Telenor PESTLE Analysis
Detailed PESTLE analysis of Telenor examining political, economic, social, technological, legal & environmental factors.
Political Factors:
Telenor Group is subject to many sector-specific regulations in Asian and Nordic countries, where it operates its business. Regulatory changes could impact cost of compliance and impact profitability of the company. The company is dependent on receiving licenses and spectrums to provide services to its customers. In some countries, the company also anticipates to receive spectrum licenses in the next 1 to 3 years. There is a risk of not getting approval of those spectrum licenses or may have to even pay higher rates than estimated. This could impact the business strategy and may even require the company to invest more to utilize those spectrums. The company states, that regulatory risks are high in emerging Asian markets, with a host of issues related to taxation, high spectrum charges, renewal of licenses, etc. For instance, in Bangladesh, Grameenphone, the joint venture between Telenor and Grameen Telecom Corporation still faces regulatory hurdles and has pending litigation. Such regulatory uncertainty could have a material impact on the business.
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This concludes the political factors in the Telenor PESTLE Analysis.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Telenor:
Telenor faces risk of exchange rate fluctuations. More than 70% of the Group revenues come from foreign currency.
Any fluctuations in this regard also affects financial results when the results are converted into Norwegian Kroner. The company uses hedging instruments to minimize this risk. The risk of currency fluctuation also exists when any of the company’s subsidiaries enter into financial transactions or acquires monetary assets in currencies, other than Norwegian Kroner. Also, the company faces interest rate risk. Any changes in the interest rate can impact the cost of borrowing funds, particularly for funds with floating rate of interests. The company has been affected by the spread of Covid-19, particularly in Asian markets such as Myanmar, Thailand, Bangladesh, etc. For example, reimposition of lockdowns in Thailand and Malaysia has affected new subscriber additions, negatively.
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Social Factors:
Following are the social factors impacting Telenor PESTLE Analysis:
Telenor continues to grow by tapping new opportunities in the market. For example, in Norway, the company has even started fibre services, resulting in 20% increase in fibre revenues. Mobile subscriptions, too, have risen by 2%. In emerging countries, particularly in Bangladesh & Myanmar, the trends signal an increasing consumption for data. Globally the company has added many subscribers consistently. The company has also been expanding its fibre optic infrastructure to offer better services at reasonable prices. However, there are some unfavorable trends in the television segment. Many users are now moving towards streaming services like Netflix and Hulu. Also, regulations are positive to allow such over the top (OTT) companies, by allowing infrastructure owned by older telecom companies. These trends pose as a threat to the company, as it provides TV and broadband services in Norway, northern European countries and central Asia.
Technological Factors:
The technological factors in the PESTLE Analysis of Telenor are mentioned below:
Telenor relies on its network and other service providers’ networks. There is a risk of damage to its services due to cyberattacks, data breaches or even service interruptions. Any form of cyberattack has the potential to damage essential IT infrastructure of the company. This could adversely affect the company’s goodwill and financial performance too. Yet, the company is adopting to new changes in its technological environment. For example, in 2019, the company automated about 400 use cases. This resulted in improving quality and saving time for customers. In Denmark, alone, the company automated 95% of the process in enterprise order processing. This resulted in tremendous gains for the company as the quality of orders improved by 75%. The company has also set up its own cloud platform to synergies its IT and Network functions.
The company has gained as its share of mobile data traffic on cloud increased.
Legal Factors:
Following are the legal factors in the Telenor PESTLE Analysis:
Telenor operates its business by maintaining huge volumes of personal data. Today, there is increasing concern over personal data security and strict legislations are being brought out for the same. Any breach, loss or alteration of such data may invite litigation and impose heavy fines on the company. Furthermore, the company is facing legal proceedings in few countries it operates in. For instance, the Bangladesh Telecommunication Regulatory Commission has made some financial claims against its joint venture, Grameenphone. These claims relate to allegations that the company has not adequately paid taxes such as corporate taxes, SIM tax, VAT, etc. Furthermore, in 2019, the regulatory body disapproved No Objection Certificates and disapproved any imports of new products, services and equipment’s. Thus, the ongoing legal proceedings against Grameenphone has already proved financially costly and is still uncertain. Any unfavorable outcome may have material impact of the company in Bangladesh.
Environmental Factors:
In the Telenor PESTLE Analysis, the environmental elements affecting its business are as below:
Telenor faces certain climate related risks. Extreme weather conditions and rising levels of sea can cause damage to physical infrastructure and utilities. There are certain regulatory risks also such as a rise in carbon taxes, increase in capital costs due to changes required in moving towards environmentally – friendly solutions. Yet, climate change concerns also present new opportunities for the company. For example, Telenor recycles its mobile handsets and batteries. In 2019, alone, more than 200,000 batteries and handsets were recycled. During the same year, the company reused or recycled 99% of unnecessary electrical and e-waste. In the same year, the company installed solar based solutions for almost 3000 of its stations in Asia. The company also came up with a new policy.
Any contract with a value above $250,000 would have a separate criterion in terms of handling toxic substances and better energy utilization. Thus, more than 70% of the company’s procurement processes with the said value followed this process. Overall, the company continues to implement new solutions to mitigate climate change risks.
To conclude, the above Telenor PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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