard
Climate and Environment
Science Based Targets (SBTi) | ISO14001
Human Rights
United Nations (UN) guiding principles on business and Human Rights | Organisation for Economic Co-operation
and Development (OECD) guidelines for multinational enterprises | International Labour Organization (ILO)
Diversity and Inclusion
UN Women Empowerment Principles | UN standards of business for lesbian, gay, bi, trans and intersex (LGBTI)
rights | Norwegian Gender Equality Reporting Requirement
Health, Safety, People Security and
Wellbeing
ISO 45001 | ILO Fundamental Principles and Rights at Work
Supply Chain Sustainability
SA 8000 | ILO | Norwegian Transparency Law | EU Due Diligence Act
Anti-corruption
United Kingdom Bribery Act (UKBR) | Foreign Corrupt Practices Act (FCPA) | Norwegian law (Civil Penal Code
Sections 276a-c) | ISO 37001 | OECD Anti-Corruption Guidelines
Data Privacy Compliance
General Data Protection Regulation (GDPR) | OECD Guidelines | The Law Enforcement Data Protection (LEPD)
Directive | The ePrivacy Directive (2002/58/EC)
Cyber Security
ISO 27001 | National Institute of Standards and Technology | Standard of Good Practice for Information Security
02
| Sustainability Report | Annual Report 2021 | 36
Overview of Sustainability
strategy and direction
For Telenor, sustainability is how the company does
business in a responsible way that helps both create value
for its people, shareholders and society as well as
empower and sustain the world for generations to come.
To provide inclusive and safeguarded connectivity, to
advance people and empower societies are key ambitions.
By providing resilient connectivity services, Telenor
creates direct value for the societies it operates in.
However, the company is also in a unique position to
contribute indirectly in the markets in which it operates by
leveraging on technology and services, digitalising
societies and driving the sustainability journeys across
sectors.
Responsible business is one of the three prioritized areas
of Telenor’s strategy, as the company believes the way it
operates constitutes a strategic differentiator both
commercially and in stakeholder management.
In 2021, Telenor articulated its Responsible Business work
and aligned it with the company’s purpose and Global
Identity. The Telenor Global Identity incorporates the
company purpose as its overarching element, answering
the question as to ‘why’ Telenor exists:
Empowering
Societies. Connecting you to what matters most.
purpose statement is supported by three key benefit
areas: Include, Advance, and Safeguard, which are
expressed through key messages, related to what Telenor
does and how it does it.
As part of this articulation, the company took a more
holistic approach by assessing and defining high-level
ambitions for all material areas, with targets defined within
relevant areas, and key activities needed to reach these
targets.
Based on the analysis, Telenor defined the areas of
Climate and
Environment
Digital Skills
as focus areas
for driving positive impact. These areas underline the
03
| Sustainability Report | Annual Report 2021 | 37
company’s role in using digital technologies to tackle
societal challenges and the climate emergency.
For
Climate and Environment
, Telenor set global climate
ambitions for the group in 2019. The targets of becoming
carbon neutral in the Nordics and a 50 percent reduction
of carbon emission from a 2019 baseline in Asia by 2030
were accepted by the Science-Based Targets initiative
(SBTi) in 2021. All business units have plans to address their
Scope 1 and 2 targets. To address Scope 3 emissions, the
target is to get 68 percent of suppliers by spend to set
their own science-based targets by 2025. Read more
about Climate and Environment management in the
Responsible Business Performance Section.
From its position as a digitally mature telco with mass
reach and a commitment to reducing inequalities and
inclusion, Telenor can further contribute to societies in
providing future
Digital Skills
. The topic has a clear link to
the company’s current and future commercial and
technology agendas and is also aligned with the learning-
culture being developed internally. This company-wide
priority is adapted to local needs and the company
engages with relevant local and global partners (such as
Plan International and UNICEF) to provide relevant training
and to reach its audiences. Read more about Digital Skills
management in the Responsible Business Performance
Section.
Telenor continues its efforts in responsible business
conduct by ensuring continuous improvement and
building on the strong track record in the remaining
material areas: Human Rights, Diversity and Inclusion,
Health, Safety, People Security and Wellbeing, Supply
Chain Sustainability, Anti-Corruption, Data Privacy
Compliance and Cyber Security.
"We operate across a diverse footprint with different
challenges and opportunities. We recognise our
responsibility to minimise the negative impacts in the
areas we operate and work every day to further develop
our organisational culture to ensure our employees live
and breathe our purpose, promote sustainable
behaviour at every level in our company and drive
purposeful decision-making. Our diverse and engaged
workforce serves as our internal consciousness in our
journey of raising standards across our markets”
Cecilie Heuch, Chief People and Sustainability Officer
The COVID-19 pandemic, the decline of democracy and
trend towards political polarisation in some of Telenor’s
markets, have increased the legal, operational, and
reputational challenges of the company. Human rights and
digital access rights challenges have shown that Telenor
has a role in helping solve societal challenges and ensuring
responsible data governance and network security
globally. Telenor cannot meet those challenges alone. The
company works with partners – both public and private –
to create solutions together, drive outperformance, and
take fuller advantage of the opportunities afforded by
sustainability.
| Sustainability Report | Annual Report 2021 | 38
Sustainable Development Goals
Telenor is committed to all 17 Sustainable Development
Goals (SDGs). For the past years, Telenor has had a focus
on SDG 10 (Reduced Inequalities) and while this SDG
remains highly relevant and interconnected to the
company’s purpose, in 2021 Telenor took a more holistic
approach and expanded its focus to five goals where
Telenor believes it can have the most impact. Telenor
continuously evolves its services, operations, and targets
as they relate to the SDGs. At the heart of the company’s
business functions is a drive to provide sustainable,
innovative, and resilient infrastructure (SDG 9 and SDG 13).
Through its services and programmes, Telenor is
committed to empowering societies by reducing
inequalities (SDG10), empowering women and girls (SDG5),
and helping enable quality education (SDG4). Together,
these five SDGs form the bedrock of Telenor’s global
commitments.
| Sustainability Report | Annual Report 2021 | 39
Materiality assessment
The materiality assessment is updated every year to
ensure Telenor captures the latest internal and external
developments and accounts for them in its impact
analysis. In 2021, Telenor engaged an external company –
Sustainia, to support the assessment of its material topics
guided by the principles of double materiality, as defined in
the published aspects of the European Financial Reporting
Advisory Group’s (EFRAG) framework, the European
Sustainability Reporting Standards (ESRS) working papers,
as well as the frameworks of the Global Reporting Initiative
(GRI) and the Sustainability Accounting Standards Board
(SASB). By focusing on these frameworks, Telenor has
taken proactive steps to assess its ESG impact and
financial materiality and will use this evaluation to form its
strategy moving forward.
The Telenor impact assessment based on the principles of
double materiality consisted of three phases. The first part
of the analysis mapped key ESG issues and figures in order
to understand the extent to which internal and external
impacts are already considered in Telenor’s existing
materiality assessment methodology. Next, the material
areas were mapped and ranked in consultation with
stakeholders and subject matter experts, and the
appropriate accounting methodology to be applied was
identified. The parameters and related SDGs were then
analysed for each material area, and Telenor’s targets and
initiatives were broken down across the key ESG issues.
| Sustainability Report | Annual Report 2021 | 40
The results of the impact assessment and workshop with
stakeholders and subject matter experts highlighted a
need to account more systematically for financial
materiality on most ESG issues, which refers to the extent
to which a particular ESG issue may influence future cash
flows and/or the enterprise value of Telenor. The findings
of the impact assessment identified some qualitative
consideration of financial impacts, but also identified gaps
in Telenor’s consideration of financial materiality and
inward impact in connection with ESG issues. As such,
Telenor will in 2022 work towards developing and
executing a roadmap to close the gaps of the double
materiality assessment of existing and potential ESG
issues and to proactively align with the European
Sustainability Reporting Guidelines (ESRGs). The next
section of this report describes how Telenor focuses its
efforts in its material areas and defines related ambitions
and targets. It also provides a status update from 2021 and
outlines Telenor’s strategy to achieve its stated targets.
The changes in material areas structure
compared to 2020 reporting include:
●
Updated the area of
Digital Skills
account for the inclusion of basic and future digital skills and online safety in this
area
●
Renamed the topic of
Customer and Employee Privacy Framework
Data
Privacy Compliance
●
Changed the area of
Health and Safety
to
Health, Safety, People Security and
Wellbeing
; included the area of
Mobile Mast and Health
●
Renamed
Climate Change Resilience
Climate
●
Renamed the area
Environmental Management
Environment
●
Combined the areas of R
espect for Human Rights, Labour standards / Employee
Rights
Human Rights
●
Renamed the area of
Supply Chain Risk and Resilience
Supply Chain
Sustainability
●
The area of
Diversity
and Inclusion
business partners that are accounted for in this area
●
The area of
Economic Contribution to Society
underlying and cross-cutting across all material areas
●
No changes were introduced to the areas of
Cyber Security and Anti-Corruption
| Sustainability Report | Annual Report 2021 | 41
Stakeholder engagement
As part of Telenor’s strategic focus on responsible
business, the company actively engages its stakeholders
and continues strengthening its relations as an owner and
business partner, true to its commitments, values and the
purpose of empowering societies. Telenor communicates
with its stakeholders in a transparent way, through
frequent dialogue, which feeds into its materiality analysis
as described above. Telenor’s main stakeholders include
Employees, Investors, Policy makers, Customers,
Community, Media, Industry Peers, Civil Society and Civil
Society Organisations.
Stakeholder group
Expectations
How we engage
Employees
• Well-being and health
• Diversity and equal opportunities
• Climate action
• Position on social issues
Townhalls
Strategy updates
Departmental meetings
Employee engagement surveys
Digital platforms/Workplace
Board of Directors representation
Bilateral dialogue
Labour unions
Investors
• Responsible sourcing
• Human Rights
• Digital Access
• Anti-bribery and corruption
• Transparency on how Telenor delivers value
to its stakeholders
• Climate Action
Capital Market’s Day
Quarterly presentations
Annual General Meeting
Investor roadshows
Analyst meeting with key owners/investors
Human Rights due diligence
Increased and more detailed ESG reporting
ESG targets
Improve transparency and efficiency
Customers
• Children safety online
• Digital access
• Climate action
• Data privacy and security
• Responsible sourcing
• E-waste / products sustainability
• Position on social issues
Net Promoter Score (NPS)
Managing customer privacy risks
Customer satisfaction surveys
Call centres
Industry forums
Civil Society and Civil
Society Organisations
• Human Rights
• Ethics and Digital Rights
• Transparency
• Climate Action
• Freedom of Expression
• Data protection and privacy
• Digital Access
Open dialogue and partnerships
Partnership and dialogue with Non-Governmental Organizations, via:
United Nations Global Compact (UNGC)
Confederation of Norwegian Enterprise (NHO)
Child Labour Platform (CLP)
UNI Global Union
Global Network Initiative
Policy Makers /
Governments
• Digital Access for all
• Customer privacy and security
• Climate and Environment
• Responsible sourcing
• Health and well-being
• Diversity
• AI ethics
Participation in consultations and public forums
Engagement through industry consultative bodies
Partnering on key areas (incl. Digital skills and Climate and Environment)
Engagements via:
European Union
World Economic Forum
Nordic Business Forum
NHO
International Monetary Fund
World Bank
Arendalsuka
Community and Media
• Responsible sourcing / human rights incl.
conflict minerals
• Digital Access
• Digital rights / inclusion
• Climate Action and E-waste
Meetings with NGOs
Press releases and social media
Interviews with the CEO and key executives
Close dialogues
Being transparent on recent operational and strategic developments, new
products and services, etc
Surveys
One-to-one meetings
Global partnerships
Industry peers and
Business Partners
• Transparency
• Climate Action
• Diversity and inclusion
• Health, safety and security
• Data protection and privacy
• Partnerships on key areas
• Human Rights
Memberships in associations:
Nordic business Forum
GSMA (Global Mobile Operators’ Association)
ETNO (European Telecommunications Network Operators' Association)
Joint Audit Committee (JAC)
Social media
Bilateral dialogues
Partnerships
Best practice sharing
Following up on audits and inspections
| Sustainability Report | Annual Report 2021 | 42
Creating Economic Value to
Society
The global Covid-19 pandemic has put Telenor’s
contribution to society to the test. The new normal makes
delivering connectivity crucial in every society the
company operates in and presents a clear reminder of
Telenor’s shared commitment and responsibility to
support the societies it is a part of. Telenor is an owner,
employer, and taxpayer in the markets it operates. The
company’s operations contribute with tax revenue,
employment, and investments. Contributing positively to
societies is a key component in building trust in Telenor
and creating a predictable and productive business
environment. Together, these elements improve the
company’s value creation prospects. In addition to
employing over 16.000 people and constantly striving for
high sustainability standards throughout the supply chain,
Telenor contributes to the financing of public domains
through Taxes Borne as well as Taxes Collected. Total tax
contributions are not only the taxes levied on the profit of
the Telenor Group, but also takes into account further
taxes. Activities that add value to the societies include
positive financial impact through wage taxes, social
contributions, and value-added taxes.
Telenor Group maintains responsible tax policy and
practices in line with legislation in every jurisdiction of
operation. The company has reported its country-by-
country earnings, investments, taxation, and employment
since 2014. Telenor is in constant dialogue with the
relevant authorities regarding tax, for instance on whether
it needs to adapt to new legislation. The company’s tax
policy and practice are in line with legislation in all markets.
Telenor follows the terms of applicable Double Taxation
Treaties, relevant OECD guidelines in dealing with transfer
pricing and establishing taxable presence, and the Base
Erosion and Profit Shifting initiatives. The company
endorses the aims of transparency and fairness across the
global tax system, exchange of financial information and
concerted action to fight base erosion and profit shifting.
Country-by-country tax reporting
The table below specifies the most important elements of
Telenor’s direct economic contribution country-by-
country. It includes Telenor’s revenues, capital
expenditure, EBITDA and the corporate income taxes paid
in 2021. The table does not specify all taxes and fiscal
levies – only corporate income tax (CIT) is included.
NOK in
millions
Revenues
Capex
EBITDA
Profit
before
taxes
Corporate
income
tax (CIT)
Man-years
per
31.12.2021
Norway
27,800
6,296
11,438
3,485
1,321
4,096
Sweden
12,813
1,873
5,069
2,275
394
1,607
Denmark
5,259
1,077
1,437
580
176
967
Finland
9,693
1,635
3,617
892
155
1,514
Thailand
21,826
3,852
8,349
1,530
118
2,866
Malaysia
13,088
1,699
6,473
3,393
732
1,425
Bangladesh
14,362
2,853
8,870
6,282
2,682
1,636
Pakistan
5,314
3,131
2,768
76
127
1,420
Other
86
321
(647)
(1,430)
36
232
Telenor
Group
110,241
22,737
47,375
17,084
5,740
15,763
Myanmar
4,835
-
2,717
(557)
53
703
Grameenphone awarded Highest
Corporate Taxpayer
In November 2021, Grameenphone (GP) received the highest taxpayer
award for financial year 2020-21 in the telecommunication category by
National Board of Revenue (NBR) for the sixth time in a row. In 2021, GP
contributed a total of NOK 10.3 billion to the government of
Bangladesh, which includes NOK 7.5 billion as direct and indirect tax,
NOK 1.3 billion as withholding taxes, and NOK 1.5 billion contribution to
Bangladesh Telecommunication Regulatory Commission (BTRC).
GP has contributed total NOK 95.6 billion to the national exchequer to
date in the form of Tax, VAT and other regulatory fees to NBR and
BTRC.
04
| Sustainability Report | Annual Report 2021 | 43
Responsible Business
Performance
Material issues
This section provides an overview of Telenor’s material
areas as defined in its materiality analysis, and addresses
its ambitions and targets in each area, an update from
2021 and the strategy to work towards the ambitions. The
section is divided into Environmental, Social and
Governance factors. The link to Telenor’s strategy is
underlined in the beginning of each ESG section. The pillar
of the Telenor’s Global Identify of Include, Advance,
Safeguard which the individual material area supports, is
highlighted at the beginning of each material area.
Key highlights
ENVIRONMENTAL
Ambition
Key highlights 2021
Target
SDG impact
Climate
Meet Telenor’s own
science-based targets and
explore business
opportunities to enable
third parties to reduce their
climate footprint
11%
year-on-year
company-wide
Scope 1&2 GHG
emissions cut
28.5 %
of suppliers by
spent had set
science-based
targets
Reduce scope 1&2 emissions
by 35% by 2024, compared to
2019
Ensure key suppliers commit to
Science Based Targets (60
percent based on spend by
2024)
Environment
Explore opportunities within
circular economy, set
targets and define a
strategy for climbing the
waste hierarchy
83%
of e-waste
reused
17%
of e-waste
recycled
Reinforce Telenor’s long-term
commitment and strengthen
the company’s strategic role in
the area of circular economy
by 2022
05
| Sustainability Report | Annual Report 2021 | 44
Ambition
Key highlights 2021
Target
SDG impact
SOCIAL
Digital skills
Become an inclusive
partner in building future
skills
820,768
Digital Birth
Registrations in
Pakistan
Over
850,000
children trained
in online safety
5 million
trained in digital skills by 2024
Human
Rights
Respect and promote
Human Rights, be trusted
by stakeholders and
ensure regular Human
Rights due diligence
across the organisation
Conducted a
third-party
Human Rights
Due Diligence risk
review at group
level
All business units
initiated local
Human Rights
Due Diligence
review
100%
staff completed human rights
training by 2024
Diversity &
Inclusion
Be a frontrunner in
diversity and engaged in a
sustainable future for all
38%
women in the
workforce
32%
women senior
leaders
35%
women senior leaders by 2023
35%
non-Nordic senior leaders by
2023
40%
women in the workforce by
2023
Health, Safety,
People
Security and
Wellbeing
Zero injuries to employees
and business partners and
having Health, Safety,
People Security and
Wellbeing fully embedded
in the business
2
fatalities
(compared to 6 in
2020)
1,65%
sickness
absence rate
3000
observations (unsafe acts,
unsafe conditions) by 2024
Ambition
Key highlights 2021
Target
SDG impact
GOVERNANCE
Supply Chain
Sustainability
Uphold responsible
business practices within
the supply chain through
high sustainability
standards and continuous
improvement
95 %
non-
conformance
closure rate
37,716
hours
of capacity building
Post-contract due diligence
conducted on 100% high risk
business partners by 2024
Anti-
corruption
Take a zero-tolerance
approach to bribery and
corruption and avoid even
the appearance of
misconduct or improper
actions
100%
employees competed Code of
Conduct Training
Strengthen Telenor’s
preventive anti-corruption
programme across all business
units, including relevant
controls to properly mitigate
corruption risks
Data Privacy
Compliance
Build a strong and trusted
brand with a high focus on
our customers’ privacy
Privacy Day events, including
awareness campaigns, e-learnings,
and Panel Session: Doing Good by
Doing Right
Ensure that our updated
privacy governance framework
is implemented across all of
our Business Units, and is
contributing to ongoing
privacy compliance for our
business by 2022
Cyber security
Telenor’s business
security vision is that the
company always protects
society and people in their
digital life, and security is
the foundation for
everything Telenor does.
96%
employees completed security
training
By 2023, incorporate security
in all aspects of Telenor’s
business and all technology
domains following a risk-based
approach, with defendable
architecture implemented for
all critical assets
| Sustainability Report | Annual Report 2021 | 45
E - Environmental
Telenor’s purpose is to empower societies and connect people to what matters most.
That purpose compels the company to do its part in the effort to fight climate change
and environmental hazards. Telenor provides technology and platforms to enable
climate action and raise the awareness of climate change and the risks the world faces
from global warming, pollution and waste. But the company also needs to be part of the
change and drive the action in the communities it empowers and connects. There are
two main dimensions to Telenor’s work on climate and environment. The first is to clean
up its own operations, by lowering greenhouse gas (GHG) emissions and improving
environmental performance. The second is to help other parties reduce their emissions,
by way of Telenor’s services.
Telenor focuses on responsible business practices and continuous improvement across
all its markets. Guided by international standards and its operational experience, the
company works to systematically address risks and maximise the positive impact of its
business. As such, reducing GHG emissions and waste are at the core of the company’s
efforts to ensure responsible business. Taking responsibility for its carbon emissions and
waste is also an important element of Telenor’s Code of Conduct which clearly states
that the company is accountable for its actions.
| Sustainability Report | Annual Report 2021 | 46
Reduce Scope 1
and 2 emissions
by
35 %
by 2024,
compared to 2019
Ensure key
suppliers commit
to Science Based
Targets
60 %
on spend
by 2024
Climate
Telenor is committed to reducing its climate impacts by
contributing both to the prevention of climate change
(mitigation) and resilience against damage to
infrastructure and societies from climate change
(adaptation). The company adheres to local and
internationally recognised environmental and energy
efficiency standards and all business units are required to
make reasonable efforts to minimise the use of natural
resources including energy, water and raw materials, as
well as reduce their GHG emissions.
Why the area is material
With the recent publication of the sixth assessment report
of the Intergovernmental Panel on Climate Change, it is
clearer than ever that mitigation of, and adaptation to,
climate change is among the most important tasks of the
international community in the decades to come. Telenor
is stepping up to do its part. Telenor has a dual role in its
climate journey by, on the one hand, addressing its own
sustainability priorities and, on the other, enabling the
sustainability transformation of its customers and other
sectors. The digitalisation of societies gives Telenor new
possibilities regarding how to prevent climate change, and
Telenor can play a positive part in enabling customers and
individuals to reduce their own emissions.
Ambition
Meet Telenor’s own science-based targets and explore
business opportunities to enable third parties to reduce
their climate footprint.
Target towards 2024
Update from 2021
Reducing Telenor’s Scope 1 and 2 emissions involves
reducing and optimising energy consumption (energy
efficiency), replacing diesel generators by solar solutions
for off-grid sites and sourcing renewable grid electricity
where possible. A key focus in 2021 has been to limit total
energy consumption by continuously improving the energy
efficiency in the business units’ network operations, as
these represent around 80 per cent of total energy
consumption. All business units set annual energy
usage/efficiency improvement targets and secure
financing of priority actions as part of their annual
business planning process.
In 2021, with the investment in network modernisation, 5G
rollout and forecasted data growth, the energy demand
has grown. As consumers enjoy an improved network and
data experience, the increase in energy consumption by
networks creates a larger carbon footprint. Telenor needs
to utilise technology advances to flatten the curve. For
Telenor, energy-based cost is on an increasing year-on-
year trend owing to the increases in energy demand, as
well as rising fuel prices. In Asia in particular, there is a
dependency on fuel-based energy, requiring high diesel-
generator hours and the burning of fossil fuels. As the
price of fuel is increasing exponentially in almost every
market, this affects both the environment and profitability.
Telenor launched Project Thunderbolt in 2019, a joint
energy optimisation initiative that marks a transition from
fossil fuels to renewable energies to power the business
units’ networks. Telenor has initiated a number of
Science Based Targets
In May 2021, The Science Based Targets Initiative (SBTi) approved Telenor’s GHG
emission reduction targets. The approval confirms that Telenor’s climate targets
are in line with what climate science deems necessary to meet the Paris Climate
Agreement target of limiting global warming to 1.5°C above pre-industrial levels.
Telenor's approved Climate Goals are to:
●
Reduce emissions of GHGs from global operations by 57 per cent, from a 2019
baseline, by 2030. For the two regions where Teleno r operates, this means:
o
The Nordic operations: Telenor’s target for the Nordics is carbon-
neutral business operations by 2030, focusing on energy efficiency
measures in network operations, purchasing renewable electricity,
and offsetting residual emissions by way of high-quality carbon
credits.
o
The Asian operations: Telenor’s target for the Asian operations is a
50 per cent reduction in GHG emissions by 2030 (from a 2019
baseline), focusing on substituting diesel generators with solar
solutions at base stations and exploring other renewable electricity
options in the region.
●
68 per cent of suppliers, by spend, within the categories Purchased Goods,
Services and Capital Goods, shall set science-based targets within 2025
| Sustainability Report | Annual Report 2021 | 47
28.5 %
of suppliers by
spend had set
science-based
targets in 2021
11 %
year-onyear
company-wide
Scope 1&2 GHG
emissions cut in
2021
Energy features and Artificial Intelligence and
Machine Learning (AIML) based advance
framework in DNA, Finland
DNA has been modernising its network with 5G technology and 4-5X capacity. With
more capacity and equipment on site, it was expected that energy consumption
would grow 6-7 per cent in 2021. However, with meticulous planning, deriving
efficiencies from the modernised network and use of energy-saving features on
RAN network, DNA was able to bring down the energy demand of its operations.
The efforts did not stop there, and AIML-based functionality was tested for
additional benefits. The AIML aims to significantly reduce energy consumption in
the mobile network by using advanced intelligence to analyse data traffic generated
by customers and predict in advance the mobile data traffic requirements in a day.
Hence, it can automatically and dynamically optimise the mobile site energy
requirements. This helped to gain an additional 3 per cent energy saving on the
tested network. The overall result is that a reduction of energy consumption by
more than 5 per cent compared to 2020 levels was achieved in the DNA network.
The same solution is being explored and tested now in other business units across
Telenor.
initiatives to drive energy efficiencies in its network in
parallel.
The President and CEO and other representatives from
Telenor, are actively advocating in international fora such
as the World Economic Forum, the Global Mobile
Operations’ Association and the United Nations for a push
for accelerated investments in, and deregulation of, grid
electricity in emerging markets, such as Telenor’s markets
in Asia. This initiative aims to increase access to the
region’s renewable electricity on the grid by a
commitment to long-term demand from the industry.
Through these actions, the company is working towards
building an alliance with industry peers, investors and
authorities to advance the common climate goals.
For Scope 3, Telenor has been engaging with suppliers to
influence them to commit to science-based targets
through Telenor Procurement Company, business units
and collaboration with other mobile operators, through
e.g. GSMA and Joint Audit Cooperation.
Strategy to reach targets
Telenor’s ambition is to meet its own science-based
targets and explore business opportunities to enable third
parties to reduce their climate footprint, by way of re-
ducing the company’s own Scope 1 and 2 GHG emissions,
and ensuring suppliers commit to science-based targets.
The reduction of the Scope 1 and 2 GHG emissions as per
Telenor’s targets shall be achieved through a combination
of energy efficiency measures, replacement of fossil fuels
from own assets (cars, towers) and purchase of renewable
grid electricity. As access to renewable electricity is
limited in Asia, this remains the main barrier to the
achievement of Telenor’s targets in the region. The top
priority in achieving the Scope 1 and 2 targets is to sign
Power Purchase Agreements (PPAs) in the Nordics within
2022. In Asia, renewable electricity will be phased in by way
of Energy Attribute Certificates, followed by PPAs as they
become available.
Engaging with top suppliers and influencing them to set
climate targets remains key to delivering on Telenor’s
committed Scope 3 target. Telenor engages actively with
peers through GSMA and Joint Audit Committee (JAC) to
ensure consistency and scale effects for suppliers to the
mobile operator industry.
Grameenphone and dtac will use Energy Attribute
Certificates (certificates to prove renewability of
purchased electricity) in 2022 to ensure that Telenor
Group’s emission are reduced according to the trajectory
towards 2030. A sourcing process together with Telenor
Procurement Company was initiated in Q1 2022.
Telenor will also continue engaging employees in
contributing to the green shift, for instance by way of the
newly established Green Ambassador Programme.
Telenor plans to introduce a climate related Key
Performance Indicator in the short-term incentive plan for
Group Executive Management in 2023.
Climate risk
Telenor’s climate risk reporting follows the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). As highlighted in Telenor’s TCFD
climate risk assessment, multiple climate risks and opportunities exist for Telenor
and ICTs more broadly. However, Telenor’s TCFD assessment also clearly points to
emission reducing ICT services or “climate enabling technologies” as a significant
opportunity. In demonstrating the effect of emission reducing technologies,
Telenor and the ICT industry can more easily live up to the claim of being part of the
solution to mitigating climate change. Telenor’s 2021 TCFD report highlights the
most material risks and opportunities the company faces. The report can be
accessed on Telenor.com.
Solar rollouts in Asia
In Asia, Telenor is investing in renewable energy to bring down the dependency on
fuel-based sources such as diesel generators. Telenor is currently operating 3900
solar sites. There has been an addition of 323 sites in 2021, resulting in a total
reduction of 60,000 tonnes of CO2-equivalents. The solar solutions are being
deployed in areas with unstable or no grid connections, which not only promotes
green energy utilisation, but also improves Telenor’s network availability
significantly for customers. In 2022, Telenor is planning on 500 additional solar
solutions in Telenor Pakistan and the exploration of wind-based solutions.
| Sustainability Report | Annual Report 2021 | 48
524 010
devices returned
through takeback
programmes in
the Nordics and
DTAC in 2021
83 %
of recovered e-
waste reused in
2021
17 %
percent of
recovered e-
waste recycled in
2021
Environment
Telenor complies with local laws and internationally
recognized environmental standards. All business units
shall maintain an environmental management system
including sustainable waste management and shall
support business initiatives using communications
services to develop eco-efficient solutions. All electronic
waste shall be reused, recycled or safely disposed of, and
the ambition is to steadily increase the share of reuse to
prolong the active lifetime of both end-user devices and
network/IT equipment. No electronic waste shall be
landfilled. Environmental sustainability criteria such as
reusability and repairability shall always be considered in
procurement processes for major contracts.
Why the area is material
Through technology and the Internet of Things (IoT), and
by expanding connectivity and making new digital services
available, the ICT industry has the potential to deliver
increased efficiency and environmental benefits in other
industries.
Telenor’s ability to address environmental challenges and
opportunities is likely to increasingly contribute to the
company’s business value.
Ambition
Explore opportunities within circular economy, set targets
and define a strategy for climbing the waste hierarchy.
Target towards 2022
Update from 2021
The European Green Digital Coalition
In Q1 2021, Telenor signed the declaration of the European
Green Digital Coalition (EGDC), which makes Telenor a
founding member of the industry initiative. The goal of the
EGDC is to work towards a green digital transformation
that delivers benefits to people, society, and the economy.
Through the coalition, together with 26 ICT companies,
Telenor’s Nordic business units commit to reaching net
zero by 2040. This initiative is a key component in the EU’s
commitment to a green shift through the EU Green Deal. A
key target of the initiative is to establish KPIs and methods
to quantify ICT services’ enablement effects on society.
In 2021, Telenor also released its first Digital Outlook. In this
report, industry experts, academics, and innovators
present their take on how the digital shift will advance
greener ways of living, learning, and working.
Circular economy
To reach the Paris Agreement goal of limiting global
warming to 2°C, and preferably 1.5°C, the world needs a
functioning circular economy that preserves the
environment, strengthens economic competitiveness, and
limits emissions. The EU's Circular Economy Action Plan
targets how products are designed, promotes circular
economy processes, encourages sustainable
consumption, and aims to ensure that waste is prevented,
and the resources used are kept in the economy for as
long as possible. For Telenor, the most material aspects of
circular economy and waste prevention are those related
to improving circularity of mobile phones, home devices
and other connected end-user devices, as well as network
equipment at base stations.
To be able to compile a strategy for circular economy,
workshops looking at Telenor’s status within circular
economy across the business units were held in 2021, also
to identify ways to align circular economy activities with
the company’s products and commercial goals.
Reinforce Telenor’s
long-term
commitment and
strengthen the
company’s strategic
role in the area of
circular economy
| Sustainability Report | Annual Report 2021 | 49
Strategy to reach targets
Telenor’s ambition is to explore opportunities within
circular economy, set targets and define a strategy for
climbing the waste hierarchy. The company will, in 2022,
set short-term and long-term targets in the area of circular
economy, aligned with SASB’s “product end-of-life"
metrics. In 2022, Telenor will look towards business
initiatives and partnerships to develop solutions that will
contribute to environmental enablement, i.e. using
telecommunication services to enable improved
environmental performance and GHG emission reductions
with third parties and external stakeholders. The goal is to
leverage Telenor’s technology and services to empower
other industries to reduce their environmental footprint by
digitising their operations via 5G and IoT. Telenor will
continue integrating circular economy into its strategy
processes, products and commercial goals.
Green ambassador programme
The Green Ambassador programme was launched in September 2021, and features
Telenor employees from all business units (except Digi and Telenor Myanmar), Group
Units, Telenor Connexion and Telenor Procurement Company (TPC). The employees
were selected from a variety of functions, and all share a passion about the environment
and a desire to contribute towards growing the awareness of Telenor's climate and
environmental ambitions. The responsibilities of the ambassadors are to increase
awareness locally in their BU or Group Unit and implement local campaigns connected to
climate and environment.
| Sustainability Report | Annual Report 2021 | 50
S - Social
As Telenor was founded in Norway over 165 years ago, the company lives and breathes
the Nordic values of equality, trust and democracy in the way it does business today. At
the very core of what Telenor does lies its belief in the importance of connecting people
to what matters most. A fundamental pillar of Telenor’s responsible business work is
digital access for all. Telenor is committed to equipping people with the resources,
knowledge and skills they need in an accelerated digital future, excluding no one. Telenor
continues to work to supply the necessary infrastructure to ensure everyone can access
and derive the benefits associated with digital societies, all while focusing on responsible
business conduct towards employees, supply chain operators and customers.
Telenor sets high standards in health, safety, and people security for employees as well
as in-house contractors, vendors, and suppliers. Telenor is committed to respecting
human rights and labour rights principles as laid down in the UN Global Compact,
Universal Declaration of Human Rights and ILO’s fundamental conventions. These
principles relate to respecting the rights to freedom of association and collective
bargaining, the elimination of forced labour, child labour and discrimination in the
workplace, and are reflected in Telenor’s Code of Conduct, Group People Policy and
Supplier Conduct Principles. Attracting and retaining the best talent through learning and
development opportunities, as well as supporting career prospects, are fundamental to
continued competitiveness and growth. Telenor also strives for diversity, inclusion, and
equitable opportunities in accordance with the People Policy and is committed to a
workplace free of discrimination and harassment.
| Sustainability Report | Annual Report 2021 | 51
58 %
active data users in
2021
Over
850,000
children trained in
online safety in 2021
Digital skills
A fundamental pillar of Telenor’s responsible business work is the
commitment to ensure digital access for all, equip people with the
necessary knowledge, resources to operate effectively and safely,
and stimulate a supportive ecosystem that can address the risks
and grow the digital resilience of people. In order to do its part in
helping to achieve fundamental competences, Telenor has for
many years, had a wide range of initiatives and operations aimed at
building digital skills, bolstering online safety, and promoting
diversity and inclusion in the realm of connectivity. Given the far-
reaching nature of these ambitions, the company has partnerships
with organisations such as UNICEF and Plan International to realise
its goals across all the markets in which it operates.
Why the area is material
Digital inclusion has long been a cornerstone of Telenor’s
responsible business work. The impact of the COVID-19 pandemic
has affirmed the importance of mobile services and connectivity in
tackling societal challenges. The global pandemic has accelerated
both the need for digital skills, as well as deepened the digital divide
underpinning it. There is a need to focus efforts to deliver benefits
to demographic groups that have been particularly affected by the
pandemic. Children have been disproportionately affected by the
shift from physical to virtual classrooms. Shutdowns and travel
restrictions have impacted small and medium businesses that have
struggled to reinvent their business in the digital world. It is more
important now than ever to not only ensure access to essential
services, but to support communities with easy access to relevant
skills in a digitalised future and ensure a safe online experience for
all.
Ambition
Become an inclusive partner in building future skills.
Target towards 2024
Update from 2021
Telenor has ongoing projects in several markets building key future
skills for young people, especially girls, allowing more people to take
advantage of the opportunities offered by digital connectivity. Many
of Telenor’s initiatives have expanded the target and moved the
focus towards the population segments most impacted by the
COVID-19 pandemic.
Throughout 2021, Telenor continued to focus efforts towards
including the digitally excluded (Inclusion), imparting skills to excel in
the future (Future Skills) and ensuring a safe internet experience for
all (Online Safety). Telenor partners with organisations that share
the company’s commitment to empowering societies and creating
an accelerated digital future. In 2021, Telenor re-assessed the
approach towards building digital skills with partners and explored
ways to provide safe connectivity and online experiences and build
relevant, future-ready skills.
●
In
Thailand
, the “Young Digital Resilience Leaders” project by
dtac and Plan International, Thailand continued for its second-
year on the journey to encourage young people to be active
online leaders. Forty-five teams participated in trainings in
topics relating to cyberbullying, cyber security, and digital
literacy. The youth teams were mentored by experienced
coaches, developing their ideas and campaigning to raise
awareness of online risks through various digital channels.
●
In
Malaysia
, Digi, together with its Future Skills for All (FS4A)
programme partners, Malaysia Digital Economy Corporation
(MDEC), UNICEF, and ARUS Academy launched the
‘#BolehCode Coding Challenge’, aimed at cultivating interest in
digital skills among youth. Over 3,000 students from 350
schools enrolled in the challenge that also emphasised
participation from low-enrolments schools. FS4A has enrolled
over 34,500 students to date.
●
Telenor Pakistan
Hackfair 2.0. This initiative brought the best women developers
under one roof with an innovative focus on reshaping the face
of business by eliminating stereotypes and obstacles faced by
women. More than 50 app submissions using Google
technologies were received from 172 women developers across
Pakistan.
5 million
trained in digital
skills by 2024
| Sustainability Report | Annual Report 2021 | 52
2,516,181
children
registered since
project inception
●
The Net-for-Living programme in
Thailand
and helping access digital skills for vulnerable groups and SME s
across Thailand. In 2021, the programme was further elevated to
align with Thailand’s COVID-19 response, as well as with dtac’s
commercial priorities, by focusing on digital upskilling of small-
scale SMEs affected by COVID-19 restrictions and on female
tribal youth communities. More than 700 SMEs were trained in
2021, and participants reported an average uplift in revenues of
approximately 50 percent.
●
In
Telenor Norway
, more than 100,000 students have used the
interactive training programme on cyber-bullying, Bruk Hue.
The programme, which began in 2009 in partnership with Red
Cross Norway, has been used by more than 400,000 teachers
and students to date. Bruk Hue was relaunched in 2019 in a fully
digital format, adapted to goals in the curriculum, as well as to
children's digital everyday life. Recent figures show that the
service has had a positive effect in an increasingly digitalised
everyday school environment.
●
In
Bangladesh
, Grameenphone together with global partner
UNICEF continued their Child Online Safety programme to reach
children despite the COVID-19 school closures. More than 250
000 children were trained in online safety in 2021. As part of the
partnership, a strong online awareness campaign was also
undertaken, and two national level policy dialogues with
government and other stakeholders were conducted to
integrate programme content as part of the national school
curriculum.
In Myanmar, despite the challenging and volatile
circumstances, Telenor Myanmar continued its efforts in
building digital skills and extending benefits of
communication through the existing partnership projects
where possible. This was done by, for instance, further
building on the work under the “Digital literacy and
resilience for adolescents and young people”, in
cooperation with Plan International, as well as on the
Digital Birth and Death Registration project with UNICEF,
which saw 11,235 births and 3,240 deaths registered
digitally in Myanmar in 2021. On 17 March 2022, Telenor
Group was informed that the Myanmar Investment
Commission has given final regulatory approval to the sale
of Telenor Myanmar to M1 Group, see notes 4 and 38.
Strategy to reach targets
To achieve its ambition of becoming an inclusive partner in building
future skills, Telenor will focus on including the digitally excluded,
imparting skills that help them excel and become more productive
in the future, and ensuring a safe online experience for all. The work
for inclusion focuses on children and young people, as well as on
small and medium-size enterprises, with gender equality as a cross-
cutting priority.
To reach the target of 5 million people trained in digital skills by 2024
and continue driving positive impact within the area, Telenor will
continue to leverage on, strengthen, and build partnerships globally
as well as locally.
Telenor’s focus will be on providing access and skills to use digital
products/services/internet, building on the Internet of Things,
Artificial Intelligence and business-to-business portfolio to provide
upskilling and reskilling to youth and small and medium enterprises,
and building online safety efforts for children, youth and the
vulnerable through relevant content, digital means and the
company’s products and services. Examples of initiatives that will
contribute towards Telenor’s target in 2022 include: a project in
DNA, Finland in partnership with Plan International, aimed at
preventing digital marginalisation, strengthening equality of migrant
youth, and improving understanding of diversity and inclusion;
launching a second round of Telenor Norway and Plan International
of the Girls Create Tech project - a mentorship programme initiated
in 2019 to reduce the digital gender gap in Norway and inspire more
girls to choose education and challenge gender stereotypes in
careers within technology; the “Future Nations” programme in
Grameenphone, Bangladesh, in cooperation with the UNDP, under
the national level youth development program, created to
accelerate the Nation's future economic growth by enhancing the
skills and potential of youth by identifying opportunities for
development, employment, entrepreneurship, and investment in
the post-pandemic situation.
Please see Telenor.com for more examples of Telenor’s work.
Digital Birth Registrations in Pakistan
Telenor Pakistan and UNICEF have sustainably handed over the Digital Birth Registration
(DBR) system to the Punjab and Sindh governments in Pakistan in December 2021, after
having developed and piloted this programme since 2014. The births of 2,516,181 children
were registered overall (820,768 of these in 2021) in select districts of Punjab and Sindh,
which is beyond the 2,000,000
children target Telenor had set for the project. The local
governments have now taken over the DBR project to scale it
across the provinces. The project transfer took place at
separate events and was attended by officials from
Telenor Pakistan and UNICEF along with Local
Government Departments, the National Database and
Registration Authority and the Social Welfare
Department.
DBR will continue to serve as a case study on how
technology and partnerships can create positive impact for
societies Telenor operates in, and an inspiration to leverage technology for greater
social good.
| Sustainability Report | Annual Report 2021 | 53
Human rights
Telenor’s human rights are embedded in the company’s
Code of Conduct and policies and are based on the
following international instruments: the Universal
Declaration of Human Rights (UDHR), the International
Covenant on Civil and Political Rights (ICCPR), the
International Covenant on Economic, Social and Cultural
Rights (ICESCR) and the principles concerning
fundamental rights in the eight ILO core conventions as set
out in the Declaration on Fundamental Principles and
Rights at Work. These requirements reflect the
responsibility of Telenor to respect human rights in
accordance with the UN Guiding Principles on Business
and Human Rights.
Telenor is committed to respecting human rights in
accordance with the UN Guiding Principles on Business
and Human Rights, the OECD Guidelines for Multinational
Enterprises and the UN Global Compact. This includes
ensuring regular human rights due diligence across the
organisation in order to minimise the risk of human rights
violations and/or complicity therein, and engaging with
stakeholders.
As part of Telenor’s responsibility to respect human rights,
all business units are required to conduct and document
regular human rights due diligence to identify, address and
manage human rights related risks and impacts resulting
from own activities and those in the value chain. This shall
be integrated with ongoing due diligence/risk-assessment
processes where possible.
In the business units’ human rights assessments, they
must follow the higher standard when national law and
international human rights law differ. If they are in conflict,
the business unit shall adhere to national law while seeking
ways to respect international human rights to the greatest
extent possible, in accordance with the UN Guiding
Principles on Business and Human Rights.
Why the area is material
Telenor strongly believes in telecommunications as an
enabler of the exchange of ideas and access to
information. The company also recognises the existence
of human rights challenges in some markets of operation.
Respect and continuous improvement are therefore
important to Telenor’s approach to human rights.
Ambition
Respect and promote human rights, be trusted by
stakeholders and ensure regular human rights due
diligence across the organisation.
Target towards 2024
Update from 2021
2021 was a challenging year from a human rights
perspective. In addition to the ongoing COVID-19
pandemic and the impact this has had on employees,
suppliers and customers globally, there was also a military
takeover in Myanmar which led to a deteriorating human
rights and security situation within the country.
Myanmar
Telenor has been deeply concerned with the deteriorating
human rights and people security situation in Myanmar
since the military takeover. Respecting and promoting
human rights is integral to Telenor’s way of work. Since 1
February 2021 the company has been as transparent as
possible on the developments and challenges faced in
Myanmar, and intensified its dialogue with various
stakeholders, including local and international civil society
organisations. The input received from civil society
organisations has been part of ongoing assessments and
discussions, including at the Board level. On 8 July 2021,
Telenor announced the sale of Telenor Myanmar to M1
Group. On 17 March 2022, Telenor Group was informed
that the Myanmar Investment Commission has given final
regulatory approval to the sale of Telenor Myanmar to M1
Group, see notes 4 and 38. The decision to sell was made
when it was clear that Telenor could no longer operate in
Myanmar due to human rights concerns, regulatory and
compliance reasons. The assessments before the sale
took into account the broader human rights impact for all
rightsholders, including employees, customers,
distributors, vendors and partners in Myanmar. The
company also took into account concerns raised by
various stakeholders and responded to those. Since the
100 %
staff completed
human rights
training by 2024
| Sustainability Report | Annual Report 2021 | 54
regime change, Telenor has used all efforts to advocate
for the protection and respect for human rights and to the
full extent possible used leverage to prevent and mitigate
human rights impact.
For further information about the situation in Myanmar,
please visit:
https://www.telenor.com/sustainability/responsible-
business/human-rights/mitigate/human-rights-in-
myanmar/directives-from-authorities-in-myanmar-
february-2021/
Human rights due diligence
In 2021, Telenor commissioned a third party human rights
due diligence risk review at Group level. The process
identified a number of salient group wide human rights
risks, with the following top priorities (based on severity
and likelihood):
●
Worker wellbeing and safe working environment
●
Legal authority requests related to:
●
Data access and intercept
●
Network and content legal authority requests
●
Online speech and offline harm
●
Privacy and cybersecurity, and
●
Non-discrimination and equity
Mitigating actions such as training and capacity-building
are in place for several of these risks. Training and
capacity-building was conducted through the year for
Telenor Management and specific functions within Group,
including Mergers and Acquisitions and Procurement, as
part of the mitigation actions plan.
The findings from the due diligence risk review were used to inform
the Telenor business units’ own due diligence risk review, which was
initiated in Q4 of 2021, with final output planned in Q1 2022.
Further internal awareness raising efforts were made
through workshop presentations and by taking steps to
make relevant tools and material more readily available.
Telenor also supported and contributed to Amnesty
International’s new Human Rights Due Diligence e-learning
tool, which will be made available to all employees.
To manage human right impacts and meet increased
expectations from all stakeholders and to be transparent
about its processes
and dilemmas, Telenor continues a proactive approach to
transparency efforts and stakeholder engagement.
Grievances
Grievances are to be reported through Telenor’s Integrity
Hotline. For more information on the process of handling
reports, see the section on the Integrity Hotline in this
report.
Sharing and transparency, respecting
human rights
Telenor is committed to being transparent on challenges
and company practices to the greatest extent possible
through its Annual Sustainability Report, the annual
Authority Request Disclosure Report and through other
sustainability updates, presentations and public arenas.
Examples of engagements and public communications
include the Business and Human Rights Resource Centre,
RightsCon 2021, multiple external webinars focused on
business and human rights, guest lecturing at the Institute
for Human Rights and Business and Rafto Masters Course
at the University of Bergen, and engagements as published
on Telenor’s website. As part of Telenor’s commitment to
transparency, the company also reports on specific efforts
related to ongoing human rights challenges in Myanmar.
See pages on Human rights in Myanmar on the Telenor
corporate website. Telenor engages with a number of
organisations to advance its human rights objectives,
including the UN Global Compact, the Global Network
Initiative, GSMA, and the Joint Audit Cooperation (JAC).
Labour rights and standards
Telenor respects labour rights principles as laid down in
the UN Global Compact and ILO’s fundamental
conventions. These principles relate to respecting the
rights to freedom of association and collective bargaining,
the elimination of forced labour, child labour and
discrimination in the workplace, and are reflected in
Telenor’s Code of Conduct, Group People Policy and
Supplier Conduct Principles. Telenor shall comply with
applicable laws and regulations and if there are
differences between such laws and regulations and the
standards set out in our Code of Conduct, Telenor will
apply the higher standard consistent with applicable local
laws.
Complaint Against Telenor through the OECD
Norwegian National Contact Point
On 28 July 2021, the Centre for Research on Multinational Corporations, on behalf of
474 anonymous Myanmar-based civil society organisations, filed a complaint to the
Norwegian National Contact Point (NCP) for the Organisation for Economic Co-
operation and Development (OECD), alleging that Telenor Group has failed to
comply with the OECD Guidelines in the sale of its subsidiary, Telenor Myanmar.
The NCP decided to proceed with the complaint, but has not expressed any view as
to whether Telenor has acted consistently with the OECD Guidelines or not. Telenor
remains committed to complying with the OECD Guidelines for Multinational
Enterprises guidelines, as well as the UN Guiding Principles on Business and Human
Rights, and the company continues to support the NCP with facts and clarifications
in the case. For further information, including Telenor’s formal response to the
initial complaint, please visit;
Update on the ongoing OECD complaint against
Telenor on the sale of Telenor Myanmar (27 September 2021) - Telenor Group
The previous complaint raised against Telenor (The Committee Seeking Justice for
Alethankyaw (CSJA) v Telenor), as reported in the 2020 Sustainability Report,
remains in progress. In 2021 Telenor continued to support the NCP with facts and
clarifications in the case and remained open for dialogue with the complainants and
the NCP. More information on;
Update on the ongoing CSJA complaint to NCP
against Telenor - Telenor Group
All Business Units
initiated local
Human Rights Due
Diligence review
by end of 2021
| Sustainability Report | Annual Report 2021 | 55
Telenor Group continues to promote employee
involvement throughout Telenor Group, and maintains
good labour standards in the company’s operations. All
workforce restructuring in Telenor shall be done with the
aim of creating and sustaining long-term business value.
Workforce restructuring shall be done in a responsible
manner, through verifiable processes and in accordance
with Telenor Purpose and Behaviours and applicable legal
requirements and legislation. Read more on the Labour
Rights and Standards pages on Telenor.com.
Strategy to reach targets
To achieve its ambition on respecting and promoting
human rights, being trusted by stakeholders and ensuring
regular human rights due diligence across the
organisation, Telenor will continue its focus on
strengthening governance and communication across
functions in Telenor. As part of this, Telenor has defined a
target to train 100 per cent of its staff on human rights by
2024, in order to raise awareness and understanding and
equip employees with knowledge to help promote and
respect human rights.
The company will also strengthen its stakeholder
engagement strategy and build and enhance its internal
human rights capacity. In 2022, the company will enhance
its existing human rights training materials, develop an
internal communication strategy and timeline, and will
launch an internal campaign focused on human rights. In
addition, the company will continue incorporating human
rights aspects as part of its business partner improvement
efforts, in line with its Supplier Conduct Principles.
Global Network Initiative (GNI)
In 2021, Telenor continued to engage with the GNI to address challenges related to
authority requests that may limit privacy and/or freedom of expression. The GNI is a
multi-stakeholder initiative that brings together companies, civil society
organisations, investors and academics. Telenor Group joined the GNI Board in 2017.
As part of our membership of the GNI, we have committed to implement the GNI
Principles and undergo an independent assessment every two years to assess
progress on this commitment. In Telenor’s last independent assessment by an
external assessor, which was then reviewed at the GNI board, it was determined
that Telenor is making good faith efforts to implement the GNI Principles with the
improvement over time. In 2022, Telenor will undergo its second GNI Independent
Assessment by an external assessor.
Norwegian Transparency Law
2021 also saw the adoption of the Norwegian Transparency Law (Åpenhetsloven) in
the Norwegian Parliament. The law will require companies to perform human rights
due diligence assessments and demonstrate that they have policies and processes
in place to prevent human rights violations in their operations and supply chains. It
will also require companies to report on their assessments, and to provide
information upon public request on how a company manages actual and potential
negative human rights impacts. Based on the UN Guiding Principles on Business and
Human Rights, Telenor welcomed such legislation for Norwegian companies, to
provide a more even playing field, and to avoid competition at the cost of human
rights.
Telenor took an active role in providing input during the public hearing for the new
law, and by promoting the adoption of a mandatory due diligence law through its
engagement with other companies and stakeholders. In early 2022 it plans to
conduct a gap analysis to help ensure it will meet the requirements of the law, and
will take steps to raise awareness of the law both internally and externally.
| Sustainability Report | Annual Report 2021 | 56
38 %
women in the
workforce in
2021
32%
women senior
leaders in 2021
36 %
non-Nordic
senior leaders in
2021
40 %
women in the
workforceby
2023
35 %
women senior
leaders by 2023
35 %
nonNordic
senior leaders
by 2023
Diversity and inclusion
Telenor started the journey of systematically working with
diversity and inclusion in 2014 where it initiated a review
process with stakeholders to understand the key problems
to solve. Gender balance was outlined as the first
challenge to be addressed. Hence, the company embarked
on the diversity journey with gender balance as a priority.
After having made steady progress, Telenor has since
2018 expanded its diversity scope beyond gender balance.
Telenor’s diversity and inclusion requirements and
principles for all business units are as follows:
●
have local diversity and inclusion action plans that address
locally relevant challenges and opportunities
●
ensure that the recruitment, selection, promotion and
retention processes secure diversity
●
provide learning and development opportunities aiming to
raise awareness and provide practical guidance related to
diversity and inclusion, so that all employees can actively
contribute to building a workplace that embraces diversity
and inclusion
●
support and promote internal networks and employee
resource groups that aim at uplifting and creating a sense of
belonging for diverse and under-represented groups
●
engage suppliers and business partners in sharing and
adhering to the same commitment to diversity and inclusion
Why the area is material
Telenor, being an equal opportunity employer, strongly
believes in diversity and sees it as imperative to the way
the company does business, ‘creating together’ to offer
services and solutions that include different perspectives.
To ensure diversity and inclusion and minimise any
sources of bias, there is continuous focus on all people-
related processes.
Ambition
Be a frontrunner in diversity and engaged in a sustainable
future for all.
Targets towards 2023
Update from 2021
Diversity and inclusion is prioritised as a key enabler in the
responsible business work for Telenor. It 2021 it was
defined as one of the prioritised objectives in the people
strategy and responsible business. To support this uplift, a
global diversity and inclusion action plan was created and
is updated each year to guide business units in Telenor to
align and anchor their local action plans. The focus of each
business unit differs based on their local needs. These
action plans are reviewed on a quarterly basis in the
People Reviews.
Including people with disabilities, LGBTI and
other under-represented groups
Built on a foundation of steady progress on gender
balance, Telenor expanded the diversity focus to build a
sustainable culture that embraces and respects multiple
viewpoints. The Open Mind programme for people with
disabilities runs in Norway, Sweden, Pakistan, and
Myanmar. This is a one-year job-training programme that
creates opportunities for people to enter or get back into
the labour market. The original target group of the
programme was people with disabilities, including those
with physical challenges, hearing and/or visual
impairments, or mental health problems. In Norway, the
programme also gives job training opportunity to persons
with an immigrant background from non-western
countries. Open Mind in Norway has given opportunity to
around 350 participants, while Telenor Pakistan has
enabled close to 136 participants through this programme
to date.
To further its commitment towards the inclusion of
LGBTI+, Telenor expressed commitment to the UN
business standards of support for LGBTI+ to include
under-represented segments in the workforce. In addition,
Telenor continues to support employee networks and local
events (such as Pride) in business units where it is relevant.
Dtac recently updated their benefits policy to ensure that
same sex partners are entitled to similar benefits as
married individuals receive in Thailand. Dtac also allows
| Sustainability Report | Annual Report 2021 | 57
retail store employees to choose masculine or feminine
dress regardless of gender.
Gender pay equality
Telenor is an equal opportunity employer who considers
diversity to be imperative to the way it does business.
Equal pay is critical for Telenor to be able to attract, retain
and engage employees across all markets. Furthermore,
as a responsible business it is important that Telenor also
sets high standards and implements robust and
sustainable practices. As such, Telenor applies
compensation practices that are transparent, objective,
and fair.
Equal pay for Telenor means that employees within the
same function shall, as a key principle, receive equal pay
for work of equal scope and responsibility. Any pay
differences for work of equal scope shall only be
attributed to difference in employees’ level of skills and
experience relevant to the respective roles and/or
individual performance. Telenor aims to secure equal pay
across all functions and levels of the organisation and
conducts yearly group-wide analysis and action planning in
all business units to understand and address any gender
pay gaps.
Telenor observes variations between its business units,
and this is being mitigated by improving gender
representation in certain levels and functions of the
organisation, specific focus and consideration during the
annual salary review process and creating further
awareness and commitment across the people manager
population. The company’s efforts have been focused on
reducing observed gaps to secure fair and just
compensation practices and support the broader diversity
and inclusion agenda.
In 2021, at the business unit grade levels, there is variation
with pay differentials in the range 78 to 111 per cent. At an
overall level, the findings show a healthy level of variation
at the grade levels, with certain areas for improvement.
Telenor’s approach to addressing gender pay gaps
centers on the comparison of equal pay for equal work, as
such, the company observes that the total averages by
business unit is skewed compared to the actual status at
grade levels. This is due to female representation being
higher in the lower levels of the organisation (55 per cent),
as compared to the higher levels of organisation (19 per
cent). As a comparison to the total average salary ratio of
85 percent, the average results by grade level stands at 95
per cent, which better represents the status as of year-
end 2021. Business units have seen positive development
and results from the work on this agenda in the past few
years. Telenor continues to address diverse
representation at all levels of the organisation and has an
ambition to see shifts over time that will also positively
impact the averages at business unit level.
Equality and gender pay reporting – going
beyond requirements
In 2020, new regulatory requirements related to equality
and gender pay were introduced in Norway. Although
there is no legal requirement to implement the Norwegian
reporting requirements globally, this topic is important to
Telenor in all countries where the company operates, and
as such Telenor has prepared a global overview on gender
pay for all the telco business units and Telenor Group, in
addition to the seven companies with more than 50
employees in Norway that presents the full reporting in line
with Norwegian requirements. The reports are available on
Telenor.com.
Taking a leading role in dialogue on
Diversity and Inclusion in cross-industry
coalitions and consortiums
Telenor has engaged actively with other companies on the
topic of diversity and inclusion. This has been done
through the SHE conference, workshops at the
Arendalsuka arena and through the Nordic CEOs for
Sustainable Future coalition. While the other consortiums
have been more dialogue-oriented, Telenor has also led
the work to co-create a ‘Diversity and Inclusion Guide’ with
collaboration of the Chief HR Officers and diversity experts
from the companies that are part of Nordic CEO coalition.
This guide was published in November 2021 and can be
accessed
here
.
95 %
aggregate average
salary ratio female/
male at grade level
in 2021
85 %
aggregate average
salary ratio female/
male in 2021
Telenor named Best Practice Leader
Telenor was named Best Practice Leader in 2021 among 668 companies in the
European Women on Boards Gender Equality Index Report, for having gender
equality at the highest decision-making levels. The study includes the European
STOXX 600 companies’ executive and decision-making bodies and takes into
account the share of women in leadership, women on the Board, women at
executive level and women in committees. It was conducted with the support of the
European Commission’s Rights, Equality and Citizenship programme, together with
Kantar Public – a leading data, insights and consulting company.
| Sustainability Report | Annual Report 2021 | 58
New world record: Telenor employees write e-
learning history
Telenor Group set a new Guinness World Records™ title for most users takingan
online personal development lesson in 24 hours. The record attempt started 27
October at 07:00 CET, and by the same time the following day, a total of 4,504
Telenor employees had conducted the online course Growth Mindset. The
successful world record attempt was carried out by Telenor to signal its continued
strong focus on internal upskillingand reskilling. Telenor employees across the
Nordics and Asia proved they intend to remain at the forefront of upskilling to meet
the rapidly changing demands of global customers by setting a new e-learning
world record.
Strategy to reach targets
To achieve its ambition of being a frontrunner in diversity,
progress towards the 2023 targets will continue to be in
focus. Telenor will continue working systematically
towards an inclusive culture through various initiatives and
learning programmes and has already started measuring
psychological safety and inclusion via employee surveys.
The company will continue to advance opportunities to
include people with disabilities, LGBTIQ+ and other under-
represented groups via further exploration of the Open
Mind initiative. At the same time, efforts will be placed in
enriching the workforce and leadership with a mix of
nationalities and cultural backgrounds and experiences
that enable diverse perspectives in decision-making.
Telenor will also continue to influence and challenge its
partners and stakeholders by championing the diversity
and inclusion agenda - including continued thought
leadership in cross-industry coalitions and consortiums.
Responsible employer
Telenor’s companies have a multi-pronged approach to
attracting, developing and retaining the best talent. This
includes ensuring that policies and benefits are best-in-
class and match global practices. The list of monetary and
non-monetary compensation elements and benefits varies
per market. However, here are some initiatives that have
been introduced in all markets:
●
The Employee Share Plan (ESP) provides employees with the
opportunity to become a shareholder in Telenor by purchasing
company shares at a discounted price, with the potential of a
matching bonus dependent on company performance.
●
Telenor offers six months of maternity leave as a global
standard – in some locations it can be more, but there is not a
Telenor office offering less than half a year. This is particularly
significant for Asia, where the local standard is less than six
months.
●
Telenor provides upskilling opportunities to all employees via
the Telenor Academy, the global learning platform that
manages training across all business units in Telenor. With an
updated learning curriculum, Telenor provides upskilling
opportunities on critical skills for the digital future, leadership
and new ways of working for all employees.
Examples of local initiatives include:
●
Pakistan – On-site child-care, New Beginnings programmes that
help wives and mothers re-enter the workforce and provide
transportation
●
Norway – Company cottage rentals at a reasonable rate
●
Bangladesh – Special Telenor discounts for the employees in
local and foreign hospitals- health care on site in the GP House
Read more about Telenor’s inclusive and inspiring work
environment here
https://www.telenor.com/career/life-at-
telenor/
The Naya Aghaaz programme in Pakistan
In 2021, In Pakistan, the In Pakistan, the Naya Aghaaz programme, which provides
career opportunities to female professionals who are seeking to return to work
after career breaks, was re-designed in 2021 by expanding the eligibility criteria to
include women who lost their jobs, as well as recent graduates, who were unable to
kick start their careers due to the pandemic. Naya Aghaaz associates are hired as
trainees who receive on-the-job coaching and are offered permanent roles on
merit.
Telenor rank stop 3 and top 5 on gender equality
index in Norway and Sweden
Ninety-three out of 100 possible points. That is Telenor’s score in this year’s SHE
Index report in 2021, earning the company third place among 92 participating
companies with more than 50 employees in Norway. Telenor Sweden participated
in the SHE Index for the first time and achieved 82 points, securing fifth place
among 30 participating Swedish companies. Telenor uses these achievements as
inspiration to continue its diversity and inclusion efforts.
Telenor Pakistan wins Diversity and Inclusion
Vision, Strategy and Business Impact, 2021
For the fifth year running, Telenor Pakistan has won the Global Diversity, Equity and
Inclusion Benchmarks (GDEIB) Award for Diversity and Inclusion Vision, Strategy and
Business Impact, 2021. GDEIB benchmarks are governed by The Centre for Global
Inclusion, a US non-profit organization, helping organizations across the world
determine strategy and measure progress in managing diversity and inclusion.
This award is a testament to Telenor Pakistan’s efforts in truly embedding diversity
and inclusion as a key priority to deliver greater impact in everything the company
does. Telenor Pakistan will continue with its commitment by increasing leadership
involvement, creating stronger alliances and constantly improving its processes,
policies and practices to foster a diverse and inclusive environment.
| Sustainability Report | Annual Report 2021 | 59
Health, safety, people security
and wellbeing
Telenor has the health, safety, people security (HSS) and
wellbeing of its employees and suppliers as a priority,
utilising risk-based standards and culture-building
initiatives, to secure health, safety and wellbeing for all,
across all markets. HSS is line management’s
responsibility, fully endorsed and supported by senior
management in each business unit.
Telenor is committed to:
●
Having a risk-based approach to its operations and
implementing mitigations to as low as reasonably practicable.
●
Reporting and handling all incidents and hazards to learn and
prevent them from reoccurring.
●
Having an open culture where the health, safety and wellbeing
of employees, suppliers and visitors is promoted, and everyone
has the right and duty to stop unsafe activity and intervene.
●
Identifying lessons learned and ensuring continuous
improvement by implementing ISO 45001 requirements.
Why the area is material
Some of the markets Telenor operates in, particularly in
Asia, represent significant HSS risk exposure. Telenor
promotes high standards in HSS and wellbeing in order to
ensure a healthy, safe and secure working environment. A
healthy and sustainable work-life balance is an integral
part of the company’s HSS focus. All employees should be
safe at work, both in Telenor and in the supply chain.
Ambition
Zero injuries to employees and business partners and
having HSS and wellbeing fully embedded in the business.
Target towards 2024
Update from 2021
The COVID-19 pandemic has continued to affect employees in the
transition to a post-pandemic world and Telenor has continued to
engage with its employees to ensure their health, safety and
wellbeing.
Telenor experienced two fatalities in the supply chain in 2021, both
related to road transport. The number of fatalities decreased in 2021
compared to earlier years, but the number of injuries resulting in
lost time increased. Telenor strengthened the health and safety
governance by implementing a global incident reporting approach
and tool across all markets in Asia, with an increased focus on
reporting near misses, lower severity incidents and selected leading
indicators (e.g. unsafe acts and unsafe conditions). This has resulted
in increased health and safety reporting among employees and
increased reporting of leading indicators (near-misses, unsafe acts
and conditions).
The Asian operations represent the highest risks, with road
transportation, security and work at height remaining the main
challenges. Health and safety are high on the agenda in this region,
with strong top management commitment and engagement, which
has inspired line management commitment at lower levels in the
organisation. In 2021, the Asian operations completed a project to
assess and improve the health and safety culture at business unit
level. This included a culture perception survey, document reviews,
site inspections and interviews with employees and suppliers. As a
result, each Asian business unit has developed a roadmap for
strengthening the health and safety culture across the Asian
business units.
3000
observations
(unsafe acts, unsafe
conditions) by 2024
Mental health in Telenor
Throughout 2021, the focus on mental health increased further thanks to increased
awareness of the workplace factors that can contribute to poor mental health
during the pandemic. Telenor has responded with several initiatives such as a
stronger focus on care and concern among managers, access to mental health
practitioners, as well as online campaigns, events and webinars with counselling
psychologists in the business units.
For example, as part of their commitment to creating a productive work
environment the Digi employees created a team of Digi Mental Health First Aiders.
Mental Health First Aid teaches people the skills and confidence to recognise the
signs and symptoms of common mental health issues and effectively guide a
person towards the right support. The team is known as DigiCares and is able to
provide first level mental health support to Digi employees.
Although there has been a positive development, Telenor recognised the
importance of continuing to evolve its approach on tackling mental health
challenges. The Telenor Academy houses a special course on ‘The Importance of
Mental Health’, which all Telenor employees group-wide were encouraged to take.
| Sustainability Report | Annual Report 2021 | 60
0
2
10
2017
2018
2019
2020
2021
Fatalities –3rd party
Fatalities –suppliers, Tier 1 and below
Fatalities –employees
0,05
0,1
0,15
0,2
0,25
2017
2018
2019
2020
2021
Lost Time Injury Frequency (LTIF) rate
1,4
1,5
1,6
1,7
1,8
1,9
2017
2018
2019
2020
2021
Fatalities
The two work-related fatal incidents in 2021 (in Pakistan and Bangladesh)
were both related to road transport and involved business partners.
Lost time injury frequency
Lost-Time Injury Frequency (LTIF) rate measures all work related fatal
accidents and lost time injuries for Telenor employees per million worked
hours
Sickness Absence Rate (full year average)
(%)
Sickness Absence frequency measures absence due to other health issues
for Telenor employees in per cent of possible working time.
Strategy to reach targets
To achieve its ambition of zero injuries to employees and business
partners and having HSS and wellbeing fully embedded in the
business, Telenor will work on further improving the HSS reporting.
Telenor is working towards a culture of proactive reporting with
focus on improving the leading indicator reporting. As part of this,
Telenor has defined a target for reporting of unsafe acts and unsafe
conditions and aims to achieve 3,000 reports by 2024.
Telenor is implementing a set of operational requirements for the
activities representing the highest risks, which will be common for
all operations across the company’s business units and the
business partners. This will ensure that all people working for and on
behalf of Telenor will be following the same operational
requirements. The requirements, to be named Making Zero
Possible, will highlight Telenor’s strong belief that all accidents can
be prevented by mitigating the risks.
Telenor is also working on raising the competence and awareness
of leaders and employees by implementing an health and safety
learning path company-wide, which includes safety leadership
training, HSS training of expert functions and an online health and
safety training programme for all employees. The initiatives will be
promoted and supported by a company-wide communication
campaign. For people security the scope will be defined.
Mobile masts and health
Telenor continues to abide by national and international guidelines and regulations
to sustain compliance with national or global emission standards from the World
Health Organisation and the International Commission on Non-Ionizing Radiation
Protection for network equipment and mobile phones sold through Telenor.
Telenor will also continue to inform the public about scientific facts related to radio
waves and its radio base stations, together with science-based guidelines and
science-based research, through own channels and in collaboration with local
regulators/authorities and industry associations. More facts, and Q&A at
www.telenor.com/ sustainability/responsible-business/safe-services/mobile-
phones-and-health.
| Sustainability Report | Annual Report 2021 | 61
G - Governance
Corporate governance defines a framework of rules and procedures by which Telenor
governs and controls its business. Good corporate governance involves accountability,
responsibility, transparency, fairness, and effective engagement between all internal and
external stakeholders. It is about applying the company’s values in order to create value
for Telenor stakeholders.
Telenor considers good corporate governance to be a prerequisite for value creation
and trustworthiness and for access to capital. To secure strong and sustainable
corporate governance, the company ensures responsible business practices, reporting
and an environment of compliance with legislation and regulations across the company.
Telenor’s commitment to integrity and transparency is clearly stated in the company’s
Code of Conduct.
| Sustainability Report | Annual Report 2021 | 62
Supply chain sustainability
Supply Chain Sustainability (SCS) is a key focus area for
Telenor in which we strive to raise standards of conduct
amongst our business partners through monitoring and
mitigation activities while focusing on continuous
improvement. Business partners having a direct
contractual relationship with Telenor are required to
comply with Telenor’s Supplier Conduct Principles (SCP)
and are legally obliged to trickle down the requirements in
their associated supply chain through the Agreement on
Responsible Business Conduct (ABC). More information on
Telenor.com.
Why the area is material
Ensuring responsible business conduct within Telenor’s
supply chain is key to delivering on the company’s
sustainability commitments. Given the evolving nature of
Telenor’s business, business partners and legislative
landscape, Telenor relies on a risk-based approach of
managing and monitoring business partners based on
scope of work and nature of engagement with Telenor.
Telenor is committed to working with business partners
and the industry through the Joint Audit Cooperation
(JAC) to respect human rights and ethical standards, work
towards eliminating forced labour and labour exploitation,
including that of migrant workers, and ensure health and
safety within the supply chain. Through active monitoring
and mitigation actions, Telenor seeks to develop a resilient
supply chain able to withstand the impacts of climate
change, global health pandemics, and other potential
disruptions.
Ambition
3 559
supplier inspections in 2021
45 %
442
95 %
were unannounced
1066
minor
non-conformance
non-conformities,
closure rate
followed up with
mitigation plans and
further monitoring
Uphold responsible business practices within the supply
chain through high sustainability standards and
continuous improvement.
Target towards 2024
Update from 2021
In 2021, Telenor worked to advance its business partner
management processes to address ESG risks across the
supply chain through a risk-based approach. Telenor’s key
risks in the supply chain continue to be health and safety
issues such as road accidents, working at heights and fire
safety, underage labour working in hazardous conditions,
other working condition deficits related to hours and
wages, and risks to business ethics. The majority of these
risks remain in Telenor’s operations in Asia. Use of conflict
minerals is an indirect risk area for Telenor, which is
monitored through JAC as well as via ensuring business
partners’ written policy and procedures to avoid knowingly
acquiring conflict minerals. Through the JAC forum,
Telenor, together with industry members has been
following up on forced labour and modern slavery
allegations in the common supply chain. A joint statement
in this regard was issued by JAC.
Risk-based approach towards business
partner management
In 2021, Telenor has further refined its policy,
processes/procedures, and systems for effective risk
management in the supply chain. Focus is on the quality of
managing business partners and findings from inspection
utilizing a risk-based approach.
Monitoring and mitigating actions
Telenor carries out site inspections at supplier premises
and operational sites to monitor compliance with the SCP
requirements.
Post-contract due
diligence
conducted on
100 %
high-risk business
partners by 2024
| Sustainability Report | Annual Report 2021 | 63
Through participation in industry platform JAC, Telenor
also had access to 71 audit reports conducted in the global
supply chain in 2021.
During 2021, Telenor recorded and addressed two cases of
underage labour in Thailand and five in Pakistan (15–18
years of age working in hazardous conditions). The cases
were investigated, and corrective actions were
undertaken. There have been no incidents of child labour
(12–14 years) identified in Telenor’s supply chain since 2017.
Strategy to reach targets
To achieve its ambition of upholding responsible business
practices within the supply chain through high
sustainability standards and continuous improvement, the
company will focus on a risk-based approach towards
business partners. This is why the company has set a
target of conducting post-contract due diligence on 100
per cent of high-risk business partners by 2024. In 2022,
Telenor will continue to focus on the follow-up of high-risk
business partners and strengthen its systems and
procedures to assess, identify and mitigate risk within the
supply chain. Capacity-building will continue to be in
focus, to ensure that key business partners drive trainings
and capacity building within their supply chain according
to acceptable standards. A risk-based approach is taken
when choosing business partners for such training.
More than
34,716
hours of awareness
and capacity-
building on topics
related to relevant
risks to the SCP
throughout 2021
| Sustainability Report | Annual Report 2021 | 64
Anti-corruption
Telenor is committed to conducting business activities in a
transparent manner, maintaining the highest ethical
standards and complying with all applicable anti-
corruption laws and regulations. The Telenor Code of
Conduct and the Anti-Corruption Policy prohibit corrupt
conduct in all Telenor business activities. All Telenor
business units are required to implement controls
designed to prevent corruption in Telenor’s business
operations, and to monitor and control potential conflicts
of interest. This applies also to the conduct of third parties
acting on behalf of Telenor. Business units are expected to
implement controls regarding the following:
●
Business courtesies
●
Facilitation payments
●
Intermediaries
●
Public officials
●
Sponsorships and donations
●
Conflict of interest
●
Improper payments
Why the area is material
As Telenor operates in many countries that are perceived
to represent a corruption risk exposure according to
international indices and its own risk assessments, a
systematic and proactive approach is important to
adequately manage the risk. Corruption is a threat to
Telenor’s business and to the societies where the
company operates.
Ambition
Take a zero-tolerance approach to bribery and corruption
and avoid even the appearance of misconduct or improper
actions.
Target
Update from 2021
Revision of governing documents
During 2021, Telenor conducted a simplification project
with the aim to streamline and simplify the policy
framework, as well as to improve compliance with the
policies in the business units. As part of this initiative the
anti-corruption policy was revised to clearly define
specific and measurable requirements to each business
unit for demonstrating that an adequate and risk-based
anti-corruption programme is in place.
Risk assessment
Risk assessments are the key element of the anti-
corruption programme to ensure that corruption risks are
identified and analysed on a regular basis and mitigated by
sufficiently robust controls. During 2021, several initiatives
were initiated to strengthen the anti-corruption risk
assessment process in Telenor. An updated and common
risk taxonomy has been established as a tool to establish a
more comprehensive and generic set of risk categories
and individual risk definitions that are applied across all
business units. This has significantly improved the risk
management process for the anti-corruption area and
provided a complete picture of the highest risks which
leads to better aggregation and comparability of risks
across the business units.
Anti-corruption training update
A key element in Telenor’s Anti-Corruption Programme is
capacity-building and regular training of employees. The
anti-corruption training ranges from e-learning programs
and dilemma-training to other awareness activities.
Telenor Group’s commitment to integrity and
transparency is clearly stated in Telenor’s Code of
Conduct. A description of Telenor’s Anti-Corruption
Programme and the Compliance function is publicly
available on the Corporate Governance pages on
Telenor.com.
All Telenor business units have a responsibility to ensure
that concerns regarding corrupt conduct can easily and
anonymously be reported without fear of retaliation.
Remedial actions are to be implemented where corrupt
conduct is substantiated.
Strengthen Telenor’s
preventive anti-
corruption
programme across all
business units,
including relevant
controls to properly
mitigate corruption
| Sustainability Report | Annual Report 2021 | 65
Integrity otline
The Integrity Hotline is a confidential channel forquestions and concerns about
possible breaches of Telenor’s Code of Conduct, including relevant laws,
regulations and Governing Documents. In 2021, Telenor changed its operator for the
Integrity Hotline. The service is accessible via web and is available 24 hours a day,
seven days a week. It can accommodate reports in the local languages of all
Telenor’s markets. Any query or report made will be treated confidentially and
respectfully. Telenor encourages employees, business partners and other
stakeholders to speak up through the hotline.
Group Internal Audit and Investigation (GIAI) manages the investigations into alleged
breaches of the Code of Conduct and the preparation of audit reports addressing
corrective actions stemming from investigations to strengthen Telenor’s policies
and procedures. The Compliance function in Telenor handles the disciplinary
resolutions of substantiated investigations. Investigations, corrective actions and
disciplinary resolutions are reported regularly to the Board Sustainability and
Compliance Committee and annually to the Board of Directors.
All incoming reports in the Integrity Hotline are assessed by GIAI. Eight percent of
the reported concerns were concluded during the assessment phase either
because they lacked information needed for further follow-up or because they were
resolved during the assessment phase. The remainingreported concerns were
either compliance concerns, managed further either by GIAI or case handlers in the
relevant usiness nits, or pertained to other parts of the organisation and were out
of scope for further handling by GIAI and the business unit case handlers. These
concerns were followed up by line management or Human Resources. The concerns
that were assessed to meet defined criteria on materiality, were further handled by
GIAI.
550
concerns
reported in 2021
41 %
of reported
concerns classified
as compliance
incidents
41
concerns
submitted
anonymously
12
mandated
investigations
initiated by GIAI
based on reports
received in 2021
5
investigations
completed based
on concerns
reported in 2020
6
investigations
remain open at
yearend 2021
Strategy to reach targets
To achieve its ambition of taking a zero-tolerance
approach to bribery and corruption and avoiding even the
appearance of misconduct or improper actions, Telenor
Group functions are continuously working with the local
compliance functions to improve their ability to identify
and manage corruption risks.
In 2022, Telenor will also implement the revised Anti-
Corruption policy in all business units. This will improve
Telenor’s ability to handle the risks, monitor compliance
and focus on the operations that require most attention.
More Information on the Anti-corruption pages on
Telenor.com.
See Governance Report for further descriptions of
Telenor’s Corporate Governance Framework.
| Sustainability Report | Annual Report 2021 | 66
Data privacy compliance
As a telecommunications operator, a heavy responsibility
rests on Telenor to make sure our customers can trust the
privacy of our services. To take the position as a trusted
and secure provider in all markets, Telenor has a strong
focus on customer data protection and defence of its
critical infrastructure. Telenor is committed to creating
and maintaining secure and privacy-friendly services that
its customers can use without having to worry about
having their integrity and personal sphere compromised.
The Telenor Group Privacy Policy sets high-level
requirements for all subsidiaries to follow, in addition to
requirements related to reporting to the Group function.
Among the requirements are:
●
The formal allocation of responsibility and resources
for privacy management
●
Implementation of effective internal controls that
verify the privacy compliance
●
Maintenance of up-to-date processing activity
inventories and documentation of legal basis for
processing activities
●
Transparency towards data subjects
●
Performance of privacy impact assessments for high-
risk processing activities
●
Maintaining an overview of cross-border transfers and
their legal basis
●
Third-party privacy management
●
Provision of general and role-based privacy training to
employees
●
Detection, prevention and mitigation of privacy
incidents
Why the area is material
Processing personal data is ingrained in the activities of
any electronic communications company, and the
processing activities are extremely large-scale. As a
provider of mobile and internet connectivity, respect for
the rights to privacy and freedom of expression is central
to Telenor’s core business. Customers, governments and
other stakeholders demonstrate increasing concern and
knowledge about privacy.
Comprehensive privacy legislation exists in Europe, and
the attention to privacy issues is high. Additionally,
European privacy legislation is continuing to influence
Asian markets, and there is an ongoing introduction and
privacy legislation in Asian countries where Telenor
operates.
Ambition
Build a strong and trusted brand with a high focus on our
customers’ privacy.
It is a priority for Telenor to continuously monitor and act
on privacy risks, to improve the effectiveness of its privacy
controls, and to ensure that the decisions it takes as a
business are conscious of the potential impact to privacy.
Target towards 2022
Update from 2021
In 2021, Telenor developed a new and improved Privacy
Policy, with clear requirements reflecting the privacy risks
the company faces across its operations in staying
compliant with legislation, while allowing for regulatory
differences in the various markets.
Updated global privacy training was developed and
provided to all Telenor employees in 2021. The company
has continued to make more online learning resources
available for employees. Telenor’s training concept is
topic-driven and modular, with more frequent courses
being made available to contribute to the ongoing
awareness needed in the day-to-day work of the
employees. The implementation of the training began in
2021 and will continue through 2022.
Ensure that our updated
privacy governance
framework is implemented
across all of our Business
Units, and is contributing
to ongoing privacy
compliance for our
business
| Sustainability Report | Annual Report 2021 | 67
Authority Requests
To read more about how Telenor handles access requests form authorities, see the
Authority Request Reports
here
.
Recognising International Data Privacy Day
Telenor recognised International Data Privacy Day with multiple Groupwide events,
including awareness campaigns, e-learnings, articles, panel discussion sessions, as
well as a guide for business on steps to take to ensure better data protection.
Strategy to reach targets
To achieve its ambition of building a strong and trusted
brand with a high focus on our customers’ privacy, Telenor
has set a target for 2022 to ensure the revised privacy
governance framework is implemented across all business
units and is better aligned to risks, controls and internal
requirements of the company’s Privacy Policy.
The company will also continue focusing on privacy
training in close collaboration with the security functions
of the company, to recognise the vital impact of security
to the management of its privacy risks and the role of its
employees as first and most important line of defence.
Telenor is stepping up its efforts to ensure the ongoing
monitoring and management of privacy risks and controls
at both the individual company level and at the Group-
level. Telenor is also strengthening its global privacy
community to enable the sharing of best practices
between its privacy officers, and in aligning its approach to
privacy compliance.
Our strategy continues to be focused on providing
transparency in the way the company works to protect
personal data, manage privacy risks, and in remaining
compliant with regulatory requirements.
Read more on the Privacy Governance pages on
Telenor.com
«As Telenor wants to be the trusted partner in our
customers’ digital lives, privacy protection needs to
be built deeply into the standards we use to deliver
our core services and processes we follow when
processing personal data. We connect our
customers to what matters most, and we are
therefore constantly working to ensure the safety,
security and privacy of our customers.»
Rita Skjærvik, Executive Vice President Strategy and
External Relations
| Sustainability Report | Annual Report 2021 | 68
Cyber security
Telenor is committed to providing secure, well-functioning
networks and services, and has a strong interest in doing
so. Telenor’s customers and society in general should have
confidence in Telenor as a trustworthy supplier of safe,
reliable and secure telecommunications and digital
services. To meet the fast-evolving threats in the cyber
domain, Telenor has developed a holistic, Group-wide and
long-term security strategy aiming at securing Telenor’s
global business. A key element in this strategy is to
continue to build critical security capabilities and
competencies in all Telenor companies, as well as
establishing a global security operating model. To Telenor,
security is the company’s licence to operate.
Why the area is material
The global nature of Telenor’ business and role as a
provider of critical infrastructure means that it is at
constant risk of basic and advanced cyber threats, with
cyber-attacks being one of Telenor’s top enterprise risks.
Telenor faces a rapidly changing threat landscape with
new technological risks and geopolitical instability.
Repeated, prolonged or complex network or IT system
failures could damage our services and consequently
weaken the trust our customers place in us as a reliable
communications provider.
Ambition
Telenor’s business security vision is that the company
always protects society and people in their digital life, and
that security is the foundation of everything Telenor does.
Target towards 2023
Update from 2021
While Telenor has been successfully developing the
capability to detect a wide number of threats globally, the
process of establishing advanced levels of security is
lengthy, and requires substantial changes in terms of
competency, processes, technology and vendor
management. Globally, Telenor observes an increase in
advanced cyber-attacks targeting the supply chain and
increased sophistication in cyber-attacks on employees
and customers. The continued remote work solutions in
the COVID-19 pandemic still remain a security risk.
Following a 89 percent reduction in detected security
incidents from 2019 to 2020 due to a broad range of risk-
reducing activities in the cyber security area, the 2021
numbers remained at the same level as 2020. Telenor
continues to systematically manage security risks and
handle cyber security threats according to industry best
practices and local laws and regulations.
In 2021, Telenor’s security strategy focused on
safeguarding customer data, critical infrastructure, and
business information.
The company continued its security awareness program
“We are Security” to promote a security-first culture,
measured and followed up as one of our strategic KPIs.
During 2021, 96 percent of all Telenor employees
completed basic security trainings, including topics such
as working from home, security collaboration platforms,
and security in projects. In addition, more than 200
employees have completed more advanced security
training targeted for their roles.
During 2021, Telenor’s Security Execution Programme saw
an overall increase of security maturity. This includes all
areas of cyber security, physical security, and service
fraud. Measured according to global best practice
standards, all aspects of security from governance,
training, vendor management and security controls to
incident response, were improved. The Security Execution
Programme has become an integrated tool to address and
communicate security improvement activities across the
organisation and is measured frequently.
96
Telenor employees
completed basic
security training in
2021
By 2023, incorporate
security in all aspects of
Telenor’s business and all
technology domains
following a risk-based
approach, with defendable
architecture implemented
for all critical assets.
| Sustainability Report | Annual Report 2021 | 69
Strategy to reach targets
To achieve its ambition of always always protecting
society and people in their digital life, and having security
as the foundation of everything Telenor does, Telenor has
set a target towards 2023 to incorporate security in all
aspects of the company’s business and all technology
domains following a risk-based approach, with defendable
architecture implemented for all critical assets.
Close corporation with authorities, business partners and
third-party providers will be vital to address legitimate
concerns about security and protect societies and
consumers from cyber threats. In 2022, Telenor will
execute on security strategy to manage security risks to
meet emerging threats and continue the security training
and awareness for all employees. Read more on Telenor’s
Cyber Security pages on Telenor.com.
2021 Outstanding Security Performance Award
(OSPA)
Telenor received the 2021 Outstanding Security Performance Award (OSPA) in the
category “Outstanding Security Consultant.
The OSPAs recognise and reward companies and individuals across the security
sector and are designed to be both independent and inclusive, providing an
opportunity for outstanding performers, whether buyers or suppliers to be
recognised and their success to be celebrated. The criteria for these awards are
based on extensive research of key factors that contribute to and characterise
outstanding performance (Aspiring to Excellence – Perpetuity Research).
The award recognises the change in Telenor security transformation. Through this
work, security has become an integrated part of Telenor’s business and technology
strategy, and the results are measured through two strategic KPI’s for security
culture and maturity at the Board level.
| Sustainability Report | Annual Report 2021 | 70
Key ESG figures
2018
2019
2020
2021
ENVIRONMENTAL
Climate
Total GHG emissions (thousand tonnes CO
2
e) (Market based
CO
2
1,297*
5,355
4,727
5,145
Direct GHG emissions/Scope 1 (thousand tonnes CO
2
e)
212
203
167
150
Indirect GHG emissions /Scope 2 (thousand tonnes CO
2
e)
1,085
1,000
1,069
954
Other indirect GHG emissions/Scope 3 (thousand tonnes
CO
2
e)
0
4,152
3,491
4,040
Scope 1+2 GHG emissions - change from science-based
target Baseline year 2019 (%)
0
0
3
(8)
Asia Scope 1+2 GHG emissions
1,085
1,047
1,025
1,070
Nordic Scope 1+2 GHG emissions
211
169
212
35
Scope 1+2 GHG emissions per mobile data traffic (tonnes
CO2e / petabyte)
273
165
108
78
Total energy use (GWh)
3,174
3,238
3,242
3,345
Number of new solar base stations
0
500
798
280
Environment
Total electronic waste recycled/reused (%)
86
99
99
100
Devices returned through take back programmes
0
0
0
524,010
Recovered materials reused (%)
0
0
0
83
Recovered materials recycled (%)
0
0
0
17
Recovered materials landfilled (%)
0
0
0
0
SOCIAL
Digital skills
Mobile Internet users (% of active data users)
0
57
58
58
Child birth registrations (total – Pakistan and Myanmar)
433,189
1,266,507
1,728,263
2,560,266
Children trained in online safety (total)***
2,200,000
3,300,000
4,480,825
5,337,112
Diversity and Inclusion
Women in total workforce (%)
37
37
38
38
Women in management positions (%)
28
30
32
32
Non-Nordic leaders in senior leadership positions (%)
0
0
34
36
Aggregate salary ratio female/ male (%)
0
0
0
85
Health, Safety, People Security and Wellbeing
Fatalities – employees
0
0
0
0
Fatalities – suppliers, Tier 1 and below
4
5
5
2
Fatalities – 3rd party
4
0
1
0
Lost Time Injury Frequency (LTIF)
0.22
0.17
0.06
0.20
Sickness Absence Rate (full year average) (%)
1.82
1.85
1.57
1.65
06
| Sustainability Report | Annual Report 2021 | 71
GOVERNANCE
Supply Chain Sustainability
Capacity building of suppliers (man-hours)
20,028
24,986
24216
34,716
Sustainability inspections
3,515
3,616
3560
3,559
% of inspections that were unannounced
87
86
52
45
No of major non-conformities
451
651
1,054
442
No of minor non-conformities
1,170
1,398
1,475
1,066
Supply Chain Sustainability Inspections - Closure rate (%)
86
75.8
79
95
Child labour
0
0
0
0
Underage labour in hazardous conditions
5
7
1
7
Compliance and Anti-corruption
No of concerns reported through the Integrity Hotline****
558
655
461
550
% of reports classified as compliance incidents
70
51
50
41
% of reports from the Integrity Hotline that were submitted
anonymously
37
38
39
41
Code of conduct training (%)
0
100
100
100
Cyber security
Telenor employees who completed basic security training
(%)
0
0
99
96
*Not including Scope 3
** Following publication of Telenor’s science-based targets in 2021, the company now reports Scope 3 emissions across all categories that were confirmed
material when validating these the targets.
*** Number for Children Trained in Online Safety number for 2020 has been adjusted, following inclusion of backlog data that became available after the 2020
Sustainability report was published.
****Historical data from the Integrity hotline has been revised to exclude reports from Telenor Microfinance Bank (TMB), which is a joint venture between
Telenor and Ant Financial
| Sustainability Report | Annual Report 2021 | 72
Reporting frameworks and
verification:
GRI index
Telenor reports its sustainability performance in
accordance with the Consolidated Set of GRI
Sustainability Reporting Standards. Telenor’s GRI index
can be found on link
SASB
Telenor has also adopted the SASB reporting framework.
With a growing interest for how sustainability factors
influence the company’s business activities and financial
position, this is a useful supplement to the already
implemented ESG reporting standards.
Telenor is classified by SASB in the Telecommunications
Services industry category under the Technology and
Communications sector. SASB’s Materiality Map identifies
sustainability issues that are likely to affect the financial
condition or operating performance of companies within
an industry. The SASB report can be found on
Telenor.com.
UN Global Compact Principles and
Sustainable Development Goals
Telenor fully supports the UN Global Compact Principles in
the areas of Human Rights, Labour, Environment and Anti-
corruption and reports its Communication on Progress
(COP) to the United Nations Global Compact (UNGC),
meeting the requirements of the UNGC Active Level.
Telenor supports the UN Sustainable Development Goals
(SDGs) and has prioritized 5 SDGs where it believes it can
have the most impact.
EU Taxonomy
Telenor is closely monitoring the EU developments on
Sustainable Finance Disclosure (SFDR) 2019/2088 and EU
Taxonomy Regulation 2020/852. The company has
engaged in a process to analyse to what extent and how
Telenor’s operations align with the EU Taxonomy.
Currently, these is a consensus among the majority of the
members of ETNO that the major part of
telecommunication activities are not eligible as per date, in
the Scope of the Taxonomy. The Taxonomy Climate
Delegated Act is however a living document and will
continue to evolve over time, with more activities being
added to its Scope, including enabling activities. Telenor
estimate that approximately 1 percent of its total
revenues, mainly related to IOT, are eligible as per
December 31, 2021.
CDP and TCFD
Telenor also reports to the Carbon Disclosure Project
(CDP) and in line with the Task Force on Climate-related
Financial Disclosures (TCFD). The reports can be found on
Telenor.com.
Reporting boundaries
This report includes disclosures and data from companies
under the operational control of Telenor ASA. Data from all
BUs where Telenor is a majority owner is included.
Diversity and Inclusion data excludes data from Telenor
Myanmar.
Mobile Internet users (% of active data users) data
excludes data from Telenor Myanmar.
Climate and Environment
•
Climate and environment data excludes the impact of
suppliers and the life-cycle-perspectives of activities
is excluded (e.g. waste management, energy
consumption and environmental impact of products
and services purchased by BUs, etc.).
•
Following publication of Telenor’s science-based
targets in 2021, the company now reports Scope 3
emissions across all categories that were confirmed
material when validating these targets. As such, the
Scope 3 emissions data are not comparable to data
reported in the previous years.
07
| Sustainability Report | Annual Report 2021 | 73
•
External reporting on Municipal waste recycled has
been discontinued as it is not defined as a material
area for Telenor; All Telenor business units are
required to establish and maintain an Environmental
Management System (EMS) according to the ISO
14001 standard, which requires that all business units
shall secure sustainable waste management,
including reducing resource consumption, reusing or
refurbishing own equipment rather than disposing it,
and promoting reuse and recycling of products
offered to customers.
•
Total energy use (GWh) reflects Scope 1 and 2
boundaries
•
External reporting on Customer mobile phones and
batteries collected for recycling or reuse has been
discontinued and replaced by reporting on the
number of devices returned through take back
programmes. These consist of mobile devices such as
smartphones and fixed CPE devices such as TV boxes
and broadband routers
For small Telenor entities, accounting for less than 3
percent ESG of parent company or less than 3 percent of
the total number of employees of the parent company,
and for companies which have no significant and material
impact on the ESG performance of the Telenor Group, the
following applies:
•
The ESG data of small Telenor entities is included in
the ESG reporting of the parent company, if these
companies are co-located and there is no system in
place to measure their impact separately from the
parent company`s impact (e.g. employees sharing the
same office space; there is no infrastructure for
separate energy metering; etc).
•
The ESG impact of small Telenor entities is excluded
from the ESG reporting of the parent company, if
these companies are operating in separate locations
and there is a system in place to measure the ESG
impact of the two entities separately (e.g. metering,
separate utility invoices, etc.).
Data from joint ventures is included if the ESG impact is
essential to Telenor`s core business and is also reflected in
Telenor’s financial accounts. The reporting includes only
the Telenor relevant ESG impact of the joint venture,
including but not limited to, energy consumption, energy
cost and CO2 emissions (Scope 1 and 2).
In case where business units have outsourced functions to
independent company the reporting shall include the ESG
impact of outsourced functions that are essential to
Telenor`s core business and reflected in Telenor's financial
accounts and the aggregated ESG impact is more than
3percent of the BUs total impact. The impact of different
sub-contractors delivering services related to the same
business functions is aggregated.
The same applies in cases of outsourcing functions to a
company with Telenor ownership. The ESG impact related
to the outsourced activity shall be reported by the
business unit, where the impact of the outsourced activity
has been realized.
In case of organisational changes, the ESG reporting is
aligned with the financial reporting.
Targets
In view of material change to company ownership
structure, the targets as set out in this report might be
revised to better reflect the structural organization of
Telenor Group and its business units.
Verification
DNV’s Independent Limited Assurance Report can be
found on Telenor.com.
| Financial Statements Telenor Group | Annual Report 2021 | 74
Consolidated Income Statement
Telenor Group 1 January – 31 December
NOK in millions, except earnings per share
Note
2021
2020
Revenues
6
Cost of materials and traffic charges
7
(29,176 )
(29,037 )
Salaries and personnel costs
8
(10,457 )
(11,152 )
Other operating expenses
9
(21,446 )
(23,302 )
Other income
10
Other expenses
10
(1,960 )
(2,480 )
EBITDA
Depreciation and amortisation
17, 18, 19
(25,868 )
(26,298 )
Impairment losses
15, 17, 18, 19
(11 )
Operating profit
Share of net income (loss) from associated companies and joint ventures
20
(480 )
(414 )
Gains (losses) on disposal of associated companies and joint ventures
20
Financial income and expenses
Financial income
12
Financial expenses
12
(3,553 )
(4,081 )
Net currency gains (losses)
12
(1,066 )
Other changes
12
(727 )
Net financial income (expenses)
(3,962 )
(3,331 )
Profit before taxes
Income taxes
13
(5,740 )
(6,419 )
Profit from continuing operations
Profit (loss) from discontinued operations
4
(6,753 )
Net income
Net income attributable to:
Non-controlling interests
Equity holders of Telenor ASA
Earnings per share in NOK:
Basic/diluted from continuing operations
14
Basic/diluted from discontinued operations
14
(4.83 )
Basic/diluted from total operations
14
| Financial Statements Telenor Group | Annual Report 2021 | 75
Consolidated Statement of Comprehensive
Income
Telenor Group 1 January – 31 December
NOK in millions
Note
2021
2020
Net income
Other comprehensive income (loss)
Translation differences on net investment in foreign operations
24
(3,514 )
Amount reclassified from other comprehensive income to income statement on partial disposal
24
(133 )
Net gain (loss) on hedge of net investment
24, 29
(3,587 )
Income taxes
(538 )
Share of other comprehensive income (loss) of associated companies and joint ventures
( 4 )
Amount reclassified from other comprehensive income to income statement on disposal
( 3 )
Items that may be reclassified subsequently to income statement
(1,529 )
(530 )
Net gain (loss) on equity investments
24
Remeasurement of defined benefit pension plans
24, 26
(416 )
Income taxes
(57 )
Items that will not be reclassified to income statement
(280 )
Other comprehensive income (loss), net of taxes
(1,186 )
(810 )
Total comprehensive income (loss)
Total comprehensive income (loss) attributable to:
Non-controlling interests
Equity holders of Telenor ASA
| Financial Statements Telenor Group | Annual Report 2021 | 76
Fornebu, 21 March 2022
Consolidated Statement of Financial Position
Telenor Group as of 31 December
NOK in millions
Note
2021
2020
ASSETS
Deferred tax assets
13
Goodwill
15, 16
Intangible assets
17
Right-of-use assets
18
Property, plant and equipment
19
Associated companies and joint ventures
20
Other non-current assets
22
Total non-current assets
Prepaid taxes
Inventories
Trade and other receivables
21
Other current financial assets
22
Assets classified as held for sale
4
Cash and cash equivalents
23
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity attributable to equity holders of Telenor ASA
24
Non-controlling interests
24
Total equity
Liabilities
Non-current lease liabilities
18
Non-current interest-bearing liabilities
28
Non-current non-interest-bearing liabilities
27
Deferred tax liabilities
13
Pension obligations
26
Provisions and obligations
25
Total non-current liabilities
Current lease liabilities
18
Current interest-bearing liabilities
28
Trade and other payables
27
Current tax payables
Current non-interest-bearing liabilities
27
Provisions and obligations
25
Liabilities classified as held for sale
4
Total current liabilities
Total equity and liabilities
| Financial Statements Telenor Group | Annual Report 2021 | 77
Consolidated Statement of Cash Flows
Telenor Group 1 January – 31 December
NOK in millions
Note
2021
2020
Profit before taxes from continuing operations
Profit (loss) before taxes from discontinued operations
4
(6,699 )
Profit before taxes
Income taxes paid
(6,113 )
(7,395 )
Net (gains) losses from disposals, impairments and change in fair value of financial assets and
(4,828 )
Depreciation, amortisation and impairment losses
Share of net (income) loss and (gains) losses on disposal of associated companies and joint ventures
Dividends received from associated companies
Net interest expense
Changes in net operating working capital
23
Net currency (gains) losses not relating to operating activities
(919 )
Interest received
Interest paid
(2,635 )
(3,539 )
Other adjustments
(2,689 )
Net cash flow from operating activities
Proceeds from sale of property, plant and equipment, intangible assets and right-of-use assets
Purchases of property, plant and equipment, intangible assets and prepayments for right-of-use
23
(19,447 )
(19,000 )
Proceeds from disposal of subsidiaries and associated companies, net of cash disposed
23
Purchases of subsidiaries, associated companies and joint ventures, net of cash acquired
23
(391 )
(340 )
Proceeds from sale of other investments
Purchases of other investments
(150 )
(364 )
Net cash flow from investing activities
(17,228 )
(10,565 )
Proceeds from borrowings
23
Repayments of borrowings
23
(29,399 )
(33,257 )
Payments of lease liabilities related to spectrum licences
23
(2,871 )
(3,634 )
Payments of lease liabilities related to other lease contracts
23
(5,955 )
(5,395 )
Net payments related to supply chain financing
(1 )
(89 )
Purchase of treasury shares
29
(4,161 )
Dividends paid to non-controlling interests in subsidiaries
23
(3,551 )
(3,202 )
Dividends paid to equity holders of Telenor ASA
24
(12,595 )
(12,277 )
Net cash flow from financing activities
(27,903 )
(27,583 )
Effects of exchange rate changes on cash and cash equivalents
(245 )
Net change in cash and cash equivalents
(3,103 )
Cash and cash equivalents as of 1 January
Cash and cash equivalents as of 31 December
Of which cash and cash equivalents in assets held for sale as of 31 December
4
Cash and cash equivalents excluding assets held for sale as of 31 December
23
| Financial Statements Telenor Group | Annual Report 2021 | 78
Consolidated Statement of Changes in Equity
Telenor Group – for the years ended 31 December 2020 and 2021
Attributable to equity holders of Telenor ASA
NOK in millions
Paid-in
capital
Other
reserves
Retained
earnings
Cumulative
translation
differences
Total
Non-
controlling
interests
Total equity
Equity as of 1 January 2020
(17,792 )
(2,746 )
Net income for the period
Other comprehensive income (loss) for the period
(268 )
(435 )
(703 )
(106 )
(810 )
Total comprehensive income (loss) for the period
(268 )
(435 )
Disposal of equity investments at fair value through other comprehensive
income
(4 )
Equity adjustments in associated companies
Dividends
(12,277 )
(12,277 )
(3,304 )
(15,581 )
Share buyback
(139 )
(3,974 )
(4,113 )
(4,113 )
Share-based payment, exercise of share options and distribution of shares
Equity as of 31 December 2020
(22,014 )
(3,181 )
Net income for the period
Other comprehensive income (loss) for the period
(1,446 )
(1,031 )
(155 )
(1,186 )
Total comprehensive income (loss) for the period
(1,446 )
Transactions with non-controlling interests
(1 )
(1 )
(1 )
(2 )
Equity adjustments in associated companies
Dividends
(12,595 )
(12,595 )
(3,296 )
(15,891 )
Share-based payment, exercise of share options and distribution of shares
Equity as of 31 December 2021
(21,530 )
(4,627 )
See note 24 for additional equity information.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 79
Notes to the Financial Statements
Telenor Group
Contents notes
1
General information, compliance and changes in
21
Trade and other receivables
International Financial Reporting Standards
22
Other non-current assets and current financial assets
2
Summary of significant accounting policies
23
Additional cash flow information
3
Critical accounting judgments and key sources of
24
Additional equity information
estimation uncertainty
25
Provisions and obligations
4
Held for sale and discontinued operations
26
Pension obligations
5
Segments
27
Trade and other payables and non-interest-bearing
6
Disaggregation of revenues
liabilities
7
Costs of materials and traffic charges
28
Interest-bearing liabilities
8
Salaries and personnel costs
29
Financial risk management
9
Other operating expenses
30
Fair values of financial instruments
10
Other income and other expenses
31
Guarantees
11
Research and development costs
32
Contractual commitments
12
Financial income and expenses
33
Related parties
13
Income taxes
34
Legal disputes and contingencies
14
Earnings Per Share
35
Key management compensation and fees to external
15
Goodwill
auditor
16
Impairment testing
36
Number of shares, authorisations, ownership etc.
17
Intangible assets
37
COVID-19
18
Leases
38
Events after the reporting period
19
Property, plant and equipment
20
Associated companies and joint arrangements
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 80
NOTE 1
General information, compliance, and changes in International Financial Reporting
Standards
General information
Telenor ASA (the Company) is a public limited liability company
incorporated in Norway. The Company is subject to the provisions of
the Norwegian Act relating to Public Limited Liability Companies. The
Company’s principal offices are located at Snarøyveien 30, N-1360
Fornebu, Norway. Telephone number: +47 67 89 00 00. Telenor is a
telecommunication company and the principal activities of the
Company and its subsidiaries (the Group) are described in Note 5
Segments.
These consolidated financial statements have been approved for
issuance by the Board of Directors on 21 March 2022 and is subject to
approval by the Annual General Meeting on 11 May 2022.
Statement of compliance
As required by the European Union’s IAS Regulation and the Norwegian
Accounting Act, the Company has prepared its consolidated financial
statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU). References to
IFRS hereafter should be construed as references to IFRS as adopted by
the EU.
The accounting policies applied are consistent with those applied in the
previous financial year, except for the implementation of new and
revised accounting standards as described below.
Adoption of new and revised standards, amendments and
interpretations
The below amendments have been adopted with effect from 1 January
2021:
●
Amendments to IFRS 9
Financial Instruments,
IAS 39
Instruments Recognition and Measurement
and
IFRS 7
Instruments: Disclosures (phase 2)
. The amendments include
requirements related to accounting of financial instruments when
the contractual cash flow changes as an effect of a changed
benchmark rate, including the impact on the hedge accounting and
disclosures.
●
Amendment to IFRS 16
Covid-19
Related Rent Concessions beyond
30 June 2021
. The amendment permits lessees, as a practical
expedient, not to assess whether particular rent concessions
occurring as a direct consequence of the COVID-19 pandemic are
lease modifications and instead to account for those rent
concessions as if they are not lease modifications. The amendment
may be applied for annual reporting periods beginning on or after 1
April 2021, earlier application is permitted. The amendment
extended the application period for the same practical expedient
permitted through the amendment to IFRS 16
Covid-19
Related Rent
Concessions
, adopted by the Group with effect from 1 January
2020.
None of the amendments implemented with effect from 1 January 2021
has had a significant impact on the Group’s consolidated financial
statements. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective, except for Amendment to IFRS 16
Covid-19 Related Rent
Concessions beyond 30 June 2021.
At the date of authorisation of these financial statements, the following
amendments that could affect the Group’s consolidated financial
statements were issued:
●
Amendments to IAS 37
Provisions, Contingent Liabilities and
Contingent Assets: Onerous Contracts - Cost of Fulfilling a Contract
(effective from 1 January 2022). These narrow-scope amendments
specify which costs an entity includes in determining the cost of
fulfilling a contract for the purpose of assessing whether the
contract is onerous.
These amendments will be implemented with effect from 1 January
2022. They are not expected to have a significant impact on the Group’s
consolidated financial statements.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 81
Mandatory concepts
Name of reporting entity:
Domicile of entity:
Legal form of entity:
Country of incorporation:
Address of entity's registered office:
Principal place of business:
Description of nature of entity's operations and principal activities:
Name of parent entity:
Name of ultimate parent of group:
NOTE 2
Summary of significant accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a
historical cost basis, except for equity investments (primarily
shareholdings of less than 20%) and derivative financial instruments,
which are carried at fair value.
The consolidated financial statements are presented in Norwegian
Kroner (NOK). Amounts are rounded to the nearest million, unless
otherwise stated. As a result of rounding adjustments, amounts and
percentages may not add up to the total.
Basis of consolidation and non-controlling interests
The consolidated financial statements include the financial statements
of Telenor ASA and entities controlled by Telenor ASA (the Group).
Control is achieved when the company is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
Control normally exists when the Group has more than 50% of the
voting power through ownership or agreements, except where non-
controlling interests are such that a non-controlling shareholder is able
to prevent the Group from exercising control.
In addition, control may exist without having 50% voting power through
ownership or agreements as a consequence of de facto control. De
facto control is the ability to exercise control through the majority of the
votes at the General Meeting and at the Board of Directors meeting,
without the legal right to exercise unilateral control. Control may also
exist through potential voting rights, such as options. Such potential
voting rights are only considered if they are substantive.
The financial statements of the subsidiaries are prepared for the same
reporting periods as the parent company. Consistent accounting
policies are applied. The results of subsidiaries acquired or disposed of
during the year are included in the income statement from the date
when control is obtained and until control ceases, respectively.
Intercompany transactions, balances, revenues, expenses and
unrealised Group internal profit or losses are eliminated on
consolidation.
Non-controlling interests in subsidiaries are presented within equity
separately from the equity attributable to the owners of the parent.
Non-controlling interests consist either of the proportionate fair value
of net identifiable assets or of fair value of those interests at the date of
the business combination, and the non-controlling interests’ share of
changes in equity since the date of the business combination. The
principle for measuring non-controlling interests is determined
separately for each business combination. Currently, all non-controlling
interests have been measured at the proportionate fair value of net
identifiable assets at the date of the business combination.
In some circumstances the Group has, in substance, present ownership
over non-controlling interests based on a transaction that currently
gives the Group access to the returns associated with an ownership
interest. In such circumstances, the Group derecognises the non-
controlling interest, and recognises a financial liability reflecting the
value of the redemption amount. This may for example be the case if
put and call options related to the non-controlling shares are issued on
terms effectively giving the Group access to the returns associated with
ownership interest in these shares.
A change in ownership interest of a subsidiary, without a loss of control,
is accounted for as an equity transaction. Consideration in excess of, or
lower than, the carrying amount of non-controlling interests is
recognised against the equity attributable to the owners of the parent. If
the Group loses control over a subsidiary it derecognises the assets,
liabilities and non-controlling interest, and reclassifies to profit or loss,
or transfers directly to retained earnings as appropriate, the amounts
recognised in other comprehensive income in relation to the subsidiary.
Any investment retained at the date when control is lost is measured at
fair value and a gain/loss is recognised.
Foreign currency translation
The consolidated financial statements are presented in NOK, which is
Telenor ASA’s functional currency. Transactions in foreign currencies
are initially recognised in the functional currency at the exchange rate
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated to the functional
currency using the exchange rate at the reporting date. All exchange
differences are recognised in the income statement with the exception
of exchange differences on foreign currency borrowings that provide
an effective hedge against a net investment in a foreign entity, or
monetary items that are regarded as a part of the net investments.
These exchange differences are recognised as a separate component
of other comprehensive income until the disposal of the net investment
or settlement of the monetary item, at which time they are recognised
in the income statement. Tax charges and credits attributable to
exchange differences on those borrowings are also recognised in other
comprehensive income. Non-monetary items measured at historical
cost in foreign currency are translated using the exchange rates at the
dates of the initial transactions. The date of initial transaction for non-
monetary assets on which the Group has paid an advance
consideration is the date of the payment of the advanced
consideration.
The Group has foreign entities with functional currency other than NOK.
At the reporting date, the assets and liabilities of foreign entities with
functional currencies other than NOK are translated into NOK at the rate
of exchange at the reporting date and their income statements are
translated at the average exchange rates for the year. The translation
differences arising from the translation are recognised in other
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 82
comprehensive income until the disposal of the net investment, at
which time they are recognised in the income statement.
Current/non-current classification
An asset is classified as current when it is expected to be realised, or is
intended for sale or consumption, in the Group’s normal operating
cycle, it is held primarily for the purpose of being traded, or it is
expected/due to be realised or settled within twelve months after the
reporting date. Other assets are classified as non-current. A liability is
classified as current when it is expected to be settled in the Group’s
normal operating cycle, is held primarily for the purpose of being
traded, the liability is due to be settled within twelve months after the
reporting period or if the Group does not have an unconditional right to
defer settlement of the liability for at least twelve months after the
reporting period. All other liabilities are classified as non-current.
Financial instruments, other than those held for trading, are classified
based on maturity, and hedging instruments are classified consistently
with the underlying hedged item.
Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups are classified as held for sale if
their carrying amounts will be recovered principally through sale rather
than continuing use. This also applies for situations where the Group
continues its operations but loses control over the operation. Non-
current assets and disposal groups classified as held for sale are
measured at the lower of their carrying amount and fair value less cost
to sell and presented separately as assets held for sale and liabilities
held for sale in the statement of financial position.
The criteria for held for sale classification is regarded as met only when
the sale is highly probable, and the asset or disposal group is available
for immediate sale in its present condition. Actions required to
complete the sale should indicate that it is unlikely that significant
changes to the plan will be made or that the plan to sell will be
withdrawn. In addition, management must be committed to the plan,
and must be expected that the sale will be completed within a year.
Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale. The equity
method is discontinued for associated companies classified as held for
sale.
A disposal group qualifies as discontinued operation if it is a cash
generating unit that has either been disposed of, or is classified as held
for sale, and represent a separate major line of business or
geographical area of operations. Discontinued operations are excluded
from the results of continuing operations and are presented as a single
amount as profit or loss after tax from discontinued operations in the
income statement. All consolidation procedures as presented above
are still applicable, and only external revenues and expenses are shown
as discontinued operations.
Operations previously classified as discontinued operations which
cease to be held for sale are reclassified and included in continuing
operations with retrospective effect. Comparative information in
statements and disclosures are re-presented.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition
method. Acquisition costs incurred are expensed and included in
operating expenses. When the Group acquires a business, it assesses
the identifiable assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual
terms, economic circumstances, and relevant conditions as of the
acquisition date.
The acquiree’s identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition are recognised at their fair
values at the acquisition date, except for non-current assets that are
classified as held for sale and recognised at fair value less cost to sell,
and deferred tax assets and liabilities which are recognised at nominal
value.
Goodwill arising on acquisition is recognised as an asset measured at
the excess of the sum of the consideration transferred, the fair value of
any previously held equity interests and the amount of any non-
controlling interests in the acquiree over the net amounts of the
identifiable assets acquired and the liabilities assumed. If, after
reassessment, the Group’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities exceeds the total
consideration of the business combination, the excess is recognised in
the income statement immediately.
Any contingent consideration will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of contingent
consideration which is not classified as equity will be recognised in the
income statement as financial income or expense. If the contingent
consideration is classified as equity, it will not be remeasured, and
subsequent settlement will be accounted for within equity.
If the business combination is achieved in stages, the Group’s
previously held non-controlling interest in the acquiree is remeasured at
fair value at the acquisition date through the income statement.
Investments in associated companies
An associated company is an entity over which the Group has
significant influence and that is not a subsidiary or a joint arrangement.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but without the ability to have
control over those policies. Significant influence normally exists when
the Group has 20% to 50% voting power through ownership or
agreements. Investments in associated companies are accounted for
using the equity method.
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group
and other parties undertake an economic activity that is subject to joint
control. That is when the strategic financial and operating policy
decisions relating to the activities of the joint arrangement require the
unanimous consent of the parties sharing control. If the parties to the
joint arrangement have rights to the net assets of the arrangement, the
arrangement is classified as a joint venture. If the parties have rights to
the assets and obligations for the liabilities relating to the arrangement,
the arrangement is classified as a joint operation.
In relation to its interest in a joint operation, the Group recognises its
assets, including its share of assets held jointly, its liabilities, including
its share of liabilities incurred jointly, its revenues and its expenses,
including its share of revenues earned and expenses incurred jointly.
Adjustments are made where necessary to bring the accounting
policies in line with those of the Group. The accounting for joint
operations structured through separate vehicles reflects the Group’s
involvement in the assets and liabilities and not the joint operations
involvement with other joint operators.
Any goodwill arising on the acquisition of the Group’s interest in a joint
operation is accounted for in accordance with the Group’s accounting
policy for goodwill arising on the acquisition of a subsidiary (see above).
Where the Group transacts with its joint operation, unrealised profits
and losses are eliminated to the extent of the Group’s interest in the
joint operation.
Interests in joint ventures are accounted for using the equity method.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 83
Equity method
The results, assets and liabilities of associated companies and joint
ventures are accounted for using the equity method. Under the equity
method, investments are carried in the consolidated statement of
financial position at cost and adjusted for post-acquisition changes in
the Group’s share of the net assets of the investees (i.e. total
comprehensive income and equity adjustments), less any impairment in
the value of the investments. Adjustments are made where necessary
to bring the accounting policies in line with those of the Group. Losses
in excess of the Group’s interest in such companies, including any long-
term loans and receivables that, in substance, form part of the Group’s
net investment, are not recognised unless the Group has incurred legal
or constructive obligations, or made payments on behalf of these
associated companies or joint ventures.
Any goodwill is included in the carrying amount of the investment and is
assessed for impairment as part of the investment. At each reporting
date the Group evaluates if there are indications that the investment
may be impaired. If there are such indications, the recoverable amount
of the investment is estimated in order to determine the extent of the
impairment (if any).
Where a Group entity transacts with an associate or joint venture of the
Group, unrealised profits or losses are eliminated or deferred to the
extent of the Group’s interest in the relevant associated company or
joint venture.
The share of net result, including amortisation of excess values,
impairments, and reversals of impairments, is presented as a separate
line item in the income statement between operating profit (loss) and
financial items. Gains and losses on disposals are presented separately.
The share of other comprehensive income is recognised in the Group’s
comprehensive income. Other equity adjustments in the investees are
recognised in the statement of changes in equity.
Financial statements as of the reporting date are for some investments
not available before the Group issues its quarterly financial information.
In such instances, the share of net income of the investment is
recognised in the consolidated financial statements with a one quarter
lag. Adjustments are made for the effects of publicly available
information on significant transactions or events that occur between
the latest interim financial reporting of the investee and the date of the
consolidated financial statements of the Group. To ensure consistency
in reporting in Quarterly and Annual Reports, the figures in the Annual
Report are not updated in situations where the financial statements for
the investee are made available between the issuance of the quarterly
report for the fourth quarter and the issuance of the Annual Report,
unless the financial statements of the investee contains information
about significant transactions or events.
Goodwill
Goodwill arising in a business combination is not amortised. Goodwill
does not generate cash flows independently of other assets or groups
of assets and is allocated to the cash-generating units (defined below)
expected to benefit from the synergies of the combination that gave
rise to the goodwill. Cash-generating units to which goodwill has been
allocated are tested for impairment annually or more frequently if there
is any indication that the cash-generating unit may be impaired.
Impairment is recognised if the recoverable amount (the higher of fair
value less costs of disposal and value in use) of the cash-generating unit
is less than the carrying amount of the cash-generating unit. The
impairment first reduces the carrying amount of any goodwill and then
reduces the carrying amount of the other assets of the unit pro-rata.
The carrying amount of any individual asset is not reduced below its
individual recoverable amount or zero. Any impairment is presented as
impairment in the income statement.
An impairment recognised for goodwill is not reversed if the
recoverable amount of the cash-generating unit exceeds the carrying
amount in a subsequent period. On disposal of businesses, the
attributable amount of goodwill is included in the determination of gain
or loss on disposal.
Cash-generating units
A cash-generating unit is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets. In identifying whether cash
inflows from an asset (or group of assets) are largely independent of the
cash inflows from other assets (or groups of assets), management
considers various factors including how management monitors the
entity’s operations (such as by product or service lines, businesses or
geographical areas). Goodwill is monitored and tested for the group of
cash-generating units combined in markets where the fixed and mobile
operations are monitored and reported as one operating segment. The
group of cash-generating units is in any case not larger than an
operating segment determined in accordance with IFRS 8 Operating
Segments.
Revenue from contracts with customers
Revenues from contracts with customers primarily comprise sale of
●
Services: subscription and traffic fees, connection fees,
interconnection fees, roaming charges, fees for data network
services and fees for TV distribution and satellite services.
●
Goods: customer equipment, primarily mobile devices/phones.
Recognition and measurement
When the Group enters into an agreement with a customer, the goods
and services promised in the contract are identified as separate
performance obligations to the extent that the customer can benefit
from the goods or services either on their own or together with other
resources that are readily available to the customer, and that the goods
and services are separately identifiable from other promises in the
contract. Goods and services that do not meet the criteria to be
identified as separate performance obligations are aggregated with
other goods and/or services in the agreement, until a separate
performance obligation is identified. Examples of goods and services
which are normally considered to be distinct performance obligations
within the Group are mobile and fixed line subscription plans, handsets
and other equipment and set-top boxes.
The Group determines the transaction price to be the amount of
consideration which it expects to be entitled in exchange for
transferring the promised goods and services to the customer, net of
discounts and sales related taxes. Sales related taxes are regarded as
collected on behalf of the authorities. The Group adjusts the transaction
price for a significant financing component if, at contract inception, the
expected period between the transfer of a good or service to the
customer and when the customer pays for that good or service is more
than one year, unless the timing of the transfer of those goods or
services is at the discretion of the customer (i.e. prepaid services). The
discount rate used reflects the relevant risk-free rate and customer
specific credit risk. In some markets where discounted handsets and
subscriptions are sold through external channels, the Group is the
principal in the subscription sale only, while the discounted handset is
regarded as sold by the dealer.
If the consideration promised in a contract includes a variable amount,
the Group estimates the amount of consideration which it expects to be
entitled. An amount of variable consideration is included in the
transaction price to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur
when the uncertainty associated with the variable consideration is
subsequently resolved. When the Group sells a handset with an option
for the customer to buy a new handset before the original instalment
period is over, without paying the remaining instalments on original
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 84
handset, the consideration related to the handset included in the
current contract is estimated based on the expected value approach. If
the Group is obliged to accept return of the original handset, the Group
recognises a refund liability reflecting the amount of consideration the
Group expects not to be entitled to, and a return good asset (with a
corresponding adjustment to cost of sales) for its right to recover the
handsets returned on settling the refund liability. The new device is
accounted for as a new, separate contract.
The transaction price is allocated to each performance obligation in the
contract on a relative stand-alone selling price basis. The stand-alone
selling price for each performance obligation is determined according
to the prices that the Group would achieve by selling the same goods or
services to a similar customer on a stand-alone basis. Except when the
Group has observable evidence that the entire discount included in a
contract relates to only one or more, but not all, performance
obligations in a contract, the Group allocates the discount
proportionately to all performance obligations in the contract.
Revenue is recognised when the respective performance obligations in
the contract are satisfied and payment remains probable. Revenue
from sales of customer equipment, such as handsets or other devices,
is normally recognised at the point in time when the equipment is
transferred to customer, including the related significant risks and
rewards of ownership. Revenue from the provision of services is
generally recognised over time when or as the Group performs the
related service during the agreed service period, by measuring
progress towards complete satisfaction of the performance obligation.
The effects of significant financing components are recognised over
the payment period. Revenues for prepaid services are recognised
based on usage.
Presentation and impairment
If recognised revenue exceeds amounts received or receivable from a
customer, a contract asset is recognised. For the Group, this will for
example be relevant for contracts where the transaction price allocated
to a handset or other customer equipment is recovered by the Group
through future service fee payments. If amounts received or receivable
from a customer exceed revenue recognised for a contract, for
example if the Group receives an advance payment from a customer, a
contract liability is recognised. This will typically be relevant for prepaid
services, where revenue is recognised based on usage.
Contract assets and contract liabilities are expected to be realised
within in the Group’s normal operating cycle and are classified as
current within trade and other receivables and trade and other payables
respectively. Contract assets are adjusted for provision for impairment
in accordance with the expected credit loss model. The Group applies
the simplified approach for contract assets, measuring the loss
allowance at an amount equal to lifetime expected credit losses.
Impairment for expected credit losses is recognised in the income
statement and updated at each reporting date. The impairment is
calculated by considering the historic evidence of the level of bad debt
experienced for customer types.
Contract assets are transferred to receivables when rights become
unconditional. Receivables from contracts with customers are
presented separately from contract assets. The effects of significant
financing components are presented as interest income, separately
from revenue from contracts with customers in the statement of
comprehensive income.
When another party is involved in providing goods or services to a
customer, the Group evaluates whether it has an obligation to provide
the specified goods or services itself (i.e. the Group is a principal) or to
arrange for those goods or services to be provided by the other party
(i.e. the Group is an agent). Where the Group acts as a principal, the
revenues are recognised on a gross basis with any related expenses
charged as costs. Where the Group acts as an agent, the expenses are
offset against the revenues and the resulting net revenues represent
the margins or commissions earned for providing services in the
capacity of an agent.
Revenues from roaming are recognised gross and in line with generally
accepted accounting principles within the telecommunications
industry.
Licence payments to telecommunications authorities that are
calculated based on revenue share arrangements are not offset against
the revenues. Instead, they are recognised as variable lease expense
because the Group is considered to be the primary obligor.
Costs of obtaining or fulfilling contracts with customers
Costs incurred that are incremental to obtaining a contract with a
customer, and are expected to be recovered, are recognised as
contract acquisition cost assets, and amortised in a way that is
consistent with the recognition of the related revenue. Contract
acquisition costs include, for example, certain commissions or bonuses
to employees or dealers, directly related to the contracts obtained on
behalf of the Group.
Costs directly related to fulfilling a specified contract with a customer,
which generate or enhance resources that will be used in fulfilling the
performance obligations in the contract, are recognised as contract
fulfilment cost assets to the extent they are expected to be recovered.
The costs are expensed in the period in which the related revenue is
recognised. Contract fulfilment costs include, for example, costs
incurred for connection and installation of equipment on customer
premises, including direct labour and material costs.
Contract acquisition and fulfilment cost assets are presented as other
non-current assets. The amortisation period normally covers the
expected customer life, which is the contractual period and additional
expected renewal periods assessed based on historical churn data,
unless new costs are incurred on contract renewals. These costs are
included in EBITDA. The Group applies the practical expedient of not
capitalising contract costs that would have been amortised within 12
months.
Interest and dividend income
Interest income is accrued on a time proportionate basis that reflects
an effective yield on the asset. Interest income is included in financial
income in the income statement. Dividend income from investments is
recognised when the Group’s rights to receive payment have been
established (declared by the General Meeting or otherwise) and
classified as financial income.
Government Grants
Government grants are recognised when there is reasonable assurance
that the grant will be received, and all attached conditions will be
complied with. When the grants relate to an expense item, it is normally
recognised as a reduction of the expense on a systematic basis over
the periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an asset, it is
presented in the statement of financial position by deducting the grant
in arriving at the carrying amount of the asset. The grant is recognised
in the income statement over the useful life of a depreciable asset as a
reduced depreciation expense.
Pensions
The Group operates various post-employment plans, both defined
benefit and defined contribution plans. The Group’s liability recognised
in the statement of financial position related to defined benefit plans is
the present value of the defined benefit obligation at the end of the
reporting period less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using the
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 85
projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating to the terms of the related
pension obligation.
The Group recognise service cost, comprising of current service cost,
past service cost and non-routine settlements, as salaries and
personnel costs in the income statement. Gains and losses on
curtailments, which also form part of service cost, are presented as
part of other income or other expenses in the income statement. Net
interest expense is recognised as financial expense in the income
statement.
Remeasurements, comprising of actuarial gains and losses and the
return on plan assets (excluding net interest), are recognised in the
statement of comprehensive income. Remeasurements are not
subsequently reclassified to the income statement.
Past service cost is recognised in the income statement on the earlier
of the date of the plan amendment or curtailment, and the date that the
Group recognises related restructuring costs. A curtailment occurs
when the Group is either demonstrably committed to make a material
reduction in the number of employees covered by a plan, or amends the
terms of a defined benefit plan such that a material element of future
service by current employees will no longer qualify for benefits or will
qualify only for reduced benefits.
Payments to defined contribution plans are expensed as incurred.
When sufficient information is not available to use defined benefit
accounting for a multi-employer plan that is a defined benefit plan, the
plan is accounted for as if it was a defined contribution plan.
Leases
Determining whether a contract is, or contains, a lease is based on the
substance of the contract and requires an assessment of whether the
contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration, i.e. whether the Group or
a lessee of the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset and has the right to
direct the use of the identified asset throughout the period of use.
The Group as lessee
The Group recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets
for all leases where it is the lessee, except for low-value leases (i.e.
leases of low-value assets, meaning mainly leased office equipment)
and short-term leases. The Group has chosen to account for right to
use spectrum as a lease. Short-term leases are leases with a lease term
of 12 months or shorter that do not contain a purchase option, except
for leases of spectrum licences. Lease payments on short-term leases
and leases of low-value assets, are recognised as expenses on a
straight-line basis over the lease term. Fixed non-lease components
embedded in the lease contracts are not separated and hence
recognised as lease liabilities and capitalised as right-of-use assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date
of the lease (i.e., the date the underlying asset is available for use). Right-
of-use assets are measured at cost, less accumulated depreciation and
impairments, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. The
cost of a right-of-use asset also includes an estimate of costs to be
incurred by the Group in dismantling and removing the underlying
leased asset, restoring the site on which it is located or restoring the
underlying leased asset to the condition required by the terms and
conditions of the lease. Unless the Group is reasonably certain to
exercise an option to obtain ownership of the leased asset at the end of
the lease term, the recognised right-of-use asset is depreciated on a
straight-line basis over the shorter of its estimated useful life and the
lease term. Right-of-use assets are subject to impairment assessments
as described further below.
For spectrum licences, the Group might sometimes pay significant
amounts up front and before the spectrum is available for the Group.
The payments will under such circumstances be accounted for as a
prepayment until commencement date.
Gains and losses arising from derecognition of right-of-use assets and
corresponding lease liabilities (i.e. cancellation, transfer or sales of
leases) are measured as the difference between the remaining net
carrying amount of the right-of-use assets and corresponding lease
liabilities, and any proceeds or termination fees, and are reported as
other income or other expenses in the income statement as part of
operating profit.
Lease liabilities
At the commencement date of the lease, the Group recognises lease
liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments less
any lease incentives receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term reflects
the Group exercising the option to terminate. The variable lease
payments that do not depend on an index or a rate are recognised as
expense in the period in which the event or condition that triggers the
payment occurs.
The Group determines the lease term as the non-cancellable term of
the lease, together with any periods covered by an option to extend the
lease if it is reasonably certain to exercise the option, or any periods
covered by an option to terminate the lease, if it is reasonably certain
not to exercise the option. For further information on judgement
applied when evaluating lease term of contracts with renewal or
termination options, see note 3.
In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. To arrive at
the incremental borrowing rate the Group applies the respective
country’s (economic environment) risk free rate for the term
corresponding to the lease term, adjusted for own credit risk. For
subsidiaries with external financing, the Group applies the external
borrowing rate corresponding to the lease term available to those
subsidiaries.
After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the Group remeasures the lease liability
upon the occurrence of certain events (e.g. a change in the lease term, a
change in future lease payments, or other modifications). Generally, the
amount of remeasurement of the lease liability is recognised as an
adjustment to the right-of-use asset.
The Group as lessor
Receivables on assets leased to others under finance leases are
presented at an amount equal to the net investment in the leases.
Finance income is allocated using a constant periodic rate of return on
the net investment over the lease term. Direct costs incurred that are
directly attributable to negotiating and arranging the leases, are
included in the receivables.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 86
Lease income from operating leases is recognised on a straight-line
basis over the lease terms. Incentives provided to the lessees are
aggregated and recognised as a reduction of income on a straight-line
basis over the lease terms. Initial direct costs incurred in negotiating
and arranging an operating lease are included in the carrying amounts
of the leased assets and recognised as an expense over the lease term
on the same basis as the lease. Contingent rents are recognised as
revenue in the period in which they are earned.
Subleases
In a transaction for which an underlying asset is re-leased by the Group
to a third party, and the head lease between the head lessor and the
Group remains in effect, the Group classifies the sublease as a finance
lease or an operating lease by reference to the right-of-use asset
arising from the head lease.
Financial instruments
A financial instrument is defined as any contract that gives rise to a
financial asset of one entity and a financial liability or equity instrument
of another entity. The Group has classified financial assets and liabilities
into the following classes: trade receivables and other current and non-
current financial assets, equity investments, cash and cash equivalents,
trade payables and other non-interest-bearing liabilities, interest-
bearing liabilities, and derivatives. The categorisation of the financial
instrument for measurement purposes is done based on the objective
for holding the asset and the asset’s contractual cash flow
characteristics determined at initial recognition. The Group does not
apply the fair value option.
The Group has financial assets classified in the following measurement
categories: financial assets at amortised cost (FAAC), financial assets at
fair value through other comprehensive income (FVTOCI), and financial
assets at fair value through profit or loss (FVTPL). In addition, derivatives
are used for hedging purposes. FAAC consist of financial assets held to
collect contractual cash flows that are solely payments of principle and
interest. Financial assets measured at FVTOCI consist of equity
investments not held for trading. Financial assets measured at FVTPL
include derivatives not designated for hedging purposes, assets held
for trading and financial assets that are not classified in one of the other
categories.
The Group has financial liabilities classified in the following categories:
financial liabilities at amortised cost (FLAC) and financial liabilities at fair
value through profit or loss (FVTPL). In addition, derivatives are used for
hedging purposes. Financial liabilities at FVTPL include derivatives not
designated for hedging purposes and other liabilities held for trading.
FLAC consist of liabilities that are not a part of the category at fair value
through profit or loss.
The financial instruments are recognised in the Group’s statement of
financial position as soon as the Group becomes a party to the
contractual provisions of the instrument, using trade date accounting.
Financial assets and liabilities are offset, and the net amount presented
in the statement of financial position when the Group has the intention
and legally enforceable right to settle the contracts net, otherwise the
financial assets and liabilities are presented gross.
Trade receivables and other current and non-current financial
assets
Trade receivables and other current and non-current financial assets
include trade and other current receivables, other financial non-current
interest-bearing and non-interest-bearing assets, and bonds and
commercial papers with original maturity beyond three months. These
assets are part of the category FAAC. FAAC are measured on initial
recognition at fair value including directly attributable transaction costs
and subsequently measured at amortised cost using the effective
interest rate method.
FAAC are adjusted for provision for impairment in accordance with the
expected credit loss model. The Group applies the simplified approach
for trade receivables, measuring the loss allowance at an amount equal
to lifetime expected credit losses. Impairment for expected credit
losses is recognised in the income statement and updated at each
reporting date. The impairment is calculated by considering the historic
evidence of the level of bad debt experienced for customer types and
the aging of the receivable balance.
Equity investments
Equity investments include equity instruments and capital contribution
to Telenor Pension Fund. Equity investments are divided into the two
categories of financial instruments at FVTOCI and FVTPL. Equity
instruments measured at FVTOCI consist of equity investments not held
for trading. Presenting fair value gains and losses in OCI for these equity
instruments is considered to provide more useful information to users
of the Group’s financial statements, as this will allow the users to more
easily identify the associated fair value changes. FVTOCI investments
are initially measured at fair value plus directly attributable transaction
costs and are subsequently measured at fair value. Unrealised gains and
losses arising from changes in fair value are recognised directly in other
comprehensive income until the investment is disposed of, at which
time the cumulative gain or loss is reclassified within equity from other
reserves to retained earnings.
Equity investments classified as assets held for trading are part of the
category financial assets measured at FVTPL. Assets held for trading
are initially and subsequently measured at fair value. Transaction costs
are immediately expensed in this category. Gains and losses arising
from changes in fair value are recognised in the income statement on
the line net change in fair value of financial instruments at fair value
through profit or loss.
Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits, fixed rate
bonds and commercial papers with original maturity of three months or
less which are readily convertible to known amount of cash and subject
to insignificant risk.
Trade payables and other non-interest-bearing financial liabilities
Trade payables and other non-interest-bearing financial liabilities
include trade payables, contract liabilities, liabilities to associated
companies and other current and non-current non-interest-bearing
financial liabilities. These liabilities are a part of the category FLAC
initially recognised in the statement of financial position at fair value,
and subsequently measured at amortised cost using the effective
interest rate method.
The Group has introduced supply chain financing for some of the
vendors to the Group. In circumstances where the supply chain
financing arrangements are linked to the payment terms of the contract
with the vendor, the payable for the services or goods delivered are
reclassified from trade payables to current non-interest-bearing
liabilities, as the payment terms are not extended beyond normal
payment terms for the Group and interests related to early payments
provided by the bank is carried by the vendor. When the payable is
reclassified from trade payable to current non-interest-bearing liability,
the Group shows a cash outflow from operating activities if it is related
to operating activities and cash outflow from investing activities if it is
related to investing activities. At the same time a cash inflow is
recognised in financing activities, reflecting the required payment to
the financial institution providing the supply chain financing
arrangement. When the Group makes the payment to the finance
institution, it will be reflected as a repayment of debt in financing
activities in the statement of cash flow. Supply chain financing
arrangements that do not have any link to payment terms or any other
parts of the contract with the vendor are classified as trade payables.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 87
Cash outflow from such arrangements are presented as operating
activities in the Statement of Cash Flows.
Interest-bearing liabilities
Interest-bearing liabilities include bonds and commercial papers, bank
loans and overdrafts, and are classified in the category FLAC. These
liabilities are initially measured at fair value net of transaction costs and
are subsequently measured at amortised cost using the effective
interest-rate method. In addition, where fair value hedge accounting is
applied the hedged liabilities are adjusted for gains and losses
attributable to the risk being hedged. On extinguishment of debt, in
whole or in part, the difference between the carrying amount of the
liability and the consideration paid is recognised in the income
statement.
Derivatives
The Group uses derivative financial instruments such as forward
currency contracts, interest rate swaps, cross currency interest rate
swaps and, to a small extent, interest rate options to hedge its risks
associated with interest rate and foreign currency fluctuations.
The derivative financial instruments are measured at fair value. Any
gains or losses arising from changes in fair value on derivatives that are
not cash flow hedges or hedges of net investments are recognised in
the income statement as financial income or expense. The accounting
for fair value hedges and hedges of net investments are described
below.
Derivatives embedded in other financial instruments or other non-
financial host contracts are treated as separate derivatives when their
risk and economic characteristics are not closely related to those of the
host contract and the host contract is not carried at fair value with
unrealised gains or losses recognised in the income statement.
Currency derivatives embedded in committed purchase or sales
contracts are not bifurcated and recognised at fair value if the contract
requires payments denominated in either the functional currency of
one of the parties to the contract or in a commonly used currency for
purchase or sales in the relevant economic environment.
Derivatives are recognised without any offsetting; as assets when the
value is positive and as liabilities when the value is negative, unless the
Group has the intention or legally enforceable right to settle the
contracts net.
Hedging
The Group applies hedge accounting for hedges that meet the criteria
for hedge accounting. The Group has fair value hedges and hedges of
net investments in foreign operations.
At the inception of each hedge relationship, the Group designates and
documents the hedge accounting relationship, risk management
objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or
transaction, the nature of the risk being hedged and how the entity will
assess the hedging instrument’s effectiveness in offsetting the
exposure to change in the hedged item’s fair value or cash flows
attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in fair value or cash flows and
are assessed on an ongoing basis to determine that they actually have
been highly effective throughout the financial reporting periods for
which they were designated.
Hedge relationships that meet the requirements for hedge accounting
are accounted for in the Group’s consolidated financial statements as
follows:
Fair value hedges
Fair value hedges are hedges of the Group’s exposure to changes in the
fair value of a recognised asset or liability or an unrecognised firm
commitment, or an identified portion of such, that is attributable to a
particular risk and could affect the income statement. For fair value
hedges, the carrying amount of the hedged item is adjusted for gains
and losses attributable to the risk being hedged. The derivative is also
measured at fair value, and gains and losses from both the hedging
instrument and the hedged item are recognised in the income
statement.
The Group discontinues fair value hedge accounting if the hedging
instrument expires or is sold, terminated, or exercised, the hedge no
longer meets the criteria for hedge accounting, or the Group revokes
the designation. If the hedged item still exists and is not sold, the fair
value adjustment to the hedged item attributable to the risk being
hedged at de-designation will be amortised in the income statement
over the remaining time to maturity.
Hedges of a net investment
A hedge of a net investment in a foreign operation is accounted for in a
similar way to a cash flow hedge. Foreign exchange gains or losses on
the hedging instrument relating to the effective portion of the hedge
are recognised directly in other comprehensive income while any
foreign exchange gains or losses relating to the ineffective portion are
recognised in the income statement. On disposal of the foreign entity,
the cumulative foreign exchange gains or losses recognised in other
comprehensive income is reclassified to the income statement.
Income taxes
Current tax assets and liabilities are measured at the amount expected
to be recovered or paid to the tax authorities. Deferred tax assets and
liabilities are calculated using the liability method with full allocation for
all temporary differences between the tax base and the carrying
amount of assets and liabilities in the consolidated financial statements,
including tax losses carried forward. Deferred tax assets and liabilities
are not recognised if the temporary difference arises from the initial
recognition of goodwill or in respect of temporary differences
associated with investments in subsidiaries, associates or joint
ventures where the timing of the reversal of the temporary difference
can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
For undistributed earnings in subsidiaries, deferred tax is provided for
to the extent it is expected that retained earnings will be distributed in
the foreseeable future. For undistributed earnings in associated
companies, deferred tax is provided for because the Group cannot
control the timing of the reversal of the temporary differences.
Deferred taxes are calculated on undistributed earnings in foreign
subsidiaries and associated companies based on the estimated
taxation on transfer of funds to the parent company, based on the
substantially enacted tax rates and regulation as of the end of the
reporting period.
The Group treats expenses as tax deductible and income as not taxable
based on interpretation of relevant laws and regulations and when it is
assessed as probable that such treatment will be sustained in a tax
review. The Group records provisions relating to uncertain or disputed
tax positions at the amount expected to be paid, reflecting the effect of
uncertainty over tax treatment. The provision is reversed if the disputed
tax position is settled in favour of the Group and can no longer be
appealed.
Deferred tax assets are recognised in the statement of financial
position to the extent it is more likely than not that the tax assets will be
utilised. The enacted tax rates at the end of the reporting period and
undiscounted amounts are used.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 88
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities, and the Group is able to and intends to settle its current tax
assets and liabilities on a net basis.
A change in deferred tax assets and liabilities because of change in tax
rates is recognised in profit or loss, except to the extent that it relates to
items that previously was recognised in other comprehensive income
or directly in equity.
Inventories
Inventories are valued at the lower of cost or net realisable value for
products that will be sold as a separate item. Inventories that will be sold
as part of a transaction with several items, which is expected to earn
net income, are not considered as an indicator of write down, even
though the allocated sales price in the transaction is lower than the
cost. Cost is determined using the FIFO or weighted average method,
depending on the nature of the inventories.
Property, plant and equipment
Property, plant and equipment are recognised at cost less accumulated
depreciation and accumulated impairment losses, if any. Depreciation is
calculated to reduce the cost of assets, other than land, which is not
depreciated, to their estimated residual value, if any, over their
estimated useful lives. The cost to be capitalised as part of the asset,
includes direct and incremental costs, borrowing costs for qualifying
assets and the initial estimate of the cost of dismantling and removing
the item and restoring the site on which it is located. If payment is
deferred beyond normal credit term, its cost is the cash price
equivalent. Depreciation commences when the assets are ready for
their intended use.
The gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is reported
as other income or other expenses in the income statement as part of
operating profit or loss.
Estimated useful life, depreciation method and residual value are
evaluated at least annually. The straight-line depreciation method is
used as this best reflects the consumption of the assets, which often is
the passage of time. Residual value is estimated to be zero for most
assets, except for any commercial buildings and vehicles which the
Group does not expect to use for the assets’ whole economic lives.
Repair and maintenance are expensed as incurred. If new parts are
capitalised, replaced parts are derecognised and any remaining net
carrying amount is recognised in operating profit (loss) as loss on
disposal.
An exchange of assets is recognised at fair value if the transaction has
commercial substance and the value of the assets can be measured
reliably. If these criteria are not met, the carrying amount of the
replaced assets is carried forward for the new assets.
Intangible assets
Intangible assets acquired separately are measured initially at cost and
recognised as an intangible asset when the Group has control over the
asset, future economic benefits are expected to flow to the Group and
the cost can be measured reliably. The cost to be capitalised as part of
the asset includes direct and incremental costs and, for qualifying
assets, borrowing costs. If payment of an intangible asset is deferred
beyond normal credit term, its cost is the cash price equivalent. The
cost of intangible assets acquired in a business combination is the fair
value at the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and
accumulated impairment losses, if any.
Intangible assets with finite lives are amortised over the useful lives.
Useful lives and amortisation method for intangible assets with finite
useful life are reviewed at least annually. The straight-line amortisation
method is used for most intangible assets as this best reflects the
consumption of the assets. The amortisation period for a customer
base is the expected customer relationship and the amortisation
method is based on historical experience of churn for the individual
businesses.
Gains and losses arising from derecognition of intangible assets are
measured as the difference between the net sales proceeds and the
carrying amount of the assets and are reported as other income or
other expenses in the income statement as part of operating profit.
Research and development costs
Development expenditures are capitalised only when the criteria for
recognition is met, i.e. that it is probable that the expected future
economic benefits that are attributable to the asset will flow to the
entity, management has committed itself to complete the asset, the
technical feasibility of completing the asset has been demonstrated
and the cost can be measured reliably. The assets are amortised over
their expected useful life once the assets are available for use. Costs
incurred during the research stage of a project, as well as maintenance
and training costs are expensed as incurred. Development costs that do
not meet the criteria for capitalisation are expensed as incurred.
Impairment of property, plant and equipment, right-of use assets and
intangible assets other than goodwill
At each reporting date, the Group evaluates if there are indicators that
property, plant and equipment, right-of-use assets or intangible assets
may be impaired. If there are indicators, the recoverable amount of the
assets is estimated in order to determine the extent of the impairment
(if any). Intangible assets with indefinite useful life and intangible assets
not yet brought into use are assessed for impairment annually. If it is not
possible to estimate the recoverable amount of an individual asset, the
Group determines the recoverable amount of the cash-generating unit
to which the asset belongs.
An asset’s recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset or the cash-generating unit to which
the asset belongs.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than it’s carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable
amount. The impairment is recognised in the income statement. If the
impairment is subsequently reversed, the carrying amount of the asset
(cash-generating unit) is increased to the updated estimate of its
recoverable amount to the extent the increased carrying amount does
not exceed the carrying amount that would have been recognised had
no impairment losses been recognised for the asset (or cash-
generating unit) in prior years. Reversals of impairments are recognised
in the income statement.
Provisions
Provisions such as workforce reductions, onerous contracts and legal
claims are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation, and the
amount can be reliably estimated. Provisions are measured at
management’s best estimate of the expenditure required to settle the
obligation at the reporting date and are discounted to present value.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 89
Asset retirement obligations
An asset retirement obligation exists where the Group has a legal or
constructive obligation to remove an asset and restore the site. Where
the Group is required to settle an asset retirement obligation, the Group
has estimated and capitalised the net present value of the obligations
and increased the carrying value of the related asset. The cash flows are
discounted at a pre-tax risk-free rate as risks are reflected in the cash
flows. After the initial recognition, an accretion expense is recognised
as finance cost relating to the asset retirement obligation, and the
capitalised cost is expensed as ordinary depreciation with the related
asset. The effects on the net present value of any subsequent changes
to the gross removal costs or discount rates adjust the carrying value of
assets and liabilities and are expensed over the remaining estimated
useful life of the related assets.
Share-based payments
The Group has share-based payment programs to management and
employees. Bonus shares in these programs are awarded net after tax.
The Group is obliged to withhold an amount for an employee’s tax
obligation associated with a share-based payment and transfer that
amount, normally in cash, to the tax authority on the employee’s behalf.
These share-based payment programs, including tax, are considered as
equity-settled share-based payments. In addition, the Group is obliged
to make a provision for social security tax related to these programs, to
be transferred to the tax authority, normally in cash. This part of the
share-based payment arrangements is recognised as a cash-settled
share-based payment.
Equity-settled share-based payments are measured at fair value
(excluding the effect of non-market-based vesting conditions) at the
date of grant. The fair value determined at the grant date of the equity-
settled share-based payments is expensed over the vesting period,
based on the Group’s estimate of the shares that will eventually vest,
adjusted for the effect of non-market-based vesting conditions.
Cash-settled share-based payments are measured at fair value of the
liability. The liability is remeasured at each reporting date.
Statement of cash flows
The Group presents the statement of cash flows using the indirect
method. Cash inflows and outflows are shown separately for investing
and financing activities, while operating activities include both cash and
non-cash line items. Interest received and paid, and dividends received,
are reported as a part of operating activities. Dividends distributed
(both by Telenor ASA and by subsidiaries with non-controlling interests)
are included as a part of financing activities. Value Added Tax and other
similar taxes are regarded as collection of tax on behalf of authorities
and are reported net.
Treasury shares
Own equity instruments which are reacquired (treasury shares) are
deducted from equity. No gain or loss is recognised in the income
statement on the purchase, sale, issue, or cancellation of the
Company’s own equity instruments.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 90
NOTE 3
Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities, and the disclosures of contingent liabilities, at the end of the
reporting period. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment
to the carrying amount of the asset or liability affected within the next
financial year.
Critical judgements in applying the Group’s accounting policies
The following represents a summary of the critical accounting
judgements the management has made in the process of applying the
Group’s accounting policies:
Lease term of contracts with renewal or termination options
The Group determines the lease term as the non-cancellable term of
the lease, together with any periods covered by an option to extend the
lease if it is reasonably certain to exercise the option, or any periods
covered by an option to terminate the lease, if it is reasonably certain
not to exercise the option, within the period for which the contract is
enforceable.
The Group determines the period for which the contract is enforceable
considering the broader economics of the contract and not only
contractual termination payments. For example, if the Group expects to
use significant non-removable leasehold improvements beyond the
date on which a lease contract can be terminated, the existence of
those leasehold improvements may indicate that the Group might incur
a more than insignificant penalty if it terminates the lease.
When the Group concludes that the enforceable period exceeds the
notice period of a cancellable lease or the initial period of a renewable
lease, the Group considers whether it is reasonably certain to extend
the lease or not to exercise the option to terminate the lease. The
threshold for being reasonably certain is not explicitly specified in IFRS
16 Leases. However, the Group considers reasonably certain to be lower
than virtually certain and significantly higher than more likely than not
under IAS 37
Provisions, Contingent liabilities and Contingent Assets
.
The Group applies judgement in evaluating whether it is reasonably
certain to exercise an option to renew or not exercise an option to
terminate a lease contract, considering all relevant factors that create
an economic incentive for the Group to exercise the renewal or not
exercise an option to terminate, including significant leasehold
improvements.
The main part of the Group’s lease contracts excluding spectrum
licences relates to the mobile networks (mainly towers) and
land/property. For lease of land for own towers or leasing of towers
from tower companies/other operators, factors considered in
particular for assessing the lease term are technology development and
potential changes in business models. Based on an assessment of these
factors, the lease term for the Group’s leases relating to sites will
normally be within a range of 4 to 7 years. This means that the lease
term for sites with renewal options shall normally be the higher of a
non-cancellable period or within a range of 4 to 7 years. Some sites may
be in strategically important locations and it might be more than
reasonably certain that the sites will be maintained beyond 7 years. In
these exceptional cases, the lease term may be up to 10 years.
Consolidation of Digi
The Group consolidates Digi. Digi is listed on Bursa Malaysia Securities
Berhad and the shares in Digi are widely dispersed. As the Group owns
49% of the shares, 98% of the shares must be present at the General
Meeting for the Group not to have the majority of the votes at the
General Meeting. As a consequence of this and based on experience
from past general meetings, the Group has the power to direct Digi’s
activities. The Group’s assessment is that the ability to exercise control
is upheld through a majority of the votes at the General Meeting and at
the Board of Directors meetings. Consolidation based on de facto
control is assessed on an ongoing basis.
Key sources of estimation uncertainty - critical accounting estimates
A critical accounting estimate is one which is both important to the
presentation of the Group’s financial position and results and requires
management’s most difficult, subjective or complex judgements, often
as a result of the need to make important estimates based on
assumptions about the outcome of matters that are inherently
uncertain. Management evaluates such estimates on an ongoing basis,
based upon historical results and experience, consultations with
experts, trends, and other methods which management considers
reasonable under the circumstances, as well as forecasts as to how
these might change in the future.
Depreciation and amortisation, see note 17, 18 and 19
Depreciation and amortisation expenses are based on management’s
estimates of residual value, depreciation and amortisation method and
the useful life of property, plant and equipment, right-of-use assets, and
intangible assets. Estimates may change due to technological
developments, competition, changes in market conditions, climate
change and other factors and may result in changes in the estimated
useful life and in the amortisation or depreciation charges.
Technological developments are difficult to predict and the Group’s
views on the trends and pace of development may change over time.
The impact of climate change on technological development, markets,
and economic or legal environment, together with remaining licence
period and general expected developments in technology and markets
are critical estimates in the evaluations of useful lives. The useful lives
are reviewed at least annually taking into consideration the factors
mentioned above and all other important relevant factors. Estimated
useful lives for similar types of assets may vary between different
entities in the Group due to local factors such as growth rate, maturity
of the market, history and expectations for replacements or transfer of
assets, climate and quality of components used. A change in estimated
useful life is a change in accounting estimate, and depreciation and
amortisation plans are adjusted prospectively.
Impairment, see note 15, 16, 17, 18, 19 and 20
The Group has made significant investments in property, plant and
equipment, intangible assets, goodwill, associates and other
investments, and is party to a significant amount of lease contracts
giving rise to right-of-use assets, both in the ordinary
telecommunication industry and in the digital sphere. Goodwill,
intangible assets with indefinite useful life and intangible assets not yet
in use are tested for impairment annually or more often if indicators of
impairment exist, whereas other assets are tested for impairment when
circumstances indicate there may be a potential impairment. Factors
that indicate impairment which trigger impairment testing include the
following: significant fall in market values; significant underperformance
relative to historical or projected future operating results; significant
changes in the use of the assets or the strategy for the overall business,
including assets that are decided to be phased out or replaced and
assets that are damaged or taken out of use; significant negative
industry or economic trends; significant loss of market share;
significant adverse political and/or regulatory development including
unfavourable court decisions and significant cost overruns in the
development of assets.
In accordance with IAS 36
Impairment of assets
amounts of assets and companies is the higher of value in use and fair
value less cost of disposal. Value in use, particularly when discounted
cash flow methods are used, involves management judgement. There is
estimation uncertainty, complexity and subjectivity related to the value
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 91
in use determination, including determining appropriate cash-
generating units, determining the discount rate, estimating future
performance, revenue generating capacity of the assets, margins,
prices on future renewals of spectrum licences, political and regulatory
risk, required maintenance capex, network costs and technological
developments, and assumptions of the future market conditions. In
some markets, certain expenses and capex are denominated in foreign
currency and impacted by currency fluctuations. Recessionary effects
and increased macroeconomic risks may impact the estimates of
growth, future performance and discount rates used in estimating
recoverable amounts of assets. Discount rates are impacted by several
macroeconomic factors including borrowing rates, country risk,
inflation assumptions and currency development. For assumptions
used, external evidence has been taken into consideration.
The Group is exposed to climate-related physical risks such as potential
damage to infrastructure and utilities through the impact of more
extreme weather events and rising sea levels. Climate-related
regulatory risks for the Group include potentially higher operational
costs due to increasing carbon taxes and energy/fuel taxes, as well as
risks of higher capital expenditures due to a required transition towards
the use of renewable energy solutions and energy efficient networks.
Climate-related risks are considered in the cash flow projections.
There are significant variations between different markets with respect
to growth, mobile penetration, ARPU, market share, inflation, regulatory
costs, and technological development, resulting in differences in
EBITDA margins, future investments, and long terms growth
assumptions. The future developments of EBITDA margins, invested
capital and growth, are important in the Group’s impairment
assessments, and the long-term estimates of EBITDA margins for each
country are uncertain.
Asset retirement obligations (ARO), see note 25
Asset retirement obligations exist where the Group has a legal or
constructive obligation to remove an asset and restore the site. The
Group has asset retirement obligations relating primarily to equipment
and other leasehold improvements installed on leased network sites
and in administrative and network buildings. Where the Group is
required to settle an asset retirement obligation, the Group has
estimated and capitalised the net present value of the obligations and
increased the carrying value of the related asset.
In most situations, the timing of asset removals will be well into the
future and there is uncertainty as to whether and when the obligation
will be paid. Provisions for asset retirement obligations are based on
management’s estimates of the reasonably possible outcomes in terms
of both the range of settlement dates and amount of expenses, as well
as probabilities to be assigned to each of the reasonably possible
outcomes. The actual gross removal costs that the Group will incur may
be significantly different from the estimated costs, for example due to
negotiation of prices for a large amount of removals or agreements that
reduce or relieve the Group from its obligations. The actual timing of the
removals may also differ significantly from the estimated timing, for
example due to change in strategy, technological developments,
changes in market conditions and other factors, and may result in
changes in the provisions. The estimated cash flows are discounted at a
pre-tax risk-free rate as risks are reflected in the cash flows.
Deferred tax assets, see note 13
Deferred tax assets are recognised to the extent that it is probable that
the tax assets will be realised. Significant judgement is required to
determine the amount that can be recognised and depends foremost
on the expected timing, level of taxable profits as well as tax planning
strategies and the existence of taxable temporary differences. The
judgements relate primarily to tax losses carried forward in some of the
Group’s foreign operations. When an entity has a history of recent
losses the deferred tax asset arising from unused tax losses is
recognised only to the extent that there is convincing evidence that
sufficient future taxable profit will be generated. Uncertainty related to
new transactions and events and the interpretation of new tax rules
may also affect these judgements.
Uncertain tax positions, legal proceedings, claims and regulatory
discussions, see also note 13 and 34
The Group is subject to various legal proceedings, disputes and claims
including regulatory discussions related to the Group’s business,
licences, tax positions, investments etc., of which the outcomes are
subject to significant uncertainty. Management evaluates, among other
factors, the degree of probability of an unfavourable outcome and the
ability to make a reasonable estimate of the amount of loss.
Unanticipated events or changes in these factors may require the
Group to accrue for a matter that has not been previously accrued for
because it was not considered probable or a reasonable estimate could
not be made, or increase or decrease an amount accrued for a matter
in previous reporting periods.
The Bangladesh Telecommunication Regulatory Commission (BTRC)
has over several years conducted an information system audit of
Grameenphone for the period 1997 to 2014. On 2 April 2019,
Grameenphone received a demand notice from BTRC for payment of
NOK 8.7 billion. On 20 and 24 February 2020, the Appellate Division of
the Supreme Court (AD) ordered Grameenphone to make payment of a
total deposit of approximately NOK 2.0 billion to BTRC in two equal
instalments before 24 February 2020 and 31 May 2020. Both instalments
were paid before due dates. Errors in the audit-findings, the
unprecedented long period covered by the audit, inclusion of already
settled/resolved items, erroneous claim on behalf of third parties and
inclusion of sub-judice items in conjunction with the absence of merit
based determination through any solution process, create significant
uncertainty about the validity of the demand and outcome of the
dispute. Please see Note 34 Legal disputes and contingencies for
further details.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 92
NOTE 4
Held for sale and discontinued operations
Discontinued operations and assets held for sale
As announced on 8 July 2021, Telenor Group has entered into an agreement with M1 Group to sell
100 percent of
its mobile operations
in Myanmar
for
a total consideration of USD 105 million (approximately NOK 920 million), of which USD 55 million (approximately NOK 480 million) is a deferred
payment over five years.
The transaction corresponds to an implied enterprise value of approximately USD 600 million (approximately NOK 5.2
billion). On 17 March 2022, Telenor Group was informed that Myanmar Investment Commission has given final regulatory approval to the sale of
Telenor Myanmar to M1 Group, see note 38. With effect from the second quarter 2021, Telenor Myanmar has been classified as assets held for sale
and discontinued operations. The comparative numbers for the income statement are re-presented.
On 1 February 2021, a state of emergency was declared under military leadership in Myanmar. Due to worsening of the economic and business
environment outlook and a deteriorating security and human rights situation, Telenor saw limited prospects of improvement going forward. As a
consequence, Telenor recognised an impairment of NOK 6.5 billion in the first quarter. Telenor estimated the value in use of the cash-generating
unit Myanmar as of 31 March 2021 based on a scenario analysis incorporating discounted cash flows from current revenue streams and capex
levels, as well as the substantial uncertainty emerging from the overall unstable situation. Determination of key assumptions, including number of
days with continued shutdown of mobile data, and probabilities to be assigned to the scenarios came with significant uncertainty. The discount
rate applied in the terminal value of 12.2% was unchanged from 31 December 2020, as the increased risk emerging from the current situation was
reflected in the cash flow scenarios. After the impairment (of which NOK 3.6 billion related to property, plant and equipment, NOK 2.4 billion related
to right-of-use assets net of lease liabilities and NOK 0.5 billion related to other assets) the recoverable amount of the cash-generating unit Telenor
Myanmar was approximately zero. Since the first quarter, Telenor Myanmar has generated significant profits (mainly in the fourth quarter). Due to
the continued uncertain situation, Telenor has in the fourth quarter recognised an additional impairment of NOK 1.0 billion, bringing the recoverable
amount of the cash generating unit Telenor Myanmar back to approximately zero as of 31 December 2021.
The profit (loss) for Telenor Myanmar presented as discontinued operation are as follows:
NOK in millions
2021
2020
Revenue
4,835
6,971
EBITDA
2,751
4,272
EBIT
(5,743)
1,516
Profit (loss) before tax
(6,185)
1,349
Income taxes
(53)
(158)
Profit (loss) after tax
(6,238)
1,191
Gain (loss) on disposal after tax
-
-
Profit (loss) from discontinued operations - attributable to equity holders of Telenor ASA
(6,238)
1,191
As announced on 22 October 2019, the Group entered into an arrangement with Nordic Entertainment Group (NENT) to combine the companies’
satellite-based entertainment businesses in a joint venture to extract synergies and deliver enhanced customer experience. With effect from the
fourth quarter 2019, the Group’s Canal Digital operations, the main contributor to the Broadcast segment, were classified as asset held for sale and
discontinued operations in the Group’s financial reporting. The arrangement was approved by the European Commission on 30 April 2020 and the
transaction was closed on 5 May 2020. Accordingly, the Group disposed of Canal Digital as a subsidiary and recognised its 50% share of the joint
venture Allente at fair value of NOK 3.1 billion with a gain of NOK 1.7 billion recognised in the income statement in 2020. See note 20.
On 23 February 2017, the Group entered into an agreement with Bharti Airtel Limited (Airtel), whereby Airtel would take full ownership of Telenor
India. The transaction was completed 14 May 2018. The exposure to claims related to the period Telenor owned the business remains with Telenor.
A guarantee to Airtel was recognised at fair value as of closing date of the transaction, and subsequent changes to the estimate are recognised on
the discontinued operations line in the income statement. During 2021, an additional provision of NOK 0.2 billion plus interests was recognized
following reassessment of the demand from Department of Telecommunication (DoT).
The profit (loss) of all disposal groups including Telenor Myanmar presented as discontinued operations until disposal, and subsequent
adjustments:
NOK in millions
2021
2020
Revenue
4,835
8,267
EBITDA
2,751
4,587
EBIT
(5,743)
1,832
Profit (loss) before tax
(6,185)
1,592
Income taxes
(53)
(161)
Profit (loss) after tax
(6,238)
1,431
Gain (loss) on disposal after tax
(515)
1,755
Profit (loss) from discontinued operations - attributable to equity holders of Telenor ASA
(6,753)
3,186
The losses on disposal recognised during 2021 is mainly related to Telenor India and gain on disposal recognized during 2020 was mainly related to
Canal Digital.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 93
Cashflow related to discontinued operations presented below are from external transactions. Hence, the cash flows for discontinued operations do
not reflect these operations as if they were standalone entities.
NOK in millions
2021
2020
Net cash flow from operating activities
2,574
3,758
Net cash flow from investing activities
(256)
(1,095)
Net cash flow from financing activities
(981)
(987)
Total cash flows from discontinued operations
1,337
1,676
Effects of exchange rate changes on cash and cash equivalents
(229)
(64)
Net cash flows from discontinued operations
1,108
1,612
On 24 November 2021, Telenor Sweden agreed to divest Open Universe and the company’s fiber to the home (FTTH) accesses in the single dwelling
unit (SDU) segment to Global Connect for a total consideration of NOK 2.9 billion. The transaction was approved by the Swedish competition
authorities in December 2021 and subsequently Telenor Sweden finalised the divestment on 1 February 2022. The sale includes around 200,000
ports in the open fiber networks model and approximately 14,000 single dwelling unit fiber to the home accesses. As a result, related assets of NOK
0.7 billion has been classified as assets held for sale as of 31 December 2021.
The major classes of assets and liabilities of the disposal groups classified as held for sale as of 31 December 2021 (representing mainly Telenor
Myanmar, Telenor India and Open Universe transaction in Sweden) and 31 December 2020 (representing mainly India):
NOK in millions
31 December 2021
31 December 2020
Assets
Property, plant and equipment
717
-
Inventory
13
-
Trade and other receivables
317
-
Cash and cash equivalents
1,863
-
Total assets classified as held for sale
2,910
-
Liabilities
Non-current liabilities
23
-
Current liabilities
5,557
3,070
Total liabilities held for sale
5,580
3,070
Assets held for sale of NOK 2.2 billion relates to Telenor Myanmar and remaining NOK 0.7 billion relates to Open Universe. Liabilities held for sale
includes NOK 2.1 billion related to Telenor Myanmar and NOK 3.4 billion representing the exposure to claims from the Indian Department of
Telecommunications (DoT) related to the period the Group owned the business in India.
The accumulated amounts for discontinued operations recognised in Other comprehensive income within Equity are as follows:
NOK in millions
2021
2020
Telenor Myanmar
(802)
(195)
Telenor India
(180)
(136)
Total gain (loss)
(982)
(331)
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 94
NOTE 5
Segments
Segment information for 2021 and 2020 is reported in accordance with the reporting to Group Executive Management (chief operating decision
makers) and is consistent with financial information used for assessing performance and allocating resources. The accounting principles for the
segment reporting are consistent with those applied by the Group. The Group’s operating and reportable segments are based on business
activities and geographical location. The main products and services are mobile communication and fixed line communication. In addition, the
Group reports Other units as a separate segment. The segment result is defined as EBITDA before other income and other expenses.
The Group’s mobile communication business mainly includes voice, data, internet, content services, customer equipment and messaging. In
Norway, Sweden, Denmark and Finland, the fixed line businesses are reported together with mobile operations. Fixed services comprise telephony,
internet and TV and leased lines, as well as data services and managed services.
Other units consist of Corporate Functions, Telenor Infra, Telenor Satellite and Other Businesses. Corporate Functions comprise activities such as
global shared services, research and development, strategic Group projects, Group Treasury, the internal insurance company, and support
functions. Telenor Infra operates all passive infrastructure in Norway previously operated by Telenor Norway, Norkring and Telenor Real Estate.
Telenor Satellite offers broadcasting and data communication services via satellite. Other Businesses consists mainly of mobile communication
business at sea conducted by Telenor Maritime; Global Services, which is focused on interconnecting global operators and delivering key
communications services on a global scale; Telenor Real Estate; Connexion, which is specialising in Internet of Things with capabilities to support
the most advanced machine-to-machine-communication and Internet of Things customers worldwide; and other businesses, including internet
based services and financial services, none of which are material enough to be reported as separate segments.
Deliveries of network-based regulated services within the Group are based on cost-oriented prices based on negotiations between the units. All
other transactions between the segments are based on market conditions. Gains and losses arising from internal transfer of businesses, group
contribution and dividends within the Group are not included in the income statements for the segments.
Change in composition of reportable segments
Pursuant to announcement on 8 July 2021 about divestment of Telenor Myanmar, Telenor Myanmar is classified as discontinued, hence not part of
the Group’s segment reporting.
From 1 January 2020, Telenor Infra became the operator of all passive infrastructure in Norway. However, Telenor
Norway retained ownership of its passive infrastructure, and as a second step, the ownership of the passive mobile infrastructure was transferred
from Telenor Norway to Telenor Infra with effect from 1 January 2021. The reported figures for 2020 have not been restated to reflect the transfer.
Segment Information 2021
NOK in millions
Revenues
External revenues
EBITDA before
other
income and other
expenses
1)
EBITDA
1)
Depreciation,
amortisation and
impairment losses
Operating profit
(loss)
Investments
2)
Capital employed
3)
Norway
25,362
24,915
12,758
11,726
(6,739)
4,987
5,637
25,326
Sweden
12,107
12,038
4,434
4,428
(2,651)
1,777
1,839
16,242
Denmark
5,346
5,259
1,413
1,362
(927)
434
1,077
4,621
DNA - Finland
9,712
9,678
3,645
3,643
(2,651)
993
1,625
33,951
dtac - Thailand
21,878
21,826
8,067
7,934
(6,050)
1,884
3,852
39,701
Digi - Malaysia
13,136
13,088
6,281
6,248
(2,621)
3,626
1,699
12,463
Grameenphone -
Bangladesh
14,464
14,362
9,052
8,730
(2,327)
6,403
2,853
7,976
Pakistan
5,604
5,328
2,976
2,967
(1,751)
1,216
3,129
8,886
Other units
7,518
3,747
1,508
1,323
(1,231)
92
1,027
n.m.
Eliminations
(4,887)
-
(971)
(987)
1,080
93
-
n.m.
Group
110,241
110,241
49,162
47,375
(25,869)
21,506
22,737
n.m.
Segment Information 2020
NOK in millions
Revenues
External revenues
EBITDA before
other income and
other expenses
1)
EBITDA
1)
Depreciation,
amortisation and
impairment losses
Operating profit
(loss)
Investments
2)
Capital employed
3)
Norway
26,307
25,509
12,787
11,368
(6,345)
5,023
5,544
24,322
Sweden
12,618
12,561
4,832
4,686
(2,457)
2,228
1,435
16,642
Denmark
5,308
5,217
1,360
1,270
(953)
317
520
4,795
DNA - Finland
9,998
9,977
3,553
3,576
(2,547)
1,030
1,919
33,764
dtac - Thailand
23,704
23,661
9,076
8,844
(6,302)
2,542
7,717
41,502
Digi - Malaysia
13,766
13,719
6,938
6,819
(2,734)
4,085
1,605
12,511
Grameenphone -
Bangladesh
15,483
15,411
9,776
9,659
(2,623)
7,036
1,165
6,474
Pakistan
5,880
5,598
3,167
3,133
(1,929)
1,205
889
9,454
Other units
4)
7,968
4,186
1,725
5,808
(1,234)
4,575
724
n.m.
Eliminations
(5,193)
-
(867)
(871)
815
(56)
-
n.m.
Group
115,839
115,839
52,347
54,293
(26,309)
27,984
21,519
n.m.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 95
1)
See table below for definition and reconciliation of EBITDA.
2)
Investments consist of capex and investments in businesses. See page 175 for alternative performance measures. Financial figures for 2020 have been restated
to align with Group definition of Capex.
3)
Capital employed (average for the period) adjusted for dividend and group contribution payables/receivables.
For definition of capital employed and Group
figures, see page 175 for alternative performance measures. (n.m. – not measured)
4)
Revenues of NOK 50 million have been reclassified from eliminations to Other units as correction of error .
Reconciliation
NOK in millions
2021
2020
EBITDA before other
49,162
52,347
Other income
173
4,426
Other expenses
(1,960)
(2,480)
EBITDA
47,375
54,293
Geographical distribution of external revenues based on customer location
NOK in millions
2021
2020
Norway
25,725
26,302
Sweden
12,810
13,056
Denmark
5,422
5,414
Finland
9,528
9,860
Thailand
21,866
23,690
Malaysia
13,150
13,776
Bangladesh
14,359
15,412
Pakistan
5,343
5,598
Other countries
2,037
2,731
Total revenues
110,241
115,839
Assets by geographical location of the company
Non-current assets excluding deferred tax
assets and other non-current assets
Total assets
NOK in millions
2021
2020
2021
2020
Norway
34,503
34,882
56,423
59,584
Sweden
17,349
20,270
22,803
25,773
Denmark
3,921
3,891
7,723
10,939
Finland
33,985
36,344
38,522
40,706
Thailand
37,973
42,644
47,305
54,402
Malaysia
13,266
13,704
17,333
17,853
Bangladesh
12,958
11,378
16,648
14,910
Pakistan
10,536
9,508
12,784
13,563
Myanmar
349
13,180
2,543
14,802
Other countries
2,816
2,964
3,658
3,996
Total assets
167,657
188,766
225,740
256,529
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 96
NOTE 6
Disaggregation of revenues
Disaggregation of revenues from contract with customers
In the following table, revenues are disaggregated by major revenue streams divided into the reportable segments as shown in note 5.
Year 2021
NOK in millions
Norway
Sweden
Denmark
DNA
Finland
dtac
Thailand
Digi
Malaysia
Grameenphone
Bangladesh
Pakistan
Other
units
Eliminations
Group
Type of good/ services
Mobile operation
15,350
8,268
4,814
7,496
18,502
12,941
14,288
5,461
-
(1,011)
86,111
Services
13,362
6,541
3,617
5,951
16,133
11,077
14,263
5,451
-
(1,010)
75,385
Goods
1,987
1,728
1,197
1,546
2,370
1,864
25
10
-
(1)
10,726
Fixed operation
9,058
3,623
502
2,185
-
-
-
-
1,732
(561)
16,540
Services
8,690
3,616
502
2,185
-
-
-
-
1,732
(511)
16,214
Goods
369
7
-
-
-
-
-
-
-
(50)
326
Other
639
-
-
-
-
-
-
-
3,903
(1,855)
2,687
Services
639
-
-
-
-
-
-
-
3,888
(1,855)
2,672
Goods
-
-
-
-
-
-
-
-
14
-
14
Sum type of goods/services
25,047
11,892
5,316
9,682
18,502
12,941
14,288
5,461
5,635
(3,427)
105,338
Type of mobile subscription
Contract
11,525
5,723
3,199
5,396
10,286
4,996
629
162
-
(71)
41,845
Prepaid
122
177
-
209
5,190
5,883
13,591
5,224
-
(516)
29,881
Other
1)
1,715
640
419
345
656
198
44
65
-
(423)
3,659
Sum services in Mobile
operation
13,362
6,541
3,617
5,951
16,133
11,077
14,263
5,451
-
(1,010)
75,385
Timing of revenue recognition
Over time
22,691
10,157
4,119
8,136
16,133
11,077
14,263
5,451
5,621
(3,376)
94,272
At a point in time
2,356
1,735
1,197
1,546
2,370
1,864
25
10
14
(50)
11,066
Total revenue from contract
with customers
25,047
11,892
5,316
9,682
18,502
12,941
14,288
5,461
5,635
(3,427)
105,338
Other revenue
2)
314
216
30
31
3,376
195
176
143
1,883
(1,461)
4,903
Total revenue
25,362
12,107
5,346
9,712
21,878
13,136
14,464
5,604
7,518
(4,887)
110,241
Segment revenue as
presented in note 5
25,362
12,107
5,346
9,712
21,878
13,136
14,464
5,604
7,518
(4,887)
110,241
1)
Other includes revenues from other mobile and non-mobile services, refer to definitions on page 175.
2)
Other revenue includes mainly lease revenue, see note 18 for more information.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 97
Year 2020
NOK in millions
Norway
Sweden
Denmark
DNA
Finland
dtac
Thailand
Digi
Malaysia
Grameenphone
Bangladesh
Pakistan
Other
units
Eliminations
Group
Type of good/ services
Mobile operation
15,503
8,718
4,777
7,722
20,681
13,579
15,309
5,729
-
(1,089)
90,928
Services
13,263
6,830
3,591
6,123
18,612
12,143
15,295
5,684
-
(1,078)
80,464
Goods
2,240
1,887
1,185
1,599
2,070
1,437
13
45
-
(11)
10,465
Fixed operation
9,679
3,697
505
2,241
-
-
-
-
1,845
(620)
17,346
Services
9,274
3,675
505
2,241
-
-
-
-
1,845
(529)
17,010
Goods
405
22
-
-
-
-
-
-
-
(92)
336
Other
712
-
-
-
-
-
-
-
4,345
(2,023)
3,033
Services
712
-
-
-
-
-
-
-
4,339
(2,023)
3,027
Goods
-
-
-
-
-
-
-
-
6
-
6
Sum type of goods/services
25,894
12,415
5,281
9,963
20,681
13,579
15,309
5,729
6,189
(3,733)
111,307
Type of mobile subscription
Contract
11,452
6,052
3,250
5,579
11,908
5,454
647
179
-
(55)
44,467
Prepaid
154
171
-
220
6,039
6,452
14,604
5,440
-
(342)
32,737
Other
1)
1,658
607
341
324
665
236
45
65
-
(681)
3,259
Sum services in Mobile
operation
13,263
6,830
3,591
6,123
18,612
12,143
15,295
5,684
-
(1,078)
80,464
Timing of revenue recognition
Over time
23,249
10,506
4,096
8,363
18,612
12,143
15,295
5,684
6,183
(3,630)
100,501
At a point in time
2,645
1,910
1,185
1,599
2,070
1,437
13
45
6
(102)
10,807
Total revenue from contract
with customers
25,894
12,415
5,281
9,963
20,681
13,579
15,309
5,729
6,189
(3,733)
111,307
Other revenue
2)
414
203
27
35
3,022
187
174
151
1,779
(1,460)
4,532
Total revenue
26,307
12,618
5,308
9,998
23,704
13,766
15,483
5,880
7,968
(5,193)
115,839
Segment revenue as
presented in note 5
26,307
12,618
5,308
9,998
23,704
13,766
15,483
5,880
7,968
(5,193)
115,839
1)
Other includes revenues from other mobile and non-mobile services, refer to definitions on page 175.
2)
Other revenue includes mainly lease revenue, see note 18 for more information.
Type of goods/ services:
Mobile operation:
Services:
national roaming, telemetric, revenues related to service providers and MVNOs, and other mobile services.
Goods:
include revenues from sales of handsets and other customer equipment.
Fixed operation:
Services:
subscription, traffic charges and connection fees for xDSL, cable and fibre, revenues from TV services and data services, and revenues
from fixed wholesale and other fixed retail.
Goods:
Other
Type of mobile subscription:
Contract
the Group performs the related services over the agreed service period.
Prepaid
includes revenues from subscriptions paid for in advance, except when invoiced in advance by the Group. Revenues are recognised based
on usage.
Other
Timing of revenue recognition:
Over time
agreed service period, by measuring progress towards complete satisfaction of the performance obligation.
At a
point in time
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 98
NOTE 7
Costs of materials and traffic charges
NOK in millions
2021
2020
Traffic charges
(12,307)
(12,516)
Cost of materials etc
(16,870)
(16,522)
Total costs of materials and traffic charges
(29,176)
(29,037)
Costs of materials etc includes variable lease expenses, see note 18 for more information.
NOTE 8
Salaries and personnel costs
NOK in millions
2021
2020
Salaries and holiday pay
(9,175)
(9,908)
Social security tax
(913)
(952)
Pension costs including social security tax (note 26)
(1,039)
(1,046)
Share-based payments
(136)
(160)
Other personnel costs
(502)
(508)
Own work capitalised
1,307
1,421
Total salaries and personnel costs
(10,457)
(11,152)
1)
Include expenses related to the Group's employee share programme, and the Group's long term incentive programme for managers and key personnel (please
refer to note 35 as well as 11 and 12 of the Board of Directors’ report).
The average number of labour-years employed in continuing operations was approximately 16,000 in 2021 and 18,000 in 2020.
NOTE 9
Other operating expenses
NOK in millions
2021
2020
Other cost of premises, vehicles, office equipment etc.
(2,458)
(2,894)
Operation and maintenance
(5,818)
(6,234)
Marketing and sales commission
(5,069)
(5,163)
Advertising
(1,763)
(1,761)
External personnel and consultancy fees
(1,949)
(2,018)
Variable lease expenses
1)
(2,783)
(2,964)
Other
2)
(1,606)
(2,269)
Total other operating expenses
(21,446)
(23,302)
1)
See note 18 for more information.
2)
Includes expenses related to short term and low value leases, see note 18 for more information.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 99
NOTE 10
Other income and other expenses
NOK in millions
2021
2020
Gains on disposals of property, plant and equipment (PPE), right-of-use assets and operations
145
4,366
Other
28
60
Total other income
173
4,426
Losses on disposals of property, plant and equipment (PPE), right-of-use assets and operations
(499)
(518)
Expenses for workforce reductions, onerous contracts and other
(1,461)
(1,963)
Total other expenses
(1,960)
(2,480)
For the year 2021, other expenses consisted mainly of a fine from the Norwegian Competition Authority of NOK 788 million, losses on termination of
leases in dtac of NOK 138 million, and workforce reductions (of which NOK 338 million in Grameenphone and NOK 168 million in Telenor Norway).
In 2020, total other income consisted mainly of the sale of Tapad of NOK 2.1 billion, the gain on sale and partial leaseback of the headquarter
office building at Fornebu, Norway of NOK 1.2 billion, a gain of NOK 538 million from the sale and leaseback of development properties in Norway,
and a NOK 310 million adjustment to the gain on the partial disposal of 701Search in 2019. Other expenses were mainly related to a provision of NOK
1.2 billion based on the decision from ESA (see note 34), and workforce reductions (of which NOK 308 million in Telenor Norway, NOK 139 million in
Grameenphone, and NOK 110 million in Telenor Sweden).
NOTE 11
Research and development costs
Research and development costs that have been recognised in the income statement amount to NOK 187 million in 2021 (NOK 238 million in 2020).
Expensed research and development activities mainly relate to new technologies, digital services and products, 5G projects, security awareness
and network optimisation.
NOTE 12
Financial income and expenses
NOK in millions
2021
2020
Interest income on cash and cash equivalents
383
486
Other financial income
183
171
Total financial income
566
657
Interest expenses on financial liabilities
1)
(2,999)
(3,417)
Other financial expenses
(554)
(664)
Total financial expenses
(3,553)
(4,081)
Foreign currency gains
3,861
2,649
Foreign currency losses
(4,926)
(1,829)
Net foreign currency gains (losses)
(1,066)
820
Net change in fair value of financial instruments at fair value through profit or loss
128
(373)
Net change in fair value of hedging instruments and hedged items
(44)
(354)
Net gains (losses and impairment) on financial assets and liabilities
7
(0)
Other changes
91
(727)
Net financial income (expenses)
(3,962)
(3,331)
1)
Includes interest expenses on lease liabilities, see note 18 for more information.
In 2021, interest expenses related to interest-bearing debt amounts to NOK 1.7 billion, a decrease of NOK 0.3 billion compared to 2020. This
decrease is mainly explained by lower interest rates. Further, interest expenses on lease liabilities amounts to NOK 1.3 billion, a decrease of NOK 0.1
billion compared to 2020.
Net foreign currency losses were NOK 1.1 billion in 2021, compared to gains of NOK 0.8 billion in 2020. The net foreign currency losses in 2021 was
mainly related to translation of debt denominated in USD used for economic hedges of assets and USD liabilities in Pakistan. Net foreign currency
gains in 2020 was mainly related to funding activities in EUR in the beginning of 2020, this partly offset by net foreign currency losses related to
liabilities denominated in USD.
Net change in fair value of financial instruments in 2020 includes a loss of NOK 0.3 billion related to discontinuation of fair value hedge accounting.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 100
NOTE 13
Income taxes
NOK in millions
2021
2020
Profit before taxes
17,084
24,292
Current taxes
(6,524)
(6,198)
Deferred taxes
785
(221)
Income tax expense
(5,740)
(6,419)
Current taxes in 2021 are impacted by a fine paid by Telenor to NCA for a claim on an alleged breach of the prohibition against abuse of a dominant
position (see comments below on NCA case). Current taxes in 2020 were impacted mainly by the sale of Telenor’s properties and sale of Tapad,
partly offset by the provision for ESA decision against Telenor (see comments below on Provision based on the ESA decision). 2021 deferred taxes
decrease is impacted by the foreign currency losses.
Effective tax rate
The table below reconciles the reported income tax expense to the expected income tax expense according to the Norwegian corporate income
tax rate of 22%. It also discloses the main elements of the tax expense. Comments are provided on selected line items in the table below.
NOK in millions
2021
2020
Income tax expense at corporate income tax rate in Norway 22%
(3,759)
(5,344)
Effect of tax rates outside Norway different from 22%
(1,148)
(1,328)
Effect of changes in tax rates
(0)
9
Current and deferred taxes on retained earnings and dividend in subsidiaries and associated companies
(98)
(253)
Sale of Telenor properties
-
679
Sale of Tapad
-
201
Provision based on the ESA decision
-
(257)
Fine imposed by NCA
(173)
-
Other items
(590)
(102)
Prior years assessments or adjustments on current tax
23
(69)
Change in previously not recognised deferred tax assets
6
45
Income tax expense
(5,740)
(6,419)
Effective tax rate in %
33.6
26.4
Tax rates outside Norway different from 22%
Effects are mainly related to Grameenphone Ltd. (Bangladesh: 40%), Telenor Pakistan (29%) and Digi (Malaysia: 24%) having higher nominal tax
rates than the nominal tax rate for Norway. Telenor Sweden (20.6%), DNA (Finland: 20%) and dtac (Thailand: 20%) have lower nominal tax rates.
Effect of changes in tax rates
Sweden enacted a decrease of their corporate income tax rate from 21.4% to 20.6% from 1 January 2021.
Current and deferred taxes on retained earnings and dividend in subsidiaries and associated companies
Includes current taxes on dividends received, as well as change in deferred tax liability (primarily withholding tax) recognised on undistributed
earnings in subsidiaries and associated companies outside of Norway. Deferred taxes on retained earnings in foreign subsidiaries are provided for
in full as of 31 December 2021 and 2020.
Sale of Telenor's properties
Last year Telenor has carried out an intra-group restructuring where the purpose has been to cultivate the Group's real estate business. As part of
the restructuring several sales transactions have been completed, including the sale of the headquarter at Fornebu, Norway.
Sale of Tapad
The tax effect last year of the non-taxable gain on the disposal of Tapad is partly offset by tax on a gain on a related internal loan receivable.
Provision based on the EFTA Surveillance Authority (ESA) decision
The 2020 tax effect relates to NOK 1.2 billion provision for ESA decision against Telenor for abuse of dominant position in the Norwegian mobile
broadband market (see note 34).
Fine imposed by the Norwegian Competition Authority (NCA)
In 2021 Telenor paid a fine of NOK 0.8 billion to NCA for a claim from 21 June 2018. The claim relates to an alleged breach of the prohibition against
abuse of a dominant position related to the pricing model in one mobile wholesale agreement in the mobile market in the period 2010-2014 (see
note 34).
Other items
In 2021 the increase on non-deductible items is partly related to increase of non-deductible sales and marketing costs in Grameenphone. In 2020
non-deductible items are offset by tax credits on network investments in dtac.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 101
Tax losses carried forward
Tax losses carried forward in selected countries expire as follows as of 31 December 2021:
NOK in millions
Denmark
Thailand
Other
Total
2022
-
139
0
139
2023
-
2 063
1
2 064
2024
-
938
1
939
2025
-
305
2
307
2026
-
700
14
714
2027 and later
-
-
334
334
Not time-limited
735
366
242
1 344
Total tax losses carried forward
735
4 512
594
5 841
Of which deferred tax assets have not been recognised
146
427
485
1 059
Of which deferred tax assets have been recognised
589
4 085
109
4 782
Tax losses carried forward in selected countries expire as follows as of 31 December 2020:
NOK in millions
Denmark
Thailand
Other
Total
2021
-
0
26
26
2022
-
1 821
4
1 825
2023
-
2 223
-
2 223
2024
-
1 012
-
1 012
2025
-
366
-
366
2026 and later
-
-
256
256
Not time-limited
1 026
442
289
1 757
Total tax losses carried forward
1 026
5 863
576
7 465
Of which deferred tax assets have not been recognised
153
513
505
1 171
Of which deferred tax assets have been recognised
873
5 351
71
6 294
In 2021, tax losses carried forward, before and after valuation allowance, decreased by NOK 1.6 billion and NOK 1.5 billion, respectively, mainly due to
utilisation of tax losses in Denmark and Thailand. In 2020, tax losses carried forward, before and after valuation allowance, decreased by NOK 4.1
billion and NOK 2.8 billion, respectively, mainly due to disposal of Tapad, and utilisation of tax losses in Denmark and Thailand.
Tax assets recognised on tax losses carried forward
Thailand and Denmark have recognised tax assets on unused tax losses as the Group expects there will be sufficient future taxable profits available
to utilise these losses.
Uncertain tax positions
Pakistan
Telenor Pakistan has received reassessment orders from the Tax Authority concerning deductibility of certain expenses in tax returns and
disputing the adjustment of advance income tax paid on import of equipment with a total exposure of NOK 2.5 billion. Telenor Pakistan is of the
opinion that the deductibility of these expenses is in accordance with the tax law in Pakistan (also supported by external legal advisors), hence
Telenor Pakistan disagrees with the reassessment orders and has challenged the orders, which are pending at various appellate forums.
Norway
In 2012, Telenor ASA recorded a loss on receivables on its Indian subsidiary Unitech Wireless after having repaid, as guarantor, all Unitech Wireless’
interest-bearing borrowings, amounting to NOK 10.6 billion. A deferred tax asset of NOK 2.5 billion was recognised. In 2013, after the business
transfer from Unitech Wireless to Telenor India was completed, Telenor ASA deducted the actual tax loss of NOK 9.3 billion in its tax return. During
2017 and 2018 Telenor ASA received draft notices of possible reassessment, and Telenor has disclosed an uncertain tax position in its Annual
Reports since 2016. On 22 August 2019, Telenor ASA received a reassessment order related to income year 2013, disallowing deduction for the loss
Telenor ASA recognised in 2012. Following this reassessment, Telenor ASA recognised a tax expense of NOK 2.5 billion in the third quarter 2019 and
paid the amount on 3 October 2019. Telenor ASA disagrees with the tax authorities’ position and has appealed the reassessment. In a decision
received 10 February 2021 the Tax Appeal Board upheld the reassessment. Telenor ASA appealed the decision to the district court. The court
hearing is scheduled from 2 to 9 March 2022.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 102
Tax effect of temporary differences and tax losses carried forward as of 31 December
2021
2020
NOK in millions
Deferred
tax assets
Deferred tax
liabilities
Of which
deferred
assets
not recognised
Recognised in
the income
statement
Deferred
tax assets
Deferred tax
liabilities
Of which
deferred assets not
recognised
Recognised in
the income
statement
Tangible and intangible assets
1,861
(11,885)
(80)
571
1,130
(12,487)
(91)
157
Undistributed earnings in foreign subsidiaries
and associated companies
-
(344)
-
106
-
(465)
-
(52)
Non-current borrowings
4,920
(169)
-
(807)
6,785
(215)
-
714
Other non-current items
1,262
(1,307)
-
119
1,072
(1,194)
-
135
Total non-current assets and liabilities
8,043
(13,706)
(80)
(12)
8,987
(14,361)
(91)
954
Total current assets and liabilities
2,884
(288)
-
1,021
2,310
(111)
-
(574)
Tax losses carried forward
1,184
-
(216)
(241)
1,516
-
(239)
(613)
Valuation allowance recognised
in the income statement
17
12
Deferred tax recognised in the income
statement
785
Total deferred tax assets/liabilities
12,111
(13,994)
(296)
12,812
(14,472)
(330)
Net deferred tax assets/liabilities
-
(2,179)
-
-
(1,990)
-
Of which deferred tax assets
-
2,195
-
2,841
Of which deferred tax liabilities
-
(4,374)
-
(4,831)
For 2021, the decrease in deferred tax assets is mainly related to the reclassification of Telenor Myanmar as discontinued operations (see note 4).
Changes in net deferred tax assets/liabilities
NOK in millions
2021
2020
As of 1 January
(1,990)
(2,457)
Recognised in the income statement
785
(221)
Recognised in other comprehensive income
(592)
881
Recognised directly to equity
(14)
(19)
Acquisitions and disposals of subsidiaries
9
(90)
Translation differences on deferred taxes
63
(147)
Discontinued operations
(440)
63
As of 31 December
(2,179)
(1,990)
For 2021, the change of the amount recognised in other comprehensive income between 2021 and 2020 is related to gains on net investment
hedges.
NOTE 14
Earnings per share
The calculations of earnings per share attributable to the ordinary equity holders of Telenor ASA are based on the following net income and share
data:
Net income
NOK in millions
2021
2020
Net income from continuing operations
8,281
14,155
Net income from discontinued operations
(6,753)
3,186
Net income from total operations
1,528
17,341
Number of shares
In thousands
2021
2020
Weighted average number of shares for the purpose of basic earnings per share
1,399,458
1,407,764
Basic/Diluted earnings per share
NOK
2021
2020
Basic/Diluted earnings per share from continuing operations
5.92
10.05
Basic/Diluted earnings per share from discontinued operations
(4.83)
2.26
Basic/Diluted earnings per share for total operations
1.09
12.32
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 103
NOTE 15
Goodwill
NOK in millions
Telenor
Sweden
dtac
Thailand
DNA
Finland
Tapad
Other
Sum
Accumulated cost
As of 1 January 2020
6,124
3,694
16,396
2,816
1,512
30,541
Translations differences
647
(122)
1,006
200
(4)
1,727
Arising on acquisition of subsidiaries
-
-
-
-
85
85
Derecognised on disposal of subsidiaries and
reclassified to assets held for sale
-
-
-
(3,016)
(89)
(3,105)
As of 31 December 2020
6,771
3,572
17,401
-
1,504
29,248
Translations differences
(455)
(249)
(807)
-
(7)
(1,518)
As of 31 December 2021
6,317
3,323
16,594
-
1,497
27,730
Accumulated impairment
As of 1 January 2020
(251)
-
-
(2,816)
(24)
(3,091)
Translations differences
(27)
-
-
(200)
-
(226)
Derecognised on disposal of subsidiaries and
reclassified to assets held for sale
-
-
-
3,016
-
3,016
As of 31 December 2020
(278)
-
-
-
(24)
(301)
Translations differences
19
-
-
-
-
19
As of 31 December 2021
(259)
-
-
-
(24)
(283)
Carrying amount
As of 31 December 2021
6,057
3,323
16,594
-
1,473
27,448
As of 31 December 2020
6,493
3,572
17,401
-
1,480
28,947
Other includes primarily Digi (Malaysia) and Telenor Norway.
See note 16 for impairment testing.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 104
NOTE 16
Impairment testing
Goodwill acquired through business combinations has been allocated to individual cash-generating units as presented in note 15.
The recoverable amount of assets and companies is the higher of value in use and fair value less cost of disposal. Fair value less cost of disposal
derived from quoted market prices as of 31 December 2021 and 2020, has been applied to determine the recoverable amount of the listed cash-
generating units with goodwill, Digi and dtac. Digi is listed on the Stock Exchange in Malaysia and dtac is listed on the Stock Exchange in Thailand.
Discounted cash flow models have been applied to determine the value in use for the remaining cash-generating units, based on the most recent
financial forecasts approved by management. Management has projected cash flows based on financial forecasts and strategy plans covering the
period 2022-2024 and 2022-2026 for DNA. The cash flows beyond the explicit forecast period have been extrapolated into perpetuity using a
constant nominal growth rate to arrive at the terminal value. The estimates of value in use have been compared to market valuation and multiples
for peers in the telecommunication business for reasonableness.
Key assumptions in the discounted cash flow models used for value in use calculations
Key assumptions used in the calculation of value in use are growth rates, ARPU, EBITDA margins, capital expenses (capex) and discount rates.
Growth rates
expected development in the market in which the entity operates and assumptions in terms of development in market share. The growth rates
applied in the explicit forecast period converge from its current level experienced over the last few years to the long-term growth level in the
market where the entity operates. The growth rates used to extrapolate cash flow projections beyond the explicit forecast period are not higher
than the average expected long-term growth in the markets in which the entities operates. In periods with relatively low discount rates, the
estimated growth rates used in the projections might be determined significantly below the average expected long term growth observed in the
market.
ARPU
revenues from the company’s own subscriptions, divided by the average number of subscriptions for the relevant period. ARPU is estimated based
on the current ARPU level and expected future market development.
EBITDA margin
1)
implemented operational efficiency programmes are included. Changes in the outcome of these initiatives may affect future estimated EBITDA
margins.
Capital expenses (capex)
1)
long run. Changes in traffic volumes and number of subscriptions during a growth phase will affect the future capex/revenues ratio. Estimated
capex does not include capex that enhances current performance of assets, or new spectrum. However, renewals of existing spectrum licenses
are included in the projections. For renewals of spectrum licenses, the renewal prices are related with uncertainty. To estimate renewal prices
Telenor takes into consideration the development in neighbouring countries and more advanced markets.
Discount rates
methodology. The cost is derived from its weighted average cost of capital. In economies where the Group considers risk-free yields to be
unreliable, the WACC rates used in discounting the future cash flows are based on a US 30-year risk-free interest rate, adjusted with a country risk
premium and the inflation differential between the US and the relevant country. The discount rates consider the debt premium, market risk
premium, gearing, corporate tax rate, inflation, and asset beta. For cash-generating units in economies with unstable inflation rates, rolling
discount rates are applied.
1)
Please refer to page 175 for description of alternative performance measures.
The recoverable amounts for the cash-generating units with significant goodwill have been determined based on the following discount rates and
terminal value nominal growth rates for the years 2021 and 2020:
Discount rate after tax (%)
Discount rate pre-tax (%)
Nominal growth in cash flow in terminal value (%)
2021
2020
2021
2020
2021
2020
Telenor Sweden
5.0
5.0
6.4
6.4
0.0
0.0
DNA
5.0
5.0
6.3
6.3
0.75
0.5
In the recoverable amount assessment, the Group has applied estimated cash flows after tax and corresponding discount rates after tax. The
recoverable amounts would not change significantly if pre-tax cash flows and pre-tax discount rates had been applied instead.
Impairment in 2021 and 2020
The Group has not recognised any significant impairments in 2021 or 2020, except for the impairment recognised for discontinued operations, see
note 4.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 105
Sensitive cash-generating units with significant goodwill
Apart from DNA in Finland, the Group believes that no reasonably possible change in any of the key assumptions used for impairment testing would
cause the carrying amounts of the cash-generating units with significant goodwill to exceed recoverable amounts. The recoverable amount of DNA
has been estimated based on discounted cash flows from current revenue streams and the estimated recoverable amount exceeds the carrying
amount by approximately NOK 4.8 billion. Key assumptions used to determine recoverable amount of DNA are listed in the table below:
Key assumptions in 2021
DNA
Revenue growth during 2022-2026, per cent
1)
1.9
EBITDA growth during 2022-2026, per cent
1)
3.3
EBITDA margin growth from 2022 to 2026, percentage points
2)
0.5
EBITDA margin in the year used as basis for calculation of terminal value, per cent
39.7
Nominal growth in cash flow in terminal value, per cent
0.75
Capex/revenues in the terminal value, per cent
14.3
WACC, per cent
5.0
1)
Represents the compound annual growth rate during the period.
2)
Represents annual growth during the period.
The Finnish market has historically seen a relatively high growth in subscription and traffic revenues. The expected growth in revenue and EBITDA
for DNA reflects expectations of continued upselling of existing customers following the 5G rollout, increased market share within the business
segment and higher contribution from value added services, supported by DNA’s historical performance and external sources of information. Real
GDP growth in the Finnish economy is expected to be between 1.5-2.0 % per year in the medium to long-term period, and inflation is expected to be
at comparable level. Capex/revenues in terminal value represent normal investment level after 5G roll-out and is in line with historical levels
(excluding spectrum). Spectrum prices are assumed to be in line with historical levels.
The following changes in key assumptions, in isolation, would result in the recoverable amount being approximately equal to the carrying amount.
Consequential effects of a change in one key assumption on other key assumptions may occur. Predicting any interaction between them involves
significant uncertainties and judgements, and thus has not been done. Changes beyond those described below may lead to impairment:
DNA
Decrease in revenue growth
1)
Decrease in EBITDA growth
1)
Decrease in EBITDA margin growth
2)
Decrease in EBITDA margin in the year used as basis for calculation of terminal value by 2.9 percentage points
Decrease in nominal growth in cash flow in terminal value by 0.7 percentage points
Increase in capex/revenues in the terminal value by 2.4 percentage points
Increase in WACC by 0.6 percentage points
3)
Represents the compound annual growth rate during the period.
4)
Represents annual growth during the period.
Sensitive cash-generating units without goodwill
The recoverable amount of Telenor Pakistan has been estimated based on discounted cash flows from current revenue streams subject to
scenario analysis incorporating the uncertainty related to key assumptions; WACC and perpetual growth. The recoverable amount is estimated to
be approximately equal to the carrying amount of Telenor Pakistan as of 31 December 2021. Hence, adverse changes in political and/or regulatory
development, including unfavourable court decisions, and changes in management’s and market participants’ evaluations and assumptions, may
give rise to impairment being recognised in future periods.
Telenor Pakistan’s 900 MHz and 1800 MHz spectrum licence expired on 25 May 2019, and Telenor Pakistan applied for renewal. The renewal fee was
set to NOK 4.0 billion by the Pakistan Telecommunication Authority (PTA) for an extension of 15 years. Telenor Pakistan disagrees with the terms
and conditions for renewal and has challenged the terms and conditions. The case is now pending in the Supreme Court. In December 2021, Telenor
Pakistan signed the licence agreement under protest whilst waiting for the Supreme Court’s hearing of the case. Considering the unresolved
dispute regarding the license payments, NOK 2.5 billion has been recognised as right-of-use asset. Please see note 34 for more information.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 106
NOTE 17
Intangible assets
NOK in millions
Customer
base
Trade-
marks
1)
Software
acquired
Internally
generated
software
Others
Work in
progress
2)
Total
Accumulated cost
As of 1 January 2020
2,407
6,235
17,451
4,130
1,954
2,282
34,459
Reclassifications
3)
-
-
983
292
73
(1,519)
(171)
Additions
-
-
1,341
-
101
1,078
2,520
Additions internally developed
-
-
-
285
13
-
297
Additions through acquisition of subsidiaries
3
-
-
44
-
-
47
Translation differences
150
200
295
135
129
58
967
Derecognition
-
(63)
(308)
(632)
(173)
(4)
(1,180)
As of 31 December 2020
2,560
6,372
19,762
4,253
2,097
1,894
36,938
Reclassifications
3)
-
-
1,386
700
(423)
(2,053)
(391)
Additions
-
-
1,111
-
99
1,379
2,589
Additions internally developed
-
-
-
219
8
-
227
Additions through acquisition of subsidiaries
-
-
-
-
-
-
-
Translation differences
(114)
(331)
(518)
(103)
(92)
(40)
(1,199)
Derecognition
(77)
-
(871)
(392)
(250)
(1)
(1,592)
Reclassified to assets held for sale
-
-
(361)
-
-
-
(361)
As of 31 December 2021
2,369
6,041
20,510
4,677
1,438
1,178
36,212
Accumulated amortisation and impairment
As of 1 January 2020
(726)
(3,080)
(14,173)
(3,568)
(1,533)
(8)
(23,090)
Amortisation - continuing operations
(295)
-
(2,144)
(424)
(223)
-
(3,086)
Amortisation - discontinued operations
-
-
(53)
-
-
-
(53)
Impairment - continuing operations
-
-
-
(8)
-
(3)
(11)
Translation differences
(43)
(6)
(213)
(96)
(122)
-
(479)
Derecognition
-
-
274
543
175
8
1,000
As of 31 December 2020
(1,064)
(3,086)
(16,309)
(3,552)
(1,703)
(2)
(25,716)
Reclassifications
3)
-
-
-
(40)
230
-
190
Amortisation - continuing operations
(247)
-
(2,129)
(504)
(188)
-
(3,069)
Amortisation - discontinued operations
-
-
(10)
-
-
-
(10)
Impairment - discontinued operations
-
-
(140)
-
-
-
(140)
Translation differences
50
178
420
62
88
-
798
Derecognition
77
-
855
383
250
2
1,569
Reclassified to assets held for sale
-
-
361
-
-
-
361
As of 31 December 2021
(1,184)
(2,907)
(16,954)
(3,651)
(1,323)
-
(26,018)
Carrying amount
As of 31 December 2021
1,185
3,134
3,556
1,026
115
1,178
10,195
As of 31 December 2020
1,496
3,286
3,453
702
394
1,892
11,222
Amortisation periods in years
3-20
-
3-10
3-5
3-5
-
-
1)
Trademarks have indefinite useful lives.
2)
The Additions line items represent net additions of work in progress during the financial year. Work in progress capitalised and activated within the same
financial year is shown as Additions in the relevant asset categories in this table.
3)
Including reclassifications to/from other lines in the statement of financial position which are not a part of this table.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 107
NOTE 18
Leases
Group as lessee
The Group recognise lease liabilities related to lease payments over the lease term with corresponding right-of-assets under all lease agreements
where the Group is a lessee. In addition, the right to use the underlying spectrum is accounted for as a lease. For information on judgement applied
when evaluating lease term of contracts with renewal or termination options, see note 3.
Right-of-use assets
Right-of-use assets are classified based on the nature of underlying assets as follow:
NOK in millions
Spectrum
licences
1)
Network
passive infra-
structure
Cables
Land
Buildings
Others
Total
Accumulated cost
As of 1 January 2020
48,471
16,525
5,305
4,814
2,869
109
78,091
Additions
5,495
4,256
378
1,620
1,772
48
13,570
Additions through acquisition of subsidiaries
2
-
-
-
-
-
2
Derecognition
(84)
(624)
(98)
(416)
(550)
(46)
(1,818)
Disposal of companies
-
-
-
(13)
(59)
-
(72)
Reclassifications
1
285
(29)
(234)
42
-
64
Translation differences
(461)
22
295
(152)
92
5
(199)
As of 31 December 2020
53,423
20,464
5,851
5,618
4,167
116
89,638
Additions
4,403
2,999
213
748
452
200
9,015
Derecognition
(93)
(1,121)
(191)
(453)
(348)
(40)
(2,246)
Reclassifications
(2)
(326)
-
238
87
-
-
Translation differences
(2,930)
(1,405)
(415)
(299)
(157)
-
(5,207)
Reclassified to assets held for sale
(4,563)
(4,414)
(1,403)
(105)
(102)
(6)
(10,594)
As of 31 December 2021
50,237
16,197
4,054
5,747
4,099
270
80,604
Accumulated depreciation
As of 1 January 2020
(13,133)
(2,503)
(1,430)
(893)
(712)
(40)
(18,711)
Amortisation - continuing operations
(3,103)
(2,470)
(525)
(1,027)
(765)
(44)
(7,933)
Amortisation - discontinued operations
(466)
(739)
(191)
(26)
(24)
(3)
(1,448)
Derecognition
79
318
44
253
180
42
916
Disposal of companies
-
-
-
6
26
-
32
Reclassifications
124
6
(145)
(15)
(17)
-
(47)
Translation differences
234
112
(26)
56
(10)
(1)
365
As of 31 December 2020
(16,264)
(5,276)
(2,272)
(1,646)
(1,321)
(46)
(26,826)
Amortisation - continuing operations
(3,348)
(2,830)
(487)
(1,007)
(715)
(61)
(8,448)
Amortisation - discontinued operations
(93)
(405)
(126)
(10)
(10)
(1)
(645)
Impairment - discontinued operations
(2,542)
-
-
-
-
-
(2,542)
Reassessment of RoU assets - discontinued
operations
(136)
(2,103)
(720)
(47)
(40)
(1)
(3,047)
Derecognition
93
572
180
278
312
34
1,469
Reclassifications
(3)
15
(2)
4
(14)
-
-
Translation differences
795
391
121
92
69
3
1,472
Reclassified to assets held for sale
4,543
3,651
1,150
89
88
5
9,526
As of 31 December 2021
(16,954)
(5,986)
(2,156)
(2,247)
(1,631)
(67)
(29,040)
Carrying amount
As of 31 December 2020
37,159
15,188
3,579
3,972
2,845
70
62,813
As of 31 December 2021
33,283
10,211
1,898
3,500
2,467
203
51,565
Weighted average remaining lease term
As of 31 December 2020
1)
-
6
7
5
9
3
-
As of 31 December 2021
1)
-
5
7
5
9
2
-
Related lease liability disaggregated per class of
right-of-use assets
As of 31 December 2020
17,047
15,071
2,966
5,189
4,535
75
44,882
As of 31 December 2021
14,760
10,134
1,460
4,499
4,024
201
35,077
1)
See table below for overview spectrum licences, including lease term.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 108
For lease of network passive infrastructure (lease of tower space in networks and lease of part of buildings for own towers), land for own sites or
towers and lease of buildings for office spaces, equipment and retail stores, lease agreements generally contain termination options or renewal
options. These options are used to limit the period to which the Group is committed to individual lease contracts and to maximise operational
flexibility in terms of dynamic network requirements. The Group has determined the lease term as the non-cancellable term of the lease, together
with any periods covered by an option to extend the lease on the same terms and conditions, if it is reasonably certain to exercise the option, or
periods covered by an option to terminate the lease, if it is reasonably certain not to exercise the option. The remaining non-cancellable period for
lease contracts under network passive infrastructure is 3 years on average, a reduction of 2 years from 2020 which is mainly due to exclusion of
Myanmar from 2021 calculation and reduction of non-cancellable period after modifications of CAT lease agreement in Thailand. The non-
cancellable period for lease contracts related to land is 2 years on average, which is mainly driven by non-cancellable lease agreements in Thailand.
On 1 February 2021, a state of emergency was declared under military leadership in Myanmar. Due to worsening of the economic and business
environment outlook and a deteriorating security and human rights situation, Telenor saw limited prospects of improvement going forward. As a
consequence, Telenor made an impairment of the right of use assets and at the same time reassessed the lease term of all the lease agreements in
Myanmar, limiting the lease term to one year. Please see note 4 for further information.
The additions of spectrum licences in 2021 were primarily related to renewal of spectrum under the 900 MHz and 1800 MHz bands in Pakistan,
acquisition of spectrum under 1800 MHz and 2100 MHz bands in Grameenphone, 3500 MHz band in Sweden and 3500 MHz and 26 GHz bands in
Denmark. The additions of spectrum licences in 2020 were primarily related to acquisition of spectrum under the 700 MHz and 26 GHz bands in
dtac, 900 MHz band in Denmark (the licences are held by TT Netværket), and 26 GHz band in DNA.
In 2021, the additions in network passive infrastructure were mainly related to site leases from towerco in Grameenphone, CAT equipment in dtac,
tower spaces and part of building for own towers in Digi and Telenor Norway. The additions in cables were mainly in Sweden. The additions in
building were mainly related to dtac and Telenor Infra. The additions in land were mainly related to land for own sites in dtac, Digi and Pakistan.
In 2020, the additions in network passive infrastructure were mainly related to tower spaces and part of building for own towers in DNA, Digi,
Myanmar, and Telenor Norway. The additions in cables were mainly in Myanmar and Sweden. The additions in building were mainly related to dtac
and leaseback of Fornebu headquarters in Norway (see more information related to the sale and leaseback transaction below). The additions in
land were mainly related to land for own sites or towers in dtac, Digi and Pakistan.
For lease of spectrum, the agreements are generally non-cancellable. The Group has not considered periods covered by renewal options even if in
some agreements the option to renew exists, given the uncertainty around terms and conditions of renewal of licences.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 109
The following table sets forth the spectrum licences that the Group holds as of 31 December 2021:
Spectrum (MHz)
Bandwidth (MHz)
Spectrum expiration
Telenor Norway
700
2x10
2039
800
2×10
2033
900
2×15
2033
1800
2×10 + 2×20
2028/2033
2100
2×20
2032
2600
2×40
2022
2600
2×40
2042
3500
120
2042
Telenor Sweden
700
2×10
2040
800
2×10
2035
900
2×6a) + 2×5
2025
1800
2×20 + 2×10
2027/2037
2100
2×19.8 + 1×5
2025
2600
2×40 1
2023
3500
100
2045
Telenor Denmark
700
2x5
2040
800
2×10
2034
900
2×10
2034
1500
45 2
2042
1800
2×25
2032
2100
2×15 + 1×5
2022
2100
2x20
2042
2600
2×20 + 1×10
2030
3500
140
2042
26000
600
2042
DNA, Finland
700
2x10
2033
800
2x10
2033
900
2x11.6
2033
1800
2x24.8
2033
2100
2x19.8
2033
2600
2x20
2029
3500
1x130
2033
26000
1x800
2033
dtac, Thailand
700
2x10
2035
900
2×5
2033
1800
2×5
2033
2100
2×15
2027
2300
1×60
2025
26000
1x200
2035
Digi, Malaysia
900
2×5
2032
1800
2×20
2032
2100
2×15
2034
2600
2×10
2022
2600
2×10
2022
Grameenphone, Bangladesh
900
2×7.4
2026
1800
2×7.2 + 2×7.4 +2x0.4
2026
1800
2×5
2033
2100
2×10
2026
2100
2×10
2028
Telenor Pakistan
850
2×10
2031
900
2×4.8
2034
1800
2×8.8
2034
2100
2×5
2029
Telenor Myanmar - Assets held for sale
900
2×5
2029
900
2×2.2
2023
1800
2×20
2029
2100
2×10+2×5
2029
1)
The licences are held by Net4Mobility (a joint operation with Tele 2 owned 50% by the Group).
2)
The licences are held by TT Netværket (a joint operation with Telia, owned 50% by the Group).
3)
As a part the 900 MHz spectrum licencing conditions, dtac is entitled to use spectrum under the 850 MHz band before fully switching to the spectrum in the
900 MHz band.
4)
The spectrum is held under capacity agreement with TOT and therefore, is not part of right-of-use assets.
5)
The spectrum is held under agreement with Altel.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 110
Telenor Pakistan’s 900 MHz and 1800 MHz spectrum licence expired on 25 May 2019, and the renewal fee was set to NOK 4.0 billion (USD 449
million) by the Pakistan Telecommunication Authority (PTA) for an extension period of 15 years. Telenor Pakistan disagrees with the terms and
conditions for renewal, primarily on the price. Telenor Pakistan believes that the renewal price should have been NOK 2.5 billion (USD 291 million),
which is the same as for prior renewals for other operators. Accordingly, Telenor Pakistan challenged the terms and conditions for renewal of said
licence in Islamabad High Court. On 19 July 2021, the High Court decided the case in Telenor’s disfavor. Telenor Pakistan appealed the case to the
Supreme Court on 31 August 2021. In December 2021, Telenor Pakistan signed the licence under protest whilst waiting for the Supreme Court’s
hearing of the case. Telenor Pakistan has paid a total of NOK 2.8 billion (USD 314 million excl. interest) of the demanded licence renewal fee, which is
considered adjustable against the final outcome of the case. Considering the unresolved dispute regarding the license payments, NOK 2.5 billion
has been recognised as right-of-use asset representing the in substance fixed lease payments, and NOK 0.3 billion has been recognised as
prepayment.
Lease liabilities
Lease liabilities measured at amortised cost:
2021
2020
NOK in millions
Current
Non-current
Total
Current
Non-current
Total
Lease liability related to spectrum licences
2,264
12,496
14,760
3,601
13,446
17,047
Lease liability related to other lease contracts
4,713
15,604
20,317
5,697
22,138
27,835
Total lease liabilities
6,977
28,101
35,077
9,298
35,584
44,882
The distribution of lease liabilities per currency and subsidiary as of 31 December 2021 is as follow:
2021
2020
NOK in millions
Currency
Spectrum
licences
Other lease
contracts
Total
Spectrum
licences
Other lease
contracts
Total
Subsidiary
dtac
THB
9,350
5,062
14,412
11,718
6,411
18,128
Digi
MYR
1,776
3,428
5,204
1,892
3,587
5,479
Grameenphone
BDT
1,230
2,059
3,289
562
1,505
2,066
Myanmar
MMK
-
-
-
220
4,595
4,814
Myanmar
USD
-
-
-
-
773
773
Pakistan
PKR
-
2,339
2,339
-
2,546
2,546
Pakistan
USD
88
-
88
343
-
343
Norway
NOK
1,401
351
1,752
1,560
714
2,274
Sweden
SEK
36
1,875
1,912
42
2,407
2,449
Denmark
DKK
585
569
1,154
285
686
971
Finland
EUR
294
1,589
1,883
426
1,768
2,193
Other units
NOK
-
3,044
3,044
-
2,844
2,844
Total subsidiaries
14,760
20,317
35,077
17,047
27,835
44,882
The lease liabilities maturity profile is as follow:
NOK in millions
Total as of
31.12.21
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
Lease liabilities - spectrum licences
14,760
2,264
1,812
1,852
1,839
1,864
1,768
800
798
811
352
600
Lease liabilities - other lease contracts
20,317
4,713
3,752
3,650
2,944
1,995
796
465
316
226
161
1,299
Sum of lease liabilities
35,077
6,977
5,564
5,503
4,783
3,858
2,565
1,265
1,114
1,037
514
1,899
Future interest payments
4,672
1,158
927
744
562
404
277
192
151
114
80
63
Total including future interest
39,749
8,135
6,491
6,247
5,345
4,263
2,842
1,457
1,264
1,151
594
1,961
NOK in millions
Total as of
31.12.20
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
Lease liabilities - spectrum licences
17,047
3,601
1,863
1,779
1,772
1,768
1,805
1,848
806
803
298
704
Lease liabilities - other lease contracts
27,835
5,696
4,977
4,401
3,857
3,382
2,144
874
498
331
161
1,513
Sum of lease liabilities
44,882
9,298
6,840
6,180
5,629
5,150
3,950
2,723
1,304
1,134
459
2,217
Future interest payments
6,077
1,501
1,187
959
753
565
393
261
171
127
89
74
Total including future interest
50,959
10,795
8,027
7,139
6,381
5,715
4,343
2,984
1,474
1,261
548
2,291
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 111
Cash payments made relating to lease contracts are presented below:
NOK in millions
Classification in cash flow statement
2021
2020
Payments of lease liabilities – principal portion
Financing activities
8,826
9,029
Payments of lease liabilities – interest portion
Operating activities
1,029
2,108
Payments of variable, short term and low value leases
Operating activities
3,540
3,800
Prepayments made at or before lease
Investing activities
1,202
984
Total cash outflow
14,597
15,922
Repayments of the principal portion related to total lease liabilities in 2021 of NOK 8.8 billion (NOK 9.0 billion in 2020) include instalment payment of
spectrum licences of NOK 2.9 billion (NOK 3.6 billion in 2020) and repayments of other leases of NOK 6.0 billion (NOK 5.4 billion in 2020). During 2021,
the instalment payments of spectrum licences were mainly in dtac, Norway and Pakistan whereas in 2020 it was mainly in dtac, Pakistan and Digi.
Lease payments related to other lease contracts were mainly in dtac, Sweden, Digi, Myanmar, Pakistan and DNA in 2021 whereas in 2020 it was
mainly in dtac, Sweden, Digi, and Myanmar.
Repayments of the interest portion of total lease liabilities in 2021 of NOK 1.0 billion include repayments of interest related to spectrum licences of
NOK 0.3 billion (NOK 0.9 billion in 2020) and repayments of interest related to other lease contracts of NOK 0.7 billion (NOK 1.2 billion in 2020).
Payments of variable, short term and low value leases of NOK 3.5 billion include variable lease payments of NOK 3.2 billion and payments of short
term and low value leases of NOK 0.3 billion.
Prepayments of investing activities of NOK 1.2 billion in 2021 mainly related to payments made at or before acquisition of spectrum licences of NOK
0.4 billion in Sweden for the bands of 3500 MHz and NOK 0.4 billion in Grameenphone for the bands 1800 MHz and 2100 MHz.
Expenses recognised in the income statement related to lease contracts are presented below:
NOK in millions
Classification in income statement
2021
2020
Depreciation of right-of-use assets
Depreciation and amortisation
8,448
7,933
Interest expenses on lease liabilities
Financial expenses (note 12)
1,286
1,426
Variable lease expenses not dependant on index or rate
Other operating expenses (note 9)
2,783
2,964
Variable lease expenses not dependant on index or rate
Cost of materials and traffic charges (note 7)
116
168
Expenses relating to short term leases
Other operating expenses (note 9)
244
231
Expenses relating to low value leases
Other operating expenses (note 9)
12
14
Total
12,889
12,736
Variable lease expenses of NOK 2.9 billion (NOK 3.1 billion in 2020) recognised in other operating expenses include NOK 2.5 billion (NOK 2.7 billion in
2020) related to spectrum and NOK 0.4 billion (NOK 0.4 billion in 2020) related to other lease contracts. Variable lease expenses related to spectrum
agreements vary mainly with revenue, as a significant part of the expenses are based on share of revenues under the agreements. Variable lease
expenses related to other lease contracts of NOK 0.4 billion (0.4 billion NOK in 2020) represent energy charges paid to lessors as part of the lease
agreements for some mobile sites, and the expenses vary with the consumption of energy on those mobile sites.
Sale and leaseback in 2020
As part of the Group’s continued simplification program, the Group entered into two sale and leaseback transactions related to the headquarter
office building at Fornebu, Norway, and development properties in Norway that will not be needed once the planned copper net decommissioning
is completed.
Headquarter office building at Fornebu:
The Group disposed of its ownership of the headquarter office building at Fornebu, Norway, with a carrying amount of NOK 1.9 billion for a sale
consideration of NOK 4.9 billion. Upon closing of the transaction, the Group entered into several lease agreements with Snarøyveien 30 AS for
leasing back office space for parts of the building. The non-cancellable period under the lease agreements is between 7-15 years, with a lease term
of 7-25 years. A lease liability of NOK 2.4 billion was recognised, and a right-of-use asset amounting to NOK 1.0 billion was recognised at the
proportion of the previous carrying amount of the building that relates to the right-of-use retained by the Group. Consequently, a gain of NOK 1.2
billion (note 10) was recognised in the income statement which relates to the rights transferred. Under the lease agreements, in addition to the
repayment of lease liability along with interest, the Group will make variable lease payment to the lessor for its share of common costs related to
the use of the building.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 112
Development properties:
The Group disposed of its ownership of several development properties in Norway with a carrying amount of NOK 0.1 billion for a sale consideration
of NOK 0.9 billion. Upon closing of the transaction, the Group entered into lease agreements for leasing back those properties in their entirety for a
period of 5 years. After the initial lease period, Telenor will rent small and limited areas to host fibre and mobile equipment. The non-cancellable
period and lease term under these lease agreements are 5 years. A lease liability of NOK 0.2 billion was recognised, and a right-of-use asset
amounting to NOK 24 million was recognised at the proportion of the previous carrying amount of the building that relates to the right-of-use
retained by the Group. Consequently, a gain of NOK 0.5 billion (note 10) was recognised in the income statement which relates to the rights
transferred.
Group as lessor
Operating leases
The Group has operating lease arrangements in which it is a lessor, mainly related to passive infrastructure sharing with other telecommunication
operators. The Group has classified these leases as operating leases because they do not transfer substantially all the risks and rewards incidental
to ownership of the underlying assets.
Revenue of NOK 4.9 billion (NOK 4.5 billion in 2020) (note 6) recognised in the income statement includes variable lease revenue of NOK 65 million
(NOK 60 million in 2020) primarily relating to energy charges received from lessees based on the consumption.
The following table sets forth the maturity analysis of minimum lease payments to be received in nominal terms after the reporting date:
NOK in millions
2021
2020
Less than 1 year
4,919
4,599
1 to 2 years
4,478
3,917
2 to 3 years
4,438
3,851
3 to 4 years
2,658
3,679
4 to 5 years
400
1,256
After 5 years
504
127
Total
17,397
17,430
Finance leases
The Group has recognised receivables at present value of future lease payments to be received in lease arrangements where the Group has
transferred substantially all the risks and rewards incidental to ownership of the underlying assets to the lessee.
2021
2020
NOK in millions
Sublease of land
329
1,203
1,533
375
1,565
1,940
Lease of satellite
94
153
247
98
245
343
Total finance lease receivables
423
1,356
1,779
474
1,810
2,283
During 2021, the Group recognised interest income of NOK 73 million (NOK 99 million in 2020) (note 12) related to finance lease receivables.
Sublease of land in Thailand
Dtac has Tower Service Agreement with CAT and under the agreement, dtac transferred towers that dtac procured under the concession
agreement to operate and to provide cellular telephonic service and entered into lease agreement to use the towers. The right to use towers from
CAT was recognised as right-of-use asset with corresponding lease liability. Under the agreement, dtac shall itself have lease agreements for the
land with landowners and shall receive compensation from CAT for this. dtac recognised lease agreements as a lessee with the landowners for the
land related to transferred towers to CAT with related lease liabilities. Right-of-use assets related to land was derecognised on 1 January 2019
based on the sublease arrangement with CAT and a finance lease receivable was recognised with reference to the tenure of the agreement with
CAT.
Lease of satellite
The Group entered into a long-term lease with UPC on 1 April 2017 for the lease of 9 transponders on Thor 6, where the final payment from UPC will
be made in January 2025. According to the agreement, substantially all the risks and rewards related to Thor 6 are transferred to UPC, and
accordingly a finance lease receivable was recognised at present value, which represents the deferred payments to be received until January 2025.
The following table sets forth the maturity analysis of lease receivables:
NOK in millions
2021
2020
Less than 1 year
438
493
1 to 2 years
449
459
2 to 3 years
415
460
3 to 4 years
360
445
4 to 5 years
269
391
After 5 years
-
275
Total undiscounted lease payments receivable
1,931
2,523
Unearned interest income
(152)
(240)
Net investment in leases
1,779
2,283
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 113
NOTE 19
Property, plant and equipment
NOK in millions
Local,
regional
and trunk
networks
Mobile
telephone
network
Subscribe
r
equipmen
t
Switches
and equip-
ment
Radio
installa-
tions
Cable-TV
equipmen
t
Buildings
Land
Corporate
adminis-
trative
assets
Satellites
Work in
progress
1)
Total
Accumulated cost
As of 1 January 2020
60,458
37,759
1,758
17,304
44,326
6,286
11,960
1,060
11,467
5,021
7,364
204,764
Reclassifications
2)
1,173
2,123
141
507
1,879
87
(103)
2
477
-
(6,178)
107
Additions
2,796
1,554
864
310
2,092
107
98
9
866
-
5,573
14,269
Additions through acquisition of
subsidiaries
-
-
-
-
1
-
-
-
2
-
-
3
Translation differences
828
246
81
163
(296)
85
(27)
(17)
100
-
88
1,252
Derecognitions
(1,007)
(1,357)
(194)
(2,499)
(1,278)
(63)
(4,699)
(367)
(1,528)
-
(33)
(13,026)
As of 31 December 2020
64,248
40,324
2,651
15,785
46,725
6,502
7,229
686
11,383
5,021
6,814
207,369
Reclassifications
2)
1,890
3,014
195
484
3,270
84
(560)
3
(106)
-
(7,839)
436
Additions
1,653
792
752
367
1,784
65
35
2
703
(14)
8,749
14,888
Translation differences
(1,187)
(1,685)
(65)
(403)
(1,920)
(59)
(127)
(28)
(381)
-
(223)
(6,079)
Derecognitions
(869)
(1,645)
(504)
(1,219)
(2,271)
(28)
(155)
(3)
(872)
-
(7)
(7,574)
Reclassified to assets held for
sale
(2,064)
(1,564)
(1)
(484)
(3,751)
(272)
(36)
-
(465)
-
(167)
(8,804)
As of 31 December 2021
63,671
39,236
3,028
14,530
43,837
6,293
6,386
660
10,262
5,007
7,326
200,235
Accumulated depreciation and impairment
As of 1 January 2020
(37,901)
(20,794)
(915)
(14,620)
(24,257)
(3,836)
(7,516)
(15)
(8,497)
(3,233)
-
(121,585)
Reclassifications
2)
140
256
-
(81)
(488)
(1)
34
11
176
-
-
48
Depreciation - continuing
operations
(2,909)
(3,703)
(655)
(1,105)
(4,952)
(432)
(376)
-
(937)
(209)
-
(15,279)
Depreciation - discontinued
operations
(224)
(207)
-
(75)
(664)
-
(5)
-
(80)
-
-
(1,254)
Impairment - continuing
operations
-
-
-
-
(2)
-
-
-
-
-
-
(2)
Translation differences
(245)
(187)
(56)
(138)
235
(46)
35
-
(38)
-
-
(440)
Derecognition
972
1,196
194
2,377
1,215
63
3,030
-
1,463
-
-
10,510
As of 31 December 2020
(40,166)
(23,439)
(1,431)
(13,642)
(28,912)
(4,252)
(4,798)
(4)
(7,914)
(3,442)
-
(128,001)
Reclassifications
2)
(402)
(448)
(9)
(2)
(397)
-
381
1
641
-
-
(236)
Depreciation - continuing
operations
(2,959)
(3,648)
(823)
(806)
(4,534)
(395)
(250)
-
(729)
(206)
-
(14,351)
Depreciation - discontinued
operations
(43)
(38)
-
(9)
(136)
-
(1)
-
(17)
-
-
(245)
Impairment - discontinued
operations
(641)
(817)
-
(43)
(1,488)
-
(15)
-
(215)
-
(176)
(3,395)
Translation differences
503
935
48
325
1,180
38
74
1
227
-
-
3,331
Derecognition
862
1,559
504
1,218
2,257
27
123
-
811
-
-
7,361
Reclassified to assets held for
sale
1,463
1,562
1
484
3,746
135
36
-
465
-
176
8,067
As of 31 December 2021
(41,383)
(24,335)
(1,711)
(12,475)
(28,283)
(4,447)
(4,451)
(2)
(6,733)
(3,648)
-
(127,468)
Carrying amount
As of 31 December 2021
22,287
14,901
1,317
2,055
15,554
1,846
1,935
658
3,529
1,359
7,326
72,767
As of 31 December 2020
24,081
16,885
1,220
2,143
17,812
2,250
2,431
682
3,469
1,579
6,814
79,367
Depreciation periods, years
3)
3-30
5-20
3
3-7
5-15
3-15
5-30
-
2-10
17
-
-
1)
The Additions line items represent net additions of work in progress during the financial year. Work in progress capitalised and activated within the same
financial year is shown as Additions in the relevant asset categories in this table.
2)
Including reclassifications to/from other lines in the statement of financial position which is not a part of this table.
3)
Asset categories presented in this movement schedule is an aggregated total from different asset components belonging to a particular category, and the
disclosed depreciation rates represent a range of useful lives allocated to components.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 114
NOTE 20
Associated companies and joint arrangements
Associated companies and joint ventures
NOK in millions
2021
2020
Balance as of 1 January
6,417
4,299
Additions
393
4,043
Disposals
3
(142)
Share of net income (losses)
1)
(480)
(414)
Share of other comprehensive income
79
-
Dividends received
2)
(532)
(1,211)
Translation differences
(198)
(157)
Balance as of 31 December
5,683
6,417
Of which investment in Telenor Microfinance Bank Limited
3)
952
980
Of which investment in Carousell
4)
2,619
2,669
Of which investment in Allente
1,420
1,978
Of which investment in others
692
790
1)
Share of net income (loss) includes the Group’s share of net income (loss) after taxes, amortisation of excess values, impairments, and adjustment for
differences in accounting policies.
2)
Of which NOK 0.5 billion from Allente in 2021 and NOK 1.2 billion in 2020.
3)
Of which allocated to goodwill NOK 0.9 billion in 2021 and NOK 0.9 billion in 2020.
4)
Of which allocated to goodwill NOK 2.1 billion in 2021 and NOK 2.2 billion in 2020.
During 2021, the Group injected NOK 0.3 billion representing its proportionate share of the capital into Telenor Microfinance Bank Limited (TMB).
Share of net loss for 2021 includes the Group’s share of losses related to TMB of NOK 0.3 billion (NOK 0.3 billion in 2020).
As announced on 22 October 2019, the Group entered into an arrangement with Nordic Entertainment Group (NENT) to combine their satellite-
based entertainment businesses in a joint venture to extract synergies and deliver enhanced customer experience. The arrangement was
approved by the European Commission on 30 April 2020 and the transaction was closed on 5 May 2020. Accordingly, the Group disposed of Canal
Digital as a subsidiary and recognised its 50% share of the joint venture Allente at fair value of NOK 3.1 billion with a gain of NOK 1.7 billion
recognised during the second quarter of 2020.
During 2020, the Group`s economic interest increased from 32.4% to 36.3% for correction of employee share options in Carousell and an additional
gain of NOK 310 million on disposal of 701Search as a subsidiary was recognised. Following the capital investment in Carousell by consortium led by
Naver during 2020, the Groups economic interest was reduced from 36.3% to 35.2%. Further, the Group exchanged its 11.3% ownership interest in
associated company Silver Indonesia for additional 2.2% interest in Carousell and recognised a gain of NOK 55 million. As of 31 December 2020, the
Group’s economic interest in Carousell stands at 37.4%. During the third quarter of 2021, new capital of USD 100 million was raised by Carousell
leading to the dilution of Group`s economic interest in Carousell to 33.6% as of 31 December 2021. The gain of NOK 21 million was recognised in
2021.
Allente
Allente Group AB (Allente) is a joint venture where the Group controls 50% of the shares and the voting rights. The joint venture is accounted for
using the equity method. Allente is a Nordic TV distributor broadcasting via satellite and internet TV, to customers within Norway, Sweden,
Denmark, and Finland. Allente was established in May 2020 through a merger between the former Group subsidiary Canal Digital and Nordic
Entertainment Group (NENT).
The following table sets forth summarised financial information of Allente, and reconciliation with the carrying amount of the investment for the
Group:
2021
2020
Statement of comprehensive income
Revenue
6,826
4,699
EBITDA
593
620
Depreciation and amortisation
(663)
(515)
Net financial items
-
(4)
Income tax expense
46
(58)
Net income
(25)
43
Other comprehensive income(loss)
148
12
Total comprehensive income (loss)
123
55
Group's ownership in %
50
50
Group's share of net income (loss) from continuing operations
(12)
21
Group's share of other comprehensive income (loss)
74
6
Group's share of total comprehensive income (loss)
61
28
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 115
2021
2020
Statement of financial position
Non-current assets
4,910
5,553
Current assets excluding cash and cash equivalents
1,647
1,662
Cash and cash equivalents
191
1,297
Non-current non-interest-bearing liabilities
(514)
(599)
Non-current interest-bearing liabilities
(2,252)
(2,610)
Current non-interest-bearing liabilities
(1,940)
(2,203)
Total equity
2,042
3,101
Group's share of equity
1,021
1,550
Goodwill related to the Group's investment
399
428
Carrying amount of investment
1,420
1,978
Dividends received
501
1,209
Malaysia and Thailand
In June 2021, the Group and Axiata Group Berhad announced that they have entered into an agreement to merge Digi and Celcom Axiata Berhad in
Malaysia. The transaction is subject to approvals by shareholders and customary regulatory approval. If the merger is completed, the merged
company will be accounted for as an associated company in the financial statements of the Group.
In February 2022, dtac and True Corporation (“True”) announced that they have entered into an agreement to merge the two companies in
Thailand. The transaction is subject to approvals by shareholders and customary regulatory approval. If the merger is completed, the merged
company will be accounted for as an associated company in the financial statements of the Group. See note 38.
Joint operations
The Group is part of four joint arrangements for networks sharing in Sweden, Denmark, and Finland. These joint arrangements are structured
through separate vehicles. The activities are designed for the provision of output to the investors and hence these arrangements are classified as
joint operations.
Joint Operation
Description
Ownership interest in %
3G Infrastructure Services
Joint operation with the mobile operator 3 in Sweden
1)
50
Net4Mobility HB
Joint operation under partnership agreement with the mobile operator Tele2 Sverige AB in
Sweden
1)
50
TT Netværket P/S
Joint operation with the mobile operator TeliaSonera Mobile Holding AB in Denmark
50
Suomen Yhteisverkko Oy
Joint operations with mobile Operator Telia Finland Oy in Finland
2)
49
1)
Under Swedish law, all partners in a partnership are jointly and severally liable for all obligations in a partnersh ip.
2)
According to the shareholder’s agreement, both partners in are jointly and severally liable for all obligations in the joint undertaking.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 116
NOTE 21
Trade and other receivables
NOK in millions
Category
2021
2020
Receivables from contracts with customers
15,490
16,936
Provision for expected credit losses on trade receivables
(998)
(1,268)
Total receivables from contracts with customers as of 31 December
FAAC
1)
14,492
15,667
Interest-bearing receivables
3)
1,051
2,236
Finance lease receivable
4)
423
474
Accrued financial income
-
1
Other non-interest-bearing receivables
2,334
2,249
Provision for expected credit losses on other current receivables
(15)
(31)
Total other current receivables as of 31 December
FAAC
1)
3,793
4,929
Contract asset
362
412
Return good asset
5)
71
63
Governmental taxes and duties
685
905
Prepayments
2,336
4,383
Total other current non-financial assets as of 31 December
NF
2)
3,455
5,763
Total trade and other receivables as of 31 December
21,739
26,359
1)
FAAC: Financial assets at amortised cost
2)
NF: Non-financial assets and liabilities
3)
This includes the current portion of the deferred sales consideration receivable from PPF Group for the sale of shares in Telenor Serbia in 2018. See note 22
for more information.
4)
See note 18 for more information
5)
Asset for the right to recover returned goods on settling refund liabilities.
As of 31 December 2021, NOK 3.1 billion (NOK 0.7 billion as of 31 December 2020) of trade and other receivables relates to handset instalments not
due within one year.
NOK in millions
2021
2020
Balance as of 1 January
412
470
New contract assets during the period less transfer to receivables
(41)
(59)
Currency and other effects
(9)
1
Balance as of 31 December
362
412
Performance obligations to provide services are generally satisfied over time when or as the Group performs the related services over the agreed
service period. For the majority of contracts with customers, services will be delivered monthly during the contract period of maximum 24 months,
and payments normally follow the service delivery cycle. Performance obligations to deliver customer equipment are normally satisfied at the point
in time when the equipment is delivered to the customer. Payments related to equipment are made either when the equipment is delivered to the
customer or on a monthly basis over the agreed contract period due to instalment plans related to customer equipment giving rise to a receivable
and/or due to other differences between recognised revenue and amounts received or receivable from a customer resulting in contract assets in
the Group accounts. For the Group, the main part of recognised contract assets relates to contracts where the transaction price allocated to the
customer equipment is recovered by the Group through future service fee payments. The contract assets are transferred to receivables when
rights to payment become unconditional, normally monthly over the agreed instalment period.
NOK in millions
2021
2020
Provision as of 1 January
(1 268)
(1 200)
Change during the year - continuing operations
148
( 84)
Change during the year - discontinued operations
18
( 13)
Disposal of subsidiaries
-
15
Reclassified to assets held for sale
49
2
Currency and other effects
55
11
Provision as of 31 December
( 998)
(1 268)
Realised losses for the year - continuing operations
( 778)
( 839)
Realised losses for the year - discontinued operations
( 54)
( 54)
Recovered amounts previously provided for - continuing operations
85
73
Recovered amounts previously provided for - discontinued operations
-
2
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 117
Past due on the reporting date in the following periods:
NOK in millions
Carrying
amount
Not past due on the
reporting date
Less than 30 days
Between 30 and
60 days
Between 61 and
90 days
Between 91 and
180 days
Between 181 and
365 days
More than
365 days
As of 31 December 2021
Trade receivables
15,490
12,825
990
239
137
277
399
621
Provision for expected
(998)
(101)
(43)
(45)
(51)
(135)
(229)
(394)
Total trade receivables
14,492
12,724
947
194
86
142
171
227
As of 31 December 2020
Trade receivables
16,936
13,847
1,093
338
166
337
489
665
Provision for expected
(1,268)
(218)
(53)
(48)
(50)
(159)
(299)
(442)
Total trade receivables
15,667
13,629
1,040
290
117
178
190
223
For the trade and other current receivables that are not impaired or past due, there are no indicators at the date of the reporting that the debtors
will not be able to meet their payment obligations.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 118
NOTE 22
Other non-current assets and current financial assets
NOK in millions
Fair value level
5)
Category
2021
2020
Other non-current assets
Equity investments
3
FVTOCI
1)
975
968
Financial derivatives
2
FVTPL
2)
59
273
Financial derivatives designated for net investment hedge
2
27
665
Other financial non-current non-interest-bearing assets
FAAC
3)
3,318
3,088
Fair value hedge instruments
2
927
2,387
Other financial non-current interest-bearing assets
FAAC
3)
970
1,362
Finance lease receivable
6)
1,356
1,810
Total non-current financial assets as of 31 December
7,632
10,553
Contract costs
4,059
3,926
Governmental taxes and duties
138
111
Prepayments
217
266
Total non-current non-financial assets
NF
4)
4,414
4,304
Total other non-current assets as of 31 December
12,046
14,856
Other current financial assets
Assets held for trading
2
FVTPL
2)
48
39
Bonds and commercial papers > 3 months
FAAC
3)
327
356
Financial derivatives
2
FVTPL
2)
1
4
Financial derivatives designated for net investment hedge
2
320
177
Fair value hedge instruments
2
143
-
Total other current financial assets as of 31 December
839
576
1)
FVTOCI: Fair value through other comprehensive income.
2)
FVTPL: Fair value through profit and loss.
3)
FAAC: Financial assets at amortised cost.
4)
NF: Non-financial assets.
5)
For information about the fair value level of financial instruments, see note 30.
6)
See note 18 for more information.
Equity investments
Equity investments (FVTOCI) include capital contribution to Telenor Pension Fund of NOK 0.3 billion and other equity investments of NOK 0.7 billion
(NOK 0.3 billion and NOK 0.7 billion in 2020, respectively).
Other financial non-current non-interest-bearing assets
Other financial non-current non-interest-bearing assets as of 31 December 2021 includes a deposit of NOK 2.0 billion paid to the Bangladesh
Telecommunication Regulatory Commission (BTRC, see note 34), long term deposits of NOK 0.6 billion and other non-current receivables of NOK
0.7 billion (NOK 2.0 billion, NOK 0.6 billion and of NOK 0.5 billion in 2020, respectively).
Other financial non-current interest-bearing assets
As of 31 December 2020, other financial non-current interest-bearing assets includes deferred sales consideration receivable of NOK 1.0 billion
(EUR 100 million) from PPF Group for the sale of shares in Telenor Serbia in 2018, while receivable of NOK 2.2 billion (EUR 215 million) was included in
Trade and other receivables. During 2021, receivable plus interest of NOK 2.2 billion (EUR 215 million) was paid and the last installment plus interest of
NOK 1.0 billion (EUR 101 million) is included in Trade and other receivables as of 31 December 2021 (see note 21).
Contract costs
Contract costs include incremental costs of obtaining and fulfilling contracts with customers. Costs of obtaining a contract typically include sales
commissions incurred at the time of entering a sales contract with a customer. The amortisation period is the expected contract period, including
expected renewals. The below tables set forth the costs capitalised and amortised during the year 2021 and 2020:
NOK in millions
As of 31 December
2020
Costs capitalised
during the year
Amortisation
- continued
operations
Amortisation
- discontinued
operations
Impairment
- discontinued
operations
Translation
Differences
As of 31 December
2021
Contract acquisition costs
3,851
2,518
(2,259)
-
-
(101)
4,008
Contract fulfilment costs
75
21
(25)
(3)
(12)
(6)
51
Total contract costs
3,926
2,539
(2,285)
(3)
(13)
(107)
4,059
NOK in millions
As of 31 December
2019
Costs capitalised
during the year
Amortisation
- continued
operations
Amortisation
- discontinued
operations
Impairment
- discontinued
operations
Translation
Differences
As of 31 December
2020
Contract acquisition costs
3,534
2,453
(2,188)
(13)
-
65
3,851
Contract fulfilment costs
80
40
(34)
(16)
-
5
75
Total contract costs
3,614
2,493
(2,222)
(29)
-
70
3,926
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 119
NOTE 23
Additional cash flow information
Changes in net operating working capital
Changes in net operating working capital include changes in accounts receivable and accounts payable related to operating activities, and
inventory.
NOK in millions
2021
2020
Inventory
(319)
242
Trade and other receivables
392
1,589
Trade and other payables
831
(730)
Changes in net operating working capital
905
1,101
Property, plant and equipment and intangible assets reconciliation of additions and purchases
2021
2020
Additions to property, plant and equipment and (see note 19)
(14,888)
(14,269)
Additions to intangible assets (see note 17)
(2,816)
(2,817)
Additions to right-of-use assets (see note 18)
(9,015)
(13,570)
Capital expenses incurred as part of assets held for sale
(127)
(16)
Lease liabilities
5,704
14,121
Change in estimates for ARO obligations
(339)
781
Adjustments in lease liabilities
-
(1,630)
Changes in accounts payable and prepayments
1,985
(1,420)
Other Adjustments
50
(181)
Purchases of property plant and equipment and intangible assets (cash flow from investing activities)
(19,447)
(19,000)
Cash payments at or before lease commencement date are classified as cash outflows from investing activities. Subsequent payments during the
lease term are classified as cash outflows from financing activities.
During 2021, the recognised lease liabilities of NOK 5.7 billion represent the deferred payments of total additions in right-of-use assets of NOK 9.0
billion, NOK 3.3 billion was paid at or before lease commencement date mainly relating to spectrum licences in Pakistan (NOK 2.2 billion),
Grameenphone and Sweden, which is classified as cash outflow from investing activities. See note 18 for more information related to leases.
During 2020, the recognised lease liabilities of NOK 14.1 billion (of which NOK 1.6 billion is related to sale and leaseback agreements in Norway)
represent the deferred payments of total additions in right-of-use assets of NOK 13.6 billion, whereby NOK 1.1 billion was paid at or before lease
commencement date mainly relating to spectrum licences in dtac, which is classified as cash outflow from investing activities. See note 18 for more
information related to leases.
Changes in accounts payable and prepayments in 2021 are mainly due to reclassification from prepaid capex to right-of-use licences in Pakistan,
see note 18 for more information. Changes in accounts payable and prepayments in 2020 are mainly related to change in capex related payables in
Norway and Pakistan and spectrum licence renewal deposit in Pakistan, see note 18 for more information.
During 2020, adjustments in lease liabilities are mainly due to the sale and leaseback transaction related to the headquarter office building at
Fornebu, Norway, and development properties in Norway. See note 18 for further information.
Acquisitions and disposals of subsidiaries, associated companies, and joint ventures
The table below shows the effects on the consolidated statement of financial position from disposals of subsidiaries, associated companies, and
joint ventures.
2021
2020
Disposals of subsidiaries, associated companies, and joint ventures
Associated companies and joint ventures
(3)
142
Other non-current assets
12
4,587
Current assets
-
(159)
Liabilities
(1)
(1,777)
Gains (losses) adjusted for translation differences on disposals
1)
(174)
5,732
Sales price
(166)
8,525
Of which non-cash
182
(1,728)
Proceeds received as sale consideration
17
6,797
Cash in subsidiaries disposed of
-
854
Proceeds from disposal of subsidiaries and associated companies net of cash disposed of
17
7,651
1)
In 2021, there are no actual disposals, the effects are mainly related to adjustments to disposals made in 2020. In 2020, the total gain of NOK 5.7 billion mainly
relates to disposal of Canal Digital, Tapad, 701Search and Valyou (see note 10 and 20)
During 2020, disposals of associated companies and joint ventures were mainly related to disposal of the associated company Silver Indonesia, see
note 20.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 120
During 2021, disposals of subsidiaries were mainly related to disposal of development properties. During 2020, disposals of subsidiaries were mainly
related to disposal of the wholly owned subsidiary Canal Digital of NOK 1.7 billion to acquire a 50% share in the joint venture Allente, as well as
disposal of the headquarter office building at Fornebu, Tapad Inc and Valyou.
The table below shows the effects on the consolidated statement of financial position from acquisition of subsidiaries, associated companies, and
joint ventures.
2021
2020
Purchases of subsidiaries associated companies, and joint ventures
Investments in associated companies and joint ventures
393
4,043
Other non-current assets
-
139
Current assets
-
3
Liabilities
-
(48)
Non-controlling interests
1
-
Total purchase price and capital injections
394
4,137
Of which non-cash
(5)
(3,795)
Cash payments related to acquisitions
(391)
(340)
Cash in subsidiaries acquired
-
-
Purchases of subsidiaries associated companies and joint ventures net of cash acquired
(391)
(340)
During 2021, investments in associated companies and joint ventures are mainly related to capital injection in Telenor Microfinance Bank Limited
(TMB), see note 20.
During 2020, investments in associated companies and joint ventures are mainly related to contribution of the wholly owned subsidiary Canal
Digital to acquire a 50% ownership share in the joint venture Allente at fair value of NOK 3.1 billion and NOK 0.5 billion relates to Carousell. See note
20 for further information. In addition, a capital injection in the associated company TMB of NOK 0.2 billion, see note 20. Purchases of subsidiaries
are related to acquisition of KNL Investments for a cash consideration of NOK 0.1 billion.
Reconciliation of interest bearing liabilities
NOK in millions
2021
2020
Interest-
bearing
liabilities
Lease
liabilities
Total
Interest-
bearing
liabilities
Lease
liabilities
Total
Balance as of 1 January
105,923
44,882
150,805
98,749
41,297
140,046
Cash flow from Financing activities
Proceeds from borrowings
26,470
-
26,470
34,432
-
34,432
Repayments of borrowings
(29,399)
-
(29,399)
(33,257)
-
(33,257)
Payments of lease liabilities related to spectrum licences
-
(2,871)
(2,871)
-
(3,634)
(3,634)
Payments of lease liabilities related to other lease contracts
-
(5,955)
(5,955)
-
(5,395)
(5,395)
Net cash flow from financing activities
(2,930)
(8,826)
(11,756)
1,175
(9,029)
(7,854)
Change due to hedge accounting
(1,160)
-
(1,160)
1,200
-
1,200
Effects from exchange rate fluctuations
(4,915)
(2,227)
(7,142)
4,238
(362)
3,876
Net interest paid/accrued
(10)
353
343
303
(131)
172
Acquisitions
-
-
-
64
-
64
Disposals
(22)
-
(22)
(22)
(60)
(82)
New lease contracts
-
5,704
5,704
-
14,121
14,121
Termination and reassessment of lease contracts
-
(4,076)
(4,076)
-
(971)
(971)
Classified as liabilities held for sale
-
(733)
(733)
-
-
-
Other
201
-
201
215
18
233
Other changes
(5,906)
(979)
(6,885)
5,999
12,614
18,613
Balance as of 31 December
97,086
35,077
132,164
105,923
44,883
150,805
Non-current liabilities
87,811
28,101
115,911
98,627
35,584
134,211
Current liabilities
9,276
6,977
16,253
7,296
9,298
16,594
Cash flow from financing activities consists of proceeds from and repayments of borrowings, including repayments of lease liabilities – principal
portion. Net cash flow from financing activities excluding repayments of lease liabilities amounted to NOK -2.9 billion in 2021 compared to NOK 1.2
billion in 2020, mainly explained by no bond issuances under the EMTN program in 2021. For comments related to lease payments, see note 18.
Dividends paid to non-controlling interests
During 2021, dividends paid to non-controlling interests in subsidiaries amounted to NOK 3.6 billion (NOK 1.2 billion in Digi, NOK 1.6 billion in
Grameenphone and NOK 0.7 billion in dtac).
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 121
During 2020, dividends paid to non-controlling interests in subsidiaries amounted to NOK 3.2 billion (NOK 1.5 billion in Digi, NOK 1.1 billion in
Grameenphone and NOK 0.6 billion in dtac).
Cash and cash equivalents as of 31 December
NOK in millions
2021
2020
Cash in the Group’s cash pool systems
4,976
9,168
Cash outside the Group’s cash pool systems
1)
9,777
10,951
Cash equivalents
2)
470
458
Total cash and cash equivalents in statement of financial position
15,223
20,577
Bank overdraft (part of cash in statement of cash flows)
(102)
(489)
Total cash and cash equivalents in statement of cash flows
15,121
20,088
1)
Includes restricted cash in Grameenphone of NOK 10 million as of 31 December 2021 (NOK 184 million as of 31 December 2020) mainly related to declared
dividend not yet paid.
2)
Related to fixed deposit placement – shorter than 3 months maturity in Digi and Telenor ASA in 2021 and Digi in 2020.
The Group has established cash pool systems. Under these agreements, Telenor ASA is the Group account holder and the other companies in the
Group are sub-account holders or participants. The banks can offset balances in their favour against deposits so that the net position represents
the net balance between the bank and the Group account holder.
Subsidiaries in which Telenor owns less than 90% of the shares are normally not participants in the Group’s cash pool systems held by Telenor
ASA. As of 31 December 2021 and 2020 the major part of the cash and cash equivalents outside the Group’s cash pool systems relates to Telenor
ASA, dtac, Grameenphone, Telenor Pakistan and Digi.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 122
NOTE 24
Additional equity information
Paid-in capital
NOK in millions, except number of shares
Number of shares
Share capital
Other paid in capital
Treasury shares
Total paid-in capital
Equity as of 1 January 2020
1,442,458,032
8,655
69
(120)
8,605
Share buyback
-
-
-
(138)
(138)
Cancellation of shares
(42,999,999)
(258)
-
258
-
Equity as of 31 December 2020
1,399,458,033
8,397
69
-
8,466
Share buyback
-
-
-
-
-
Cancellation of shares
-
-
-
-
-
Equity as of 31 December 2021
1,399,458,033
8,397
69
-
8,466
Nominal value per share is NOK 6.
Other reserves
NOK in millions
Net unrealised
gains/(losses)
reserve
Employee
equity bene-
fits reserve
Pension
remeasure-
ment reserve
Transactions
with non-
controlling
interests
Share of equity
adjustments and
other
comprehensive
income in
associated
companies
Other equity
transactions
Total other
reserves
Equity as of 1 January 2020
88
382
590
-
1,475
(20,328)
(17,792)
Other comprehensive income (loss), net of taxes
32
-
(293)
-
(7)
-
(268)
Share-based payment
-
21
-
-
-
-
21
Share buyback
-
-
-
-
-
(3,974)
(3,974)
Disposal of equity investments at fair value through
other comprehensive income
(4)
-
-
-
-
-
(4)
Equity adjustments in associated companies
-
-
-
-
2
-
2
Equity as of 31 December 2020
117
403
298
-
1,469
(24,302)
(22,014)
Other comprehensive income (loss), net of taxes
134
-
204
-
76
-
415
Share-based payment
-
66
-
-
-
-
66
Equity adjustments in associated companies
-
-
-
-
3
-
3
Other changes in other reserves during 2021
251
469
503
-
1,548
(24,302)
(21,530)
Net unrealised gains/losses reserve
This reserve includes unrealised gains and losses arising from changes in fair value of equity investments are recognised directly in other
comprehensive income until the investment is disposed of, at which time the cumulative gain or loss is reclassified within equity from other
reserves to retained earnings.
Employee equity benefits reserve
Share-based payments represents cost charged to income statement over the vesting period based on the fair value measured at grant date for
equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. In 2021, the
Group did not pay any amount (NOK 48 million in 2020) related to the equity-settled share-based program.
Please refer to note 35 and chapter 12 in the corporate governance section of the Board of Directors’ report for further details on these
programmes.
Pension re-measurement
This reserve includes the effect of re-measurement of pension obligations arising due to change in assumptions, such as discount rate and long
term demographic trends.
NOK in millions
Pension
remeasurement
Income taxes
Net pension
remeasurement
Equity as of 1 January 2020
790
(200)
590
Other comprehensive income (loss)
(385)
92
(293)
Equity as of 31 December 2020
406
(107)
298
Other comprehensive income (loss)
259
(54)
204
Equity as of 31 December 2021
665
(161)
503
See note 26 for more information relating to pension obligations.
Share of equity adjustments and other comprehensive income in associated companies
This reserve includes underlying adjustments to equity in associated companies, such as other comprehensive income, share buybacks and
transactions with non-controlling interests.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 123
Other equity transactions
This includes the decrease in other reserves as a result of acquisition and sale/cancellation of treasury shares and the increase as a result of
transfers from
other paid-in capital, including transfers from other paid-in capital related to cancellation of treasury shares. The price paid in excess of the nominal
value of the shares reduces this reserve.
Cumulative translation differences
NOK in millions
Foreign currency
translation
Net investment
hedge
Income taxes
Net translation
differences
Equity as of 1 January 2020
(939)
(1,979)
175
(2,746)
Changes during 2020, excluding effects of disposal
2,496
(3,587)
789
(302)
Amount reclassified from other comprehensive income to income
statement on disposal
(133)
-
-
(133)
Net changes during 2020
2,363
(3,587)
789
(435)
Equity as of 31 December 2020
1,424
(5,565)
964
(3,181)
Changes during 2021, excluding effects of disposal
(3,355)
2,447
(538)
(1,446)
Amount reclassified from other comprehensive income to income
statement on disposal
-
-
-
-
Net changes during 2021
(3,355)
2,447
(538)
(1,446)
Equity as of 31 December 2021
(1,931)
(3,118)
426
(4,627)
During 2021, there was no reclassification from other comprehensive income to income statement
During 2020, a gain of NOK 133 million was reclassified from other comprehensive income to income statement which consisted of NOK 190 million
currency gain on disposal of Canal Digital as a subsidiary and recognised its 50% share of the joint venture Allente, NOK 11 million currency gain on
disposal of Valyou and NOK 68 million currency loss on disposal of Tapad. See note 20 for more information.
In 2021, the translation difference loss on net investment in foreign operations was caused by appreciation of the Norwegian Krone against all the
functional currencies of the Group’s investments except the Bangladeshi Taka. The depreciation of Euro by 5%, Swedish Krone by 7%, Thai Bath by
7%, Danish Krone by 5%, Pakistani Rupee by 6% and Myanmar Kyat by 23% against Norwegian Krone had the most significant impact on the
translation difference loss.
In 2020, the translation difference gain on net investment in foreign operations was caused by depreciation of the Norwegian Krone against Danish
Krone, Swedish Krone, Euro and Myanmar Kyat. The appreciation of Danish Krone by 7%, Swedish Krone by 11%, Euro by 6% and Myanmar Kyat by
9% against Norwegian Krone had the most significant impact on the translation difference gain.
Dividends paid and proposed
NOK in millions
2021
2020
Ordinary dividend per share in NOK – paid
9.00
8.70
Ordinary dividend per share in NOK - proposed by the
9.30
9.00
Total dividend of NOK 12.6 billion has been paid and charged to equity in 2021 (NOK 12.3 billion in 2020).
In respect of 2021, the Board of Directors proposed an ordinary dividend of NOK 9.30, to be resolved by the Annual General Meeting on 11 May 2022.
The total amount of dividend is estimated to be NOK 13.0 billion based on the outstanding number of shares as of 31 December 2021. The dividend
will be split into two tranches of NOK 5.00 and NOK 4.30 per share to be paid out in May 2022 and October 2022, respectively.
Non-controlling interests
NOK in millions
Country of
incorporation
and
operation
Non-controlling
interests share of
net income (loss)
2021
Non-controlling
interests share of
net income (loss)
2020
Non-controlling
interests in the
statement of
financial position
31.12.21
Non-controlling
interests in the
statement of
financial position
31.12.20
Non-controlling
interests share of
dividend in 2021
Non-controlling
interests share of
dividend in 2020
Digi.Com Bhd
Malaysia
1,227
1,393
686
661
1,196
1,483
Grameenphone Ltd.
Bangladesh
1,523
1,824
2,255
2,324
1,616
1,159
Total Access Communications
Plc (dtac)
Thailand
314
535
2,287
2,625
484
661
Others
(1)
(34)
(23)
(17)
-
-
Total
3,063
3,718
5,205
5,594
3,296
3,304
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 124
Summarised financial information for subsidiaries with significant non-controlling interests
Summarised statement of financial position as of 31 December:
2021
2020
NOK in millions
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Current assets
3,251
1,010
6,189
3,383
1,002
6,867
Non-current assets
14,077
15,680
40,786
14,590
13,952
46,434
Current liabilities
(6,318)
(8,731)
(12,517)
(5,301)
(7,732)
(13,731)
Non-current liabilities
(9,053)
(3,032)
(25,917)
(10,761)
(2,151)
(29,286)
Total equity
1,958
4,927
8,541
1,911
5,071
10,283
Attributable to:
Equity holders of Telenor ASA
1,271
2,672
6,254
1,249
2,747
7,658
Non-controlling interests
686
2,255
2,287
661
2,324
2,625
Summarised comprehensive income information 1 January – 31 December:
2021
2020
NOK in millions
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Revenues
13,136
14,464
21,878
13,766
15,483
23,704
Net income
2,405
3,460
979
2,731
4,033
1,565
Total comprehensive income
2,391
3,511
313
2,771
3,827
1,340
Attributable to non-controlling
1,227
1,523
314
1,393
1,824
535
Summarised cash flow information 1 January – 31 December:
2021
2020
NOK in millions
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Digi.Com Bhd
Grameenphone Ltd
Total Access
Communications
Plc (dtac)
Operating activities
5,343
5,623
6,779
5,786
3,524
7,655
Investing activities
(1,481)
(1,899)
(3,915)
(1,786)
(1,244)
(3,755)
Financing activities
(4,066)
(3,708)
(3,691)
(4,347)
(3,518)
(4,465)
Effect of exchange rate changes on cash and
cash equivalents
(6)
4
(121)
7
74
(54)
Net increase/(decrease) in cash and cash
(210)
19
(947)
(339)
(1,164)
(620)
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 125
NOTE 25
Provisions and obligations
Non-current
NOK in millions
2021
2020
Provision for workforce reductions and onerous (loss) contracts
195
244
Asset retirement obligations
7,526
8,247
Other provisions
250
328
Total non-current provisions and obligations as of 31 December
7,971
8,820
Current
NOK in millions
2021
2020
Provisions for workforce reduction and onerous (loss) contracts
416
577
Asset retirement obligations
12
41
Other provisions
468
489
Total current provisions and obligations as of 31 December
896
1,108
Development in provisions
The table below shows the development of provisions during 2021. Provisions for legal disputes are mainly recognised as trade and other payables
in the statement of financial position. Provisions made for discontinued operations are disclosed in note 4.
NOK in millions
Legal disputes
Asset retirement
obligations
Workforce reduction
and onerous (loss)
contracts
As of 1 January
4,499
8,288
822
Obligations arising and effects of changes in estimates during the year
781
(474)
673
Accretion expense
-
122
-
Amounts utilised
(1,404)
(140)
(873)
Other changes and translation difference
(269)
(169)
(11)
Reclassified to liabilities held for sale
(60)
(89)
-
As of 31 December
3,548
7,538
611
Legal disputes
Following an investigation that started in 2012, the Norwegian Competition Authority issued a decision against Telenor Norway on 21 June 2018 with
a fine of NOK 0.8 billion for breach of the prohibition against abuse of a dominant position related to the pricing model in a mobile wholesale
agreement in the period from 2010 to 2014. Telenor’s appeal to the Supreme Court was rejected on 26 November 2021. Telenor recognised cost of
NOK 0.8 billion and paid the fine in December 2021. See note 34 for disclosures of significant legal disputes.
Workforce reduction
Provisions for workforce reductions included approximately 670 employees as of 31 December 2021 and approximately 820 employees as of 31
December 2020.
Asset retirement obligations
The Group has asset retirement obligations relating primarily to equipment and other leasehold improvements installed on leased network sites
and in administrative and network buildings. Those leases generally contain provisions that require the Group to remove the assets and restore the
sites to their original condition at the end of the lease term. The table above presents all changes in the Group’s asset retirement obligations.
In most situations, the timing of asset removals will be well into the future and there is uncertainty as to whether and when the obligation will be
paid. The actual gross removal costs that the Group will incur may be significantly different from the estimated costs, for example due to
negotiation of prices for a large amount of removals or agreements that reduce or relieve the Group from its obligations. The actual timing of the
removals may also differ significantly from the estimated timing.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 126
NOTE 26
Pension obligations
The pension schemes of the Norwegian companies in the Group follow the requirements in the Act on Mandatory company pensions.
The Group provides pension plans for employees in Norway. In addition, the Norwegian government provides social security payments to all retired
Norwegian citizens. Such payments are calculated by reference to a base amount annually approved by the Norwegian parliament (G-regulation).
Benefits are determined based on the employee’s length of service and compensation. The cost of pension benefit plans is expensed over the
period that the employees render services and becomes eligible to receive benefits.
Telenor Pension Fund, covering the defined benefit plans offered to all employees in Norway, was closed to new members during 2006 and
replaced by defined contribution plans with insurance companies.
3,383 of the Group’s employees were members of the contribution plan in Norway as of 31 December 2021 (3,355 as of 31 December 2020). In 2021,
1,135 of the Group’s employees were covered by the defined benefit plans through Telenor Pension Fund (1,234 in 2020). In addition, Telenor
Pension Fund paid out pensions to 2,475 persons in 2021 (2,469 in 2020). Telenor Sweden has a defined benefit plan with 614 active members in
2021 (673 in 2020). Other companies outside Norway and Sweden primarily offer contribution plans.
The funded defined benefit plans in Norway have net funds of NOK 618 million as of 31 December 2021 (NOK 425 million in net funds as of 31
December 2020). The current service cost was NOK 174 million in 2021 (NOK 172 million in 2020). Net interest income was NOK 10 million (interest
income of NOK 16 million in 2020).
Unfunded defined benefit plans have previously been offered to executive employees. These plans are now closed. As of 31 December 2021, the net
defined benefit liability recognised in the statement of financial position was NOK 684 million (NOK 656 million as of 31 December 2020). The service
cost was NOK 8 million in 2021 (NOK 11 million in 2020). Net interest cost was NOK 11 million (NOK 14 million in 2020). Telenor does not have a right to
use the net funds in the funded plans to settle the obligations under the unfunded plans.
In Norway, the Group is a member of an agreement-based early retirement plan (new AFP). Essentially all the Norwegian employees are entitled to
life-long benefits from the age of 62 from this plan, in addition to other plans. The plan is financed through a pooled arrangement, where private
sector employers cover 2/3 of the funding requirements and the Norwegian government covers 1/3. For 2021, the contribution was 2.5% of total
salaries between 1 and 7.1 times the base amount (G) (2.5% for 2020). For 2022 the contribution is set to 2.6%. The plan is considered to be a defined
benefit multi-employer plan with limited funding and where plan assets are not segregated. The information required to calculate a proportionate
share of the plan, and account for the plan as a defined benefit plan, is not available from the plan administrator. Consequently, the plan is
accounted for as a defined contribution plan.
The defined benefit plan in Sweden has a net benefit liability of NOK 1,372 million as of 31 December 2021 (NOK 1,695 million as of 31 December
2020). The service cost was NOK 82 million and net interest cost was NOK 21 million in 2021 (NOK 76 million and NOK 23 million in 2020, respectively).
The discount rate used for the pension calculations as of 31 December 2021 was 2.0% (1.5% in 2020) and expected salary increase was set to 3.0%
(3.0% in 2020).
For the Norwegian defined benefit plans, the Group applies the K2013 risk table for mortality and a risk table for disability based on historical figures
in Telenor Pension Fund (both implemented in 2013). The average expected lifetime in the risk tables is 88 years for men and 91 years for women.
The table below shows the probability of an employee in a certain age group becoming disabled or dying, within one year, as well as expected
lifetime.
Mortality %
Disability %
Expected lifetime
Age
Men
Women
Men
Women
Men
Women
40
0.1
0.0
0.1
0.1
88
92
50
0.1
0.1
0.2
0.3
87
91
60
0.4
0.3
0.8
1.2
87
91
70
1.2
0.8
-
-
88
91
80
3.9
2.7
-
-
90
92
The plan assets were measured at fair value 31 December 2021 and 31 December 2020. The calculation of the projected benefit obligations (PBO) as
of 31 December 2021 was based on the member base at 20 October 2021 (at 14 October 2020).
The actuarial calculations for the Telenor Pension Fund obligations were carried out by independent actuaries. The present value of the projected
defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
Employees that leave the Group before the age of retirement receive a paid-up policy. Telenor Pension Fund administers some of these policies.
This is at the discretion of the Telenor Pension Fund and does not affect the Group. At the time of issuance of a paid-up policy, the Group is relieved
of any further obligations towards the receiver. The funds and obligations are valued at the time of issuance of paid-up policies and are
derecognised from pension obligations and plan assets.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 127
Changes in the defined benefit obligation and fair value of plan assets
2021
2020
NOK in millions
Defined benefit
obligation
Fair value plan
assets
Benefit liability
Defined benefit
obligation
Fair value plan
assets
Benefit liability
As of 1 January
(10,231)
7,913
(2,318)
(9,481)
7,586
(1,895)
Current service cost
(337)
-
(337)
(333)
-
(333)
Past service cost
26
-
26
50
-
50
Net interest
(189)
155
(34)
(238)
202
(36)
Discontinued operations
-
-
-
-
-
-
Sub-total included in Income Statement
(501)
155
(345)
(521)
202
(319)
Return on plan assets (excluding amounts
included in net interest expense)
-
327
327
-
74
74
Actuarial changes arising from changes in
demographic assumptions
(10)
-
(10)
13
-
13
Actuarial changes arising from changes in
financial assumptions
(65)
-
(65)
(685)
-
(685)
Experience adjustments
15
-
15
182
-
182
Sub-total in Other Comprehensive Income
(61)
327
266
(490)
74
(416)
Effects of business combinations and disposals
(3)
-
(3)
102
(102)
1
Contributions by employer
-
448
448
-
424
424
Benefits paid
321
(303)
18
283
(253)
30
Translation differences
41
84
125
(124)
(19)
(142)
As of 31 December
(10,432)
8,624
(1,808)
(10,231)
7,913
(2,318)
Of which classified as:
Pension obligations
(2,429)
(2,747)
Other non-current assets
1)
620
428
1)
Telenor does not have a right to use the net funds in the funded plans to settle the obligations under the unfunded plans.
Experience adjustments on benefit obligations are the effects of differences between previous actuarial assumptions and what has actually
occurred.
Assumptions used to determine defined benefit obligations for Norwegian companies as of 31 December
2021
2020
Discount rate in %
1.90
1.70
Future salary increase in %
2.50
2.00
Future increase in the social security base amount in %
2.50
2.00
Future turnover in %
3.00
4.00
Expected average remaining service period in years
7.00
8.00
Future pension increases in %
1.75
1.25
The Group has used the Norwegian covered bonds (OMF – Obligasjoner med fortrinnsrett) as basis for the discount rate as of 31 December for both
2021 and 2020 for the Norwegian plans. OMFs are covered bonds issued by mortgage companies owned by Norwegian banks under a well-
established legal framework. Generally, bonds with ratings better than AA are considered to be of high quality. Most OMFs have AAA rating.
Components of net periodic benefit cost
NOK in millions
2021
2020
Current service cost
(337)
(333)
Past service cost
26
50
Net interest cost
(34)
(36)
Net periodic benefit costs
(345)
(319)
Contribution plan costs
(709)
(718)
Total pension costs charged to the income statement for the year
(1,054)
(1,037)
Of which reported as other expense (note 10)
19
45
Of which reported as pension cost (note 8)
(1,039)
(1,046)
Of which reported as net interest cost (note 12)
(34)
(36)
Sensitivity analysis
The table below shows an estimate of the potential effects of changes in the key assumptions for the defined benefit plans in Norway. The
following estimates are based on facts and circumstances as of 31 December 2021. Actual results may deviate materially from these estimates.
NOK in millions
Discount rate
Future salary increase
Social security base
amounts
Annual adjustments to
pensions
Turnover
Change in % is percentage points
-1%
+1%
-1%
+1%
-1%
+1%
-1%
+1%
-1%
+1%
Changes in:
Increase (decrease) in benefit obligations
1,585
(1,168)
(482)
485
110
(164)
(907)
1,138
66
(124)
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 128
Asset categories
Telenor Pension Fund’s weighted average asset allocations as of 31 December, by asset category, were as follows:
2021
2020
Bonds %
58
59
Equity securities %
36
35
Other %
5
6
Total
100
100
The bond investments are in securities issued by the Norwegian government, Norwegian municipals, financial institutions, and corporations. Bonds
held in foreign currencies are to a large extent currency hedged. Equity investments are both in Norwegian and foreign securities. There is no
currency hedging for investments in foreign equity securities. The category Other consist mainly of investments in Private Equity and Hedge fonds.
Contributions in future years
The Group expects to contribute approximately NOK 374 million to the Telenor Pension Fund in 2022.
The following table shows expected benefit payments from the Norwegian defined benefit plans in future years:
NOK in millions
Within the next 12 months (next annual reporting period)
185
Between 2 and 5 years
816
Next 5 years
1,489
Total expected payments next 10 years
2,490
The average duration of the Norwegian defined benefit plans at the end of the reporting period is 16 years.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 129
NOTE 27
Trade and other payables and non-interest-bearing liabilities
Non-current non-interest-bearing liabilities
NOK in millions
Fair value level
4)
Category
2021
2020
Financial derivatives
2
FVTPL
1)
156
321
Financial derivatives designated for net investment hedge
2
950
984
Other non-current non-interest-bearing liabilities
FLAC
2)
282
161
Total non-current non-interest-bearing liabilities as of 31 December
1,388
1,466
Trade and other payables
NOK in millions
Fair value level
4)
Category
2021
2020
Trade payables
9,082
9,064
Accruals
13,530
13,929
Total trade payables and accruals as of 31 December
FLAC
2)
22,612
22,993
Contract liabilities
6,001
6,785
Government taxes, tax deductions etc.
3,707
4,113
Total other payables as of 31 December
NF
3)
9,708
10,898
Total trade and other payables as of 31 December
32,320
33,891
Current non-interest-bearing liabilities
NOK in millions
Fair value level
4)
Category
2021
2020
Financial derivatives
2
FVTPL
1)
6
1
Financial derivatives designated for net investment hedge
2
669
505
Other current non-interest-bearing liabilities
FLAC
2)
1,294
1,365
Total current non-interest-bearing liabilities as of 31 December
1,969
1,871
1)
FVTPL: Fair value through profit and loss.
2)
FLAC: Financial liabilities at amortised cost.
3)
NF: Non-financial assets and liabilities.
4)
For information about the fair value level of financial instruments, see note 30.
Other current non-interest-bearing liabilities include liabilities to financing institutions under supply chain financing programs of NOK 596 million as
of 31 December 2021 (NOK 596 million as of 31 December 2020).
Specification of contract liabilities:
NOK in millions
2021
2020
Balance as of 1 January
6,785
6,410
Revenue recognised that was included in opening balance
(6,063)
(4,587)
New contract liabilities less transfer to revenue
5,990
4,848
Currency and other effects
( 206)
115
Reclassified to liabilities held for sale
( 505)
-
Balance as of 31 December
6,001
6,785
Contract liabilities comprise Group’s obligation to transfer services to its customers for which it has received consideration in advance. This
includes unearned revenue relating to prepaid services, connection fee not considered to be a separate performance obligation, and other
contract liabilities.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 130
NOTE 28
Interest-bearing liabilities
2021
2020
NOK in millions
Current interest-
bearing liabilities
Non-current
interest-bearing
liabilities
Total
Current interest-
bearing liabilities
Non-current
interest-bearing
liabilities
Total
Interest-bearing liabilities measured at amortised cost
Bank loans
2,783
3,331
6,115
2,548
4,323
6,871
Bonds and Commercial Papers
6,423
83,781
90,204
4,211
94,031
98,242
Deposits from customers
32
-
32
32
-
32
Other liabilities
38
698
736
506
273
779
Total interest-bearing liabilities
9,276
87,811
97,087
7,296
98,627
105,923
Fair value of debt
1)
99,389
111,882
Of which fair value hierarchy level 1
2)
92,421
102,223
Of which fair value hierarchy level 2
2)
6,968
9,659
1)
Excluding lease liabilities and licence obligations.
2)
For information about the fair value hierarchy for valuation of financial instruments, see note 30.
Non-current interest-bearing liabilities
2021
2020
NOK in millions
Currency
Debt before the
effect of currency
swaps
Debt adjusted for
the effect of
currency swaps
2)
Debt before the
effect of currency
swaps
Debt adjusted for
the effect of
currency swaps
2)
Company
Telenor ASA
EUR
62,981
39,014
72,224
43,552
NOK
1)
-
(2,735)
-
(2,735)
SEK
4,376
16,152
4,687
15,719
USD
-
15,540
-
20,468
Total Telenor ASA
67,357
67,970
76,910
77,004
DNA - Finland
EUR
2,454
2,454
2,560
2,560
dtac - Thailand
THB
13,558
13,558
13,584
13,584
Digi - Malaysia
MYR
3,863
3,863
5,299
5,299
Other non-current interest-bearing liabilities
578
578
273
273
Total subsidiaries
20,454
20,454
21,716
21,716
Total non-current interest-bearing liabilities
87,811
88,424
98,627
98,720
1)
Telenor ASA’s debt position in Norwegian Kroner is a net asset position when including currency swaps.
2)
Debt adjusted for currency swaps includes financial instruments that are not classified as interest-bearing liabilities in the statement of financial position.
Current interest-bearing liabilities
2021
2020
NOK in millions
Currency
Debt before the
effect of currency
swaps
Debt adjusted for
the effect of
currency swaps
2)
Debt before the
effect of currency
swaps
Debt adjusted for
the effect of
currency swaps
2)
Company
Telenor ASA
NOK
1)
-
(558)
-
(2,760)
EUR
1)
4,992
(658)
-
(883)
SEK
-
351
2,871
3,080
MYR
-
2,106
-
2,112
THB
-
5,093
-
5,474
USD
1)
-
(1,000)
-
(3,808)
Total Telenor ASA
4,992
5,333
2,871
3,215
DNA - Finland
EUR
-
-
628
628
dtac - Thailand
THB
2,121
2,121
1,849
1,849
Digi - Malaysia
MYR
1,460
1,460
828
828
Grameenphone - Bangladesh
BDT
563
563
125
125
Pakistan
PKR
81
81
489
489
Other current interest-bearing liabilities
58
58
506
506
Total subsidiaries
4,284
4,284
4,425
4,425
Total current interest-bearing liabilities
9,276
9,617
7,296
7,640
1)
Telenor ASA’s debt positions in Norwegian Kroner, US Dollars and Euro as of 31 December 2021 and 31 December 2020, are net asset positions when including
currency swaps.
2)
Debt adjusted for currency swaps includes financial instruments that are not classified as interest-bearing liabilities in the statement of financial position.
Debt issued under Telenor ASA’s EMTN programme is based on documentation that is commonly used for investment grade issuers in the
Eurobond market. This documentation contains provisions restricting the pledge of assets to secure future borrowings without granting a similar
secured status to the existing lenders (negative pledges) and contains covenants limiting disposals of assets.
Bonds issued under the EMTN programme are subject to a Change of Control Clause. Such Change of Control shall be deemed to have occurred if
a person or entity, other than the Kingdom of Norway, directly or indirectly owns or acquires more than 50% of the issued ordinary share capital of
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 131
Telenor ASA. If such Change of Control leads to a downgrade below investment grade rating, the holder of such bonds can require Telenor ASA to
redeem the principal amount together with accrued interest. The full definition of this Change of Control Clause is described in the Final Terms for
each specific bond issue.
In February 2020, Telenor ASA issued the following bond tranches under the EMTN programme:
-
EUR 500 million with fixed coupon rate of 0.25% and maturity in 2028
-
EUR 500 million with fixed coupon rate of 0.875% and maturity in 2035
All outstanding debt issued by Telenor ASA is unsecured.
Furthermore, debt in dtac is mainly comprised of issued bonds (NOK 11.7 billion) and debt to financial institutions (NOK 4.0 billion) and debt in Digi is
mainly comprised of issued bonds (NOK 3.8 billion) and debt to financial institutions (NOK 1.5 billion).
The interest-bearing liabilities in subsidiaries are generally not guaranteed by Telenor ASA and are subject to standard financial covenants, some of
which limit the ability to transfer funds to Telenor ASA in the form of dividends or loans.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 132
NOTE 29
Financial risk management
Managing capital
Telenor Group’s capital allocation priorities are:
1.
Maintain a solid balance sheet
2.
Offer competitive shareholder remuneration
3.
Value driven investment approach
Telenor has a leverage guiding in the range of 1.8x to 2.3x Net debt/EBITDA before other items (see page 175 for alternative performance measures).
As of 31 December 2021 the reported Net debt/EBITDA before other items was 2.1x (2.0x as of 31 December 2020). The targeted capital structure
provides a good balance between shareholder return and a solid balance sheet with stable access to global debt markets, while also supporting
Telenor’s strategic priorities. As of 31 December 2021, Telenor ASA’s long-term credit rating was “A3/negative watch” by Moody’s Investors Service
and “A-/stable outlook” by Standard & Poor’s (S&P). During 2021, Moody’s changed their rating outlook from “A3/stable outlook” to “A3/negative
watch”, while S&P’s rating and outlook were unchanged throughout the year.
Key elements of the Group’s capital structure include interest-bearing debt as disclosed in note 28, cash and cash equivalents as disclosed in note
23 and equity attributable to the shareholders of Telenor ASA as presented in the consolidated statement of changes in equity and in note 24.
In order to adjust the capital structure, the Group may acquire or sell own shares, distribute dividends to shareholders, return capital to
shareholders or issue new shares. In 2021, Telenor’s shareholder remuneration via dividend was NOK 12.6 billion comprised of ordinary dividends
paid out in June 2021 (NOK 5.00 per share) and October 2021 (NOK 4.00 per share).
For the financial year 2021, the Telenor Board of Directors will propose an ordinary dividend of NOK 9.30 per share to be resolved by the Annual
General Meeting in May 2022 and paid out in two tranches of NOK 5.00 and NOK 4.30 per share in June 2022 and October 2022, respectively. The
total ordinary dividend amount proposed for the financial year 2021 is NOK 13.0 billion.
Telenor’s shareholder remuneration policy is to aim for a year-on-year growth in dividend per share, where the annual dividends are paid in two
instalments. Buyback of own shares or extraordinary dividend pay-outs might also be used as a measure to reach a targeted leverage.
Financial risk
Telenor Group Treasury is responsible for funding and financial risk management for the parent company and subsidiaries owned, directly or
indirectly, more than 90% by Telenor ASA. Subsidiaries owned less than 90% normally have stand-alone financing and management of financial
risks. Beyond hedging activities, the Group has limited trading activities.
Liquidity risk
The Group emphasises financial flexibility. An important part of this is to minimise liquidity risk through ensuring access to a diversified set of
funding sources. Debt issued in the international capital market is predominately issued under the existing EMTN programme (Euro Medium Term
Note) to secure longer dated funding and under existing ECP programme (Euro Commercial Paper) to secure shorter dated funding up to 12
months. In addition to these uncommitted loan programmes, the Norwegian domestic capital market is used from time to time.
Telenor ASA also has a sustainability-linked committed syndicated revolving credit facility (RCF) of EUR 1.8 billion with maturity in 2024. The RCF
was undrawn as of 31 December 2021.
When permissible by local rules and regulations, subsidiaries owned 90% or more are part of Telenor ASA’s cash management framework
agreements and participate in Telenor ASA’s cash pool setup. Subsidiaries owned less than 90% have established separate framework
agreements for banking services.
Telenor ASA shall have sufficient sources of liquidity to cover expected operational liquidity needs for the next 12 months. Potential liquidity to fund
acquisitions is considered separately.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 133
Maturity profile of the Group’s liabilities (in nominal values)
NOK in millions
Total as of
31.12.21
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
Not
specified
Interest-bearing liabilities
Financial Debt
96,008
9,143
8,694
13,236
11,157
11,823
7,840
6,331
11,611
665
5,655
9,854
-
Other interest-bearing liabilities
134
134
-
-
-
-
-
-
-
-
-
-
-
Sum of interest-bearing liabilities
1)
96,142
9,276
8,694
13,236
11,157
11,823
7,840
6,331
11,611
665
5,655
9,854
-
Non-interest-bearing liabilities
Trade and other payables
32,320
32,320
-
-
-
-
-
-
-
-
-
-
-
Other current non-interest-bearing
liabilities
1,294
1,294
-
-
-
-
-
-
-
-
-
-
-
Derivative financial instruments
1,782
675
44
284
216
387
59
54
-
-
63
-
-
Other non-current non-interest-
bearing liabilities
282
-
-
-
-
-
-
-
-
-
-
-
282
Sum of non-interest-bearing
liabilities
35,677
34,288
44
284
216
387
59
54
-
-
63
-
282
Total
131,818
43,565
8,738
13,520
11,374
12,210
7,898
6,384
11,611
665
5,718
9,854
282
Future interest payments
8,260
1,322
1,425
1,415
1,056
781
584
462
365
224
196
430
-
Total including future interest
payments
140,079
44,887
10,163
14,935
12,430
12,991
8,482
6,846
11,976
889
5,913
10,284
282
NOK in millions
Total as of
31.12.20
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
Not
specified
Interest-bearing liabilities
Financial Debt
103,275
6,775
8,480
8,330
13,384
11,776
10,910
7,529
6,104
11,196
715
18,077
-
Other interest-bearing liabilities
521
521
-
-
-
-
-
-
-
-
-
-
-
Sum of interest-bearing liabilities
1)
103,796
7,296
8,480
8,330
13,384
11,776
10,910
7,529
6,104
11,196
715
18,077
-
Non-interest-bearing liabilities
Trade and other payables
33,891
33,891
-
-
-
-
-
-
-
-
-
-
-
Other current non-interest-bearing
liabilities
1,365
1,365
-
-
-
-
-
-
-
-
-
-
-
Derivative financial instruments
1,811
506
320
27
194
132
549
-
82
-
-
-
-
Other non-current non-interest-
bearing liabilities
161
-
-
-
-
-
-
-
-
-
-
-
161
Sum of non-interest-bearing
liabilities
37,228
35,762
320
27
194
132
549
-
82
-
-
-
161
Total
141,024
43,057
8,800
8,357
13,578
11,908
11,460
7,529
6,186
11,196
715
18,077
161
Future interest payments
8,226
1,331
1,223
1,152
1,094
857
612
469
382
314
189
602
-
Total including future interest
payments
149,250
44,388
10,023
9,509
14,672
12,765
12,071
7,998
6,568
11,510
904
18,679
161
1)
The maturity tables do not include lease liabilities related to licences or other lease liabilities. See 18 for more information on licence commitments and lease
liabilities.
Interest rate risk
The Group is exposed to interest rate risk through funding and cash management activities. Changes in interest rates affect the fair value of assets
and liabilities. Interest income and interest expense in the income statement are influenced by changes in interest rates in the market. In 2021,
average interest rate for the Group was 1.6% on interest-bearing liabilities, excluding lease and licence liabilities (1.8% in 2020).
The majority of debt issued by the Group is fixed rate debt. The Group uses interest rate derivatives to manage interest rate risk of the debt
portfolio. This typically involves interest rate swaps, swapping floating interest rates to fixed interest rates and vice versa.
According to Group Policy, Telenor subsidiaries with external debt instruments shall maintain a balanced profile between fixed and floating rate
debt. The portion of the fixed rate shall be between 30% to 70% of external debt. As of 31 December 2021, the portion of fixed rate of Group’s debt
was 50% (48% as of 31. December 2020). For Telenor ASA the portion of fixed rate debt as of 31 December 2021 was 55% (53% as of 31. December
2020).
Effect from the interest rate benchmark reform
The Group is exposed to the interest rate benchmark reform (IBOR reform) through financial instruments with exposures from EURIBOR, THBFIX
(Thai Baht) and USD Libor interest rate fixings. As of 31 December 2021, there are no effects on the Group’s consolidated financial statements as a
result of the IBOR reform. The Group has signed ISDA Fallback Protocol and supplement as part of the transition plan to the alternative rates,
further Group is in dialogue with counterparties about the IBOR reform, and this has not resulted in changes to the Group’s risk management
strategy.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 134
The table below shows the financial instruments impacted by interest rate benchmark reform as of 31 December 2021:
Non-derivatives
Carrying amount
Derivatives
Nominal amount
NOK in millions
Bonds
EURIBOR 12 months
70,547
THBFIX 6 months
11,700
82,247
Interest Rate Swaps
EURIBOR 6 months
21,965
EURIBOR 3 months
15,975
THBFIX 6 months
5,836
USD LIBOR 6 months
881
USD LIBOR 3 months
7,651
52,308
Cross Currency Swaps
EURIBOR 6 months
10,483
EURIBOR 3 months
18,356
USD LIBOR 3 months
19,935
48,774
Derivative instruments designated as fair value hedging instruments
The majority of debt is issued using fixed rate bonds. In order to manage interest rate risk, a portion of the debt may be swapped to floating interest
rate by using interest rate swaps. Fair value hedge accounting is applied when hedge accounting criteria are met. There is an economic relationship
between the hedged items and the hedging instruments, as the terms of the interest rate swaps match the terms of the fixed rate bonds (i.e.,
notional amount, maturity, payment and rate set dates).
Effectiveness testing is performed using the hypothetical derivative method and compares changes in fair value of the hedging instrument against
the changes in fair value of the hedged item attributable to the hedged risk. Hedge ineffectiveness in fair value hedges can arise from:
●
Different interest rate curve applied to discount the hedged items and hedging instruments.
●
Differences in timing of cash flows of the hedged items and hedging instruments. The table below shows the effects of the Group’s fair value
hedges.
●
The effects of the forthcoming IBOR reforms because these might take effect at a different time and have a different impact on the hedged
item (the fixed rate debt) and the hedging instruments (the interest rate swaps used to hedge the debt).
The change in fair value of the hedging instrument and the hedged item is recognised on the line item Net change in fair value of financial
instruments under financial items in the income statement.
Fair value hedging relationships
NOK in millions
2021
2020
Net gain / (loss) recognised in the income statement on hedged items
1,280
(1,308)
Net gain / (loss) recognised in the income statement on hedging instruments
(1,323)
954
Amount of hedge ineffectiveness
(44)
(354)
Net hedge ineffectiveness for 2020 includes a loss of NOK 0.3 billion related to discontinuation of fair value hedge accounting.
Financial instruments designated as hedging instruments in fair value hedges are classified on the line items Other non-current assets and Other
current financial assets in the statement of financial position, see note 22:
2021
2020
NOK in millions
Assets
Liabilities
Assets
Liabilities
As of 31 December
Nominal amounts fair value hedge instruments
42,278
-
44,488
-
Fair values of fair value hedge instruments
1,071
(120)
2,387
-
The following table shows the maturity profile of the Group’s fair value hedge instruments (in nominal values):
NOK in millions
Total
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
As of 31 December 2021
2,148
524
378
369
321
203
119
91
79
13
13
40
As of 31 December 2020
2,630
517
527
376
366
317
195
109
80
77
13
54
The terms of the fixed rate receive leg of the interest rate swaps designated as fair value hedge instruments match the terms of the fixed rate pay
leg of the hedged items. The average interest rate terms of the floating pay legs of the interest rate swaps are EURIBOR 3/6 months + 71 basis
points (+ 71 basis points in 2020) for EUR denominated swaps, and THBFIX + 140 basis points (+ 140 basis points in 2020) for THB denominated
swaps.
The table below shows the carrying amounts of the Group’s fair value hedge items, which are recognised on the line items Non-current interest-
bearing liabilities and Current interest-bearing liabilities in the statement of financial position:
NOK in millions
2021
2020
As of 31 December
Carrying amount of hedged items recognised in the statement of financial position
43,003
46,499
Fair value hedge adjustments included in the carrying amount of the hedged items
825
2,126
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 135
Interest rate risk sensitivity analysis
Effects on changes in fair value
The Group calculates the sensitivity on the change in fair value of assets and liabilities of a defined parallel shift in the yield curve of the relevant
currencies. For each simulation, the same shifts in interest rates are used for all currencies. The sensitivity analysis is run only for assets and
liabilities that represent significant interest-bearing positions. Due to debt instruments the net position is a liability. Since hedge accounting is
applied and interest-bearing debt is measured at amortised cost, the full effect of change in fair value is not recognised in the income statement.
This is shown in the table below:
2021
2020
NOK in millions
Yield curve increase
50 Basis points
Yield curve decrease
50 Basis points
Yield curve increase
50 Basis points
Yield curve decrease
50 Basis points
Reduction (increase) in fair value of net liabilities
1,629
(1,709)
1,933
(2,035)
Gain (loss) in the income statement
41
(44)
(9)
11
Sensitivity analysis of change in floating interest rates on net financial items in the income statement:
2021
2020
NOK in millions
Yield curve increase
50 Basis points
Yield curve decrease
50 Basis points
Yield curve increase
50 Basis points
Yield curve decrease
50 Basis points
Gain (loss) in the income statement
(491)
491
(547)
547
Exchange rate risk
The Group is exposed to changes in the value of NOK relative to other currencies. The carrying amount of the Group’s net investments in foreign
entities and proceeds from these investments varies with changes in the foreign exchange rate. The net income of the Group is also affected by
currency fluctuations, as the profit and losses from foreign operations are translated into NOK using average exchange rates for the period.
Exchange rate risk related to some net investments in foreign operations is partly hedged by issuing debt instruments in the currencies involved or
correlated currencies when this is considered appropriate. Combinations of money market instruments (Commercial Paper and bonds) and
derivatives (foreign exchange forward contracts and cross currency swaps) are used for this purpose. Short-term currency swaps are used for
liquidity management purposes. Net investment hedge accounting is applied when possible.
Exchange rate risk also arises when Telenor ASA or any of its subsidiaries enter into transactions or holds monetary items denominated in other
currencies than their own functional currency. In accordance with Group Policy, committed cash flows in foreign currency equivalent to NOK 300
million or above are evaluated for hedging.
Financial instruments designated as hedging instruments of net investment in foreign operations
As of 31 December 2021 and 2020, material hedging positions are designated as net investment hedges.
There is an economic relationship between the hedged items and the hedging instruments as the net investment creates a translation risk that will
match the foreign exchange risk on the debt and derivatives designated as hedging instruments.
Net investment hedging is mainly applied in currencies that have well-functioning financial markets, but the Group may also designate debt in
correlated currencies as hedging instruments to hedge foreign exchange risk.
The Group has established hedge ratios to match the underlying risk of the hedging instruments with the hedged risk component. Hedge
ineffectiveness may arise when the amount of the investment in the foreign subsidiary becomes lower than the amount of the debt and derivatives
designated as hedging instruments. There was no ineffectiveness in the years ending 31 December 2021 and 2020.
For additional information and a reconciliation of the net investment hedge balance in equity, see note 24.
Net investment hedging relationships
NOK in millions
2021
2020
Amount recognised directly to other comprehensive income (OCI)
2,447
(3,587)
Interest-bearing debt and derivatives designated as hedging instruments in net investment hedges (only effective part of instruments is included):
2021
2020
NOK in millions
Debt
Derivatives
Debt
Derivatives
As of 31 December
Nominal amounts net investment hedge instruments
(54,232)
9,184
(58,177)
9,046
Fair value net investment hedge instruments
(55,997)
(1,273)
(62,086)
(647)
Debt designated as hedging instruments in net investment hedges are recognised on the line items Non-current interest-bearing liabilities and
Current interest-bearing liabilities in the statement of financial position.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 136
Classification of derivatives designated for net investment hedge in the consolidated statement of financial position:
NOK in millions
2021
2020
As of 31 December
Other non-current assets
27
665
Other financial current assets
320
177
Non-current non-interest-bearing financial liabilities
(950)
(984)
Current non-interest-bearing liabilities
(669)
(505)
Fair value net investment hedge instruments
(1,273)
(647)
The following table shows the maturity profile (in nominal values) of the Group’s net investment hedge instruments (only effective part of
instruments is included):
NOK in millions
Total
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
As of 31 December 2021
(49,304)
(5,688)
(1,903)
(3,707)
(2,449)
(7,126)
(3,057)
(4,223)
(8,259)
(134)
(4,372)
(8,386)
As of 31 December 2020
(54,532)
(6,686)
(689)
(1,890)
(4,682)
(2,542)
(8,360)
(3,159)
(4,535)
(8,677)
(137)
(13,174)
Average currency rates in cross currency swaps designated as net investment hedge instruments were NOK/USD 8.57 (8.55 in 2020), USD/EUR 1.16
(1.16 in 2020), SEK/EUR 10.47 (10.57 in 2020) and NOK/EUR 10.83 (10.83 in 2020) in 2021. In 2021, average currency rates in foreign exchange contracts
designated as net investment hedge instruments were NOK/SEK 1.00 (0.96 in 2020), NOK/EUR 9.98 (n.a. in 2020), USD/EUR 1.16 (1.19 in 2020),
USD/MYR 0.24 (0.24 in 2020), USD/THB 0.03 (0.03 in 2020) and SEK/USD n.a (8.26 in 2020).
Exchange rate risk sensitivity analysis
This analysis does not consider correlation between currencies. Empirical studies confirm substantial diversification effect across the currencies
that the Group is exposed to.
Effects on net currency gains (losses)
Currency gains and losses on monetary items in foreign currency are recognised in the income statements of Telenor ASA and its subsidiaries. Net
currency gains (losses) in foreign subsidiaries are translated to NOK in the consolidated income statement. The table below shows the effect on
consolidated net currency losses of 10% depreciation in functional currencies in the Group, keeping other currencies constant (only significant
exposures are included in the table):
Monetary Item Currency
2021
2020
NOK in millions
EUR
SEK
USD
Other
EUR
SEK
USD
Other
Depreciating Functional Currency
NOK
(146)
(443)
(1,212)
(116)
-
(605)
(1,290)
(106)
Effects due to foreign exchange translations on other comprehensive income
Translation of subsidiaries from their functional currencies into the presentation currency of the Group (NOK) will impact the Group’s other
comprehensive income (OCI) and equity. If NOK had weakened by 10% against all other functional currencies of the Group, the change in the
carrying amount of consolidated equity as of 31 December 2021, including effects of net investment hedge, would have been an increase of
approximately NOK 2.2 billion (increase of NOK 3.4 billion as of 31 December 2020).
The table below shows the impact on OCI of net investment hedge (NIH) instruments if the functional currency weakened by 10%.
2021
2020
NOK in millions
EUR
SEK
USD
Other
EUR
SEK
USD
Other
Currency effect on OCI (before tax) of NIH instruments
NOK
(2,474)
(1,128)
(267)
(636)
(2,726)
(1,242)
(273)
(672)
Effect on other comprehensive income (OCI)
-
-
-
(4,505)
-
-
-
(4,913)
Effects due to foreign exchange translations on net income
Translation of net income from subsidiaries with functional currency other than NOK, also represents a currency exposure for the Group’s reported
figures. If the presentation currency (NOK) had weakened / strengthened by 10% against all other currencies included in the analysis, net income for
the Group would have been NOK 0.3 billion higher / lower in 2021 (NOK 1.3 billion in 2020).
Credit risk
Credit risk is the loss that the Group would suffer if a counterparty fails to perform its financial obligations. The Group considers its maximum
exposure to credit risk to be as follows:
Maximum credit exposure
NOK in millions
2021
2020
Cash and cash equivalents
15,223
20,577
Bonds and commercial papers > 3 months (note 22)
327
356
Financial derivatives (note 22)
1,333
3,506
Other financial non-current interest-bearing assets – deferred payment from disposal (note 22)
-
1,047
Current interest-bearing receivables – deferred payment from disposal (note 21)
998
2,180
Trade and other current financial receivables (note 21)
17,286
18,416
The Group’s credit risks largely arise from trade receivables, financial derivatives and cash and cash equivalents.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 137
Credit risk from cash and cash equivalents is managed by the Group’s Treasury department in accordance with the principles defined in the Group
Policy Treasury. Cash deposits are only made with approved counterparties and in accordance with approved credit limits per counterparty.
Counterparty credit limits for core banks are reviewed by the Group’s Board of Directors on a regular basis. The limits are set to minimise the
concentration of risks and therefore mitigate financial loss through a counterparty’s potential payment default.
Credit risk arising from financial derivatives and cash deposits is managed through diversification, internal risk assessment and credit scoring, as
well as credit risk mitigation tools. The main risk mitigation tools include legal netting and collateral agreements.
Credit risk from other financial non-current interest-bearing assets and current interest-bearing receivables regarding deferred payment of EUR
100 million from disposal of operations in Central Eastern Europe (CEE) is mitigated through received bank and parent company guarantees as well
as covenants in the sales agreement.
Credit risk related to trade receivables is assessed to be limited due to the high number of customers in the Group’s customer base. As such, no
further credit risk provision is required in excess of the normal provision for bad and doubtful receivables. See note 21 for information on
receivables in terms of age distribution and provision for bad debt. Credit risk related to sale of handsets on instalment plans, where the effect of
discounting is considered material, is also assessed to be limited. Credit risk related to such arrangements are embedded in the discount rate and
reflected as reduced revenue.
As of 31 December 2021, NOK 658 million was posted as cash collateral (receivable). As of 31 December 2020, NOK 78 million was posted as cash
collateral (receivable).
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 138
NOTE 30
Fair values of financial instruments
Principles for estimating fair values
Based on the characteristics of the financial instruments that are recognised in the financial statements, the financial instruments are grouped into
classes and categories. The estimated fair values of the Group’s financial instruments are based on available market prices and the valuation
methodologies per class are described below.
Fair value hierarchy
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value.
Level 1:
Level 2:
indirectly (i.e. derived from prices).
Level 3:
Interest-bearing liabilities
Fair values of interest-bearing liabilities as shown in note 28 are based on quoted prices where available. Interest-bearing liabilities that are not
traded in an active market have been estimated using yield curves which incorporate estimates of the Telenor ASA credit spread. The credit curves
have been extrapolated using indicative prices on debt issuance by Telenor ASA for different maturities. The yield curves have been interpolated
from cash and swap curves observed in the market for different currencies and maturities.
Trade receivables and other current and non-current financial assets
For trade receivables and other current receivables, the carrying amount is assessed to be a reasonable approximation of fair value. The effect of
not discounting is considered to be immaterial for this class of financial instruments.
Trade payables and other non-interest-bearing financial liabilities
For trade payables and other non-interest-bearing financial liabilities, the carrying amount is assessed to be a reasonable approximation of fair
value. The effect of not discounting is considered to be insignificant for this class of financial instruments.
Equity investments
Fair values for listed shares as shown in note 22 are based on quoted prices at the end of the reporting period. Fair value of unlisted shares is
estimated by using commonly used valuation techniques or measured at cost if the investment does not have a quoted market price in an active
market and the fair value cannot be reliably measured.
Cash and cash equivalents
The fair value for this class of financial instruments is assessed to be equal to the nominal amount.
Derivatives
Fair value of currency swaps, foreign currency forward contracts and interest rate swaps as shown in note 22 and 27 is estimated based on
calculating the net present value of future cash flows, using interest rate curves, exchange rates and currency spreads as of 31 December 2021 and
2020, respectively.
NOTE 31
Guarantees
Guarantee obligations:
NOK in millions
2021
2020
Guarantee obligations as of 31 December
2 475
2 477
The exposure to claims from the Department of Telecommunications (DoT) in India related to the period Telenor owned the business remains with
Telenor. A guarantee to Bharti Airtel was recognised at fair value as of closing date of the transaction and classified as liabilities held for sale. As of
31 December 2021, the amount recognised was NOK 3.4 billion (NOK 3.0 billion as of 31 December 2020). The guarantee to Bharti Airtel is not
included in the table above.
Purchased bank guarantees are not shown in the table.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 139
NOTE 32
Contractual commitments
The Group has entered into agreements with fixed payments in respect of the following as of 31 December 2021 and as of 31 December 2020:
2021
NOK in millions
2022
2023
2024
2025
2026
After 2026
Contractual purchase obligations
IT-related agreements
329
28
4
-
-
-
Other contractual obligations
5 080
1 855
334
45
13
10
Committed investments
Property plant and equipment and intangible assets
3 621
9
-
-
-
-
Total contractual obligations
9 031
1 892
338
45
13
10
2020
NOK in millions
2021
2022
2023
2024
2025
After 2025
Contractual purchase obligations
IT-related agreements
422
76
63
-
-
-
Other contractual obligations
6 511
2 193
1 999
74
44
10
Committed investments
Property plant and equipment and intangible assets
4 311
25
-
-
-
-
Total contractual obligations
11 243
2 294
2 062
74
44
10
The tables above include agreements under which the Group has only committed minimum purchase obligations.
The table for 2020 has been updated with changes related to other contractual obligations in Denmark.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 140
NOTE 33
Related parties
As of 22 March 2022, Telenor ASA was 53.97% owned by the Kingdom of Norway, represented through the Ministry of Trade, Industry and Fisheries
(MTIF).
The Norwegian telecommunications market is governed by the Electronic Communications Act of 4 July 2003 and other regulations issued
pursuant to this Act. The Group provides designated Universal Service Obligations (USO) through an agreement between the Group and the
Norwegian Ministry of Local Government and Modernisation (MLGM). The USO obligation entails among other things the provision of public voice
telephony and basic access to internet to all households and companies. The Group is imposed USO obligations to provide text telephony services
for the deaf and hearing impaired. The Group receives no compensation for providing USO services.
In addition, the Group was in 2021 and 2020 subject to Special Service Obligations (SSO), mainly related to security and emergency following an
agreement between the Norwegian Ministry of Justice and Public Security and Telenor Coastal Radio. The Group receives compensation for
providing SSO. In 2021 and 2020, the Group received NOK 93 million and NOK 98 million, respectively, under this agreement.
The Group may also receive compensation for the obligations to fulfil additional requirements on the network to serve national security issues and
other statutory services. In 2021 and 2020, the Group received a refund related to such activities of NOK 57 million and NOK 99 million, respectively.
In 2021 and 2020, the Group received NOK 67 and NOK 146 million in government grants, respectively, in connection with construction of
broadband networks in designated areas in Norway.
The Group pays an annual fee to Norwegian Communications Authority and an annual levy to MLGM for delivering electronic communication
services, including payments for frequencies and numbers. The fee/levy was NOK 206 million and NOK 219 million in 2021 and 2020, respectively.
In 2021, the Group invested NOK 1.2 billion in spectrum in the 2.6 GHz and 3.6 GHz frequency bands in Norway. The allocation in the 3.6 GHz band will
be usable from 1 January 2022, while the 2.6 GHz band allocation can be used from 1 January 2023. Expiry of both licenses are 31 December 2042.
The Group provides mobile and fixed telephony services, leased lines, customer equipment, internet connections, TV distributions and other
services to the state and companies controlled by the state in the normal course of business and at arms-length prices. The Group also purchases
services, such as postal services, in the normal course of business and at arm’s-length prices. Details of such transactions are not included in this
note.
In addition, the Group sold transmission capacity and related services in the digital and analogue terrestrial transmission network to Norsk
rikskringkasting AS of NOK 210 million in 2021 and NOK 211 million in 2020.
Transactions with associated companies and joint ventures
2021
2020
NOK in millions
Sales to
Purchases from
Sales to
Purchases from
499
(696)
421
(712)
Amounts receivable from and amounts due to associated companies and joint ventures
2021
2020
NOK in millions
Receivables
Payables
Receivables
Payables
88
(38)
78
(16)
Sales to associated companies in 2021 and 2020 include NOK 432 million and NOK 285 million in sale of satellite capacity to Allente Group. Allente
Group AB was accounted for as an associate company from May 2020 upon the completion of the merger between Canal Digital AS and Viasat
Consumer AB. Purchases from Strex AS regarding mobile content services were NOK 542 million in 2021 and NOK 567 million in 2020.
Transactions with subsidiaries have been eliminated on consolidation and do not represent related party transactions. See Note 15 Related Parties
and Note 16 Shares in Subsidiaries in the financial statements of Telenor ASA for further details. The same applies to transactions with joint
operations, see note 20 in the financial statements of Telenor Group.
For compensation to key management personnel, please refer to note 35 and chapter 11 and 12 in the corporate governance section of the Board of
Directors’ report.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 141
NOTE 34
Legal disputes and contingencies
The Group is subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group’s business, licences
and investments, the outcomes of which are subject to significant uncertainty. While acknowledging the uncertainties related to these matters, the
management is of the opinion that based on the information currently available, these matters will be resolved without any material adverse effect
individually or in the aggregate on the Group’s financial position.
In case of certain matters below, we state that we have established a provision, and for the other matters, we make no such statement. With
respect to the matters for which we do not state whether we have established a provision, either (a) we have not established a provision, in which
case the matter is treated as a contingent liability under the applicable accounting standard; or (b) we have established a provision but expect
disclosure of that fact to prejudice seriously our position with other parties in the matter because it would reveal the fact that Telenor believes an
outflow of resources to be probable and reliably estimable. The development in provisions during 2021 related to legal disputes in total is disclosed
in note 25.
See note 13 for uncertain tax positions.
Grameenphone
BTRC – Audit
BTRC has over several years conducted an information system audit of Grameenphone for the period 1997 to 2014. On 2 April 2019, Grameenphone
received a demand notice from BTRC for payment of NOK 8.7 billion to BTRC (NOK 2.4 billion in principal and NOK 6.3 billion in interest), including
some matters pending in ongoing formal resolution processes (sub-judice). These claims are unjustified from Telenor’s and Grameenphone’s
position. In addition, BTRC has unauthorised and erroneously claimed NOK 4.2 billion, which mainly is related to an already resolved matter and
other sub-judice matters with the National Board of Revenue (NBR). The total demand amounts to NOK 12.9 billion (the Demand). Overall, the
Demand is based on allegations that Grameenphone has, amongst other things, underpaid various taxes, such as corporate taxes, SIM tax, VAT,
and revenue share from its mobile operation. The Demand is comprised of claims against 26 line items, of which 22 line items are related to BTRC
matters and no provision has been recorded based on the Demand dated 2 April 2019, as such. The other four line items are related to the NBR
matters, where Telenor and Grameenphone in previous years have recorded provisions based on an assessment of the legal merits of the claims.
On 22 July 2019, BTRC imposed operational restrictions on Grameenphone by stopping No Objection Certificates (NOCs) and approvals on import
of products, services, and equipment. Late August 2019, Grameenphone filed both a civil case (title suit) to the District Court contesting the
Demand and an injunction application with a request to stay the suspension of NOCs and to restrain BTRC from taking any steps in enforcing the
Demand. The District Court rejected the application for injunction. Grameenphone appealed before the High Court Division (HCD) on 17 September
2019. On 17 October 2019, HCD passed an injunction order restraining BTRC, for a period of two months, from taking any steps to realise or enforce
the Demand and suspend NOCs for import of equipment/software and approvals of tariff/service packages etc. (the “HCD order”). The HCD order
was appealed by BTRC to the Appellate Division of the Supreme Court (AD) and on 24 November 2019 the AD decided that the HCD order shall be
maintained, subject to payment of NOK 2.0 billion by Grameenphone; otherwise the HCD order would stand vacated.
On 20 and 24 February 2020, the AD ordered the payment of the deposit of NOK 2.0 billion to BTRC to be made in two equal instalments within 24
February 2020 and 31 May 2020. Both instalments were paid before the due dates and recognised as non-current financial assets (see note 22).
Further, AD directed BTRC to allow Grameenphone to carry on its business without any hindrance and fixed the matter on 31 May 2020 for passing
further order. Due to the COVID-19 situation in Bangladesh, the meeting was postponed, and no new date has been set. BTRC has lifted the
operational restrictions on the import of equipment/software and approvals of tariff/service packages etc. The original Title suit, where the court is
supposed to assess the merits of the Demand, is pending at the District Court. BTRC and its Auditor appeared in the suit earlier, but they have not
yet submitted their reply.
Singapore and Bangladesh have entered into a Bilateral Investment Treaty (BIT) and in October 2019, Telenor Asia Pte Ltd, a Telenor subsidiary
being a shareholder in Grameenphone and domiciled in Singapore, sent a notice to the President of Bangladesh to initiate discussions as a first
step in an attempt to resolve issues arising from the audit dispute between Grameenphone and BTRC pursuant to the procedural mechanisms in
such BIT.
As set out above, Telenor’s and Grameenphone’s position is that the BTRC claims are unjustified. Grameenphone has performed a detailed
assessment and obtained legal advice for each of the line items in the Demand. The errors in the BTRC audit-findings, the unprecedented long
period covered by the audit (more than 20 years backwards), the inclusion of already settled/resolved items, the erroneous claim on behalf of third
parties and the inclusion of sub-judice items in conjunction with the absence of merit based determination through any solution process, create
significant uncertainty about the validity of the demand and outcome of the dispute.
Dividend restrictions by Bangladesh Bank
Bangladesh Bank informed Grameenphone in 2019 that future dividend repatriation to Telenor with respect to its shares which were issued against
contribution in-kind will be suspended until supporting documentary evidence is submitted to Bangladesh Bank. The original shareholders in
Grameenphone had contributed services which were incurred as pre-incorporation expenses, and received shares currently representing 2.9% of
the total number of shares in the company. Grameenphone has responded to all queries from Bangladesh Bank and duly submitted all available
documents as requested by Bangladesh Bank. On 13 April 2021, Bangladesh Bank issued a letter to Grameenphone where the bank revoked its
earlier decision and allowed Grameenphone to undertake dividend repatriation related to the shares issued against contribution in-kind. Retained
dividend in this matter amounted to NOK 0.2 billion, which was received in the second quarter 2021.
SIM tax on replacement SIM cards
The Large Taxpayer Unit-VAT has issued three notices to Grameenphone claiming SIM tax of in total NOK 1.5 billion (excl. interest) on the
replacement of SIM cards issued during three time periods from July 2007 to June 2015. In 2019 and 2020, the VAT Appellate Tribunal gave
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 142
decisions in Grameenphone’s disfavour in two of the three periods (2007-2011 and July 2012-June 2015), representing a total demand of NOK 1.4
billion (excl. interest). Grameenphone has appealed the decisions to the High Court Division of the Supreme Court who passed stay orders on these
two decisions by the Tribunal until final adjudication.
dtac
Revenue share - deduction of interconnect expenses
In January 2021 the two Thailand’s state-owned telecom companies TOT Public Company Limited (TOT) and CAT Telecom Public Company Limited
(CAT) merged and became National Telecom Public Company Limited (NT). The disputes mentioned below were initiated prior to the merger, as
disputes with CAT, but as a result of the merger, NT is now dtac’s counterpart in these proceedings.
dtac is involved in industry disputes with NT) related to the calculation of revenue share in the now expired concession. The issue of the disputes is
whether dtac had the right to deduct interconnect expenses from its interconnect revenues to be used as basis for calculating the payment of
concession fee to NT. Since late December 2019, various arbitration panels have made decisions in dtac’s favor and disfavor for concession years
16 to (including) 20. Pursuant to these awards, dtac has an obligation to pay an approximate total amount of NOK 4.9 billion. Dtac has appealed the
negative awards to the Central Administrative Court. Similar disputes exist for concession years 21 to 27 (16 September 2011 to 15 September 2018)
where NT has presented claims of NOK 4.2 billion in total.
Revenue share - deduction of excise tax
On 11 January 2008, NT submitted a claim to the Arbitration Institute in Thailand requesting dtac to make concession revenue sharing payments for
the concession period 16 September 2002 to 15 September 2006 amounting to NOK 6.6 billion including VAT and penalties. The basis for the claim
is that revenue share paid by dtac to NT was made after deduction of excise tax. dtac’s opinion is that it was entitled to deduct excise tax pursuant
to resolutions made by the Thai Council of Ministers on 11 February 2003 and a letter issued by NT on 27 March 2003. On 28 May 2012, the Thai
Arbitral Tribunal rendered an award in favour of dtac and dismissed NT's claim. However, on 31 August 2012, NT filed a lawsuit with the Central
Administrative Court in Thailand in order to revoke the Arbitral Tribunal's award. On 29 January 2016, dtac was notified by the Central
Administrative Court in Thailand that the court had decided the case in dtac's favour. NT has appealed the case to the Supreme Administrative
Court in Thailand. These proceedings are pending.
Foreign ownership
One of dtac's competitors made a number of complaints to the Thai Police and the Thai Ministry of Commerce early in 2011, that dtac is in breach of
the Foreign Business Act (FBA) limiting foreign ownership to 49% of the share capital without special governmental permission.
In addition, on 22 September 2011, one of dtac's minority shareholders (holding 100 shares in dtac) filed a complaint against the state agency,
National Broadcasting and Telecommunication Commission (NBTC), with the Central Administrative Court in Thailand alleging that NBTC (as an
administrative agency) has negligently failed to perform its duties in allowing dtac to operate its telecom business. The Central Administrative
Court in Thailand has issued a summons requesting dtac to become a co-defendant in these proceedings. On 26 November 2015, the Central
Administrative Court in Thailand ruled that the court cannot revoke dtac's right to operate. However, the court has ordered NBTC to investigate
whether dtac is in breach of the FBA. Both NBTC and dtac have filed an appeal to the Supreme Administrative Court in Thailand.
Currently, these two cases are under the consideration of the Royal Thai Police and the Supreme Administrative Court in Thailand. Telenor believes
that the Group's ownership structure in dtac was established, and is, in accordance with Thai law as well as established practices in Thailand.
India
Telenor’s previous operations in India are subject to a number of disputes with the Indian Department of Telecommunications (DoT), which remain
to be concluded.
One of these disputes is related to the basis for calculation of licence fees and spectrum usage charges for the entire duration of Telenor’s
operations in India. This is a principal matter common to all industry participants. During 2019 – 2021, DoT has issued demand notices in the
mentioned matter to approximately NOK 4.7 billion, including penalty and interest, against Telenor’s Indian subsidiaries. In a ruling in the fourth
quarter of 2019 and in subsequent court orders in 2020, the Supreme Court of India upheld DoT’s view on the determination of how to calculate
licence fees and spectrum usage charges. Despite the Supreme Court’s final ruling in this matter, there are still computational elements that remain
unclarified and hence the outcome is uncertain.
On 2 February 2012, the Indian Supreme Court quashed all 122 2G licences awarded in 2008, including those granted to Unitech Wireless. The Indian
Supreme Court ordered that all such 2G licences and spectrum should be auctioned. The spectrum auction was completed in November 2012 and
the Group, through Telewings, secured spectrum licences in 6 circles. In February 2013, the Indian Supreme Court ordered the payment of
retroactive spectrum fees for the licences quashed in February 2012. DoT issued a notice in November 2014 to Unitech Wireless seeking an
explanation as to why retrospective spectrum fee payment should not be recovered by DoT pursuant to the February 2013 order of the Indian
Supreme Court. Telenor replied to the above notice in December 2014. However, on 14 February 2017 DoT issued a demand notice of NOK 0.9 billion
(including interest). Telenor has challenged such demand and the interpretation by DoT of the Indian Supreme Court judgment before the Telecom
Disputes Settlement and Appellate Tribunal in India. A stay order is currently in place.
DoT has further issued a notice to 8 entities of Unitech Wireless relating to a financial penalty of NOK 1.2 billion imposed, due to an alleged violation
of a merger approval for the Unitech Wireless entities. Telenor has contested the basis for the claim.
See note 4 under Discontinued operations and assets held for sale for information on provisions related to the period the Group owned the
business in India.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 143
Telenor Pakistan
Licence renewal
Telenor Pakistan’s 900 MHz and 1800 MHz spectrum licence expired on 25 May 2019, and the renewal fee was set to NOK 4.0 billion by the Pakistan
Telecommunication Authority (PTA) for an extension period of 15 years. Telenor Pakistan disagrees with the terms and conditions for renewal,
primarily on the price. Telenor Pakistan believes that the renewal price should be NOK 2.5 billion, which is the same as for prior renewals for other
operators. Accordingly, Telenor Pakistan has challenged the terms and conditions for renewal of said licence in Islamabad High Court.
On 19 July 2021, the High Court decided the case in Telenor Pakistan’s disfavour. Telenor Pakistan appealed the case to the Supreme Court on
31 August 2021. In December 2021, Telenor Pakistan signed the licence under protest whilst waiting for the Supreme Court’s hearing of the
case. Telenor Pakistan has paid a total of NOK 2.8 billion (excl. interest) of the demanded licence renewal fee, which is considered adjustable
against the final outcome of the case. Considering the unresolved dispute regarding the licence payments, NOK 2.5 billion has been recognised
as right-of-use asset based on best estimate of the final outcome of the case, and NOK 0.3 billion has been recognised as prepayment.
Federal Excise Duty (FED) on interconnect charges
The Federal Board of Revenue (FBR) alleged that the Cellular Mobile Operators (CMOs) have, together, evaded Federal Excise Duty (FED) payable on
interconnect charges. The alleged liability for Telenor Pakistan was approximately NOK 0.4 billion, excluding penalty and interests. The CMOs
collectively challenged the FED decision on interconnect charges in the Islamabad High Court, as they had collected and paid the FED on the full
value of calls. The case was decided in favour of the CMOs in January 2014 as no double taxation of excise duty is permissible on the basis of law.
The decision of the single bench was appealed by the FBR. The Division Bench of the High Court dismissed the appeal in June 2019 and upheld the
decision of the single bench. FBR has now filed an appeal before the Supreme Court against the judgment of the High Court. Telenor is contesting
the matter along with the industry in the Supreme Court. On 11 January 2022, the Supreme Court rejected the appeal, and the case is thereby
closed.
Telenor Norway
EFTA Surveillance Authority (ESA) and the Norwegian Competition Authority (NCA) initiated an inspection of Telenor Norge AS on 4 December 2012
based on the suspected abuse of a dominant position and/or anti-competitive collaboration in the Norwegian mobile market.
ESA
On 29 June 2020 ESA issued a decision against Telenor Norway and Telenor ASA with a fine of NOK 1.2 billion for abuse of dominant position in
Norway. The investigation has covered a number of issues, but the final decision only concerns the alleged insufficient margins between Telenor’s
wholesale prices and prices for mobile broadband to residential customers when sold on a stand-alone basis between 2008 and 2012. The case
rests on a number of legal, economic, and factual considerations, on which ESA and Telenor have different opinions. Telenor has paid the fine in
accordance with the obligation in the decision. Telenor appealed the decision to the EFTA Court on 28 August 2020. The case is still under the
court’s consideration.
NCA
The case relates to an alleged breach of the prohibition against abuse of a dominant position related to the pricing model in one mobile wholesale
agreement in the mobile market in the period 2010-2014. The NCA’s concern relates to the roll-out of the third mobile network in Norway. On 21
June 2018, the NCA issued a decision where it imposed a fine of NOK 0.8 billion. Telenor appealed the decision to the Competition Complaint Board
on 20 December 2018. In a decision from 19 June 2019, the Competition Complaint Board sustained the NCA fine, but with a split decision. Telenor
appealed the decision by the Competition Complaint Board to the Gulating Court of Appeal on 18 September 2019 and the court proceeding took
place in January and February 2021. On 24 June 2021, the Gulating Court of Appeal gave a ruling where they upheld the decision from NCA and the
Competition Complaint Board. Telenor appealed the ruling to the Supreme Court on 3 September 2021. On 26 November 2021, the Supreme Court
rejected the appeal. The case is thereby closed, and Telenor paid the fine in December 2021.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 144
NOTE 35
Key management compensation and fees to external auditor
Key management compensation
The table below outlines key management compensation for 2021 and 2020 by categories. The figures presented in each category are the total
amounts for both the President & CEO and the Group executive management (GEM).
NOK in thousands
2021
7)
2020
7)
Base salary
1)
35,299
38,609
Benefits
2)
4,516
5,269
Short-term incentive (STI)
3)
10,548
13,472
Long-term incentive (LTI) and Employee Share plan (ESP)
4)
8,737
7,718
Extraordinary items
5)
913
24
Pension
6)
6,040
6,726
Total compensation
66,053
71,817
1)
Base salary includes holiday pay, if applicable.
2)
Benefits include any type of cash or benefit in kind provided, such as car allowance or car benefit, insurances, mobile phone and broadband subscriptions,
expatriate benefits, such as accommodation, children schooling, etc.
3)
STI reflects the annual bonus earned in the respective year. Any applicable holiday pay is reported under ‘Base salary’.
4)
LTI and ESP are multi-year incentive plans. LTI is a restricted share plan under which participants can receive Telenor ASA shares or phantom shares for a
defined maximum percentage of their annual base salary. The shares are locked for a period of 3 years (4 years for the shares granted prior to 2020). LTI is
reported on expensed basis, i.e. cost in any particular year is a total of annual cost of all active programs in that year. ESP is a voluntary share purchase plan,
where employees after holding shares for a period of 2 years, can potentially receive matching shares (1x or 3x) through the performance-based ESP bonus.
ESP cost are expensed to income statement over the vesting period. Reported ESP reflects the actual bonus award issued in the respective year. No ESP bonus
awards were issued in 2021.
5)
In 2021, Telenor issued a one-time compensation to recognize the hardship the extensive restrictions related to travel and freedom of movement had on their
expatriate population and their families. The compensation was equivalent to one-month base salary, and Rostrup and Sabanovic were also beneficiaries of
this allowance. Extraordinary items in 2021 mainly include the allowances received by Rostrup and Sabanovic.
6)
The calculations of pension benefits earned are based on the same actuarial and other assumptions as used in the pension benefit calculations in note 26.
7)
Rostrup's assignment to Singapore has been impacted by travel restrictions. As a result, larger portions of Rostrup’s compensation for the duration of the
assignment are subject to taxation both in Norway and Singapore (double taxation). Norwegian taxes paid for 2020 of NOK 2.0 million and estimated Norwegian
taxes for 2021 of NOK 6.2 million, before taking any exemptions into account, are not included in the above table.
In addition to the above, fees to the Board of Directors amount to NOK 5.5 million in 2021 and NOK 5.2 million in 2020. The fees consist of an annual
fee reflecting the role in the Board and additional fees for any board committee the respective director takes part in.
Loans to employees
Total loans to employees were NOK 3.9 million as of 31 December 2021 and NOK 5.1 million as of 31 December 2020.
Fees to the auditors
The table below summarises audit fees for 2021 and 2020 and fees for audit related services, tax services and other services incurred by the Group
during 2021 and 2020. Fees include both Norwegian and foreign subsidiaries.
Audit fees
Fees for further assurance
services
Fees for tax services
Other fees
NOK in millions, excluding VAT
2021
2020
2021
2020
2021
2020
2021
2020
Telenor ASA
6.1
5.4
0.3
1.3
0.6
1.0
2.0
1.7
Other Group companies
32.3
28.9
4.7
4.0
14.7
14.7
8.8
7.0
Total Group auditors
38.3
34.3
5.0
5.3
15.3
15.7
10.8
8.7
Other auditors in subsidiaries
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total
39.2
34.3
5.0
5.3
15.3
15.7
10.8
8.7
Fees for audit services include fees associated with the required statutory and financial audits. Further assurance services principally include other
attestation services required by laws and regulations, attestations related to information system, audits, attestations and agreed upon procedures
reported on to regulators and other third parties.
Fees for tax services include tax compliance and advice regarding tax rules and consequences, as well as tax due diligence services in connection
with acquisitions, disposals, and other transactions. Other fees relate primarily to process/system/project/supplier reviews, financial due diligence
services and consultations in connection with acquisitions, disposals, and other transactions.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 145
NOTE 36
Number of shares, authorisations, ownership etc.
As of 31 December 2021, Telenor ASA had a share capital of NOK 8,396,748,198 divided into 1,399,458,033 ordinary shares with a nominal value of
NOK 6 each. All ordinary Telenor shares have equal voting rights and the right to receive dividends. As of 31 December 2021, the company held no
treasury shares.
At the AGM in May 2019, authority was given to the Board of Directors to acquire up to 43 000 000 own shares, corresponding to approximately 2%
of the share capital, for the purpose of cancellation. Within this authorisation, which was valid until AGM in May 2020, on 31 October 2019 Telenor
completed the market part of share buyback programme where Telenor purchased 19,794,961 own shares in the open market. Prior to the AGM,
Telenor entered into an agreement with its largest shareholder, the Kingdom of Norway, represented through the Ministry of Trade, Industry and
Fisheries. The agreement implied that the Kingdom of Norway was committed, through the Ministry of Trade, Industry and Fisheries’ participation
and voting in Telenor’s general meeting, to sell a proportionate number of its shares so that the Kingdom of Norway’s ownership interest in Telenor
would remain unaffected if Telenor repurchased shares for the purpose of cancellation. The agreement was valid until the AGM in 2020. Following
AGM approval in May 2020, Telenor’s share capital was decreased by NOK 257 999 994 by cancellation of the 19,794,961 repurchased shares under
the authorisation from AGM in May 2019 and redemption of 23 205 038 shares owned by the Kingdom of Norway against payment of an amount of
NOK 4 112 795 215.
Changes in treasury shares including redemption of shares owned by the Norwegian State:
2021
2020
Balance as of 1 January
-
19,794,961
Purchase of treasury shares
-
23,205,038
Cancellation of treasury shares
-
(42,999,999)
Balance as of 31 December
-
-
As of 31 December 2021, Telenor ASA had about 57,100 registered shareholders, compared with about 47,800 as of 31 December 2020.
The 20 largest shareholders as of 31 December 2021 from the shareholder register
1)
Name of shareholders
Number of shares
%
1
Ministry of Trade, Industry and Fisheries, Kingdom of Norway
755,220,420
53.97
2
Folketrygdfondet
66,000,408
4.72
3
State Street Bank and Trust Company (nominee)
26,433,684
1.89
4
State Street Bank and Trust Company (nominee)
26,400,357
1.89
5
State Street Bank and Trust Company (nominee)
21,571,358
1.54
6
JPMorgan Chase Bank (nominee)
15,349,781
1.10
7
JPMorgan Chase Bank (nominee)
14,938,299
1.07
8
State Street Bank and Trust Company (nominee)
12,161,996
0.87
9
State Street Bank and Trust Company (nominee)
9,117,443
0.65
10
State Street Bank and Trust Company (nominee)
8,473,683
0.61
11
Clearstream Banking S.A. (nominee)
7,827,325
0.56
12
The Northern Trust Comp (nominee)
6,704,373
0.48
13
The Bank of New York Mellon (nominee)
6,629,622
0.47
14
Verdipapirfondet KLP Aksjenorge IN
6,530,462
0.47
15
BNP Paribas (nominee)
6,219,838
0.44
16
VPF DNB AM Norske Aksjer
6,050,300
0.43
17
Verdipapirfondet Storebrand Norge
5,975,704
0.43
18
State Street Bank and Trust Company (nominee)
5,958,638
0.43
19
Euroclear Bank S.A./N.V. (nominee)
5,729,942
0.41
20
Danske Invest Norske INSTIT. II
5,165,878
0.37
Total held by 20 largest shareholders
1,018,459,511
72.80
Total all Telenor shares
1,399,458,033
100.00
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 146
The 20 largest shareholders as of 31 December 2021 beneficial ownership
2)
Name of shareholders
Number of shares
%
1
Ministry of Trade, Industry and Fisheries, Kingdom of Norway
755,220,420
53.97
2
Folketrygdfondet
66,000,408
4.72
3
BlackRock Institutional Trust Company, N.A.
25,040,740
1.79
4
DNB Asset Management AS
23,018,108
1.64
5
The Vanguard Group, Inc.
22,025,479
1.57
6
DWS Investment GmbH
21,747,244
1.55
7
Caisse de Depot et Placement du Quebec
20,182,311
1.44
8
Storebrand Kapitalforvaltning AS
18,381,514
1.31
9
KLP Forsikring
13,498,958
0.96
10
Lazard Asset Management, L.L.C.
11,639,054
0.83
11
BlackRock Advisors (UK) Limited
10,031,931
0.72
12
APG Asset Management N.V.
9,610,049
0.69
13
Danske Invest Asset Management AS
8,944,393
0.64
14
State Street Global Advisors (US)
8,441,308
0.60
15
Pyrford International Limited
8,428,446
0.60
16
Fidelity International
8,224,549
0.59
17
Aberdeen Standard Investments (Edinburgh)
7,696,064
0.55
18
Legal & General Investment Management Ltd.
6,960,846
0.50
19
Danske Bank Asset Management
6,906,599
0.49
20
Deka Investment GmbH
6,082,525
0.43
Total held by 20 largest shareholders
1,058,080,946
75.59
Total all Telenor shares
1,399,458,033
100.00
1)
Source: VPS share register
2)
The data is provided by Nasdaq Advisory Services and is obtained through an analysis of beneficial ownership and fund manager information provided in
replies to disclosure of ownership notices issued to all custodians on the Telenor VPS share register. Every reasonable effort has been made to verify the data;
however, neither Telenor nor Nasdaq Advisory Services can guarantee the accuracy of the analysis.
NOTE 37
COVID-19
The spread of cross-border diseases such as COVID-19 may have an operational effect on Telenor Group due to, among other things, mobility
restrictions and lockdown measures, change in consumption, usage patterns, potential disruptions in the supply chain of hardware and handsets,
maintenance of infrastructure and access to resources as well as impact on employees. During 2021, the Group has seen continued impact from
the COVID-19 pandemic in Asia and through reduction in roaming revenues. The pandemic receded in Asia towards the end of the year following
increased level of vaccination, and the economies gradually reopened. Nevertheless, the outlook for 2022 in Asia remains uncertain. Furthermore,
the Group is exposed to the related uncertainty regarding the macroeconomic development and currency fluctuations.
In light of the effects on financial results and outlook, Telenor has assessed whether there are indicators of impairment of cash-generating units
(CGUs) with or without goodwill and associated companies in accordance with IAS 36
Impairment of Assets
. The expected impact of COVID-19 has
been incorporated into the projected cash flows; however, with the exception of Telenor Myanmar (please see note 4), the Group has not
recognised any significant impairments in 2021. Please refer to note 16. Telenor Myanmar is classified as discontinued operation.
Further, the need for additional provisions for expected credit losses related to trade receivables and contract assets has also been assessed,
please see note 21. The level of provisions has not been significantly impacted by COVID-19.
NOTE 38
Events after the reporting period
Sale of Telenor Myanmar approved by Myanmar authorities
On 17 March 2022 Telenor Group was informed that the Myanmar Investment Commission has given final regulatory approval to the sale of Telenor
Myanmar to M1 Group. During the regulatory approval process the Myanmar authorities made it a condition that M1 Group should have a local
partner in the ownership of Telenor Myanmar after the transaction between Telenor and M1 closes. Telenor will close the transaction as soon as
possible. The business will continue to operate under the brand name Telenor Myanmar for four months and have a transition service agreement
with Telenor for six months. See note 4
Russia’s invasion of Ukraine
On 24 February 2022 Russia began its invasion of Ukraine, resulting in geopolitical uncertainty and volatility. The resulting impact could be higher
inflation, potential disruption of financial market and increased cyber threats among other things.
Dtac and True entered into agreement to merge
On 18 February 2022, Total Access Communication (“Dtac”) and True Corporation (“True”) announced that following the completion of the merger
due diligence, the Board of Directors of each company approved the amalgamation and entered into an agreement to create a new telecom-tech
company. There will be a voluntary tender offer (VTO) following regulatory approval. Prior to the VTO Telenor will hold around 28 % of the shares.
| Notes to the Financial Statements Telenor Group | Annual Report 2021 | 147
The outcome of the VTO will determine the equalized ownership percentage and the parties will be aiming for an ownership share of around one-
third in the merged company. The transaction is subject to approvals by shareholders and customary regulatory approvals. Dtac and True have
filed a merger notification with the National Broadcasting and Telecommunication Commission.
Divestment of Open Universe and fiber to the home (FTTH) in Sweden
On 1 February, Telenor Sweden finalised the divestment of Open Universe and company’s fiber to the home (FTTH) to GlobalConnect Sverige AB for
a total consideration of NOK 2.9 billion. The transaction was approved by the Swedish competition authorities in December 2021. The sale includes
around 200,000 ports in the open fiber networks model and approximately 14,000 single dwelling unit fiber to the home accesses. See note 4.
Digital Money Myanmar Limited (Wave Money)
On 17 January 2022, Telenor Group announced that it has entered into an agreement with Yoma Strategic to sell the Group’s 51 percent ownership
share in Digital Money Myanmar Limited (Wave Money) for USD 53 million (around NOK 470 million) to Yoma MFS Holdings Pte. Ltd, a subsidiary of
Yoma Strategic. The transaction is subject to various conditions in order to be completed, among them regulatory approval from the Myanmar
Central Bank.
Dividend proposed or declared by the Board of Directors in subsidiaries with non-controlling interests
Grameenphone Bangladesh
On 26 January 2022, the Board of Directors of Grameenphone Ltd. proposed final dividend for 2021 of BDT 12.5 per share, which corresponds to
approximately NOK 1.7 billion total dividend and approximately NOK 0.7 billion for the non-controlling interests ownership share.
Digi Malaysia
On 27 January 2022, the Board of Directors of Digi declared the final dividend for 2021 of MYR 0.039 per share, which corresponds to approximately
NOK 0.6 billion total dividend and approximately NOK 0.3 billion for the non-controlling interests ownership share.
dtac - Thailand
On 28 January 2022, the Board of Directors of dtac proposed final dividend for 2021 of THB 1.05 per share, which corresponds to approximately
NOK 0.7 billion total dividend and approximately NOK 0.3 billion for the non-controlling interests ownership share.
| Financial Statements Telenor ASA | Annual Report 2021 | 148
Income Statement
Telenor ASA 1 January – 31 December
NOK in millions
Note
2021
2020
Revenues
1
895
911
Salaries and personnel costs
2, 3
(631)
(651)
Other operating expenses
4
(890)
(870)
Depreciation, amortisation and impairment losses
8, 9
(18)
(31)
Total operating expenses
(1,539)
(1,552)
Operating profit (loss)
(644)
(641)
Financial income and expenses
Financial income
6
15,061
17,110
Financial expenses
6
(967)
(1,213)
Net currency gains (losses)
6
1,457
(1,857)
Net change in fair value of financial instruments
6
185
(841)
Net gains (losses and impairment) on financial assets
6
10,383
-
Net financial income (expenses)
26,119
13,199
Profit before taxes
25,475
12,558
Income taxes
7
(1,630)
(600)
Net income
23,845
11,958
| Financial Statements Telenor ASA | Annual Report 2021 | 149
Statement of Comprehensive Income
Telenor ASA 1 January – 31 December
NOK in millions
2021
2020
Net income
23,845
11,958
Other comprehensive income (loss)
Remeasurement of defined benefit pension plans
(34)
(46)
Income taxes
7
10
Items that will not be reclassified to income statement
(27)
(36)
Other comprehensive income (loss), net of taxes
(27)
(36)
Total comprehensive income (loss)
23,818
11,922
| Financial Statements Telenor ASA | Annual Report 2021 | 150
Fornebu, 2 mars 2022
Statement of Financial Position
Telenor ASA as of 31 December
NOK in millions
Note
2021
2020
ASSETS
Deferred tax assets
7
2 003
1 917
Pension funds
3
132
96
Goodwill
20
20
Intangible assets
8
5
Right-of-use assets
9
945
-
Property, plant and equipment
13
16
Shares in subsidiaries
16
154 787
141 380
Non-current interest-bearing receivables from Group companies
15
31 592
37 591
Other non-current financial assets
10, 12
2 043
3 383
Total non-current assets
191 540
184 409
Trade receivables from Group companies
363
512
Trade receivables external
1
1
Other current financial assets
10, 12
830
382
Liquid assets and short-term placements
12
7 333
10 621
Total current assets
8 527
11 516
Total assets
200 067
195 925
EQUITY AND LIABILITIES
Equity
11
112 065
100 835
Liabilities
Non-current lease liabilities
9
883
-
Non-current interest-bearing external liabilities
12
67 357
76 910
Non-current non-interest-bearing external liabilities
12
1 077
1 276
Pension obligations
3
531
493
Other provisions
47
68
Total non-current liabilities
69 895
78 747
Current lease liabilities
9
67
-
Current interest-bearing liabilities to Group companies
12, 15
7 480
9 449
Current interest-bearing external liabilities
12
4 992
2 871
Drawings on Group's cash pool
12
1 965
1 480
Current non-interest-bearing liabilities to Group companies
12, 13
58
338
Current non-interest-bearing external liabilities
12, 13
3 545
2 205
Total current liabilities
18 107
16 343
Total equity and liabilities
200 067
195 925
| Financial Statements Telenor ASA | Annual Report 2021 | 151
Statement of Cash Flows
Telenor ASA 1 January – 31 December
NOK in millions
2021
2020
Profit before taxes
25 475
12 558
Income taxes paid
( 569)
(1 063)
Net (gains) losses, impairment and change in fair value of financial assets and liabilities
(10 383)
-
Depreciation, amortisation and impairment losses
18
31
Net currency (gains) losses not relating to operating activities
(1 747)
1,933
Net changes in interest accruals against Group companies
(48)
( 130)
Received dividend
8 000
9 830
Recognised dividend
(8 000)
(9 830)
Interest received
137
234
Interest paid
( 921)
(1 363)
Net changes in other accruals
673
2 150
Net cash flow from operating activities
12 635
14 350
Proceeds from sale of property, plant and equipment and intangible assets
-
-
Purchases of property, plant and equipment and intangible assets
(2)
(8)
Purchases of and capital increase in subsidiaries
(3,025)
( 900)
Net cash flow from investing activities
(3,027)
( 908)
Proceeds from borrowings
1 035
13 814
Repayments of borrowings
(4 445)
(11 446)
Payments of lease liabilities
9
( 6)
-
Net change in Group's cash pool
2 684
7 346
Purchase of treasury shares
-
(4 119)
Dividends paid to equity holders of Telenor ASA
(12 595)
(12 277)
Net cash flow from financing activities
(13 327)
(6 682)
Effect on cash and cash equivalents of changes in foreign exchange rates
(54)
( 49)
Net change in cash and cash equivalents
(3 773)
6 711
Cash and cash equivalents as of 1 January
9 141
2 430
Cash and cash equivalents as of 31 December
5 368
9 141
Specification of cash and cash equivalents:
Liquid assets and short-term placements
7 333
10 621
Drawing from Group's cash pool
(1 965)
(1,480)
Cash and cash equivalents as of 31 December
5 368
9 141
| Financial Statements Telenor ASA | Annual Report 2021 | 152
Statement of Changes in Equity
Telenor ASA – for the years ended 31 December 2020 and 2021
NOK in millions (except for number of shares)
Number
of shares
Share
capital
Treasury
shares
Share
premium
Pension re-
measurement
reserve
Other
reserves
Retained
earnings
Total
equity
Equity as of 1 January 2020
1,442,458,032
8,655
(119)
69
88
(15,332)
111,942
105,303
Net income for the period
-
-
-
-
-
-
11,958
11,958
Other comprehensive income for the period
-
-
-
-
(36)
-
-
(36)
Total comprehensive income
-
-
-
-
(36)
-
11,958
11,922
Dividends
-
-
-
-
-
-
(12,277)
(12,277)
Share buyback
-
-
(139)
-
-
(3,974)
-
(4,113)
Cancellation of shares
(42,999,999)
(258)
258
-
-
-
-
-
Share-based payment, exercise of share
options and distribution of shares
-
-
-
-
-
-
-
-
Equity as of 31 December 2020
1,399,458,033
8,397
-
69
52
(19,306)
111,623
100,835
Net income for the period
-
-
-
-
-
-
23,845
23,845
Other comprehensive income for the period
-
-
-
-
(27)
-
-
(27)
Total comprehensive income
-
-
-
-
(27)
-
23,845
23,818
Dividends
-
-
-
-
-
-
(12,595)
(12,595)
Share buyback
-
-
-
-
-
-
-
-
Cancellation of shares
-
-
-
-
-
-
-
-
Share-based payment, exercise of share
options and distribution of shares
-
-
-
-
-
7
-
7
Equity as of 31 December 2021
1,399,458,033
8,397
-
69
25
(19,299)
122,873
112,065
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 153
Notes to the Financial Statements
Telenor ASA
Contents notes
1
General information and summary of significant
11
Equity and dividends
accounting principles
12
Financial instruments and risk management
2
Salaries and personnel costs
13
Current non-interest-bearing liabilities
3
Pension obligations
14
Guarantees
4
Other operating expenses
15
Related parties
5
Research and development costs
16
Shares in subsidiaries
6
Financial income and expenses
7
Income taxes
8
Intangible assets
9
Leases
10
Other financial assets
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 154
NOTE 1
General information and summary of significant accounting principles
Telenor ASA is a holding company and contains the Group Management, Corporate Functions, Research and Development and the Group’s internal
bank (Group Treasury).
The financial statements have been prepared in accordance with simplified IFRS pursuant to the Norwegian Accounting Act § 3-9 and regulations
regarding simplified application of IFRS issued by the Ministry of Finance on 21 January 2008.
Telenor ASA’s accounting principles are consistent with the accounting principles for the Group, as described in note 2 of the consolidated
financial statements. Where the notes for the parent company are substantially different from the notes for the Group, these are shown below.
Otherwise, refer to the notes to the consolidated financial statements.
Telenor ASA uses the indirect method for the statement of cash flows. Cash and cash equivalents consist of liquid assets, short-term placements,
and drawings from cash pool. Net change in Group internal drawing rights are loans to, and placements from Group companies. These loans and
placements have high turnover and are presented net.
Revenues are mainly sale of Group services to other Group companies, sale of research and development services and sale of other consultancy
services. Purchases from other Group companies consist mainly of consultancy fees in strategic Group projects, property lease, IT-operations, and
maintenance. Telenor ASA conducts the main part of the external debt financing in the Group, and provides loan and guarantees to, and receives
deposits from Group companies. See note 28 to the consolidated financial statements.
Shares in subsidiaries and loans provided to subsidiaries are evaluated at the lower of cost or fair value. Any impairment losses and reversal of
impairment losses are classified as net gains (loss and impairment) on financial assets in the income statement.
NOTE 2
Salaries and personnel costs
The Group’s Chief Executive Officer and the Board of Directors have the same positions in Telenor ASA. Please refer to chapter 11 and 12 in the
corporate governance section of the Board of Directors’ report as well as note 35 of the consolidated financial statements, for further information
about compensation to the Board of Directors, management and auditor.
NOK in millions
2021
2020
Salaries and holiday pay
(455)
(492)
Social security tax
(67)
(66)
Pension cost including social security tax (note 3)
(67)
(72)
Share-based payments
1)
(26)
(25)
Other personnel costs
(16)
4
Total salaries and personnel costs
(631)
(651)
Number of labour-years employed, average
341
370
1)
Share-based payments are costs related to Telenor's employees share program and Long Term Incentive plan (LTI) for senior executives and key personnel.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 155
NOTE 3
Pension obligations
Telenor ASA is obliged to follow and complies with the Act on Mandatory Company Pensions. The company has a pension scheme according to the
requirements set in the Act. Telenor ASA follows the same assumptions as the Group, see note 26 to the consolidated financial statements.
Changes in the defined benefit obligation and fair value of plan assets
2021
2020
NOK in millions
Defined
benefit
obligation
Fair value
plan assets
Net liability
defined
benefit
Defined
benefit
obligation
Fair value
plan assets
Net liability
defined
benefit
As of 1 January
(1,457)
1,060
(397)
(1,381)
998
(384)
Service cost
(32)
-
(32)
(36)
-
(36)
Net interest
(25)
19
(6)
(32)
25
(7)
Sub-total included in Income Statement
(57)
19
(38)
(68)
25
(43)
Return on plan assets (excluding amounts included in net interest
-
1
1
-
(50)
(50)
Actuarial changes arising from changes in financial assumptions
(67)
-
(67)
(81)
-
(81)
Experience adjustments
31
-
31
85
-
85
Sub-total included in Other Comprehensive Income
(36)
1
(35)
4
(50)
(46)
Effects of business combinations and disposals
(87)
85
(1)
(69)
76
8
Contributions by employer
-
48
48
-
50
50
Benefits paid
65
(41)
24
57
(39)
18
As of 31 December
(1,572)
1,172
(399)
(1,457)
1,060
(397)
Of which classified as:
Pension obligations
(531)
(493)
Pension assets
1)
132
96
1)
Telenor does not have a right to use the net funds in the funded plans to settle the obligations under the unfunded plans.
Telenor ASA expects to contribute approximately NOK 71 million to the Telenor Pension Fund in 2022.
93 employees were covered by defined benefit plan of the Telenor Pension Fund. Telenor Pension Fund paid out pensions to 427 persons.
Components of net periodic benefit cost
NOK in millions
2021
2020
Service cost
(32)
(36)
Net interest cost
(6)
(7)
Contribution plan costs
(36)
(36)
Total pension costs recognised in the income statement
(74)
(79)
Of which reported as pension cost (note 2)
(67)
(72)
Of which reported as net interest cost (note 6)
(6)
(7)
NOTE 4
Other operating expenses
NOK in millions
2021
2020
Operating expenses related to country offices and services from shared service centres
(134)
(146)
Cost of premises, vehicles, office equipment, operation and maintenance etc.
(162)
(146)
Marketing, representation and sales commission
(50)
(27)
Workforce reductions and onerous contracts
(30)
(87)
Other operating expenses
1)
(514)
(464)
Total other operating expenses
(890)
(870)
1)
Other operating expenses are primarily related to safeguarding of interests and assessment of new market opportunities. In addition, audit fees and other fees
to the auditor are included, see note 35 in the consolidated financial statements. Provision for bad debt of NOK 351 million is recognised against intercompany
trade receivables, of which NOK 185 million is recognised in 2021.
NOTE 5
Research and development costs
Research and development expenses in Telenor ASA were NOK 131 million in 2021 and NOK 132 million in 2020. Research and development activities
relate to new technologies and secure full utilisation of existing technologies and network.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 156
NOTE 6
Financial income and expenses
NOK in millions
2021
2020
Interest income from Group companies
70
179
Group contribution and dividends from subsidiaries
14,903
16,877
Other financial income
87
54
Other financial income from Group companies
1
-
Total financial income
15,061
17,110
Interest expenses to Group companies
(15)
(21)
Interest expenses (external)
(952)
(1,192)
Total financial expenses
(967)
(1,213)
Foreign currency gain
2,804
2,017
Foreign currency loss
(1,347)
(3,874)
Net foreign currency gains (losses)
1,457
(1,857)
Net change in fair value of financial instruments at fair value through profit or loss
229
(1,709)
Net change in fair value of hedging instruments and hedged items
(44)
868
Net change in fair value of financial instruments
185
(841)
Gains on transfer of shares in subsidiaries
12,659
-
Impairment losses on shares in subsidiaries
(2,276)
-
Net gains (losses and impairment) on financial assets
10,383
-
Net financial income (expenses)
26,119
13,199
1)
Gains on transfer of shares in subsidiaries relate to transfer of shares in Telenor Infra AS to the wholly owned subsidiary Telenor Networks Holding AS as
contribution in-kind.
2)
The impairment is related to Telenor Real Estate AS and due to Telenor Real Estate AS paid out a dividend to Telenor ASA of NOK 3.0 billion in 2021.
Group contribution and dividends received from Group companies is recognised as financial income in the year it is approved by the General
Meeting in the relevant company and Telenor ASA obtains the right to the Group contribution and dividends. In 2021, Telenor ASA received and
recognised NOK 6.9 billion in taxable Group contribution, which relates to the financial year 2020. Telenor ASA also received dividends of NOK 5.0
billion from Telenor Mobile Holding AS and dividend of NOK 3.0 billion from Telenor Real Estate AS. Telenor Mobile Holding AS has also distributed
dividends received from its subsidiaries.
In 2020, Telenor ASA received and recognised NOK 7.0 billion in taxable Group contribution, which relates to the financial year 2019. Telenor ASA
also received dividend of NOK 6.0 billion from Telenor Mobile Holding AS and dividend of NOK 3.8 billion from Telenor Communication II AS. Telenor
Mobile Holding AS has also distributed dividends received from its subsidiaries.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 157
NOTE 7
Income taxes
NOK in millions
2021
2020
Profit before taxes
25,475
12,558
Current taxes
(1,667)
(515)
Resolution of disputed items and adjustment in previous years’ current income tax
(42)
6
Change in deferred taxes
79
(91)
Income tax
(1,630)
(600)
Tax basis
Profit before taxes
25,475
12,558
Effect of other comprehensive income and tax-free transfers
(34)
(46)
Non-deductible expenses and tax-free income
(10,009)
28
Group contribution previous year
(6,903)
(7,047)
Dividend – tax-free
(8,000)
(9,830)
Changes in temporary differences recognised in income statement
(23)
82
Change in previously years deferred tax assets
61
-
Group contribution current year
7,011
6,596
Tax basis for the year
7,578
2,340
Current taxes at nominal income tax rate in Norway (22% in 2021 and 2020)
1,667
515
Effective tax rate
Income tax expense at corporate income tax rate in Norway (22% in 2021 and 2020)
(5,605)
(2,763)
Non-deductible expenses and tax-free income
2,209
4
Accounting effect of received tax-free dividend
1,760
2,163
Resolution and adjustments of disputed item
12
6
Other
(7)
(10)
Income tax
(1,630)
(600)
Effective tax rate in %
6.40%
4.78%
NOK in millions
2021
2020
Changes
Temporary differences as of 31 December
Non-current assets
(15)
(25)
10
Interest element in connection with fair value hedges of liabilities
(653)
(1,787)
1,134
Financial derivatives
(737)
633
(1,370)
Losses on guarantees
(280)
(280)
-
Other accruals for liabilities
(10)
(188)
178
Pension liabilities
(399)
(397)
(2)
Group contribution
(7,011)
(6,596)
(415)
Disallowed interest deduction carried forward
-
(73)
73
Total temporary differences as of 31 December
(9,105)
(8,713)
(392)
Tax rate
22%
22%
-
Net deferred tax assets
2,003
1,917
86
Changes in net deferred tax assets:
Recognised in other comprehensive income
1)
7
Recognised in the income statement
79
1)
Deferred taxes recognised in other comprehensive income is related to tax re-measurement of defined benefit pension plans. Other comprehensive income
elements are presented gross in the comprehensive income with the related tax effect on a separate line. Tax effect of 22% is included in change in deferred
taxes.
The general tax rate in Norway is 22% in 2021.
Non-deductible expenses and tax-free income for 2021 includes gain of NOK 12.7 billion on transfer of shares in Telenor Infra AS to the wholly
owned subsidiary Telenor Networks Holding AS as contribution in-kind, and impairment of NOK 2.3 billion related to Telenor Real Estate AS and
comes as a consequence after Telenor Real Estate AS paid out a dividend to Telenor ASA of NOK 3.0 billion in 2021.
In 2012, Telenor ASA recorded a loss after having repaid, as guarantor, all Unitech Wireless’ interest-bearing borrowings, amounting to NOK 10.6
billion. A deferred tax asset of NOK 2.5 billion was recognised. In 2013, the business transfer from Unitech Wireless to Telenor India was completed,
and Telenor ASA deducted NOK 9.3 billion as loss on guarantees in its tax filing. In 2019, Telenor ASA has received a reassessment order from the
Norwegian tax authorities disallowing deduction for the loss, which increases previous years’ current income tax with NOK 2.5 billion in 2019.
Telenor ASA disagrees with the order and has appealed. In a decision received 10 February 2021 the Tax Appeal Board upheld the reassessment.
Telenor ASA has appealed the decision to the district court.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 158
NOTE 8
Intangible assets
2021
NOK in millions
Accumulated cost
as of 1 January
Additions
Disposals
Amortisations
and impairment
losses
Accumulated
amortisations
and impairment
losses
Carrying
amount as of
31 December
Software purchased (5 years)
412
-
-
(1)
(412)
-
Work in progress
5
-
-
-
-
5
Total intangible assets
417
-
-
(1)
(412)
5
2020
NOK in millions
Accumulated cost
as of 1 January
Additions
Disposals
Amortisations
and impairment
losses
Accumulated
amortisations
and impairment
losses
Carrying
amount as of
31 December
Software purchased (5 years)
411
1
-
(13)
(411)
1
Work in progress
5
-
-
-
-
5
Total intangible assets
416
1
-
(13)
(411)
6
NOTE 9
Leases
Group as lessee
The Group disposed of its ownership of the headquarter office building at Fornebu, Norway in 2020.
Upon closing of the transaction, the Group entered into several lease agreements with Snarøyveien 30 AS for leasing back office space in parts of
the building. In 2021 Telenor Group has entered corresponding new lease agreements with Group companies that have offices at Fornebu with the
same conditions.
The non-cancellable period under the lease agreements is between 7-15 years, with a lease term of 7-25 years.
Telenor ASA has accounted for the new lease agreements in accordance with IFRS 16 from commencement date of the agreement on 1 October
2021.
Lease liability and a corresponding right-of-use asset is recognized at the commencement date of the lease.
Property lease cost until the commencement date of the new agreements is recognized as other operating expenses as in the previous years and
amounts to NOK 33 million.
Right-of-use assets
NOK in millions
Buildings
As of 31 December 2020
-
Additions
956
As of 31 December 2021
956
Amortisation
(11)
As of 31 December 2021
(11)
Carrying amount
As of 31 December 2020
-
As of 31 December 2021
945
Related lease liability disaggregated per class of right-
of-use assets
As of 31 December 2020
-
As of 31 December 2021
950
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 159
Lease liability
2021
2020
NOK in millions
Current
Non-current
Total
Current
Non-current
Total
Lease liability related to buildings
67
883
950
-
-
-
Total lease liabilities
67
883
950
-
-
-
The lease liabilities maturity profile is as follow:
NOK in millions
Total as of
31.12.21
< 1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
>10 years
Lease liabilities - buildings
950
67
68
69
69
67
63
64
64
65
65
289
Sum of lease liabilities
950
67
68
69
69
67
63
64
64
65
65
289
Future interest payments
311
22
21
20
20
20
19
18
18
17
16
120
Total including future interest
1,261
89
89
89
89
87
82
82
82
82
81
409
Changes in lease liabilities during 2021 are presented below:
NOK in millions
2021
2020
Lease liabilities as of 1 January
-
-
Increase in lease liabilities related to other lease contracts due to new contracts or modification of existing contracts
956
-
Increase due to interest expense accrued
5
-
Decrease due to repayments of principal portion of lease liabilities
(6)
-
Decrease due to repayments of interest portion of lease liabilities
(5)
-
Lease liabilities as of 31 December 2021
950
-
Cash payments made relating to lease contracts are presented below:
NOK in millions
Classification in cash flow statement
2021
2020
Repayments of lease liabilities – principal portion
Financing activities
6
-
Repayments of lease liabilities – interest portion
Operating activities
5
-
Total cash outflow
11
-
Expenses recognised in the income statement related to lease contracts are presented below:
NOK in millions
Classification in income statement
2021
2020
Depreciation of right-of-use assets
Depreciation and amortisation
11
-
Interest expenses on lease liabilities
Financial expenses (note 6)
5
-
Variable lease expenses not dependant on index or rate
Other operating expenses (note 4)
27
-
Total
43
-
NOTE 10
Other financial assets
NOK in millions
2021
2020
Capital contribution in Telenor Pension Fund
1)
298
298
Derivatives financial instruments
29
671
Fair value hedging instruments
738
2,014
Other financial assets external
978
400
Total other non-current financial assets
2,043
3,383
Receivables from Group companies
317
165
Other current financial assets external
513
217
Total other current financial assets
830
382
1)
The amount capitalised in the statement of financial position is the cost price, which is considered an approximation of fair value. Telenor ASA holds the entire
core capital in the Telenor Pension Fund. The capital contribution to Telenor Pension Fund is classified as equity investment.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 160
NOTE 11
Equity and dividends
Allocation of equity and dispositions over the last two years is shown in a separate table, see statement of changes in shareholders’ equity.
Nominal value per share is NOK 6.
Dividends paid and proposed
2021
2020
Dividends per share in NOK – paid
9.00
8.70
Dividends per share in NOK - proposed by the Board of Directors
9.30
9.00
Dividend of NOK 12.6 billion has been recognised to equity in 2021 (NOK 12.3 billion in 2020).
Board of Directors proposes an ordinary dividend of NOK 9.30 for 2021 (NOK 13.0 billion), to be declared by the Annual General Meeting (AGM) on 11
May 2022. The proposed dividend shall be split into two tranches of NOK 5.00 and NOK 4.30 per share, to be paid in May and October 2022,
respectively.
At the Annual General Meeting 11 May 2020, the share buyback programme approved by the Annual General Meeting in 2019 was finalised by
cancellation of 19 794 961 own shares and redemption of 23 205 038 shares owned by the Norwegian Government by the Ministry of Trade, Industry
and Fisheries against a payment of an amount of NOK 4.1 billion to the Ministry of Trade, Industry and Fisheries.
NOTE 12
Financial instruments and risk management
Risk management
Telenor ASA’s treasury function is responsible for financial risk management including liquidity management, interest rate risk, managing foreign
exchange risk, credit risk and capital management. The activities in the treasury function are performed according to policies and procedures
approved by the Board of Directors of Telenor ASA.
Telenor ASA issues debts in Norwegian and foreign capital market mainly through certificates and bonds. In addition, Telenor ASA has established
a sustainability-linked committed syndicated revolving credit facility of EUR 1.8 billion with maturity in 2024.
Financing of the Group’s activities implies that Telenor ASA’s income statement is exposed to changes in interest rates in the market. Fluctuation in
interest rates also influences the fair value of assets and liabilities.
Telenor ASA holds debt in other currencies than Norwegian Kroner (NOK) and is exposed to currency risk related to changes in value of NOK
compared to other currencies. Net investment hedge relationships are established to match currency fluctuation on debt instruments to currency
fluctuations on foreign investments.
The Company is exposed to credit risk related to receivables and financial instruments with positive value against external parties and other
companies in the Group.
Telenor ASA uses derivatives as forward currency contracts and interest rate swaps to manage the risk exposure related to changes in currency
and interest rates. All derivative contracts are measured at fair value with changes through profit and loss. If the derivatives are designated for cash
flow hedge accounting or as part of a hedge of net investment, the changes in fair value are recognised as other comprehensive income.
Telenor ASA is exposed to the interest rate benchmark reform (IBOR reform) through financial instruments with exposures from EURIBOR and USD
Libor interest rate fixings. As of 31 December 2021, there are no effects on Telenor ASAs fair value hedging relationships as a result of the IBOR
reform. Telenor ASA is monitoring and managing the transition to alternative benchmark rates and is in dialogue with counterparties about the
IBOR reform.
See also note 29 in the consolidated financial statements where interest rate risk is explained in detail.
See also note 2 and note 29 in the consolidated financial statements where financial risks and accounting for financial instruments are explained in
detail.
Fair value of financial instruments
Based on the characteristics of the financial instruments that are recognised in the financial statements, the financial instruments are grouped into
the classes and categories described below. The estimated fair values of the financial instruments are based on market prices and the valuation
methodologies per class are described below.
Fair value hierarchy
Telenor ASA measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value:
Level 1:
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 161
Level 2:
indirectly (i.e. derived from prices).
Level 3:
Interest-bearing liabilities
Fair values of interest-bearing liabilities are based on quoted prices where available. Interest-bearing liabilities that are not traded in an active
market have been calculated using yield curves, which incorporates estimates of the Telenor ASA credit spread. The credit curve has been
extrapolated using indicative prices on debt issuance by Telenor ASA for different maturities. The yield curves have been interpolated from cash
and swap curves observed in the market for different currencies and maturities.
Trade receivables and other current and non-current financial assets
For trade receivables and other current receivables, the nominal amount is assessed to be a reasonable approximation of fair value. The effect of
not discounting is considered to be immaterial for this class of financial instruments.
Equity investments
Fair values for listed shares are based on quoted prices at the end of the reporting period. Fair value of unlisted shares is calculated using
commonly used valuation techniques or measured at cost if the investment does not have a quoted market price in an active market and the fair
value cannot be reliably measured.
Trade payables and other non-interest-bearing financial liabilities
For trade payables and other non-interest-bearing financial liabilities the nominal amount is assessed to be a reasonable approximation of fair
value. The effect of not discounting is considered to be immaterial for this class of financial instruments.
Cash and cash equivalents
The fair value for this class of financial instruments is assessed to be equal to the nominal amount.
Derivatives
Fair values of currency swaps, foreign currency forward contracts and interest rate swaps are estimated based on calculating the net present value
of future cash flows, using interest rate curves, exchange rates and currency spreads as of 31 December 2021 and 2020, respectively.
2021
NOK in millions
Carrying
amount
Total as of
31 December 2021
2022
2023-2025
2026-2030
2031->
Interest-bearing liabilities
Bonds and Commercial Papers
72,229
71,775
4,992
21,855
29,952
14,976
Other interest-bearing liabilities
120
-
-
-
-
-
Total interest-bearing liabilities external
72,349
71,775
4,992
21,855
29,952
14,976
Other interest-bearing liabilities Group
7,480
7,480
7,480
-
-
-
Drawing on Group cash pools
1,965
1,965
-
-
-
1,965
Interest-bearing liabilities Telenor Group
9,445
9,445
7,480
-
-
1,965
Non-interest-bearing liabilities
Trade and other payables external
631
631
631
-
-
-
Trade and other payables Group companies
55
55
55
-
-
-
Other current non-interest-bearing liabilities
2,239
2,239
2,239
-
-
-
Derivative financial instruments liabilities
1,755
1,755
678
513
502
63
Other non-current non-interest-bearing liabilities
47
47
-
47
-
-
Total non-interest-bearing liabilities
4,727
4,727
3,603
560
502
63
Total
86,522
85,948
16,075
22,415
30,454
17,004
Future interest payments
-
5,584
818
2,563
1,592
610
Total including future interest payments
86,522
91,531
16,894
24,978
32,046
17,614
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 162
2020
NOK in millions
Carrying
amount
Total as of
31 December 2020
2021
2022-2024
2025-2029
2030->
Interest-bearing liabilities
Bonds and Commercial Papers
79,781
78,240
2,871
21,450
38,215
15,705
Other interest-bearing liabilities
-
-
-
-
-
-
Total interest-bearing liabilities external
79,781
78,240
2,871
21,450
38,215
15,705
Other interest-bearing liabilities Group
9,449
9,449
9,449
-
-
-
Drawing on Group cash pools
1,480
1,480
-
-
-
1,480
Interest-bearing liabilities Telenor Group
10,929
10,929
9,449
-
-
1,480
Non-interest-bearing liabilities
Trade and other payables external
563
563
563
-
-
-
Trade and other payables Group companies
109
109
109
-
-
-
Other current non-interest-bearing liabilities
1,136
1,136
1,136
-
-
-
Derivative financial instruments liabilities
2,010
2,010
734
510
766
-
Other non-current non-interest-bearing liabilities
68
68
-
68
-
-
Total non-interest-bearing liabilities
3,886
3,886
2,542
578
766
-
Total
94,597
93,056
14,862
22,028
38,981
17,185
Future interest payments
-
5,445
879
2,193
1,610
763
Total including future interest payments
94,597
98,501
15,741
24,221
40,591
17,947
For specification regarding external interest-bearing liabilities in Telenor ASA, see note 28 in the consolidated financial statements.
NOK in millions
2021
2020
As of 1 January
79,781
71,419
Change in cash flow from financing activities
(3,410)
2,369
Change due to hedge accounting
(1,134)
1,272
Effects from changes in foreign exchange rates
(3,671)
4,529
Interest
30
40
Change in lease liabilities
950
-
Other changes
753
153
As of 31 December
73,299
79,781
1)
Classified as cash flow from operating activities.
NOTE 13
Current non-interest-bearing liabilities
NOK in millions
Category
2021
2020
Trade payables to Group companies
FLAC
1)
55
109
Financial derivatives to Group companies
FVTPL
3
229
Current non-interest-bearing liabilities within the Group
58
338
Trade payables external
FLAC
631
564
Government taxes, tax deductions, holiday pay etc.
NF
2)
123
135
Income taxes payable
NF
1,986
845
Financial derivatives
FVTPL
675
505
Other current liabilities
FLAC
130
156
Current non-interest-bearing external liabilities
3,545
2,205
1)
FLAC: Financial liabilities at amortised cost.
2)
NF: Non-financial assets and liabilities.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 163
NOTE 14
Guarantees
NOK in millions
2021
2020
Guarantee liabilities
764
685
Guarantee liabilities contain the unrecognised guarantee liabilities issued by Telenor ASA. The guarantee liabilities mainly consist of guarantees
issued by Telenor ASA on behalf of subsidiaries.
Purchased bank guarantees are not included in the table.
NOTE 15
Related parties
Telenor ASA’s transactions with its major shareholder, the Norwegian State represented by the Ministry of Trade, Industry and Fisheries, are
discussed in note 33 to the consolidated financial statements.
Telenor ASA’s other related parties consist mainly of subsidiaries of the Group. Telenor ASA sells and buys services from these companies, see
note 1 for further description, and provides loans and receives deposits from the companies. When permissible by local rules and regulations,
subsidiaries owned 90% or more are part of Telenor ASA’s cash pool systems and the internal bank in Group Treasury. Through the internal bank,
the subsidiaries can get loans, place excess liquidity, and make currency exchanges.
In addition, Telenor ASA receives dividends that are recognised as financial income, see note 6. Group contributions and dividends recognised in
2021 and 2020 of NOK 14,903 million and NOK 16,877 million, respectively, are received from companies within Other units.
Lease liabilities to Telenor Real Estate AS of NOK 950 million are included under Financial transactions, Liabilities, see note 9.
Sales and purchases of services, receivables, and liabilities
2021
2020
NOK in millions
Sales
Purchases
Receivables
Liabilities
Sales
Purchases
Receivables
Liabilities
Subsidiaries
Norway
255
42
13
13
250
49
20
32
Sweden
78
10
28
(2)
76
14
6
(1)
Denmark
37
9
6
3
35
14
4
2
Finland
5
2
-
-
5
-
7
-
dtac – Thailand
143
1
2
1
149
-
5
-
Digi – Malaysia
103
2
17
-
102
2
17
-
Grameenphone – Bangladesh
104
-
247
6
102
-
210
4
Pakistan
50
5
58
2
55
3
189
-
India
-
-
1
-
-
-
1
-
Broadcast
-
-
-
-
5
-
-
-
Myanmar
54
-
38
-
51
1
3
-
Other units
65
361
141
32
58
329
215
72
Total
894
432
551
55
888
412
677
109
Financial transactions, receivables, and liabilities
2021
2020
NOK in millions
Financial income
Financial expense
Receivables
Liabilities
Financial income
Financial expense
Receivables
Liabilities
Subsidiaries
Norway
33
-
5,180
-
27
-
1,522
-
Sweden
18
-
1,135
-
18
-
1,146
-
Denmark
-
-
-
13
-
-
-
2,301
Finland
-
-
680
-
1
-
1,184
-
Other units
19
15
24,726
8,421
133
21
33,739
7,377
Total
70
15
31,721
8,434
179
21
37,591
9,678
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 164
NOTE 16
Shares in subsidiaries
The table below sets forth Telenor ASA’s ownership interest in its subsidiaries. These subsidiaries will mainly be holding companies and their
directly owned subsidiaries. Several of the subsidiaries named in the second part own shares in other subsidiaries as described in their respective
annual financial statements.
Ownership interests correspond to voting interest if not otherwise stated.
Shares in subsidiaries
NOK in millions
Office
Ownership interest
in % 2021
Ownership interest
in % 2020
Carrying amount as of
31 December 2021
Carrying amount as of
31 December 2020
Telenor Networks Holding AS
Norway
100.0
100.0
70,765
52,749
Telenor Global Shared Services AS
Norway
100.0
100.0
626
626
Telenor Communication II AS
Norway
100.0
100.0
7,235
7,235
Telenor Mobile Holding AS
Norway
100.0
100.0
70,977
70,977
Telenor Infra AS
Norway
100.0
100.0
-
2,332
Telenor KB AS
Norway
100.0
100.0
-
-
Telenor Forsikring AS
Norway
100.0
100.0
300
300
Telenor Maritime AS
3)
Norway
98.9
98.9
172
172
Telenor GTI AS
Norway
100.0
100.0
3,850
3,850
Cinclus Technology AS
Norway
100.0
100.0
-
-
Telenor Digital AS
Norway
100.0
100.0
512
512
Telenor Real Estate AS
Norway
100.0
100.0
351
2,627
Total
154,787
141,380
1)
There has been a capital injection from Telenor ASA to Telenor Networks Holding AS in 2021.
2)
As part of the capital injection from Telenor ASA to Telenor Networks Holding AS, the shares in Telenor Infra AS have been transferred to Telenor Networks
Holding AS in 2021. Telenor Tower Holding AS is owned by Telenor Networks Holding AS.
3)
The remaining 1.1% of shares in Telenor Maritime AS are owned by Telenor Communication II AS.
4)
The shares in Telenor Real Estate AS were impaired in 2021 by NOK 2.3 billion.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 165
Shares in subsidiaries owned through subsidiaries
Office
Ownership interest
in % 2021
Ownership interest
in % 2020
Telenor Networks Holding AS
Telway AS
Norway
100.0
100.0
Telenor Global Services AS
Norway
100.0
100.0
Telenor Svalbard AS
Norway
100.0
100.0
Telenor Norge AS
Norway
100.0
100.0
Telenor Tower Holding AS
Norway
100.0
0.0
Telenor Satellite AS
Norway
100.0
100.0
Telenor Communication II AS
Telenor Financial Services AS
Norway
100.0
100.0
Telenor GO Pte Ltd
Singapore
100.0
100.0
SnT East Holding AS
Norway
100.0
100.0
Telenor India Private Ltd
India
99.9
99.9
Norkring België N.V.
Belgium
75.0
75.0
BLDNG.AI AS
Norway
100.0
0.0
Telenor Marketplace Invest AS
Norway
100.0
0.0
Telenor Mobile Holding AS
Telenor Mobile Communications AS
Norway
100.0
100.0
Telenor Danmark Holding A/S
Denmark
100.0
100.0
Telenor Sverige AB
Sweden
100.0
100.0
Telenor Connexion AB
Sweden
100.0
100.0
Canal Digital Finland Oy
Finland
100.0
100.0
Telenor Finland Holding Oy
Finland
100.0
100.0
Telenor Maritime AS
Telenor Maritime Inc
USA
100.0
100.0
Telenor Maritime AB
Sweden
100.0
100.0
Telenor Maritime Pte
Singapore
100.0
100.0
Telenor Maritime Oy
Finland
100.0
100.0
Telenor Real Estate AS
Telenor Eiendom Harelokken AS
Norway
100.0
100.0
Ilderveien 9 AS
4)
Norway
0.0
100.0
Telenor Nord 2 AS
Norway
100.0
100.0
Telenor Møre og Romsdal og Trøndelag 2 AS
Norway
100.0
100.0
Telenor Vestlandet og Rogaland 2 AS
Norway
100.0
100.0
Telenor Agder Vestfold og Telemark 2 AS
Norway
100.0
100.0
Telenor Viken og Innlandet 2 AS
Norway
100.0
100.0
Telenor Øvre Strandgate 5 2 AS
Norway
100.0
100.0
Telenor Festekontrakter AS
Norway
100.0
100.0
Telenor Jeløy Radio AS
Norway
100.0
100.0
Telenor Låveveien 55 AS
Norway
100.0
100.0
Telenor Tryvann Radio AS
Norway
100.0
100.0
Telenor Digital AS
Telenor Health AS
Norway
100.0
100.0
Telenor Digital Asia LTD
Thailand
0.0
99.0
1)
The company is newly established in 2021.
2)
The company was sold to Telenor Networks Holding AS in 2020.
3)
Telenor Marketplace Invest AS is sold from Telenor Mobile Communications AS to Telenor Communications II AS in 2021.
4)
The company is sold in 2021.
5)
The company is liquidated in 2021.
| Notes to the Financial Statements Telenor ASA | Annual Report 2021 | 166
Other significant subsidiaries (owned through holding companies)
Office
Telenor A/S
Denmark
Digi.com Bhd
Malaysia
Telenor Pakistan (Private) Ltd.
Pakistan
Total Access Communications Plc. (dtac)
Thailand
GrameenPhone Ltd.
Bangladesh
Unitech Wireless Private Limited
India
Telenor Myanmar Ltd.
Myanmar
DNA Plc
Finland
| Responsibility Statement | Annual Report 2021 | 167
Fornebu, 21 March 2022
Responsibility Statement
We confirm that, to the best of our knowledge, the consolidated financial statements for the year ended 31 December 2021 have been prepared in
accordance with IFRS as adopted by the EU, that the financial statements for the parent company for the year ended 31 December 2021 have been
prepared in accordance with the Norwegian Accounting Act and simplified IFRS in Norway, that they give a true and fair view of the Company’s and
Group’s assets, liabilities, financial position and results of operations, and that the Report of the Board of Directors gives a true and fair review of
the development, performance and financial position of the Company and the Group and includes a description of the principle risks and
uncertainties that they face.
| Statement from the Corporate Assembly | Ann ual Report 2021 | 168
Statement from the Corporate Assembly of
Telenor ASA
On 23 March 2022, the Corporate Assembly of Telenor ASA passed the following resolution:
The Corporate Assembly recommends that the Annual General Meeting approves the Board’s proposal for Financial Statements
for Telenor Group and Telenor ASA for 2021 as presented to the Corporate Assembly, by transfer of NOK 23,845 million to retained earnings and a
dividend payment of NOK 9.30 per share to be paid out in two instalments of NOK 5.00 per share and NOK 4.30 per share in May and October 2022,
respectively.
| Auditor's report | Annual Report 2021 | 169
.
| Auditor's report | Annual Report 2021 | 170
| Auditor's report | Annual Report 2021 | 171
| Auditor's report | Annual Report 2021 | 172
| Auditor's report | Annual Report 2021 | 173
| Auditor's report | Annual Report 2021 | 174
| Definitions | Annual Report 2021 | 175
Definitions
Alternative Performance Measures
Telenor Group’s financial information is prepared in accordance with International Financial Reporting standards (IFRS). In addition, it is
management’s intent to provide alternative performance measures that are regularly reviewed by management to enhance the understanding of
Telenor’s performance, but not instead of the financial statements prepared in accordance with IFRS. The alternative performance measures
presented may be determined or calculated differently by other companies.
The principles for measurement of the alternative performance measures are in accordance with the principles used both for segment reporting in
note 5 in the consolidated financial statements and internal reporting to Group Executive Management (chief operating decision makers) and are
consistent with financial information used for assessing performance and allocating resources.
Revenues
NOK in millions
2021
2020
Mobile subscription and traffic
68,817
73,869
Fixed telephony
960
1,255
Fixed Internet/TV
11,287
11,329
Fixed data services
711
694
Subscription and traffic revenues
81,776
87,147
Other revenues
28,465
28,692
Total revenues
110,241
115,839
Mobile subscription and traffic
Consist of subscription and connection fees, revenues from voice (outgoing traffic) and non-voice traffic, outbound roaming, and other mobile
service revenues. Subscription and traffic include only revenues from the company’s own subscriptions.
Fixed Telephony
Consist of subscription and connection fees, traffic (fixed to fixed, fixed to mobile, to other countries, value added services, other traffic) for
PSTN/ISDN and Voice over Internet Protocol (VoIP).
Fixed Internet and TV
Consist of subscription, traffic charges and connection fees for xDSL, cable, fibre, and fixed wireless access, in addition to revenues from TV
services. High-speed fixed internet includes fibre, cable, VDSL and fixed wireless access.
Fixed Data services
Consist of Nordic Connect/IP-VPN and security.
Other revenues
Interconnect
Consist of revenues from incoming traffic related to the company’s own subscriptions. Revenues from incoming traffic related to service provider
or MVNO (Mobile Virtual Network Operators) subscriptions are not included.
Other mobile
Consist of inbound roaming, national roaming, telemetric and revenues related to service providers and MVNOs. Telemetric is defined as
subscriptions and services related to machine-to-machine (M2M) / Internet of Things (IoT), i.e. industrial mobile data applications directed at
communication between machines.
Non-mobile
Consist of revenues from customer equipment and businesses that are not directly related to mobile operations.
Fixed wholesale and broadcasting
Consist of sale to service providers of telephony (PSTN/ISDN), Bitstream, LLUB, national and international interconnect, transit traffic, leased lines,
and other wholesale products. Broadcasting consist of revenues from terrestrial radio and TV transmission.
Other fixed
Consist of leased lines, managed services, and other retail products.
Satellite
Consist of revenues from satellite services from the satellite position 1-degree west.
Infra
Consist of revenues from passive infrastructure services in Norway.
Connexion
Consist of revenues from subscription and services related to IoT, i.e., industrial mobile data applications directed at communication between
machines.
| Definitions | Annual Report 2021 | 176
Organic revenue growth
Organic revenue is defined as revenue adjusted for the effects of acquisition and disposal of operations and currency effects. We believe that the
measure provides useful and necessary information to investors and other stakeholders for the following reasons:
●
it provides additional information on underlying growth of the business without the effect of certain factors unrelated to its operating
performance
●
it is used for internal performance analysis, and
●
it facilitates comparability of underlying growth with other companies (although the term “organic” is not a defined term under IFRS and may
not, therefore, be comparable with similarly titled measures reported by other companies).
Reconciliation
NOK in millions
2021
2020
Change whole year
Change YoY
Revenue growth
110,241
115,839
(5,599)
-4.8%
Impact using exchange rates for 2021
-
(6,476)
6,476
M&A
-
(410)
410
Organic revenue growth
110,241
108,953
1,288
1.2%
NOK in millions
2020
2019
Change whole year
Change YoY
Revenue growth
115,839
107,975
7,864
7.3%
Impact using exchange rates for 2020
5,011
(5,011)
M&A
(6,305)
(386)
(5,919)
Organic revenue growth
109,534
112,600
(3,066)
-2.7%
Organic subscription and traffic revenue growth
Subscription and traffic revenues consist of revenues from mobile subscription and traffic, fixed telephony, fixed Internet/TV, and fixed data
services.
Organic subscription and traffic revenues are defined as subscription and traffic revenues adjusted for the effects of acquisition and disposal of
operations and currency effects. We believe that the measure provides useful and necessary information to investors and other stakeholders for
the following reasons:
●
it refers to the core revenue streams of the business making up 74% of total revenues and almost the entire gross profit for the Group,
●
it provides additional information on underlying growth of the business within these core revenue streams, without the effect of certain
factors unrelated to its operating performance,
●
it is used for internal performance analysis, and
●
it facilitates comparability of underlying growth with other companies (although neither “subscription and traffic revenues” nor the term
“organic” are defined terms under IFRS and may not, therefore, be comparable with similarly titled measures reported by other companies).
Reconciliation
NOK in millions
2021
2020
Change whole year
Change YoY
Subscription and traffic revenue growth
81,776
87,147
(5,372)
-6.2%
Impact using exchange rates for 2021
-
(5,171)
5,171
M&A
-
-
-
Organic subscription and traffic revenue growth
81,776
81,976
(200)
-0.2%
NOK in millions
2020
2019
Change whole year
Change YoY
Subscription and traffic revenue growth
87,147
80,930
6,218
7.7%
Impact using exchange rates for 2020
-
3,838
(3,838)
M&A
(4,548)
-
(4,548)
Organic subscription and traffic revenue growth
82,599
84,768
(2,168)
-2.6%
Gross profit
Gross profit is a key financial parameter for Telenor and is the difference between total revenue and costs of materials and traffic charges. Gross
profit reflects the profitability contribution of Telenor’s revenue growth in its markets and therefore describes Telenor’s potential for sustainable
value creation, making gross profit a key financial parameter to follow. It is also used for internal performance analysis.
Reconciliation
NOK in millions
2021
2020
Total revenues
110,241
115,839
Costs of materials and traffic charges
(29,176)
(29,037)
Gross profit
81,065
86,802
Impact using exchange rates for 2021
(4,903)
Gross profit FX adjusted
81,065
81,899
Change
(834)
Change (%)
-1.0 %
| Definitions | Annual Report 2021 | 177
Reconciliation
NOK in millions
2020
2019
Total revenues
115,839
107,975
Costs of materials and traffic charges
(29,037)
(27,243)
Gross profit
86,802
80,732
Impact using exchange rates for 2020
6,933
Gross profit FX adjusted
86,802
87,665
Gross profit FX adjusted excl. DNA
82,880
85,062
Change
(2,181)
Change (%)
-2.5 %
Operating expenses (opex)
Operating expenses (opex) is a key financial parameter for Telenor and consists of salaries and personnel cost and other operating expenses.
Telenor’s continuous effort to improve efficiency makes opex a key financial parameter to follow. It is also used for internal performance analysis.
Reconciliation
NOK in millions
2021
2020
Salaries and personnel cost
(10,457)
(11,152)
Other operating expenses
(21,446)
(23,302)
Operating expenses
(31,903)
(34,455)
Impact using exchange rates for 2021
1,921
Operating expenses FX adjusted
(31,903)
(32,533)
Change
630
Change (%)
-1.9 %
Reconciliation
NOK in millions
2020
2019
Salaries and personnel cost
(11,152)
(10,598)
Other operating expenses
(23,302)
(22,590)
Operating expenses
(34,455)
(33,188)
Impact using exchange rates for 2020
(1,526)
Operating expenses FX adjusted
(34,455)
(34,714)
Operating expenses FX adjusted excl. DNA
(30,616)
(33,232)
Change
2,616
Change (%)
-7.5 %
EBITDA before other income and other expenses and EBITDA margin
Earnings before interest, tax, depreciation, and amortisation (EBITDA) is a key financial parameter for Telenor. EBITDA before other income and
other expenses is defined as EBITDA less gains and losses on disposals of fixed assets and operations, workforce reductions, onerous contracts,
and one-time pension costs, see note 10. EBITDA margin is defined as EBITDA before other income and other expenses divided by total revenues.
These measures are useful to investors and other stakeholders in evaluating operating profitability on a more variable cost basis as they exclude
depreciation and amortisation expenses related primarily to capital expenses and acquisitions that occurred in the past and non-recurring items,
as well as evaluating operating performance in relation to Telenor’s competitors. EBITDA margin enables comparison between segments and other
operators.
Reconciliation
NOK in millions
2021
2020
EBITDA
47,375
54,293
Other income
(173)
(4,426)
Other expenses
1,960
2,480
EBITDA before other income and expenses
49,162
52,347
EBITDA margin
NOK in millions
2021
2020
Total revenues
110,241
115,839
EBITDA before other items
49,162
52,347
EBITDA margin
44.6%
45.2%
Organic EBITDA growth
Organic EBITDA growth is defined as growth in EBITDA (before other income and other expenses) adjusted for the effects of acquisition and
disposal of operations and currency effects. We believe that the measure provides useful and necessary information to investors, and other
stakeholders for the following reasons:
●
it provides additional information on underlying growth of the business without the effect of certain factors unrelated to its operating
performance, and
●
it is used for internal performance analysis.
| Definitions | Annual Report 2021 | 178
Reconciliation
NOK in millions
2021
2020
Change whole year
Change YoY
EBITDA growth
49,162
52,347
(3,185)
-6.1%
Impact using exchange rates for 2021
-
(2,982)
2,982
M&A
-
(122)
122
Organic EBITDA growth
49,162
49,243
(82)
-0.2%
NOK in millions
2020
2019
Change whole year
Change YoY
EBITDA growth
1)
52,347
47,545
4,802
10.1%
Impact using exchange rates for 2020
2,126
(2,126)
M&A
(2,253)
(54)
(2,199)
Organic EBITDA growth
50,094
49,617
477
1.0%
Capital expenses
Capital expenses (capex) are derived from the statement of financial position and consists of investments in PPE, intangible assets and
prepayments for right-of-use assets excluding business combinations and asset retirement obligations. Capex is a measure of investments made
in the operations in the relevant period and is useful to investors and other stakeholders in evaluating the capital intensity of the operations. Capex
and capex/revenues are deemed to better gauge the actual investments in the period than the line items purchases of property, plant and
equipment (PPE), intangible assets and prepayments for right-of-assets in the cash flow statement.
Capex excluding licences and spectrum is relevant to users to measure the level of underlying investments. Historically, licence and spectrum
investments have varied significantly between reporting periods.
Reconciliation
NOK in millions
2021
2020
Purchases of PPE, intangible assets and prepayments for right-of-use assets (note 1)
19,447
19,000
Working capital movement of PPE, intangible assets and prepayments of right-of -use assets
1,745
(1,758)
Deferred licence obligations
1,340
4,466
Less:
Discontinued operations
(188)
(556)
Capex
22,345
21,152
Licence and spectrum acquisition
(4,403)
(5,341)
Capex excl. licence and spectrum
17,942
15,811
Total revenues
110,241
115,839
Capex excl. licence and spectrum/Revenues (%)
16.3%
13.6%
Total Capex/Revenues (%)
20.3%
18.3%
Investments
Investments consist of capex and investments in businesses. Investments in businesses comprise acquisitions of shares and participations,
including acquisitions of subsidiaries and businesses not organised as separate companies. Investments (or total investments) is deemed to better
gauge the actual investments for the period than in the purchases of property, plant and equipment (PPE) and intangible assets line items in the
cash flow statement.
Reconciliation
NOK in millions
2021
2020
Capital expenses
22,345
21,152
Investments in businesses
392
367
Investments
22,737
21,519
Net interest-bearing debt excluding licence obligations (Net debt)
Net debt consists of both current and non-current interest-bearing liabilities, current and non-current lease liabilities less related current and non-
current hedging instruments, financial instruments, such as debt instruments and derivatives, and cash and cash equivalents. Net debt is adjusted
for licence obligations.
Net debt is a measure of the Group’s net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure
that can be used to assess both the Group’s cash position and its indebtedness. The use of the term ‘net debt’ does not necessarily mean that the
cash included in the net debt calculation is available to settle the liabilities included in this measure.
Net debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure is the
aggregate interest-bearing liabilities (both current and non-current) and cash and cash equivalents. A reconciliation from these to net debt is
provided below.
| Definitions | Annual Report 2021 | 179
Reconciliation
NOK in millions
2021
2020
Non-current interest-bearing liabilities
87,811
98,627
Non-current lease liabilities
28,101
35,584
Current interest-bearing liabilities
9,276
7,296
Current lease liabilities
6,977
9,298
Less:
Cash and cash equivalents
(15,223)
(20,577)
Hedging instruments
(1,071)
(2,387)
Financial instruments
(327)
(356)
Adjustments:
Non-current licence obligations
(12,496)
(13,446)
Current licence obligations
(2,264)
(3,601)
Net interest-bearing debt excluding licence obligations
100,783
110,438
Net debt/EBITDA
Telenor has so far measured leverage as the ratio Net debt/EBITDA before other income and other expenses. This ensures consistency with our
alternative performance measure organic EBITDA growth, which is also based on EBITDA before other income and other expenses, and our
external guiding for this parameter. Further, this prevents temporary spikes in leverage due to other income and other expenses and thus ensures
transparency and a better understanding of Telenor’s ability to cover debt with earnings from its regular operations.
Telenor aims to maintain a solid balance sheet through keeping Net debt/EBITDA before other income and other expenses in the range of 1.8x to
2.3x, in order to maintain financial flexibility and ensure cost efficient funding.
The measure provides useful information about the strength of our financial position and is regularly reported internally. For comparability, the 12
months rolling EBITDA before other income and other expenses in 2020 includes EBITDA before other income and other expenses contribution
from Telenor Myanmar.
NOK in millions
2021
2020
Net debt
100,783
110,438
EBITDA before other items
49,162
56,520
Net debt/EBITDA before other items
2.1
2.0
Free cash flow
Telenor makes use of Free cash flow and Free cash flow before M&A activities as important performance measures when presenting and
discussing our reported results. We believe it is both useful and necessary to communicate Free cash flow and Free cash flow before M&A activities
for the following reasons:
●
Free cash flow and Free cash flow before M&A activities allow us and investors to evaluate Telenor’s liquidity and cash generated by our
operations.
●
Free cash flow excludes items that are deemed discretionary, such as Financing activities. In addition, Free cash flow before M&A activities
excludes cash flows relating to acquisitions and disposals of businesses.
●
Free cash flow facilitates comparability with other companies, although our measure of Free cash flow may not be directly comparable to
similar titled measures used by other companies.
●
These measures are used for management planning, reporting and incentive purposes.
A reconciliation of Net cash flow from operating activities and Net cash flow from investing activities to Free cash flow and Free cash flow before
M&A activities is provided in the table below.
Reconciliation
NOK in millions
2021
2020
Net cash flows from operating activities
42,272
43,820
Net cash flows from investing activities
(17,228)
(10,565)
Payments of lease liabilities related to spectrum licences
(2,871)
(3,634)
Repayments of borrowings - supply chain financing
(1)
(89)
Dividends paid to and purchase of shares from non-controlling interest
(3,551)
(3,281)
Payments of lease liabilities related to other lease contracts
(5,955)
(5,395)
Free cash flow
12,667
20,855
M&A activities
1,653
8,313
Free cash flow before M&A activities
11,014
12,542
| Definitions | Annual Report 2021 | 180
Return On Capital Employed (ROCE)
When evaluating different financial metrics before making an investment, the Group also considers the return on capital employed. Return on
capital employed is calculated by dividing the return of last twelve months by the average balance of capital employed for the same twelve-month
period. Return is defined as operating profit including share of profits from associated companies and joint ventures, less income taxes. Capital
employed is defined as the sum of total equity and net interest-bearing debt including licence obligations and net pension obligations. The average
of capital employed during the period is calculated as average of opening and closing balance for the given twelve-month period.
The calculated return on capital employed is based on the actual generated return, and hence it may be impacted by unusual returns or losses at a
particular point of time.
Reconciliation
NOK in millions
2021
2020
Operating profit
21,506
27,984
Share of net income (loss) including gains/losses from associated companies and joint ventures
(459)
(361)
Income taxes
(5,740)
(6,419)
A - Earnings before adjustments
15,307
21,204
Total equity as of beginning of the period
43,918
43,339
Net interest-bearing debt including licence obligations as of beginning of the period
127,485
123,707
Net pension obligations as of beginning of the period
2,747
2,386
B - Total capital employed as of beginning of the period
174,150
169,432
Total equity as of end the period
31,500
43,918
Net interest-bearing debt including licence obligations as of end of the period
115,543
127,485
Net pension obligations as of end of the period
2,429
2,747
C - Total capital employed as of end of the period
149,472
174,150
D- Average capital employed before adjustments (D=(B+C)/2)
161,811
171,791
E - Adjustment for Myanmar and Canal Digital
5,756
12,382
F - Average capital employed (F=D-E)
156,055
159,409
G - Return on capital employed (G=A/F)
10%
13%
Published by Telenor ASA
N-1360 Fornebu, Norway
Phone: +47 67 89 00 00
Investor Relations:
E-mail: ir@telenor.com
www.telenor.com