Interim Report January-March 2014

Steady margin and cash flow
First quarter summary

  · Net sales in local currencies, excluding acquisitions and disposals,
decreased 1.8 percent. In reported currency, net sales decreased 2.5 percent to
SEK 23,972 million (24,582).
  · The addressable cost base in local currencies, excluding acquisitions and
disposals, increased 0.1 percent. In reported currency, the addressable cost
base decreased 0.3 percent to SEK 7,010 million (7,029).
  · EBITDA, excluding non-recurring items, was unchanged in local currencies,
excluding acquisitions and disposals. In reported currency, EBITDA, excluding
non-recurring items, decreased 1.9 percent to SEK 8,345 million (8,509). The
EBITDA margin, excluding non-recurring items, improved to 34.8 percent (34.6).
  · Operating income, excluding non-recurring items, decreased 5.2 percent to
SEK 6,286 million (6,628).
  · Net income attributable to owners of the parent company decreased 4.0
percent to SEK 3,945 million (4,108).
  · Earnings per share amounted to SEK 0.91 (0.95).
  · Free cash flow increased to SEK 2,556 million (2,414).
  · Group outlook for 2014 is unchanged.


Comments by Johan Dennelind,
President and CEO

“Our markets continue to be characterized by a changing customer behavior and an
evolving convergence trend. We stay focused on upgrading our customers’ internet
experience through further investments in 4G and fiber. In Sweden, our 4G
coverage has approached 90 percent of population and we remain committed to
reach 99 percent by the end of this year.

In the first quarter, underlying EBITDA margin improved compared to last year
and reached 34.8 percent, while organic revenues declined by 1.8 percent due to
reduced low margin equipment sales and continued effects from lower regulated
mobile termination rates. Free cash flow increased by 5.9 percent to SEK 2.6
billion, supported by positive working capital development.

We continue to perform well in the consumer segment, where average billed
revenue growth in Nordic Mobility Services increased to more than 3 percent,
supported by all countries, as solid demand for data services compensated for
slower growth in voice and messaging. We see further positive effects from our
data-centric price models, which are now introduced in all Nordic markets. In
Swedish Broadband Services, sales remained flat in the consumer area, as higher
revenues for TV and broadband together with price adjustments compensated for
lower volumes in traditional fixed services. The enterprise area remains
challenging and we work hard to strengthen our position further by new products
and services.

We reached a new milestone in Spain by passing four million subscriptions in the
quarter. Billed revenues remained flat compared to last year, while total sales
growth was impacted by lower handset sales and reduced interconnect revenues.
Higher costs for subscriber acquisitions pressured profitability, but we foresee
a more balanced development going forward.

On April 1, we implemented a new country based operating model with strengthened
commercial and technology functions on group level. This will be instrumental
for our future strategic agenda and will also enable further efficiency
benefits. Our journey ahead will be based on three pillars; strengthen and
develop our core business in the Nordic and Baltic region, take Eurasia to the
next level by monetizing on the data opportunity and examine possible income
opportunities in closely related adjacent industries. Geographically, focus
remains on the markets where we are already present, with strict criteria for
return on capital. We have a prudent but pragmatic approach to M&A and will
mainly aim for potential consolidation opportunities in existing markets.

The Board’s review of last years’ transactions in Eurasia was finalized in the
quarter. As previously communicated, several of these transactions have been
inconsistent with sound business practice and our ethical requirements. We
continue to fully cooperate with both Swedish and foreign authorities’ requests
in this matter. We have taken, and will continue to take, a number of measures
to transform our internal control systems to make sure we have adequate
processes to identify and manage risk going forward.

In the regulatory area, we are concerned about the recent vote in the European
parliament, particularly related to the area of net neutrality, as this may
limit the possibilities for us to meet demand from our customers. We stress the
importance of operators being able to run efficient networks and offer
differentiated services to encourage innovation and investments.

We reiterate our full-year outlook regarding organic revenues and EBITDA margin
at approximately last year’s level with a CAPEX-to-sales of 15 percent, although
we see slightly increased risk to reduced revenues related to low margin
equipment sales.”

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 07:00 CET on April 23, 2014.