Strong operating results for the three months ended march 31, 1999

FOR IMMEDIATE RELEASE Tuesday, May 18, 1999 NETCOM AB ANNOUNCES STRONG OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 50% Annualized Increase in Group Operating Profit 30% Annualized Increase in Group Operating Revenue 115% Annualized Increase in Tele2 Sweden's Fixed Telephony and Internet Subscribers 122% Annualized Increase in Activated Prepaid Card Customers New York and Stockholm - May 18, 1999 - NetCom AB ("NetCom") (Nasdaq Stock Market: NECS), the leading alternative provider of telecommunication services in Scandinavia, today announced its consolidated results for the quarter ended March 31, 1999. FINANCIAL HIGHLIGHTS (in MSEK) T hree Months Ended, March 31, 1999 1 998 % Change MSEK (except per share amounts) 1 ,738 1 ,337 3 0 Operating Revenue Operating Profit before depreciation and 4 40 3 07 4 3 amortization * after depreciation and 2 17 1 45 5 0 amortization ** Profit after financial items 154 6 4 1 41 Profit after taxes 5 1 24 1 13 Earnings per share (SEK) *** 0 .49 0 .23 1 13 * EBITDA EBIT * Earnings per share figures are after tax and full conversion. C EO´S STATEMENT "NetCom made a promising start to 1999 with a more than 78% annualized growth in our total customer base to over 3.5 million customers. During the first quarter, we experienced a strong recovery in fixed telephony margins due to the introduction of a new, more favorable interconnect agreement and further margin upside will come from encouraging Internet customers to also become fixed telephony customers. Comviq continues to lead the mobile telephony market in terms of innovative subscription forms with the launch this month of a flexible subscription form. We remain committed to increasing the flexibility of our offering, the strong price message of our brands and the cost efficiency of our operations" stated Lars-Johan Jarnheimer, President and CEO of NetCom AB. F INANCIAL AND OPERATING HIGHLIGHTS NetCom's operating revenue increased by 30% to MSEK 1,738 in the three months ended March 31, 1999 compared to the same period of 1998; Operating profit before and after depreciation and amortization, increased by 43% and 50% respectively; For the twelve month period ended March 31th, 1999 the Mobile Telephony operation added 481,000 new subscribers for a total customer base of 1,386,000; A significant 122% annualized growth in activated prepaid card customers to 715,000; In May, Comviq announced a new flexible mobile telephony subscription with no minimum subscription period; A new interconnect agreement with Telia, introduced on December 1, 1998, benefited the margin structure of Tele2's fixed telephony operations during the first quarter; Tele2 in Sweden reported a 115% annualized increase in fixed telephony customers to 784,000 as of March 31, 1999; Tele2 in Sweden had 459,000 dial up Internet customers at March 31, 1999, an increase of 61% on the comparable 1998 period; The sum of fixed telephony and Internet subscribers for Tele2 Norway and Tele2 Denmark increased by 224% and 129% respectively to 230,000 and 501,000 subscribers respectively on an annualized basis; NetCom increased its stake in Ritabell to 94.8% in January 1999; Acquisition of a 20% stake in Suomen Kolmegee OY, which has a license to operate a UMTS network in Finland. REVIEW OF OPERATIONS Financial Results for the quarter ended March 31, 1999 In the first quarter of 1999, NetCom reported operating revenues of MSEK 1,738, an increase of 30% over the MSEK 1,337 reported in the comparative period of 1998. The Mobile Telephony operation in Sweden contributed MSEK 813 to group operating revenue, an increase of 35% over the MSEK 604 reported in the comparative period of 1998. The Fixed Telephony and Internet Operations increased operating revenue by 9% to MSEK 624 from MSEK 575 reported in the comparable period of 1998. There has been strong revenue growth in NetCom's operations in Denmark and Norway in the period reported. Tele2 Denmark reported a 86% increase in operating revenues from MSEK 109 to MSEK 203 and Tele2 Norway reported a 167% increase in operating revenues from MSEK 27 to MSEK 72 on an annualized basis. The Cable Television operation contributed revenues of MSEK 32 for the three month period, compared to MSEK 45 in the comparative period of 1998. The reduction in revenue is primarily a result of the transfer to Viasat in May 1998 of the management responsibility for individual household accounts which resulting in sales and programing services being provided by Viasat as part of that collaboration. 4T Solutions contributed revenues of MSEK 32 in the three month period ended march 31, 1999. Operating profit before depreciation and amortization in the three-month period increased by 43% to MSEK 440 from MSEK 307 reported in the comparable period of 1998. The operating profit margin before depreciation and amortization, increased during the first quarter of 1999 to 25.3% from 23.0% reported in the comparative period of 1998. This was a result of a significant improvement in the EBITDA losses contributed by Tele2 Norway and the inclusion of 4T Solutions. The Employee Share Option Program operates relative to the market value of the Group's equity. The recent decrease in share price has decreased the provisions due under the terms of the Program by MSEK 26 for the first quarter of 1999 compared to an increased provision of MSEK 25 for the comparative period of 1998. The total balance sheet provision relating to the Program for the three months ended March 31, 1999 totaled MSEK 76 and MSEK 60 for the three months ended March 1998. In the first quarter of 1999, operating profit after depreciation and amortization increased by 50% to MSEK 217 from MSEK 145 reported in the comparative period of 1998. The operating profit margin after depreciation and amortization, increased from 10.8% in 1998 to 12.5% in 1999. In the period ended March 31, 1999, Mobile Telephony operations contributed MSEK 285 to Group operating profit after depreciation and amortization, an increase of 33% compared to MSEK 214 in the corresponding period of 1998. The Fixed Telephony and Internet operations of Tele2 AB in Sweden, reported an operating profit after depreciation and amortization of MSEK 21, compared to MSEK 62 reported in the comparable period of 1998. The results for the Fixed Telephony operation over the three-month period ended March 31, 1999, benefited from the introduction of a new interconnect agreement with Telia on December 1, 1998 which resulted in a substantial improvement in margins compared with the fourth quarter in 1998. 4T Solutions contributed operating profits of MSEK 21 in the first quarter of 1999. NetCom's Norwegian listed associated company, NetCom ASA, reported an operating profit after depreciation and amortization of MNOK 82 in the three months ended March 31, 1999, compared to MNOK 37 in the corresponding period of 1998. NetCom has a 25% holding in NetCom ASA. Net interest expense and other financial items for the first quarter totaled MSEK 69, compared to MSEK 74 for the comparative period of 1998. The reduction in net interest reflects lower interest rates despite an increase in debt outstanding during the period. The average interest rate applied to debt outstanding declined from an average of 6.9% in the first quarter of 1998 to 5.5% in the first quarter of 1999. The profit after financial items for the first quarter of 1999 was MSEK 154 compared to MSEK 64 in the corresponding period of 1998. The net profit reported for the period ended March 31, 1999 was MSEK 51, or a profit of SEK 0.49 per share, compared with a net profit of MSEK 24 or SEK 0.23 per share in the comparable period of 1998. The net profit reported for the quarter reflects the improving profitability of NetCom's operations. NetCom's total assets at March 31, 1999 increased by 29% to MSEK 10,761 compared to MSEK 8,315 reported at March 31, 1998, reflecting increased investment in the core operations and the purchases of operations. MANAGEMENT CHANGES In March 1999, the NetCom Board announced the appointment of Lars-Johan Jarnheimer as President and CEO of NetCom AB as a successor to Anders Björkman who has been appointed Chairman and CEO of Société Européenne de Communication S.A. It is proposed at the NetCom AGM in May that Anders Björkman be elected as Deputy Chairman of the NetCom Board. Lars-Johan Jarnheimer was President of Comviq from 1993 to 1997 and rejoined the NetCom Group in March 1999 after 18 months with Saab Automobile. ACQUISITIONS Estonia In January 1999, a purchase agreement was signed with Levicom International Holdings BV, which wholly owns the companies, AS Levicom Cellular ("CellCo") and OÜ Levicom Broadband ("BroadCo"). At completion, NetCom acquired 90% of the share capital of CellCo, which holds the 52% interest in the share capital of Ritabell, and 100% of a DCS 1800 license in Lithuania. In addition, NetCom acquired 19% of the capital of BroadCo, which encompasses Internet activities in Estonia, and a number of cable television operations in Estonia and Lithuania. NetCom's percentage interest in Ritabell was increased from 48% to 94.8%, with the additional 46.8% interest in Ritabell being held through NetCom's interest in CellCo. The aggregate consideration of $58.6 million is payable in tranches on an annual basis, with the first payment of $28.6 million due on completion and therefore reflected in the first quarter of 1999 financial results. The operation in Estonia covers a population under license of approximately 1.5 million people and the DCS 1800 license in Lithuania covers a population under license of approximately 3.7 million. At March 31, 1999, Ritabell reported 42,000 gross cellular subscribers, inclusive of 20,000 prepaid customers. NetCom's proportional interest in Ritabell at December 31, 1998 was 48% and Ritabell was reflected as an associate company in the fourth quarter of 1998 financial statements, however, as of February 1, 1999 and thereafter NetCom's 94.8% interest in Ritabell is reflected as a subsidiary. Finland In March, 1999, NetCom announced the acquisition of 20% of the stock and 15% of the voting rights in Suomen Kolmegee OY, to become the largest shareholder. Suomen Kolmegee OY, which has been granted one of only four nationwide licenses for a third generation mobile telephony WCDMA/UMTS network in Finland. The Company is currently owned by 41 local and regional Finnet companies. The purchase price was FIM 3 million for a Company with no liabilities and a share capital of FIM 10 million. NetCom's joint shareholders in Suomen Kolmegee OY are Finnet companies and as such have access to an infrastructure and therefore the build out investment is expected to be significantly reduced. The Company plans to have an operational mobile network within approximately three years. YEAR 2000 Within NetCom, there are several systems dependent operations. The Board and management are currently giving high priority to the issue of the Year 2000 and the potential effect that this may have on the Company, its products, services and employees. An Activity Plan has been produced and resources dedicated to the planning, upgrading and testing of systems. The management are committed to a regular review of the process and will give regular quarterly updates to its shareholders. In February 1999, systems integration testing commenced, prior to this systems in telephone exchanges, billing programs and PC's had all been tested for compliance. All systems will be tested for compliance by May 31, 1999. NetCom also requires its subcontractors to test for compliance. The Company will upgrade its accounting and finance systems during the first half of 1999 and has prepared back up routines and contingency measures in the event that problems do arise. OPERATIONAL REVIEW Tele2 AB in Sweden Tele2 AB encompasses 3 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 In the first quarter of 1999, Tele2 AB's mobile telephony operations continued to make strong progress. Comviq and Tele2Mobil reported 1,386,000 subscribers, inclusive of prepaid card subscribers, representing an increase of 53% on the 905,000 subscribers reported in the same period of 1998. The annual churn rate excluding prepaid subscribers was approximately 21%. The number of activated prepaid card customers increased by a substantial 122% from 322,000 in the first quarter of 1998 to 715,000 in the first quarter of 1999. Prepaid customers accounted for 52% of the total mobile subscriber base and 93% of net new subscriber additions in the first quarter of 1999. The total number of cards sold to retailers but not yet activated in the three months ended March 31, 1999 totaled 67,000. Strong subscriber growth continues to be fueled by the introduction of new marketing and pricing initiatives. In April 1999, under the Comviq brand, a new flexible and price lead mobile telephony subscription form was launched. Commencing on May 5, 1999, Comviq will adopt a more flexible pricing model by no longer requiring contracts setting a minimum subscription period. Subscriptions will be based on customers' calling patterns, customers will have the flexibility to change subscription forms when calling patterns change. The new subscription form allows NetCom to reduce the cost of a subscription for new customers, and allow the choice of prepaid accounts or billing. The new service is priced at levels competitive with conventional fixed line services. NetCom will benefit from substantially reduced dealer commission levels as result of the introduction of this new subscription form. The average minutes of use per customer, excluding prepaid, for the first quarter of 1999 increased to 103 minutes, an 8% improvement on the 95 minutes of average usage reported in the comparable 1998 period. The monthly revenue per customer, excluding prepaid card subscribers, for the three months ended March 31, 1999 was SEK 409 compared to SEK 323 for the same period of 1998, an increase of over 26%. Fixed Telephony and Internet In the period March 31, 1998 to March 31, 1999, Tele2 in Sweden increased the number of its fixed telephony customers by 115% from 364,000 to 784,000. Tele2 reported 459,000 dial up Internet customers at March 31, 1999, corresponding to a 61% increase on the 285,000 customers reported in the comparative period of 1998. Strong customer growth has been fuelled by a number of new service initiatives such as Call2Web, the IP based telephony service, which recently launched "Double Line", which allows customers to make and receive telephone calls on a single line while surfing the Net. A new interconnect agreement with Telia was introduced on December 1, 1998 and this has lead to higher margins for Tele2's fixed telephony operations in the first quarter of 1999. In the first quarter of 1999, Tele2 began offering lower Internet surfing rates to existing Internet customers who also become telephony customers and this has proved successful with approximately 75,000 customers subscribing to both Internet and fixed telephony services as of March 31, 1999. Cable Television The number of subscribers declined in the first quarter of 1999 compared to the same period in 1998. This has resulted in a repositioning of the brand and a new program offer launch. Tele2 A/S, Denmark In the first quarter of 1999, Tele2 A/S, Denmark, continued to grow substantially reporting 347,000 fixed telephony customers as of March 31, 1999, an increase of 113% on the comparative period of 1998. Tele2 A/S has both private and corporate customers. Tele2 A/S reported 154,000 Internet customers, an increase of 175% for the three months ended March 31, 1999 compared to 56,000 customers reported in the same period of 1998. Tele2 Norge AS, Norway As of March 31, 1999, Tele2 Norge reported 145,000 fixed telephony subscribers, an increase of 303% on the 36,000 subscribers reported at March 31, 1998. In the first quarter of 1999, Tele2 Norge had a total of 85,000 activated Internet subscribers, compared to 35,000 activated subscribers reported in the same period of 1998. NetCom ASA NetCom's Norwegian affiliate, NetCom ASA, made significant progress in the first quarter of 1999. The number of subscribers increased in the three months to March 31, 1999 by 164,323 for a total of 597,203, an increase of 38% on the 432,880 subscribers reported in the comparative period of 1998. Operating revenues increased by 9% to MNOK 540 in the three months ended March 31, 1999 compared to MNOK 494 for the comparative period of 1998. Operating profit before depreciation and amortization in the three-month period increased by 52% to MNOK 159, compared to MNOK 104 in the comparative period of 1998. This improvement occurred as a result of strong subscriber growth during the period and a reduced churn rate. The operating profit after depreciation and amortization over the same period amounted to MNOK 82, compared to a loss of MNOK 37 in the comparable period in 1998. FINANCIAL SUMMARY Depreciation and Amortization The group's depreciation and amortization charge for the three months ended March 31, 1999 was MSEK 223 compared to MSEK 162 for the comparable period in 1998 This reflects increased investment in and the expansion of the Company's asset base during the period. In the first quarter of 1999, Tele2 AB's charge for depreciation and amortization was MSEK 162 (MSEK 127). Mobile Telephony accounted for MSEK 75 (MSEK 64), Fixed Telephony and Internet MSEK 70 (MSEK 47) and Cable Television MSEK 17 (MSEK 16). Depreciation and amortization for the Tele2 operations in Norway and Denmark totaled MSEK 5 (MSEK 5) and MSEK 15 (MSEK 8) respectively. The figures shown in parenthesis correspond to the comparable periods in 1998. Share Structure The weighted average number of A and B shares outstanding at March 31, 1999 was 103,850,246. Parent Company At the parent company level, the profit after financial items for the period ended March 31, 1999 was MSEK 36 compared to a loss of MSEK 19 in the corresponding period of 1998. Included within the reported profit figure is a reduction in provisions due under the terms of the Employee Share Option Program for senior management of MSEK 26 due to a reduction in the market value of the Group's equity. This compares with an increased provision of MSEK 25 for the three-month period ended March 31, 1998. ACCOUNTING PRINCIPLES NetCom has reported its quarterly financial statements in accordance with the new accounting principle RR8 introduced in 1999 by the Swedish Financial Accounting Standards Council. This has resulted in a change in the accounting treatment of goodwill arising from the purchase in foreign currencies of associate and subsidiary companies. As a consequence, the exchange rate difference arising for NetCom has been restated to increase "goodwill" and "exchange rate differences in unrestricted equity" of MSEK 16 for the second half of 1998. There has also been a decrease in "shares of associated companies" and "exchange rate difference in restricted equity" of MSEK 2 in the three months ended March 31, 1998 and MSEK 10 in the period to December 31, 1998. In 1999, Ritabell became a subsidiary. The goodwill arising from the purchase of Ritabell during 1998 of MSEK 390 is reclassified from financial assets (shares in associated companies) to intangible assets (goodwill). In all other respects, NetCom reported its quarterly financial statement in accordance with the accounting principles and methods used in the Annual Report and Accounts for the 1998 financial year. COMPANY DISCLOSURE AGM The AGM will be held at 1p.m on Thursday May 20, 1999 at Gamla Stans Bryggeri, Tullhus 2 on Skeppsbrokajen, Stockholm. Second Quarter of 1999 Results NetCom's financial and operating results for the period ended June 30, 1999 will be released on August 17, 1999. NetCom AB, formed in 1993 is a leading telecommunications company in Scandinavia. It is engaged in the GSM cellular business operating using the brand names of Comviq and Tele2Mobil in Sweden, NetCom ASA in Norway and through subsidiary Ritabell in Estonia. In the areas of public telecommunications, data communication services and Internet, NetCom operates Tele2 in Sweden, Tele2 A/S in Denmark and Tele2 Norge AS in Norway. NetCom also operates NätTeknik and Datametrix, specializing in systems integration and Kabelvision, a Swedish cable TV services company. NetCom is listed both on the Stockholm Stock Exchange under the symbols NCOMA and NCOMB and on the Nasdaq Stock Market under the NECS. CONTACTS Lars-Johan Jarnheimer Telephone: + 46 8 562 640 00 President and CEO, NetCom AB, Sweden Jörgen Latte Telephone: + 46 8 562 640 00 CFO, NetCom AB, Sweden Internet: www.netcom.se APPENDICES Consolidated Income Statement Consolidated Balance Sheet Consolidated Cashflow Statement Parent Company's Cashflow Statement Changes in Shareholders Equity Review of the Group Quarterly Historic Financial Review Five Year Summary CONSOLIDATED INCOME STATEMENT (MSEK) 1999 1998 1998 Jan 1 - Mar 31 Jan 1 - Mar 31 Full Year Operating revenue 1,738 1,337 5,969 Operating expenses (1.591) (1,219) (5,564) Option to Management 26 (25) (67) Other revenues 45 61 190 Other expenses (1) (9) (10) Operating Profit 217 145 518 Share of profit (loss) from 6 (7) (10) associated companies Net interest and other financial (69) (74) (276) expenses Profit after financial items 154 64 232 Taxes (103) (40) (165) Profit for period 51 24 67 Earnings per share after tax and after full conversion Tele2 Norway (0.29) kr (0.43) kr (1.24) kr Tele2 Denmark (0.56) kr (0.29) kr (1.69) kr Associated companies (0.09) kr (0.07) kr (0.14) kr Tele2 Sweden and other operations 1.43 kr 1.02 kr 3.71 kr Total 0.49 kr 0.23 kr 0.64 kr CONSOLIDATED BALANCE SHEET (MSEK) 1999 1998 1998 March 31 March 31 December 31 ASSETS Fixed assets Intangible assets* 2,461 1,681 1,687 Tangible assets 5,993 4,834 5,604 Long-term financial assets* 338 542 786 8,792 7,057 8,077 Current assets Materials and supplies 17 12 31 Current receivables 1,753 1,110 1,648 Cash and cash equivalents 199 136 433 1,969 1,258 2,112 Total assets 10,761 8,315 10,189 EQUITY AND LIABILITIES Shareholders' Equity Restricted equity 4,134 4,285 4,221 Non-restricted equity (833) (1.116) (952) 3,301 3,169 3,269 Minority interest 1 2 2 Provisions 76 60 102 Long-term liabilities Interest-bearing liabilities 5,284 3,693 4,801 Convertible loan debenture - 38 - Non interest-bearing 1 - 1 liabilities 5,285 3,731 4,802 Short-term liabilities Interest-bearing liabilities 163 - 239 Non interest-bearing 1,935 1,353 1,775 liabilities 2,098 1,353 2,014 Total equity and liabilities 10,761 8,315 10,189 The figures for long-term financial assets include deferred tax *relating to subsidiaries and associated companies for the periods ended March 31, 1999, March 31, 1998 and December 31, 1998 of MSEK 307, MSEK 537 and MSEK 397 respectively. From February 1, 1999, Ritabell was accounted for as a subsidiary and the goodwill of MSEK 390 arising from its purchase in 1998 is reclassified from financial fixed assets (shares in associated companies) to intangible assets (goodwill). CONSOLIDATED CASHFLOW STATEMENT (MSEK) 1999 1998 1998 Jan 1 - Mar 31 Jan 1 - Mar 31 Full Year Cash flow from 380 245 955 operations Changes in working (17) 165 35 capital Cash flows provided by operating 363 410 990 activities Investing (827) (301) (1,841) activities Financing 232 (551) 703 activities Net change in cash (232) (442) (148) Cash at beginning 433 579 579 of year Exchange difference (2) (1) 2 in cash Cash at end of 199 136 433 period PARENT COMPANY'S CASHFLOW STATEMENT (MSEK) 1999 1998 1998 Jan 1 - Mar 31 Jan 1 - Mar 31 Full Year Cash flow from 38 (19) (25) operations Changes in working (22) 43 46 capital Net cash flow from operating 16 24 21 activities Investing (25) (26) (260) activities Financing (60) - 351 activities Net change in cash (69) (2) 112 Cash at beginning 148 36 36 of year Cash at end of 79 34 148 period CHANGES IN SHAREHOLDERS EQUITY (MSEK) Restricted Equity Non-restricted Equity Share Other Share in Other Capital Restr. Associated Retained Equity Co's. Losses Equity, Jan. 1, 1999 519 3,712 (318) (650) Changed accounting (10) 16 principle Equity, Jan. 1, 519 3,702 (318) (634) 1999, adjusted Transfers: - Shares in 6 (6) associated co.'s - Deferred Tax (86) (17) 103 - Other 10 (10) Translation (1) (18) differences Profit for the 51 period Equity, Mar. 31 1999 519 3,615 (319) (514) Total Restricted & 4,134 (833) Retained Losses REVIEW OF THE GROUP (MSEK) 1999 1998 1998 Jan 1 - MarJan 1 - Mar Full Year 31 31 Operating revenue by business area Tele2 AB: -Mobile telephony 813 604 2,958 -Fixed telephony included 624 575 2,223 Internet -Cable Television 32 45 137 1,469 1,224 5,318 Tele2 Norway 72 27 169 Tele2 Denmark 203 109 546 4T Solutions 32 - 38 Other operations 102 18 159 Parent Company 2 1 6 Adjustments for sales internal (142) (42) (267) Total 1,738 1,337 5,969 Operating profit by business area Tele2 AB: -Mobile telephony 285 214 1,004 -Fixed telephony included 21 62 46 Internet -Cable Television (17) (4) (60) 289 272 990 Tele2 Norway (23) (42) (110) Tele2 Denmark (51) (27) (156) 4T Solutions 21 - 13 Other operations (9) (5) (50) Parent company 19 (32) (90) Group adjustments, depreciation (29) (21) (79) Total 217 145 518 Profit/loss after financial items by business area Tele2 225 191 651 Tele2 Norway (30) (44) (128) Tele2 Denmark (58) (30) (176) 4T Solutions 20 - 13 Other operations (16) (6) (10) Parent company 36 (19) (29) Share of profit (loss) from 6 (7) (10) associated companies Group adjustments, depreciation (29) (21) (79) Total 154 64 232 REVIEW OF THE GROUP (MSEK), continued 1999 1998 1998 Jan 1 - MarJan 1 - Mar Full Year 31 31 Investments by business area Tele2 AB: -Mobile telephony 127 132 612 -Fixed telephony included 155 93 572 Internet -Cable Television 3 - 17 -Purchase of companies (net) 425 11 95 710 236 1,296 Tele2 Norway 13 24 69 Tele2 Denmark 29 29 130 4T Solutions 15 12 51 Other operations 27 1 9 Parent company, tangible assets - (1) (4) Parent company, purchase of 33 - 319 companies (net) Long-term receivables, change - - (29) 827 301 1,841 Finance lease 41 94 118 Total investments including 868 395 1,959 finance lease QUARTERLY HISTORIC FINANCIAL REVIEW (MSEK) 1999 1998 1998 1998 1998 1997 Q1 Q4 Q3 Q2 Q1 Q4 Operating revenue by business area Tele2 AB: -Mobile telephony 813 809 796 749 604 587 -Fixed telephony included 624 592 526 530 575 466 Internet -Cable Television 32 30 26 36 45 70 1,469 1,431 1,348 1,315 1,224 1,123 Tele2 Norway 72 70 39 33 27 15 Tele2 Denmark 203 172 141 124 109 65 4T Solutions 32 21 8 9 - - Other operations 102 70 45 26 18 28 Parent company 2 2 2 1 1 1 Adjustments for sales (142) (63) (60) (42) (57) internal (102) Total 1,738 1,664 1,520 1,448 1,337 1,175 Operating profit by business area Tele2 AB: -Mobile telephony 285 205 322 263 214 90 -Fixed telephony included 21 (11) (18) 13 62 83 Internet -Cable Television (17) (16) (22) (18) (4) (12) 289 178 282 258 272 161 Tele2 Norway (23) (7) (20) (41) (42) (15) Tele2 Denmark (51) (56) (26) (47) (27) (30) 4T Solutions 21 2 4 7 - (6) Other operations (9) (31) (6) (8) (5) 2 Parent company 19 (39) 18 (37) (32) (19) Group adjustments, (29) (20) (21) (17) (21) (19) depreciation Total 217 27 231 115 145 74 Profit/loss after financial items by business area Tele2 225 103 198 159 191 52 Tele2 Norway (30) (15) (24) (45) (44) (17) Tele2 Denmark (58) (63) (32) (51) (30) (32) 4T Solutions 20 2 4 7 - (7) Other operations (16) (28) 5 19 (6) - Parent company 36 (25) 34 (19) (19) 1 Shares of profit (loss) 6 (11) 3 5 (7) (21) from associated companies Group adjustments, (29) (20) (21) (17) (21) (19) depreciation Total 154 (57) 167 58 64 (43) QUARTERLY HISTORIC FINANCIAL REVIEW (MSEK) continued 1999 1998 1998 1998 1998 1997 Q1 Q4 Q3 Q2 Q1 Q4 Investments by business area Tele2 AB: -Mobile telephony 127 186 122 172 132 149 -Fixed telephony included 155 165 191 123 93 137 Internet -Cable Television 3 12 1 4 - (15) -Purchase of companies 425 - 84 - 11 - (net) 710 363 398 299 236 271 Tele2 Norway 13 20 - 25 24 39 Tele2 Denmark 29 52 25 24 29 27 4T Solutions 15 18 12 9 12 2 Other operations 27 3 2 3 1 23 Parent company, tangible - (2) - (1) (1) 14 assets Parent company, purchase 33 319 - - - (15) of companies (net) Long-term receivables, - (29) - - - (3) change 827 744 437 359 301 358 Finance leases 41 3 19 2 94 33 Total investments 868 747 456 361 395 391 including finance leases FIVE YEAR SUMMARY 1999 1998 1998 1997 1996 1995* 3 3 months months Income Statement and Balance Sheet (MSEK) Operating revenue 1,738 1,337 5 969 4 036 2 872 1 953 Operating profit before 440 307 1 223 1 000 651 (431) depreciation Operating profit after 217 145 518 392 254 (728) depreciation Profit/loss after 154 64 232 (37) 29 (1 456) financial items Shareholders' equity 3,301 3,196 3 263 3 156 2 276 (910) Shareholders' equity, 3,301 3,207 3 263 3 193 2 923 (910) after full conversion Total assets 10,761 8,315 10 8 684 7 527 4 831 183 Cash flow provided by 363 410 990 411 610 (759) operating activities Liquidity 385 1,327 821 1 499 819 189 Net borrowing 5,239 3,595 4 600 3 579 3 894 4 555 Net borrowing, after full 5,239 3,558 4 600 3 542 3 247 4 555 conversion Investments including 868 395 1 959 1 117 1 016 1 006 financial lease** Key ratio (%) Solidity 31% 38% 32% 36% 30% Negative Solidity, after full 31% 39% 32% 37% 39% Negative conversion Return on shareholders' 1.5% 0.7% 2.1% 3.2%Negative Negative equity Return on shareholders' 1.5% 0.8% 2.1% 3.2%Negative Negative equity, after full conversion Return on capital employed 2.7% 2.0% 6.7% 4.8% 1.3% Negative Average interest rate 5.5% 6.9% 6.6% 7.1% 8.9% 11.5% Average interest rate, 5.5% 6.8% 6.6% 7.1% 8.6% 11.5% after full conversion Value per share (SEK) Profit/loss 0.49 0.23 0.64 0.50 2.80 Negative Profit/loss, after full 0.49 0.23 0.64 0.57 2.78 Negative conversion -of which Tele2 Norway (0.29) (0.43) (1.24) (0.46) (0.12) -of which Tele2 Denmark (0.56) (0.29) (1.69) (0.79) (0.16) -of which associated (0.09) (0.07) (0.14) (0.85) 2.52 companies -of which Tele2 Sweden 1.43 1.02 3.71 2.67 0.54 and other ops Shareholders' equity 31.78 30.73 31.50 32.18 25.78 Negative Shareholders' equity, 31.78 30.87 31.42 30.86 28.70 Negative after full conversion Market value at closing 280.00 233.00 330.00 170.50 110.50 - day P/E-ratio 144.15 254.87 513.19 344.43 39.40 - P/E-ratio, after full 144.15 260.98 514.43 298.12 39.81 - conversion * The NetCom group was, until market flotation 1996, a wholly owned subsidiary of Industriförvaltnings AB Kinnevik. **Finance leases are included from January 1, 1997. For definitions please see the Annual Report for 1998. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/05/18/19990518BIT00360/bit0001.doc http://www.bit.se/bitonline/1999/05/18/19990518BIT00360/bit0002.pdf