By Balazs Koranyi and Joachim Dagenborg
OSLO (Reuters) - Norwegian telecoms group Telenor released weaker than expected fourth-quarter earnings and 2014 margin guidance on Wednesday, sending its shares down five percent.
Capital expenditure in Norway, political risk in Thailand and Bangladesh, and the redeployment of 5,000 sites in India were big challenges this year and it was also bracing for major investments in Myanmar, the company said.
"It's early in the year, and given the uncertainties, we think it's prudent to guide in line with 2013, but the internal ambition is definitely higher," Chief Financial Officer Richard Aa told a news conference.
Telenor, with about 160 million subscribers across Europe and Asia, said its revenues would grow by "low single-digits" this year, against market expectations of a 5 percent rise, while earnings before interest, taxes and depreciation (EBITDA) margin would hold steady.
"Guidance of a stable EBITDA margin excluding Myanmar in 2014 is well below consensus of a 36-percent margin, pointing to 4-percent negative consensus EBITDA revision," Pareto Securities analysts said in a note.
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"We expect to make 3-4 percent negative EBITDA estimate revisions on the back of soft 2014 guidance."
Shares in state-controlled Telenor were down 5 percent at 130 crowns by 0940 GMT, underperforming a 0.3 percent fall in the European telecoms index.
Capital expenditure this year would be 16 percent of revenues, Telenor said, slightly above market forecasts.
"The 2014 guidance is weak but looks prudent and is impacted by one-offs," JP Morgan said, referring to higher one-off costs in India.
Telenor's decision to increase its dividend by 17 percent to 7 crowns a shares, above expectations, should also offer some comfort to investors, JP Morgan analysts said.
"This is reassuring given some concerns raised by Vimpelcom's decision to materially lower its shareholder remuneration," they said.
Vimpelcom, 33 percent-owned by Telenor, said last month it plans to drastically cut its 2014 dividend, hoping to reduce its more than $20 billion debt, cutting Telenor's dividend income by about 2.5 billion crowns.
The Vimpelcom move dragged Telenor stock sharply lower and the share has been among the worst performers in the sector, falling 12 percent over the past three months and underperforming a flat European telecoms index <.SXKP>.
Emerging markets turbulence and expected start-up costs in Myanmar, its 13th country of operation, has also hit the stock.
In the fourth quarter, Telenor's adjusted EBITDA rose 9.6 percent to 8.99 billion crowns, missing expectations for 9.2 billion in a Reuters poll.
(Editing by Louise Ireland)