Telenor's Earnings Disappointment and Strategic Challenges in Asia: Assessing the Long-Term Impact of 5G Costs and Economic Headwinds

Telenor's Q3 2025 earnings report has sparked investor concern, with the Norwegian telecom giant posting results below market expectations, according to a Yahoo Finance report. A 500 million Norwegian crown ($49.8 million) negative adjustment linked to 5G investments in Malaysia and macroeconomic turbulence in Bangladesh has raised questions about the sustainability of its Asian strategy. While Telenor's Nordic operations delivered robust adjusted EBITDA growth of 9.54 billion crowns, the company's exposure to high-cost 5G rollouts and economic fragility in key Asian markets underscores a critical inflection point for its long-term growth trajectory and shareholder value.

Malaysia's 5G Investment Burden: A Double-Edged Sword

Telenor's 5G expansion in Malaysia, primarily through its 49% stake in CelcomDigi, has become a significant financial drag. The Q3 2025 earnings report explicitly cited "rising 5G-related costs" in the region as a primary driver of the 500 million crown write-down, as noted in the Yahoo Finance report. This aligns with broader industry trends, where 5G infrastructure deployment-requiring dense network coverage and spectrum auctions-has proven capital-intensive. For Telenor, the challenge is compounded by Malaysia's competitive telecom landscape, where rivals such as Maxis and Digi are also investing heavily in 5G, squeezing margins.

The long-term payoff of these investments remains uncertain. While 5G adoption in Malaysia is projected to grow, the upfront costs are straining Telenor's balance sheet at a time when its core Nordic markets are already saturated. This raises a critical question: Is Telenor overextending itself in Malaysia to secure future market share, or is it merely reacting to competitive pressures without a clear path to profitability?

Bangladesh's Economic Headwinds: A Test of Resilience

In Bangladesh, Telenor's flagship subsidiary Grameenphone faced a sharper decline in Q3 2025. Revenues fell to 3,326 million crowns from 3,568 million crowns in the same period in 2024, while adjusted EBITDA dropped to 1,960 million crowns from 2,093 million crowns, according to Telenor's Grameenphone results. These declines occurred despite organic service revenue growth of 1.4%, suggesting that macroeconomic factors-rather than operational missteps-were the primary culprits.

According to a World Bank press release, Bangladesh's Q3 2025 macroeconomic environment was marked by inflationary pressures and currency exchange rate volatility, though some stabilization measures, such as a market-based exchange rate, began to take effect. However, the country's fiscal deficit remains a concern, driven by weak tax revenue and rising subsidies. For Grameenphone, this translates into higher operational costs, reduced consumer purchasing power, and currency fluctuations that erode revenue when converted to Norwegian crowns.

The subscriber base decline of 0.7 million in Q3 2025 further highlights the fragility of Telenor's position in Bangladesh. While the company has historically dominated the market, economic caution among consumers and businesses is now limiting growth. This raises the question of whether Telenor's reliance on Bangladesh-a market that has long been a profit engine-can withstand prolonged macroeconomic stress.

Strategic Implications: Balancing Growth and Risk

Telenor's dual challenges in Malaysia and Bangladesh reflect a broader tension in its global strategy. The company's investments in 5G and emerging markets are designed to future-proof its growth, but the current financial headwinds suggest that these bets may come at the expense of short-term profitability. For investors, the key issue is whether Telenor can manage these risks without compromising its long-term value proposition.

In Malaysia, the company must demonstrate that its 5G investments will yield returns through higher data usage and enterprise contracts. In Bangladesh, Telenor needs to navigate the fiscal and economic uncertainties while maintaining market leadership. Both scenarios require disciplined capital allocation and a willingness to adjust strategies in response to shifting conditions.

However, the Q3 2025 results indicate that Telenor may be underestimating the scale of these challenges. The 500 million crown write-down in Malaysia and the 1.8% decline in Grameenphone's adjusted EBITDA suggest that the company is already feeling the strain. If these trends persist, Telenor may face pressure to divest non-core assets or scale back investments-a move that could alienate growth-oriented investors but stabilize its core operations.

Conclusion: A Reevaluation of Investment Potential

Telenor's exposure to high-cost 5G investments in Malaysia and economic caution in Bangladesh justifies a reevaluation of its investment potential in the telecom sector. While the company's Nordic markets remain a stronghold, its Asian operations are increasingly vulnerable to external shocks. For investors, the critical question is whether Telenor can adapt its strategy to mitigate these risks without sacrificing its long-term growth ambitions.

The telecom sector is inherently cyclical, and Telenor's current challenges may yet be temporary. However, the magnitude of the Q3 2025 earnings disappointment and the structural issues in its key Asian markets suggest that the company's path to sustainable growth is far from assured. Shareholders should closely monitor Telenor's capital expenditure plans, debt management strategies, and regional performance metrics in the coming quarters to assess whether the company can turn these challenges into opportunities.