TeliaSonera Interim Report January–June 2014


All regions contribute to stable margin

Second quarter summary

  · Net sales in local currencies, excluding acquisitions and disposals,
decreased 1.2 percent. In reported currency, net sales decreased 1.2 percent to
SEK 25,017 million (25,312). Service revenues in local currencies, excluding
acquisitions and disposals, decreased 0.4 percent.
  · EBITDA, excluding non-recurring items, increased 0.1 percent in local
currencies, excluding acquisitions and disposals. In reported currency, EBITDA,
excluding non-recurring items, decreased 1.0 percent to SEK 8,836 million
(8,928). The EBITDA margin, excluding non-recurring items, was stable at 35.3
percent (35.3).
  · Operating income, excluding non-recurring items, decreased 10.4 percent to
SEK 6,347 million (7,086), explained by lower income from the associated
companies MegaFon and Turkcell.
  · Net income attributable to owners of the parent company decreased 12.1
percent to SEK 3,545 million (4,031).
  · Earnings per share amounted to SEK 0.82 (0.93).
  · Free cash flow decreased to SEK 2,469 million (4,462), due to higher working
capital and cash CAPEX.
  · Group net sales outlook for 2014 is changed, while guidance on EBITDA margin
and CAPEX is reiterated.

Comments by Johan Dennelind,
President and CEO

”I am pleased to present the first interim report reflecting our new country
based operating model implemented in April.

In the second quarter, group profitability remained steady with an underlying
EBITDA margin of 35.3 percent. Net sales continued to be affected by lower
equipment sales, while group service revenues were stable.

Our strategic framework was further outlined during the spring, with a clear aim
to enhance our core operations and also explore opportunities in closely related
areas.

In early July, we took an important step in our targeted direction by announcing
the acquisition of Tele2’s Norwegian operations. The transaction is a great
strategic fit and will reinforce our number-two position in the country, enhance
our customer offerings and generate significant cost synergies.

In order to have the most satisfied and loyal customers, there is a need to
further simplify our operations and transform legacy to create agility and cost
efficiency across our company.

Demand for mobile data services remains strong and it is important for us to
monetize on this opportunity. We continue to develop our data-centric price
models and see further positive effects from customers migrating to new price
plans. In this context it is encouraging to note that the number of
subscriptions increased and churn decreased in all of our Nordic mobile
operations in the second quarter.

In Sweden, net sales remained stable compared to last year and underlying EBITDA
margin improved slightly to 39.8 percent, supported by solid consumer
opera­tions and cost saving activities. We continue to expand 4G and fiber
coverage by investing SEK 5 billion annually over a three year period to ensure
our customers a superior internet experience.

In region Europe, a key priority for us is to improve competitive positions in
our Nordic and Baltic markets. In Spain, margin recovered in the second quarter,
but the business remains sub-scale with a market share around 7 percent.
Competition is fierce, forced by a strong convergence trend that puts pressure
on our mobile-only business. Consequently, we are reviewing our future presence
in the Spanish market.

In Eurasia our new management team has increased focus on governance, control
and new business initiatives. The region continues to deliver strong
profitability, with an EBITDA margin improving to 54.4 percent, supported by
solid development in Kazakhstan and Nepal. Organic revenue growth was 7 percent,
propelled by 35 percent growth in data revenues which now accounts for 14
percent of sales in the region.

Creating a long term sustainable business is a central part of our daily agenda.
We have continued to roll out our anti-corruption awareness and training across
the company during the quarter. Further, we have engaged in dialogue with key
stakeholders on Freedom of Expression in several of our Eurasian countries.

As a result of lower revenues in Spain, mainly equipment related, we revise our
full-year organic net sales outlook from previously flat to slightly below the
level in 2013. We reiterate our forecast of EBITDA margin at around last year’s
level and CAPEX-to-sales of around 15 percent.”


Questions regarding the reports
TeliaSonera AB
Investor Relations
SE–106 63 Stockholm, Sweden
Tel. +46 8 504 550 00
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 July 17, 2014.

Attachments

Financial & Operational data 2014 Q2.xlsx 07175123.pdf