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Norway’s Telenor warns on second quarter profit after error at Grameenphone

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By Victoria Klesty

OSLO (Reuters) – Norwegian telecoms group Telenor <TEL.OL> said its second-quarter earnings would take a hit from “errors” discovered at Grameenphone <GRAE.DH>, its Bangladeshi telecoms division.

“Grameenphone has discovered some erroneous omissions with regards to sales, marketing and commission payments and associated costs relating to non-deductible expenses for prior periods,” Grameenphone said in is second-quarter earnings statement on Sunday.

“As a consequence, its sales, marketing and commission expenses and associated non-deductible costs were understated,” it added.

Telenor said this would mean taking a one-off loss in the second quarter of 2019 for the group as a whole, with its expectations for earnings before interest, tax, debt and amortization (EBITDA) lowered by 299 million crowns ($35.05 million).

Net profit guidance would be lowered by 622 million crowns ($72.91 million) in the quarter, Telenor added.

The company declined to comment further on Monday.

Telenor shares traded 0.4% lower at 0908 GMT while the Oslo benchmark index <.OSEBX> was down 0.2%.

“That one-off cost is not important, but it raises new questions – why did this happen, is there a risk that there could be more of this coming, or a risk that this could happen in other markets and so on,” said Stefan Billing, analyst at Kepler Cheuvreux. “This creates a bit of uncertainty.”

The Norwegian firm holds a 55.8% stake in Grameenphone, while Grameen Telecom holds 34.2%.

Telenor will publish its second-quarter results on Tuesday.

(Reporting by Gwladys Fouche and Victoria Klesty; Editing by Jan Harvey and Emelia Sithole-Matarise)

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