Telia milks Norwegian mobile customers | FinanceAffairs.com

Share for discussion: Björn Hansen is an associate professor at the USN College of Business

Telia Norge's CEO, Stein-Erik Vellan, wrote in an article in Finansavisen that the dinosaur Telenor is quickly being forgotten. This may be true, but Phelan works for Tilia, and he's also a dinosaur. The Swedish communications network was founded in 1853, two years before its Norwegian counterpart.

Telia and its predecessor Netcom have actually been present in Norway “only” since 1989, but there are many signs that the company is behaving like a dinosaur in Norwegian business as well.

One can imagine that Telia, as the number two operator in Norway, does not have the margins to allow for price reductions. The opposite is true

Phelan says Telenor is dominant and better competition is needed for the benefit of Norwegian consumers. It is easy to agree with Phelan on this, since the Norwegian price level is much higher than prices in countries with which it is normal to compare, for example Sweden.

Telenor is working on this problem, Phelan writes. This is half the truth at best. Telia Norge is actually responsible for an important part of the solution. If Norwegian mobile prices are to be lowered without increasing Telenor's market share, it will have to be done by Telia or Ice lowering their prices.

One can imagine that Telia, as the number two operator in Norway, does not have the margins to allow for price reductions. The opposite is true. Both Telenor and Telia are very profitable companies. According to Telia's fourth-quarter report, Telia Norge achieved an EBITDA margin of 46 percent in 2023, with a profit of more than NOK 2 billion. This is better profitability than Telia achieves in its home market and, for example, a higher margin than T-Mobile achieved in Germany in 2023.

Vellan's post is a response to Telenor, which wants either to ease the regulation or for the regulation to treat Telia and Telenor identically. Telenor claims that the perverse regulation results in the transfer of approximately NOK 100 million from Telenor to Telia. Based on the financial results of Telia's operations in Norway, there is no basis for claiming that this transfer will benefit Telia's customers. It is clear that Telia would rather milk its Norwegian customers than act as a price driver for what they could be in the Norwegian market.

Bjorn Hansen

Associate Professor at USN Business School

(For the record: Björn Hansen carries out consulting tasks for Telenor regarding fixed network regulation and has previously assisted Telenor with mobile regulation. This post was written on Hansen's own initiative. Ed.)