Interim report January - June 2000

NETCOM AB ANNOUNCES STRONG OPERATING RESULTS FOR THE QUARTER ENDED JUNE 30, 2000 INTERIM REPORT JANUARY - JUNE 2000 AND QUARTERLY REPORT: APRIL - JUNE 2000 * 144% Annualized increase in EBIT * 76% Annualized increase in EBITDA * 31.1% EBITDA margin (23.5%) * 32% Annualized increase in Group Operating Revenue * 35% Annualized increase in Subscribers to 5.4 million * Announced SEK27.9 billion Offer for SEC on July 24, 2000 New York and Stockholm -August 4, 2000 - NetCom AB ("NetCom", "the Group") (Nasdaq Stock Market: NECS), the leading provider of telecommunication services in the Nordic countries, the Baltic region and Poland, today announced its consolidated results for the quarter ended June 30, 2000. Financial Summary for the Six Months ended June 30 MSEK 2000 1999 Change Operating Revenue 4,855 3,665 32% Operating Profit before depreciation and 1,511 860 76% amortization (i) after depreciation and 989 405 144% amortization (ii) Profit after financial items 887 305 191% Profit after taxes 603 131 360% Earnings per share (SEK) 5.80 1.26 360% (i) EBITDA (ii) EBIT Lars-Johan Jarnheimer, President and CEO of NetCom AB stated: "NetCom has made an impressive start to the year with strong revenue growth. The Swedish mobile telephony operations continued to make strong progress with Comviq and Tele2Mobil reporting a total of 1.8 million customers. There was a sharp increase in contract customers showing the benefits of bundling fixed and mobile services. The growth in Everyday.com's internet subscriber base was also good and management continues to focus on encouraging these users to become fixed telephony customers. In Denmark and Norway subscriber growth was particularly promising and this demand has fed through into strong revenue growth. NetCom continues to focus on the demands of a highly competitive market place with our competitive prices underpinning our brand strategy. Tight cost control and increasing efficiencies across the operations enable NetCom to maintain strong margins." FINANCIAL AND OPERATING HIGHLIGHTS @ Operating profit, before and after depreciation and amortization, increased by 76% and 144% respectively @ NetCom's operating revenues were MSEK 4,855 for the six months ended June 30, 2000, an increase of 32% over the same period last year @ The total number of subscribers for the Group at June 30, 2000 was 5,054,000, an increase of 32% over the same period of 1999 @ Fixed line operations were launched in Finland in April 2000, commencing with a pre-paid offering for fixed telephony customers @ In April 2000 NetCom announced the launch of mobile telephony services in Norway through Tele2Mobile @ Comviq confirms its position as price leader by reducing its SMS price, on May 12, 2000, to SEK1.45 per message @ Tele2 AB showed a encouraging increase in contract customers in Q2 showing the benefits of bundling fixed and mobile services @ Tele2 AB's mobile telephony business reported a 7% increase in monthly average revenue per subscriber (ARPU) to SEK 416 and an 14% increase in average airtime usage per month to 132 minutes @ @ In July NetCom signed a new interconnect agreement with Telia. The agreement will lower the cost of interconnect, and will be back-dated to 1 March 2000. The benefits of the agreement will be seen in Q3. @ On July 24 2000, NetCom AB announced an offer for the total issued share capital of Société Européenne de Communication ("SEC"). The Offer values each SEC B share at SEK 61.04 and values the total issued share capital of SEC at SEK 34.9 billion. Under the Offer shareholders of SEC A shares can elect to receive NetCom B shares instead of NetCom A shares @ On June 15, 2000, NetCom AB announced the appointment of Håkan Zadler as Chief Financial Officer (CFO), effective as of August 2000 @ OFFER FOR SEC NetCom AB announced a SEK 27.9 billion Offer for Société Européenne de Communication ("SEC") on July 24, after the reporting period ended. The Board of NetCom believes that the time is right for NetCom to combine with SEC. The Offer, if accepted, would take NetCom's interest from its current minority of 17.8% to full control. NetCom believes that SEC is a strong and well-funded business that is now fully operational in eight European countries with licences in a further three. SEC has established the Tele2 brand in these markets and it is the belief of the Board that there will be benefits in terms of brand and synergy in combining the businesses and creating a company with critical mass. FINANCIAL RESULTS (The figures shown in parenthesis correspond to the comparable periods in 1999 and all negative amounts are distinguished with a minus sign) Results for the six months ended June 30, 2000 Operating revenue was MSEK 4,855 (3,665) an increase of 32%. There has been strong revenue growth in Mobile Telephony operations in Sweden as well as Fixed Telephony operations in Sweden and Denmark. There has also been an encouraging performance from Tele2 Norway. Operating profit before depreciation and amortization (EBITDA) increased by 76% to MSEK 1,511 (860). The EBITDA margin increased to 31.1% (23.5%). This was a result of continuing improvements in both Mobile Telephony and Fixed Telephony in Sweden and a positive EBITDA contribution from Tele2 Denmark and Tele2 Norway. The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 compared to MSEK 236 as at December 31, 1999. The EBITDA figure has also been affected by a loss on the sale of 4T Solutions of MSEK -36. Operating profit after depreciation and amortization (EBIT) increased by 144% to MSEK 989 (405). The EBIT margin increased to 20.4% (11.1%). Net interest expense and other financial items totaled MSEK -102, (-125). The average interest rate applied to debt outstanding declined to 4.7% (5.2%). Profit after financial items increased by 191% to MSEK 887 (305). This increase reflects the improving profitability at the operating level as well as the reversed option cost. Profit after tax increased to MSEK 603 (131). This increase reflects the profitability of NetCom's operations and the reversed option cost. Earnings per share consequently increased to SEK 5.80 (1.26). NetCom's total assets at June 30, 2000 increased by 1% to MSEK 14,807 compared to MSEK 14,693 reported at December 31, 1999. Results for the three months ended June 30, 2000 Operating revenue was MSEK 2,515 (1,927) an increase of 31%. The Mobile Telephony operation in Tele2 Sweden contributed revenues of MSEK 1,111 (936), an increase of 19%, while Fixed Telephony in Sweden was MSEK 735 (627), an increase of 17%. NetCom's Fixed Telephony operation in Norway reported exceptional growth with revenues of MSEK 230 (84), an increase of 174%. Operating profit before depreciation and amortization (EBITDA) was MSEK 749 (762), an increase of 78%. The Group EBITDA margin was 29.8% (21.8%). Mobile Telephony in Sweden was MSEK 413 (385) while Fixed Telephony in Sweden was MSEK 99 (68). Both Tele2 Norway and Tele2 Denmark are showing positive EBITDA with MSEK 7 (-15) and MSEK 42 (-18), respectively. The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (-4). The obligation of the option to management has decreased by MSEK 48. The EBITDA figure also includes a loss on the sale of 4T Solutions of MSEK -36. Operating profit after depreciation and amortization (EBIT) was MSEK 487 (188), an increase of 159%. The EBIT margin was 19.4% (9.8%). GROUP REVIEW Associated Companies Everyday.com NetCom is the leading Internet service provider or ISP in the Nordic region and its 1,172,000 Internet subscribers are being offered Everyday.com as their starting page. MTG publishes content on the WWW and has significant experience in the mass media and marketing and advertising sales through TV channels, radio stations and newspapers. The Everyday.com content offering is growing continuously. The service was launched in Norway in February and will be launched in Denmark later this year. Investments Europe On July 24 2000, NetCom announced a SEK 27.9 billion offer for Société Européenne de Communication SA, (SEC) a leading alternative pan-European telecommunications service provider in which it has a 17.8% shareholding. SEC provides national and international long distance telephony services through Tele2 Europe in the Netherlands, Germany, Switzerland, Austria, France, Italy, Luxembourg and Liechtenstein and provides a broad range of mobile telecommunication services through Tango in Luxembourg and Liechtenstein and Tele2 Mobile in Switzerland. The SEC Group also includes 3C Communications, operating public pay telephones and public internet services; Transac, providing billing and transaction processing services; Everyday.com, the free internet service provider and portal; C³, offering co-branded pre-paid calling cards; IntelliNet, the price-guaranteed residential router device; and a 37.45% interest in Transcom World Wide, one of Europe's largest call center companies At the end of June, SEC reported a 162% increase to 4,174,876 fixed telephony subscribers. Cellular subscribers increased by 110% to 112,226 over the same time period. Revenues totaled Euro 290.4 million, and SEC reported a loss after tax of Euro 175.3 million or a loss of Euro 0.31 per ordinary share for the first half. This loss reflects the increase in marketing spend to continue the rapid growth of Tele2 subscribers and for 3 the launches of C and Everyday.com in existing and new markets. Finland NetCom is the largest shareholder in Suomen Kolmegee OY(3G), which has been granted one of only four nationwide licenses for a third generation mobile telephony network in Finland. XSource Corporation In the second quarter of this year, NetCom sold 4T Solutions, a leader in developing invoicing systems for telecommunications service providers, to XSource Corporation in exchange for 11.88% of XSource Corporation's share capital. XSource Corporation is a global billing company consisting of the following major companies: Savera, Billing Paraguay, Basset, Praesidium, Get2net and NetCom Consultants, a leading telecoms consultancy firm. The 4T Solutions holding was initially significant in the development of NetCom's customer-friendly billing applications and now that these have been successfully established, NetCom is pleased that this regional company is becoming part of global company, providing a wider range of billing solutions. NetCom believes that XSource will provide the management focus, investment and global reach necessary to extract maximum benefit from 4T Solutions and that XSource will provide an attractive investment for NetCom. OPERATIONAL REVIEW Number of customers Second Quarter 2000 1999 % Tele2 AB Sweden Mobile 1,816,000 1,504,000 20 telephony of which 1,018,000 808,000 26 prepaid Fixed 933,000 826,000 13 telephony Internet 603,000 456,000 32 Cable 160,000 135,000 16 Television Tele2 A/S Danmark Fixed 467,000 384,000 22 telephony Internet 323,000 216,000 50 Tele2 Norge A/S Mobile 7,000 - - telephony Fixed 441,000 164,000 173 telephony Internet 241,000 111,000 122 Ritabell Mobile 63,000 43,000 47 telephony Tele2 AB in Sweden Tele2 AB encompasses three operational divisions: Mobile Telephony, Fixed Telephony and Internet and Cable Television which are marketed under the respective brand names of Comviq, Tele2 and Kabelvision. Mobile Telephony Operating revenue, MSEK 2,151 (1,749), +23% EBITDA, MSEK 931 (745), +25% The number of prepaid and contract subscribers continued to grow in the second quarter, due to our market position as the price-leading operator and through our commitment to the introduction of new marketing and pricing initiatives. Prepaid customers accounted for 56% of the total mobile subscriber base and 55% of net new subscriber additions in the period. The total number of cards sold to retailers totaled 84,000 in the second quarter of 2000. The annual churn rate excluding prepaid subscribers was approximately 20% for the same period and both churn and acquisition costs for new customers were stable. In the six months ended June 30, 2000, monthly average revenue per subscriber (ARPU), excluding prepaid subscribers, increased by over 7% to SEK 416 compared to the same period in 1999. This has been achieved by major price initiatives. Average airtime usage per month increased, excluding prepaid, by 14% to 132 minutes. Fixed Telephony and Internet Operating revenue, MSEK 1,503 (1,251), +20% EBITDA, MSEK 303 (159), +91% Tele2 has been offering lower Internet surfing rates to existing Internet customers who also become telephony customers and this has proved successful with approximately 64% customers subscribing to both Internet and fixed telephony services as of June 30, 2000. A wide range of initiatives designed to increase the rate of conversion from Internet only to combined Internet, fixed telephony and mobile customers are being implemented. Through NetCom's joint venture with MTG, the majority of Tele2's Internet customers now have Everyday.com as their starting page and this service can be utilized using most browsers. In the period June 30, 1999 to June 30, 2000, Tele2 in Sweden increased the number of its fixed telephony customers by 13% from 826,000 to 933,000. Tele2 reported 603,000 dial up Internet customers at June 30, 2000, corresponding to a 32% increase on the 456,000 customers reported in the comparable period of 1999. Cable Television Operating revenue, MSEK 86 (60), +43% EBITDA, MSEK 3 (-5) The number of subscribers increased by 19% to 160,000 at June 30, 2000, from 135,000 at June 30, 1999. Tele2 A/S, Denmark Operating revenue, MSEK 554 (445), +24% EBITDA, MSEK 61 (-54) In the first half of 2000, Tele2 A/S, Denmark, continued to grow reporting 467,000 fixed telephony customers, an increase of 22% on the comparable period of 1999. Tele2 A/S has both private and corporate customers. Tele2 A/S reported 323,000 Internet customers at June 30, 2000, an increase of 50% compared to 216,000 Internet customers reported in the same period of 1999. Tele2 Norge AS, Norway Operating revenue, MSEK 455 (156), +192% EBITDA, MSEK 12 (-33) In the first half of 2000, Tele2 Norge reported a 169 % increase in the number of fixed telephony subscribers to 441,000 and had a total of 241,000 activated Internet subscribers, compared to 111,000 activated subscribers reported in the same period of 1999. In April, NetCom announced the planned launch of mobile telephony services in Norway, through Tele2Mobil, offering both pre-paid and fixed subscription forms with tariff levels below the low cost alternatives currently available. Tele2 becomes the first service provider offering pre-paid cards and Tele2Mobil became operational during the second quarter of 2000. Tele2 has an agreement with Telenor to lease network capacity enabling Tele2Mobil to offer an equal range of network coverage. At June 30 2000, Tele2Mobil in Norway had 7,000 subscribers. Other operations Operating revenue, MSEK 477 (291), +64% EBITDA, MSEK -9 (40) Included within Other Operations are, amongst others, Optimal Telecom, 4T Solutions (sold in April 2000), Datametrix and Ritabell. At June 30, 2000, NetCom's subsidiary Ritabell reported 63,000 gross cellular subscribers, an increase of 47% over the prior year and inclusive of 31,000 prepaid customers. In May, NetCom launched pre-paid international telephony services in Finland to be followed by the launch of international, long distance and Internet services marketed under the Tele2 brand. Parent Company Result after financial items was MSEK 237 (39) The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 compared to MSEK 236 as at December 31, 1999. Liquidity at June 30, 2000 was MSEK 3, compared with MSEK 7 at December 31, 2000. ACCOUNTING PRINCIPLES NetCom has reported its interim report in accordance with the accounting principles used in the Annual Report and Accounts for the financial year of 1999. The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 compared to MSEK 236 as at December 31, 1999. COMPANY DISCLOSURE Extraordinary General Meeting (EGM) An EGM regarding NetCom's offer for SEC will be held on Thursday, August 10, 2000 at 10.00 am local time at Gamla Stans Bryggeri, Tullhus 2, Skeppsbrokajen, Stockholm, Sweden. Third Quarter of 2000 Results The proposed date for the release of NetCom's financial and operating results for the period ended September 30, 2000 is November 6, 2000. Stockholm, August 4, 2000 Lars-Johan Jarnheimer President and CEO, NetCom AB REPORT REVIEW The financial and operating results for the period ended June 30, 2000 have not been subject to specific review by the Company's auditor. NetCom AB, formed in 1993, is a leading telecommunications company in the Nordic countries. The Company provides GSM cellular services, under the Comviq and Tele2Mobil brands in Sweden, under Tele2Mobil in Norway, through its Ritabell subsidiary (Q-GSM) in Estonia and under the Tele2 brand in Lithuania. For public telecommunications, data communications and Internet access, NetCom has the Tele2 brand in Sweden and the subsidiaries Tele2 A/S in Denmark and Tele2 Norge AS in Norway. Datametrix, which specializes in systems integration, and Optimal Telecom are also part of NetCom AB. The Group offers cable television services under the Kabelvision brand name. NetCom AB has a 17.8% stake in Société Européenne de Communication SA. The Company is listed on the Stockholm Stock Exchange, under NCOMA and NCOMB, and an ADR listed on the Nasdaq Stock Market, under NECS. Contacts: Lars-Johan Jarnheimer Telephone: + 46 8 562 640 00 President and CEO, NetCom AB, Sweden Andrew Best Telephone: + 44 (0)20 7321 5010 Shared Value Visit us at our homepage: http://www.netcom.se A conference call to discuss the results will be held at 16.00 (Swedish time) / 10.00 (New York time), on Friday August 4, 2000. The dial in number is: +44 (0) 20 8240 8242. A live audio stream of the conference call can also be accessed at www.netcom.se. Please dial in / log on 10 minutes prior to the start of the conference call to allow time for registration. A recording of the conference call will be available for 48 hours on +44 (0) 20 8288 4459. This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Société Européenne de Communication S.A. At the time NetCom AB (publ) commences its offer, it will file a registration statement, including a prospectus, with the U.S. Securities and Exchange Commission. THE PROSPECTUS AND RELATED OFFER DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. The registration statement will be made available to all shareholders of Société Européenne de Communication S.A. at no expense to them. The registration statement, which includes the prospectus, and related offer documents filed with the Commission will also be available for free at the Commission's website at www.sec.gov. This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ from those contained in such forward-looking statements. See "Description of Business - Risk Factors" in the Annual Report of NetCom AB (publ) on Form 20-F files with the U.S. Securities and Exchange Commission as updated with other filings from time to time. APPENDICES Consolidated Income Statement Consolidated Balance Sheet Consolidated Cashflow Statement Consolidated Changes in Shareholders Equity Company Review Quarterly Historic Financial Review Five Year Summary CONSOLIDATED INCOME STATEMENT (MSEK) 2000 1999 1999 Jan 1 - JunJan 1 - JunFull Year 30 30 Operating revenue 4,855 3,665 8,193 Operating expenses -4,166 -3,377 -7,129 Option to Management* 236 22 -134 Other revenues 104 96 213 Other expenses** -40 -1 -1 Operating Profit 989 405 1,142 Share of profit/loss from - 25 50 associated companies Sale of associated company - - 3,228 Net interest and other financial -102 -125 -241 expenses Profit after financial items 887 305 4,179 Taxes -285 -174 -412 Minority interest 1 - 2 Profit after taxes 603 131 3,769 Earnings per share after tax 5.80 1.26 36.29 (SEK) Earnings per share after tax and after full conversion Tele2 Norway -0.28 -0.57 -1.10 Tele2 Denmark 0.09 -0.97 -1.39 Associated companies - 0.04 0.18 Sale of associated companies and -0.34 - 31.08 subsidiaries** Tele2 Sweden and other operations 6.33 2.76 7.52 Total 5.80 1.26 36.29 * The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261, at June 30, 2000. ** The second quarter of 2000 has been affected by a capital loss of MSEK -36 associated with the disposal of 4T Solutions CONSOLIDATED BALANCE SHEET (MSEK) 2000 1999 1999 June 30 June 30 December 31 ASSETS Fixed assets Intangible assets 2,195 2,422 2,305 Tangible assets 6,127 6,114 6,167 Long-term financial assets 3,769 289 3,604 12,091 8,825 12,076 Current assets Materials and supplies 46 18 34 Current receivables 2,154 2,085 2,162 Cash and cash equivalents 516 41 421 2,716 2,144 2,617 Total assets 14,807 10,969 14,693 EQUITY AND LIABILITIES Shareholders' Equity Restricted equity 4,761 4,072 4,761 Non-restricted equity 2,815 -691 2,241 7,576 3,381 7,002 Minority interest - 1 1 Provisions Deferred tax liabilities 424 - 139 Options issued* - 80 236 Provisions 424 80 375 Long-term liabilities Interest-bearing liabilities 4,321 5,506 4,840 Non interest-bearing 15 1 15 liabilities 4,336 5,507 4,855 Short-term liabilities Interest-bearing liabilities 171 107 248 Non interest-bearing 2,300 1,893 2,212 liabilities 2,471 2,000 2,460 Total equity and liabilities 14,807 10,969 14,693 * The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 at June 30, 2000. CONSOLIDATED CASHFLOW STATEMENT (MSEK) 2000 1999 1999 Jan 1 - JunJan 1 - Jun Full Year 30 30 Cash flow from 1,428 715 1,812 operations Changes in working -155 -361 -41 capital Cash flows provided by 1,273 354 1,771 operating activities Investing -582 -925 -1,458 activities Financing -600 182 -322 activities Net change in cash 91 -389 -9 Cash at beginning 421 433 433 of year Exchange difference 4 -3 -3 in cash Cash at end of 516 41 421 period CONSOLIDATED CHANGES IN SHAREHOLDERS EQUITY (MSEK) Restricted Equity Non-restricted Equity Share Other Capital Restr. Equity Equity, Jan. 1, 2000 519 4,242 2,241 Translation - - -29 differences Profit for the - - 603 period Equity, Jun 30, 2000 519 4,242 2,815 Total Restricted & Retained Profit 4,761 2,815 REVIEW OF THE GROUP (MSEK) 2000 1999 1999 Jan 1 - Jun 30Jan 1 - Jun Full Year 30 Operating revenue by business area Tele2 AB: -Mobile telephony 2,151 1,749 3,909 -Fixed telephony included 1,503 1,251 2,630 Internet -Cable Television 86 60 110 3,740 3,060 6,649 Tele2 Norway 455 156 444 Tele2 Denmark 554 445 974 Other operations 477 291 696 Parent Company 4 5 10 Adjustments for sales internal -375 -292 -580 Total 4,855 3,665 8,193 Depreciation and amortization by business area Tele2 AB: -Mobile telephony -148 -150 -304 -Fixed telephony included -179 -143 -301 Internet -Cable Television -31 -32 -61 -358 -325 -666 Tele2 Norway -26 -11 -24 Tele2 Denmark -34 -31 -68 Other operations -47 -30 -78 Parent company - - - Group adjustments, -57 -58 -119 depreciation Total -522 -455 -955 Operating profit by business area Tele2 AB: -Mobile telephony 783 595 1,554 -Fixed telephony including 124 16 165 internet -Cable television*** -28 -37 -69 879 574 1,650 Tele2 Norway -14 -44 -82 Tele2 Denmark 27 -85 -115 Other operations** -56 10 -27 Parent company* 210 8 -165 Group adjustments, -57 -58 -119 depreciation Total 989 405 1,142 REVIEW OF THE GROUP (MSEK), continued 2000 1999 1999 Jan 1 - Jun 30Jan 1 - Jun Full Year 30 Profit/loss after financial items by business area Tele2*** 800 464 1,455 Tele2 Norway -29 -59 -114 Tele2 Denmark 10 -100 -144 Other operations** -74 -6 -65 Parent company* 237 39 -112 Shares of Profit/loss in - 25 50 associated companies Sale of associated company - - 3,228 Group adjustments, -57 -58 -119 depreciation Total 887 305 4,179 Investments by business area Tele2 AB: -Mobile telephony 221 269 424 -Fixed telephony included 180 269 431 Internet -Cable Television 14 6 14 -Purchase of companies (net) - 221 221 415 765 1,090 Tele2 Norway 27 23 53 Tele2 Denmark 33 44 93 Other operations 65 67 133 Parent company, tangible 1 - - assets Parent company, purchase of - 26 69 companies (net) Long-term receivables, change 41 - 20 582 925 1,458 Finance lease - 42 35 Total investments including 582 967 1,493 finance lease * The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 at June 30, 2000 ** The second quarter of 2000 has been affected by a capital loss of MSEK -36 associated with the disposal of 4T Solutions *** The result for the six months ended June 30, 2000, includes MSEK 2 proposed refund of pension premiums from the SPP, the Swedish Pension Organisation QUARTERLY HISTORIC FINANCIAL REVIEW (MSEK) 2000 2000 1999 1999 1999 1999 Q2 Q1 Q4 Q3 Q2 Q1 Operating revenue by business area Tele2 AB: -Mobile telephony 1,040 1,054 1,106 936 813 1,111 -Fixed telephony included 735 768 776 603 627 624 Internet -Cable Television 61 25 29 21 28 32 1,907 1,833 1,859 1,730 1,591 1,469 Tele2 Norway 230 225 168 120 84 72 Tele2 Denmark 272 282 283 246 242 203 Other operations 224 253 223 182 157 134 Parent company 2 2 2 3 3 2 Adjustments for sales -120 -255 -167 -121 -150 -142 internal Total 2,515 2,340 2,368 2,160 1,927 1,738 Depreciation and amortization by business area Tele2 AB: -Mobile telephony -72 -76 -78 -76 -75 -75 -Fixed telephony included -93 -86 -79 -79 -73 -70 Internet -Cable Television -16 -15 -14 -15 -15 -17 -181 -177 -171 -170 -163 -162 Tele2 Norway -15 -11 -8 -5 -6 -5 Tele2 Denmark -16 -18 -21 -16 -16 -15 Other operations -22 -25 -27 -21 -18 -12 Group adjustments, -28 -29 -32 -29 -29 -29 depreciation Total -262 -260 -259 -241 -232 -223 Operating profit by business area Tele2 AB: -Mobile telephony 341 442 423 536 310 285 -Fixed telephony included 6 118 121 28 -5 21 Internet -Cable Television*** -17 -11 -10 -22 -20 -17 330 549 534 542 285 289 Tele2 Norway -8 -6 -11 -27 -21 -23 Tele2 Denmark 26 1 -16 -14 -34 -51 Other operations** -59 3 -26 -11 -2 12 Parent company 226 -16 -158 -15 -11 19 Group adjustments, -28 -29 -32 -29 -29 -29 depreciation Total 487 502 291 446 188 217 Profit/loss after financial items by business area Tele2*** 287 513 496 495 239 225 Tele2 Norway -15 -14 -20 -35 -29 -30 Tele2 Denmark 18 -8 -23 -21 -42 -58 Other operations** -68 -6 -38 -21 -10 4 Parent company* 242 -5 -147 -4 3 36 Shares of profit (loss) - - - 25 19 6 from associated companies Sale of associated company - - 3,228 - - - Group adjustments, -28 -29 -32 -29 -29 -29 depreciation Total 436 451 3,464 410 151 154 QUARTERLY HISTORIC FINANCIAL REVIEW (MSEK) continued 2000 2000 1999 1999 1999 1999 Q1 Q4 Q3 Q2 Q1 Q4 Value per share (SEK) Profit/loss, after full 2.80 3.00 32.35 2.68 0.78 0.49 conversion -of which Tele2 Norway -0.15 -0.13 -0.19 -0.34 -0.28 -0.29 -of which Tele2 Denmark 0.17 -0.08 -0.24 -0.19 -0.40 -0.56 -of which associated - - -0.01 0.15 0.13 -0.10 companies -of which sale of -0.34 - 31.08 - - - associated companies and subsidiaries -of which Tele2 Sweden 3.12 3.21 1.71 3.06 1.33 1.44 and other operations Investments by business area Tele2 AB: -Mobile telephony 105 116 84 71 142 127 -Fixed telephony included 90 90 69 93 114 155 Internet -Cable Television 8 6 6 2 3 3 -Purchase of companies - - - - 10 211 (net) 203 212 159 166 269 496 Tele2 Norway 10 17 13 17 10 13 Tele2 Denmark 19 14 15 34 15 29 Other operations 32 33 44 22 25 42 Parent company, tangible 1 - - - - - assets Parent company, purchase - - 37 6 2 24 of companies (net) Long-term receivables, 29 12 20 - - - change 294 288 288 245 321 604 Finance leases - - -17 10 1 41 Total investments 294 288 271 255 322 645 including finance leases * The EBITDA at June 30, 2000 includes a fully reversed option cost following a decision at the AGM in May 2000 to facilitate an increase of shares in issue or to buy back shares. This has had an effect on the Income Statement of MSEK 236 (22). The obligation of the option to management has increased to MSEK 261 at June 30, 2000 ** The second quarter of 2000 has been affected by a capital loss of MSEK -36 associated with the disposal of 4T Solutions *** The result for the six months ended June 30, 2000, includes MSEK 2 proposed refund of pension premiums from the SPP, the Swedish Pension Organisation FIVE YEAR SUMMARY 2000 1999 1999 1998 1997 1996 6 months 6 months Income Statement and Balance Sheet (MSEK) Operating revenue 4,855 3,665 8,193 5,969 4,036 2,872 Operating profit before 1,511 860 2,097 1,223 1,000 651 depreciation Operating profit after 989 405 1,142 518 392 254 depreciation Profit/loss after 887 305 4,179 232 -37 29 financial items Shareholders' equity 7,576 3,381 7,002 3,269 3,156 2,276 Shareholders' equity, 7,576 3,381 7,002 3,269 3,193 2,923 after full conversion Total assets 14,807 10,969 14,693 10,189 8,684 7,527 Cash flow provided by 1,273 354 1,771 990 411 610 operating activities Liquidity 1,398 326 1,123 821 1,499 819 Net borrowing 3,874 5,559 4,605 4,600 3,579 3,894 Net borrowing, after full 3,874 5,559 4,605 4,600 3,542 3,247 conversion Investments including 582 967 1,493 1,959 1,117 1,016 financial lease* Key ratio (%) Solidity 51% 31% 48% 32% 36% 30% Solidity, after full 51% 31% 48% 32% 37% 39% conversion Debt/equity ratio 0.51 1.64 0.66 1.41 1.13 1.71 Return on shareholders' 8.3% 3.9% 73.4% 2.1% 3.2% -10.0% equity Return on shareholders' 8.3% 3.9% 73.4% 2.1% 3.2% -3.3% equity, after full conversion Return on capital employed 8.3% 5.2% 43.6% 6.7% 4.8% 1.3% Average interest rate 4.7% 5.2% 4.8% 6.6% 7.1% 8.9% Average interest rate, 4.7% 5.2% 4.8% 6.6% 7.1% 8.6% after full conversion Value per share (SEK)** Profit/loss 5.80 1.26 36.29 0.64 0.50 2.80 Profit/loss, after full 5.80 1.26 36.29 0.64 0.57 2.78 conversion -of which Tele2 Norway -0.28 -0.57 -1.10 -1.24 -0.46 -0.12 -of which Tele2 Denmark 0.09 -0.97 -1.39 -1.69 -0.79 -0.16 -of which associated - 0.04 0.18 -0.14 -0.85 2.52 companies -of which sale of associated companies and subsidiaries -0.34 - 31.08 - - - -of which Tele2 Sweden 6.33 2.76 7.52 3.71 2.67 0.54 and other ops Shareholders' equity 72.95 32.56 67.43 31.55 32.18 25.78 Shareholders' equity, 72.95 32.56 67.43 31.48 30.86 28.70 after full conversion Cash flow 12.26 3.41 17.05 9.56 4.19 6.91 Cash flow, after full 12.26 3.41 17.05 9.53 3.97 5.99 conversion Dividend - - - - - - Market value at closing 651.00 286.00 598.00 330.00 170.50 110.50 day P/E-ratio 56.10 113.12 16.48 512.92 344.43 39.40 P/E-ratio, after full 56.10 113.12 16.48 514.17 298.12 39.81 conversion * Financial lease are included from January, 1 1997 ** The weighted average number of A and B shares outstanding at June 30, 2000 was 103.850.246 For definitions: please see the Annual Report for 1999. Debt/equity ratio = net borrowing expressed as a multiple of equity at the end of the period. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/04/20000804BIT00030/bit0001.doc http://www.bit.se/bitonline/2000/08/04/20000804BIT00030/bit0002.pdf