TeliaSonera Interim Report January–September 2014

Steady performance

THIRD QUARTER SUMMARY

  · Net sales in local currencies, excluding acquisitions and disposals,
decreased 2.0 percent. In reported currency, net sales increased 0.2 percent to
SEK 25,464 million (25,416). Service revenues in local currencies, excluding
acquisitions and disposals, decreased 0.6 percent.
  · EBITDA, excluding non-recurring items, decreased 0.9 percent in local
currencies, excluding acquisitions and disposals. In reported currency, EBITDA,
excluding non-recurring items, increased 0.2 percent to SEK 9,439 million
(9,419). The EBITDA margin, excluding non-recurring items, was stable at 37.1
percent (37.1).
  · Operating income, excluding non-recurring items, decreased 5.9 percent to
SEK 7,266 million (7,721).
  · Net income attributable to owners of the parent company decreased 12.2
percent to SEK 4,073 million (4,641) and earnings per share to SEK 0.94 (1.07).
  · Free cash flow decreased to SEK 6,387 million (7,308) due to higher cash
CAPEX.
  · Group outlook for 2014 is unchanged.

Comments by Johan Dennelind,
President and CEO

”Operational performance remained stable in the third quarter, with organic
service revenues and underlying EBITDA almost unchanged compared to the
corresponding period last year, resulting in a flat EBITDA margin of 37.1
percent.

In Sweden, the consumer segment remains firm with positive service revenue
growth, fueled by migration to data-centric price models and solid demand for
high speed fixed broadband. The fiber roll-out gained further momentum in the
quarter and our 4G network now covers more than 96 percent of the population.
However, our overall performance continues to be impacted by fierce competition
in the enterprise area.

In region Europe, it is encouraging that our Finnish business returned to
positive service revenue growth and profitability improved, despite negative
impact from reduced mobile termination rates and overall difficult macro
environment. In Spain, sales growth remained impacted by lower equipment sales,
but profitability improved due to lower subscriber acquisition costs and higher
data contribution.

In Eurasia, profitability remains solid and subscription growth accelerated,
supported by positive net intake in all of our seven markets. In Kazakhstan,
service revenue growth slowed in the quarter, but profitability improved due to
lower costs. Currently, changes are being made on management level in the
country as part of our focus to strengthen governance and operational control.
In addition, we continued our assessment of the operational assets in Eurasia,
resulting in a non-cash write down in the quarter, as recently communicated.

Our strategic agenda was further presented at our capital markets day in
September, where we outlined our overall ambition to transform TeliaSonera in
the next few years to reach the full potential and equip for the all data era.
To accomplish this journey, we will invest in new growth and savings
initiatives.

We will invest an accumulated amount of up to SEK 4-5 billion during 2015 and
2016 to further drive growth and improve our competitiveness, primarily through
accelerating the Swedish fiber roll-out, establishing new offerings in the
enterprise segment and upgrading data networks in Eurasia. In Sweden, the aim is
to increase the number of households reached by Telia-Sonera’s fiber services
from 1.1 million to 1.9 million between 2014 and 2018.

Sustainable cost savings can only be achieved if we exit legacy structures and
reduce complexity across the group. Therefore an accumulated amount of SEK 2
billion will be invested in business transformation in 2015 and 2016 to reach
net savings with a yearly run rate of SEK 2 billion during 2017.

Keeping a solid balance sheet and investment grade credit rating is important to
us. We aim to balance this with continued attractive shareholder returns and our
new dividend policy targets an annual distribution of at least SEK 3 per share
for the fiscal years 2014 and 2015.

Based on the performance in the first nine months, we reiterate our full year
2014 outlook, expecting net sales in local currencies to be slightly below the
level in 2013, an EBITDA margin around last year’s level and CAPEX-to-sales of
around 15 percent.”

Stockholm, October 17, 2014

Johan Dennelind
President and CEO


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 October 17, 2014.