Interim Report January–September 2006

Teleca takes strong actions to strengthen its competitiveness and profitability

2006 2005 2006 2005
Jan- Jan- July- July-
Sept Sept Change Sept Sept
Key figures, SEK million Change
Net sales 2,057 1,837 12% 654 558 17%
Operating earnings (EBIT) -211 31 -789% -130 -8 n.a
Earnings from continuing -
operations -226 22 1,145% -123 -2 n.a
Earnings from discontinued
operations 292 24 1,136% 0 6 -100%
Earnings for the period 66 45 46% -123 3 n.a
Earnings per share 1.06 0.72 46% -1.96 0.05 n.a
Cash flow from current activities -77 133 -159% -56 24 -342%
Cash flow after investments 43 -28 n.a. -172 -18 n.a

Teleca Mobile, Net sales 1,148 923 24 % 392 287 37%

o w Products/Obigo 171 154 11% 46 45 2%

Operating earnings -54 -17 n.a -35 -13 n.a

o w Products/Obigo -125 -66 n.a -35 -27 n.a

Teleca Systems, Net sales 994 981 1% 298 289 3%

Operating earnings 11 59 -81% -18 8 -325%



Note: During the second quarter the Benima division was sold. According to IFRS, Benima is to be reported as discontinued operations, meaning that all current financial and other key numbers for the reporting period as well as comparison figures are to be reported as if Benima was not part of the Teleca Group. Net operating earnings from Benima and the net capital gain from the sale of Benima are reported as a single amount on the face of the income statement.

· Teleca has initiated a restructuring of its product development activities with the aim of maintaining or increasing the pace of development but at a significantly lower cost, taking advantage of the opportunities from Teleca’s business in Russia. Teleca Systems is taking further steps to improve profitability. The entire restructuring includes a reduction in staff levels totalling 220 people in western Europe. This will result in an annual saving of about SEK 112 million, with full effect from July 2007. The accounts for the fourth quarter of 2006 will include provision for the total estimated restructuring cost of SEK 76 million.

· Teleca Mobile showed a strong revenue growth of 37% in third quarter. Hereof the Mobile Consulting business grew by 31%, and the product business grew by 2%.

· Teleca Mobile’s consulting business reported a good margin of 12% excluding provision of SEK 46 million related to the filing for insolvency by BenQ Mobile in Germany.

· Teleca Systems showed a small increase in revenue in the quarter. Operating earnings (EBIT) was –SEK 18 million during the third quarter. Included in the result is a provision of SEK 17 million related to a new assessment of current receivables.

· A new valuation of intangible assets has resulted in a write-down of SEK 67.4 million. Depreciation of intangible assets will therefore decrease by SEK 11 million in the fourth quarter of 2006 and SEK 26 million in 2007.

· Teleca announced a forecast on 9 October 2006:

Full Year 2006
For the full year Teleca expects a moderate growth in revenue. Earnings for the period including earnings from discontinued operations are expected to be at the break-even level or just above.

Fourth quarter 2006
Teleca expects moderate growth in the fourth quarter and positive operating earnings (EBIT) before one-time charges.

The result will be affected by one-time charges of about SEK 76 million related to restructuring. The restructuring is expected to show its first positive effect on results in first quarter 2007.

For more information please contact:

· René Svendsen-Tune, President and CEO, Teleca AB, mobile +45-40540068
· Christian Luiga, CFO, Teleca AB, +46-857911604, mobile +46-703751604