Valuation of Telenor ASA

Abstract

The purpose of this master thesis was to apply my knowledge in financial management to value Telenor Group as a comprehensive group. Our problem is thus:

"What is Telenor ASA worth per share on 31.12.2020."

The assignment starts with a presentation of the company's business, history, and strategy before I continue with describing competitors and markets. After Telenor and the market introduction, the next chapter of a strategic analysis of Telenor Group. The strategic analysis is divided into external analysis, where I have used the models PESTEL and Porter's industry analysis, and internal analysis, where I have used VRIO. It is all summarized in a SWOT analysis where I try to form a picture of Telenor's situation. Furthermore, an accounting analysis has been carried out where I calculate historical key figures and assess these. The conditions I arrived at in the analyzes have provided mainly guidelines for the assumptions in the valuation later in the thesis.

I have valued Telenor using a discounting of free cash flows (FCFF), the dividend model (DDM), and market-based valuations using P/E and EV/EBITDA multiples. The different methods returned slightly different numbers. The valuation methods returned share prices of NOK 194.11, 226.83, 159.32, and 231.89, respectively.

At a weighted average of the share prices, I have concluded with a price target of NOK 202.69. In comparison, the share price in the market as of December 31st, 2020, was NOK 145.90.

The purpose of this master thesis was to apply my knowledge in financial management to value Telenor Group as a comprehensive group. Our problem is thus:

"What is Telenor ASA worth per share on 31.12.2020."

The assignment starts with a presentation of the company's business, history, and strategy before I continue with describing competitors and markets. After Telenor and the market introduction, the next chapter of a strategic analysis of Telenor Group. The strategic analysis is divided into external analysis, where I have used the models PESTEL and Porter's industry analysis, and internal analysis, where I have used VRIO. It is all summarized in a SWOT analysis where I try to form a picture of Telenor's situation. Furthermore, an accounting analysis has been carried out where I calculate historical key figures and assess these. The conditions I arrived at in the analyzes have provided mainly guidelines for the assumptions in the valuation later in the thesis.

I have valued Telenor using a discounting of free cash flows (FCFF), the dividend model (DDM), and market-based valuations using P/E and EV/EBITDA multiples. The different methods returned slightly different numbers. The valuation methods returned share prices of NOK 194.11, 226.83, 159.32, and 231.89, respectively.

At a weighted average of the share prices, I have concluded with a price target of NOK 202.69. In comparison, the share price in the market as of December 31st, 2020, was NOK 145.90.