TeliaSonera January-September 2011

Continued margin improvement and strong cash flow

Third quarter

• Net sales in local currencies and excluding acquisitions increased 2.4 percent. In reported currency, net sales decreased 1.0 percent to SEK 26,612 million (26,873).
• The addressable cost base in local currencies and excluding acquisitions decreased 0.4 percent. In reported currency, the addressable cost base decreased 3.4 percent to SEK 7,307 million (7,563).
• EBITDA, excluding non-recurring items, increased 4.0 percent in local currencies and excluding acquisitions. In reported currency, EBITDA, excluding non-recurring items, increased 0.5 percent to SEK 9,802 million (9,756). The EBITDA margin, excluding non-recurring items improved to 36.8 percent (36.3).
• Operating income, excluding non-recurring items, decreased 7.0 percent to SEK 7,997 million (8,599) due to lower income from associated companies.
• Net income attributable to owners of the parent company decreased to SEK 4,863 million (5,988) and earnings per share to SEK 1.12 (1.33).
• Free cash flow increased to SEK 5,106 million (3,857).
• During the quarter the number of subscriptions grew by 1.3 million in the consolidated operations and by 3.7 million in the associated companies. The total number of subscriptions was 164.4 million.
• Group outlook for 2011 remains unchanged.

Nine-month period

• Net sales in local currencies and excluding acquisitions increased 2.7 percent. In reported currency, net sales decreased 3.6 percent to SEK 77,231 million (80,128).
• Net income attributable to owners of the parent company decreased to SEK 13,369 million (15,948) and earnings per share decreased to SEK 3.05 (3.55).
• Free cash flow decreased to SEK 9,106 million (11,159).

Comments by Lars Nyberg, President and CEO
“We are pleased to yet again deliver a strong result and that we, despite the current macroeconomic uncertainty, continue to deliver growth. The cost reduction initiatives had effect in the third quarter, and after four quarters of cost increases we saw a reduction of the addressable cost base. Our EBITDA margin, excluding non-recurring items, has now improved twelve consecutive quarters on a rolling 12-month basis and the margin of 36.8 percent was the highest in a third quarter since 2006.

The demand for our services is greater than ever and the challenge lies in our ability to monetize on this. After the summer, we launched several new offers for mobile data to better reflect our customers’ different needs and with a better correlation between usage patterns and monthly fees. In May, we reduced prices on data roaming within the Nordic and Baltic countries by as much as 90 percent. Since then, data roaming volumes have more than doubled. Similar offers will be launched on more markets over time.

The fiber roll-out is now gaining momentum and we have today 0.5 million of our 2.5 million broadband customers in the Nordic and Baltic countries connected by fiber. In addition, we are now also rapidly upgrading 1 million of our broadband connections over the copper network with VDSL2 to better support HD-TV, on-demand services and online gaming.

Growth in Eurasia remained very healthy during the third quarter and Kazakhstan and Nepal passed 10 million and 6 million subscriptions, respectively. It is fascinating to witness the appetite for mobile data also in these countries and we are determined to take the leading position within data in our footprint. Ncell is already today the leading internet service provider in Nepal and today 25 percent of Ucell’s revenues come from value added services.

One of the cornerstones in our strategy is to increase the ownership in our core operations. In some countries, mainly in Eurasia, we have a relatively low economic ownership although we have full management control. Therefore, I was very pleased that we in September signed a Memorandum of Understanding with Kazakhtelecom to increase our ownership in Kcell in Kazakhstan by 24 percent plus one share in connection with a planned IPO.

Our first priority in implementing our agreement with Altimo is to resolve the legal disputes related to Turkcell. Therefore, the recently announced final award by the International Chamber of Commerce in Geneva in our favor and the British Virgin Islands court decision in favor of Altimo are significant steps in the right direction. The Capital Markets Board’s new decree regarding corporate governance principles, stating that the number of independent board members in Turkcell must be increased to three, is positive and fully in line with what we have been trying to achieve for a long time. Increasing the number of independent members will resolve the deadlock and prevents a minority from blocking majority decisions.”

Questions regarding the reports:
TeliaSonera AB
Investor Relations
SE–106 63 Stockholm, Sweden
Tel. +46 8 504 550 00
Fax +46 8 611 46 42
www.teliasonera.com

TeliaSonera AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 07:15 CET on October 19, 2011.

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