The Telia Group’s net sales for the first three months totaled MSEK 13,592, up 5.7 % from the same period of the preceding year. As previously, growth was in mobile communications, Internet and international carrier operations.

Interim Report January–March 2001 Visit www.telia.com for the fastest way to get financial information about Telia

Financial information is available from our web site at www.telia.com, in the Investor Relations section. Interim reports and annual reports are posted on our web site as soon as they are published and all press releases from Telia are available online. Our web site also describes Telia’s operations and strategic initiatives and provides interesting market data about subscription growth and sales in our business areas and product segments. You can also track the share price and check trading volume for Telia shares on our web site, or find informa- tion about which analysts monitor Telia. Group executive management press conferences are broadcast “live” via our Swedish web site at www.telia.se when reports are presented.

Financial Information Please direct questions regarding Reports can be content to: ordered via: Interim Report January–June 16 August Telia AB, Investor Relations Tel. +46 (0)8 713 71 43 Interim Report January–September 7 November SE-123 86 Farsta, Sweden Fax +46 (0)8 604 54 72 Tel. +46 (0)8 713 10 00 or online at www.telia.com, Fax +46 (0)8 713 69 47 or online at Investor Relations. www.telia.com, Investor Relations. wds mbl tlpoy prtos t h sm tm,the time, same the At operations. telephony mobile Swedish the in profit healthier NetComoperatorand mobile Norwegian The improvement attributable ispartly totheacquisitionof minimal impactonrevenues. the increased subscription price of1March tohave more thana for time sufficient been not has There percent. 2.0 at moderate which risk, high affected salesfor theperiod. and margins low with business from refrain particularly in enormous telephony.Teliapressure, has decided to nect fees hasslowed revenue growth inSweden. intercon- reduced on requirements Agency’s Telecomand Post National Swedish the with along which terminals, on discounts its reduced Teliahas 2000, in customers mobile new of stream After the huge munications and international carrier operations. net rose from 22,000to31,000. com hem the number of paying customers business with TV cable broadband Inter- the in and 68,000 to 42,000 from rose LAN In Sweden the number of paying year. ADSL customers and with climb.Telia increased its rate of delivery of broadband during the net andinternationalcarrier operations. As growth previously, was year. Inter- in mobile communications, preceding the of period same the from % 5.7 up 13,592, MSEK totaled months three first the for sales net Group’s TeliaThe Summary Mobileoperator Tess• divested withanestimated earningsin Operating incomewas MSEK811(3,382), • Underlying EBITDA grew by 2.7percent toMSEK • The Group’s netsalesincreased by 5.7percent to • Com hem Increased rate ofdelivery for broadband. • Improved margins inmobiletelephony operations • capital gain ofGSEK2.7inthesecondquarter 2000 affected by extensive capitalgains 3,348 MSEK 13,592 strengthens thebroadband initiative Group underlying EBITDA grew by 2.7 percent to MSEK 3,348. The decrease in revenues in the fixed network operations was under been have market carrier international the on Prices com- mobile previouslyin than weaker somewhat is Growth to continued broadband and access Internet for Demand Telia 2001 January–March Review ofGroup Earnings participate intherestructuringparticipate oftheindustry. order to strengthen the business orientation and to allow Telia to ness area. operations will betransferred tothe Telia InternetServicesbusi- initiative currently underway in the fixed network.This is why the com hem business strengthens and complements the broadband ously on the list of companies will to not sell be off, divested.The 10,000 employees. 2.7. GSEK of gain capital estimated an with April, of beginning financial Group’sinterests in The the mobile operator companies. Tess eight in of Brazil were group divested a at the of sale the forKapitalIndustri with made wasalso agreement An in SI.Mobil Slovenia. operator mobile the including strategy, focus and companies within theUnisource group. and Norway in operations network fixed of sales income in 2000 was affected by capital gains of MSEK 2,495 from increased costs. and theestablishmentofaninternationalcarrier businessentail initiative portals mobile the Sweden, in services Internet-based wholesale sales. higher and measures streamlining through tained main- were operations network fixed Swedish the in margins netet ,5 464 47,742 23.9 4,644 – 10,278 3,659 2,390 3.50 291 – 0.84 12,006 3,382 0.10 11,717 811 3.7 54,064 3,436 Investments 13,087 12,857 3,260 Return onequity(%) 24.2 502 3.7 13,592 Earnings pershare (SEK) 3,348 25.4 Net income 5.7 Income afterfinancialitems 24.6 Operating income Underlying EBITDA margin (%) Underlying EBITDA Change innetsales(%) Net sales SK20 002000 2000 2001 MSEK nw ru srcue a itoue o 1 pi 20 in 2001 April 1 on introduced was structure Group new A previ- was which hem, com business TV cable Swedish The over involve divestitures contracted and completed Telia’s Several businesses were divested as part of the Group’s refine Operating (3,382). 811 MSEK totaled income Operating The current initiatives onbuildingupabroadband market for n atcptos 1 ,5 31,162 2,459 91 and participations fwihgowl,shares of which goodwill, a–a a–a Full Year Jan–Mar Jan–Mar

3 TELIA INTERIM REPORT JANUARY–MARCH 2001 4 TELIA INTERIM REPORT JANUARY–MARCH 2001 Telecom Agency (PTS), but also to reduced discounts on terminals. on discounts reduced to also but and (PTS), Agency Telecom Post National Swedish the by determined fees interconnect decreased the to due primarily was Sweden relatively in growth The moderate market. telephony mobile Swedish the on percent of the mobile operator RevenueNetCom growthin Norway. was 7.2 strong customer growth in Denmark and Finland and the acquisition Revenues climbed by 46 percent due to continued communications. mobile in growth strong sustained with units comparable for cent compared to the same Revenue quarter quarter of growth first 2000. was the 4.2 duringper- percent 5.7 by rose sales net Group’s The Sales os rsue n rcs n sbeunl rdcd ead on demand infrastructure andnetwork capacity. reduced subsequently and prices on pressure mous enor- to led and market carrier the on uncertainty caused has ital from the preceding year.The rate of Lack growthof cap- has slowed. network. tomer connections in the fixed network and 376,000 in cus- the cable 918,000 of TV potential a have agreements general These tions. connec- broadband for buildings cooperative and owners property with customers paying broadband Internetfrom 22,000to31,000. of number the and 252,000, to 193,000 from rose installations broadband of number the hem, com ness Swedishcable the In busi- TV 38,000. to rosefrom30,000 Internet broadband with customers paying of number the while 211,000, to 175,000 from climbed installations broadband of number the where Telia offers broadband connections via the cable TV network, band Internet connections rose In from Denmark, 42,000 to 68,000. broad-payingwith customersof number where the Sweden, in off the new broadbandonthemarket. serviceslaunched partly attributable to increase in sales for applications and services, substantial a also was there and – broadband narrowband, access, dedicated access, dial-up – great remained access of types all for climbed by 25 percent compared to Demand the same period 2000. quarter growth.First sales in the Telia Internet Services business area oietlpoy ,4 5. 220 11,329 2,230 54.3 3,442 Mobile telephony Mobile oa 1,9 57 287 54,064 213 12,857 6,450 5.7 58 1,590 13,592 1,819 –12.1 –25.8 427 51 1,180 2,988 24.6 638 532 (specification). Segment Product and Area Business per 27.1 Sales Net External tion, Financial informa- Investor Relations, www.telia.com, 1) For further information: 27,217 811 1,036 Total 6,988 Group-wide 251 3,012 –4.6 Equity 675 Internet Services –31.5 6,664 172 9.6 Wholesale market 740 Retail market Networks International Carrier Other Net SalesperBusiness Area andProduct Segment te 9 3. 20 1,439 290 36.2 395 Other ewr aaiy 3 1. 34 1,571 1,871 394 20,872 467 5,483 10.9 5.4 –8.6 437 492 5,009 Customer premises equipment Data communications Network capacity Fixed telephony Sales in the international carrier business rose by 9.6 percent 9.6 by rose business carrier international the in Sales with signed were agreements general additional Sweden, In taken have LAN and ADSL via broadband of deliveries 2001, In strong showed also services Internet network-based Fixed a–a a–a Full Year Jan–Mar Jan–Mar ,7 –. 766 30,205 7,626 –2.0 7,475 12,365 2,481 45.7 3,614 SK SKMSEK MSEK % MSEK 01Cag 002000 2000 Change 2001 3 –. 34 1,464 354 –6.5 331 1) Earnings cent. per- 8.3 by units comparable for directory increased Sales the Eniro. including operations divestitures, partial and whole to utable ations climbedby 27percent during thequarter. oper- wholesaling the in Sales sales. wholesale higher by pensated 2000.The reduced net of sales on shares the retail market market retailwere partially reduced com- and impending prices slashed the the despite of effects percent 2.0 of revenues in decrease ate moder- a showedonly TeliaNetworks, business, networkfixed The business areas. the to projects Group for allocation cost transferred and services works inSweden andinternationally. net- communications and Networks, telephony maintains Swedia and to builds which attributable chiefly is growth Earnings ty. States. United the and Europe in Internet, services mobile and for services broadband networks transport establishing is Carrier national band market for Internet-based services in Sweden while Telia Inter- broad- a up building on focusing Telia is Services Internet earnings. Group burdening Carrier, International Teliaand Services Internet during theperiod. which is a decline marginof 3.1 waspercent.The maintained 2,837, MSEK was quarter the for Networks Teliafor EBITDA Underlying sales. wholesale telephony increased and measures streamlining on impact earnings in negative Teliaa had effectsNetworks.The were largely compensated bycalls, local for primarily shares, market reduced and 2000 during telephony fixed in cuts price Substantial in underlying EBITDA toMSEK1,134inthemobileoperations. gianpercentoperator34 mobile increaseNetComa to led 2000 in operations Swedish Mobile’s Telia showed continued improvement in and the acquisition of the Norwe- margins The year. ceding pre- the period same the frompercent 2.7 up 3,348, MSEK totaled non-recurring excluding items andearningsfrom associatedcompanies. depreciation, before income operating describes which used, is EBITDA” “underlyingterm the operations, Group’scoremajority-ownedthe in earnings in trendTo the show prtn noe 81 ,8 12,006 3,382 1,624 811 –8,222 126 –1,624 –1,197 8,338 –1,836 –353 642 204 3,396 –2,410 11,257 1,316 –994 –238 2,928 13,087 845 30 –157 –172 3,260 2,837 –572 1,134 –235 3,348 –114 Operating income Share ofearningsinassociates –354 pensions & Non-recurring items and write-downs amortization Depreciation, Total underlying EBITDA Group-wide Equity Internet Services Networks International Carrier Mobile Underlying EBITDA and Operating Income SK20 002000 2000 2001 MSEK Underlying EBITDA Decreased net sales in the business area business Teliaattrib-the are in Equity sales net Decreased Group-wide costs were reduced due to cutbacks in consultant in cutbacks to due reduced were costs Group-wide Underlying EBITDA improved within the business area Telia Equi- Teliaareas business the within underway are initiatives Major h Gops nelig BTA o te rt ure o 2001 of quarter first the for EBITDA underlying Group’s The a–a a–a Full Year Jan–Mar Jan–Mar –39 compared to MSEK –10 year onyear. compared toMSEK–10 –39 MSEK totaling earnings of share its with AB, Online Scandinavia Other associated companies. MSEK 218during the period. new directed affectedproceeds Theissue Telia’sby a earnings issue. shareof share included acquisitions the of One elsewhere. and Russia, Germany, in acquisitions company of number a out carried Eniro. the fact that 2000 earnings were affected by capital gains (MSEK gains capital by affected were earnings 2000 that fact the to attributable chiefly are weakerearnings The year. on year 3,382 The Group’s operating income was MSEK 811 compared with MSEK of thefixed network operations inNorway. wasmost ofwhich comprised ofcapitalgains from thedivestment Non- 2000, period same the during 1,316 MSEK totaled quarter. items recurring the during 30 MSEK totaled items Non-recurring ic involvement in TessApril. was divested atthebeginning of year onyear.Telia’s econom- compared toMSEK–246 MSEK –378 affected earnings by ator which is in a build-up Tessphase, in Brazil, mobile telephony oper- ian mobile operator company SI.Mobil.The 381 from the sale of 29 percent Teliashare in the Sloven-Overseas’ Overseas.Telia Eircom’s mobile operator company Eircell. acquire to bid Vodafone’s supports and source/Eircom Comsource/Eircom. (AUCS) burdened earnings. first quarter companies within Unisource.The deficit in the remaining operations of liquidation the with connection in gains capital to attributable Unisource/AUCS. from increased ian fixed network market was openedtocompetition. companies Eston- the the 2001, January 1 On customers. of 1,254,000 to 1,159,000 base customer The period. aggregate the during earnings customer improving strong further while continued growth demonstrating are Russia western states. Baltic profitability. improve to order in customers business on focus its sharpening is its stake in the company and to exchange The rate company effects.The growth. revenue and decline inshare ofearningsisattributable to Telia having increased customer strong shows and opment Netia. was affected by capitalgains from thedivestiture ofUnisource. which year, preceding the period same the during 642 MSEK with Earnings compared from associated companies totaled MSEK –157, oat 17 4 –1,197 642 –157 Totalt Other associatedcompanies Eniro Telia Overseas Comsource/Eircom Unisource/AUCS Baltic states Netia Holdings Share ofEarningsin Associated Companies SK20 002000 2000 2001 MSEK Operating income/netincome Non-recurring items Earnings from associatedcompanies Eut) 9 – 185 – 292 (Equity) olwn h nta ulcofrn nOtbr20,Eniro 2000, October in offering public initial the Following The company is currently in a relatively early stage of devel- Mbl/ewrs 2 1 190 15 23 (Mobile/Networks) (Equity) –2 –257 –1,719 –1,719 –257 –2 (Equity) (Networks) –143 –34 –411 –411 –34 –143 (Networks) The mobile operators in the Baltic states and north- and states Baltic the in operators mobile The Ntok) 4 104 1,445 1,004 –49 (Networks) Earnings were affected by a capital gain of MSEK of gain capital a by affected were Earnings (Networks) –204 –81 –933 –933 –81 –204 (Networks) Earnings for the first quarter of 2000 were chiefly ei itns o el t itrs i Com- in interest its sell to intends Telia Other associated companies include a–a a–a Full Year Jan–Mar Jan–Mar 7 – 46 –5 –74 other operators withsimilarbusiness. compared to which continues however, to debt/equity be ratio, low, the affected also borrowing This ASA. NetCom of acquisition the financing foryear the of months six last the duringtaken loans on which is attributable to er interestcompared to the preceding year, growth interest forcoverage comparable units.The ratio was weak- satisfactory balance equity/assets sheet ratio.The total increased with a the sales with good remains position financial Group’s The CashFlow and Financial Position sion in Sweden and greater capacity in the Nordic mobile networks. the expan- broadband for network, were carrier international the investments of expansion these of majority The doubled. were Investments in production equipment for mobile and fixed services the Group were madeduring theperiod. outside companies or companies associated to infusions capital or companyacquisitions major no that fact the primarilyto due preceding year, the to compared percent 21 by dropped Investments Investments flow cash operating and activities decreased duetogrowth ofworking capital. operating from flow Cash the preceding period. of2000. 2,390 inthefirst quarter andminority shares totaledMSEK291compared withMSEK taxes, and “Non-recurring items.” panies” com- associated from “Earnings under reported are which 2,495), elett 5 32 552 22,893 382 13 509 57 29 15,519 86 1,717 52 3,459 andequipment Machinery Real estate Other intangible assets Goodwill oa ,5 464 47,742 4,644 3,659 8,269 2,446 62 Total Shares andparticipations 0.24 0.37 0.42 Debt/equity ratio (multiple) prtn aia 242 502 39,160 41.0 50,936 75,042 7,527 92,374 82,482 44.4 13.9 20,235 0.72 100,130 24,425 45.3 60.2 8.5 0.54 3.5 7.3 0.52 1.8 Net interest-bearing liability Operating capital Capital employed Equity/assets ratio (%) Asset turnover rate (multiple) Balance sheetgrowth (%) Interest coverage ratio (multiple) Investment by Classof Asset SK20 002000 2000 2001 MSEK SK20 001999 2000 2001 MSEK oietlpoyisaltos 4 19 1,411 4,115 9,993 179 325 1,213 349 2,688 422 andequipment Other machinery Mobile telephony installations Fixed telephony installations Earnings per share totaled SEK 0.10 compared with SEK 0.84 in 0.84 SEK with compared 0.10 SEK totaled share per Earnings expense, and income financial after income net Consolidated a–a a–a Full Year Jan–Mar Jan–Mar 1Mr3 e 31Dec 31Dec 31 Mar

5 TELIA INTERIM REPORT JANUARY–MARCH 2001 6 TELIA INTERIM REPORT JANUARY–MARCH 2001 ment requires theapproval ofthePolish government agency. of acquisition the regarding agree- Thecompany AmericanVerizon. agreement the from shares remaining an into entered o.o., z PanoramacompanySp.directory Polska Polish the in shares the of Austria.Austrian company Mobilkom to the percent share in the Slovenian mobile company SI.Mobil in February the to subject May, in through go approval oftheEuropean Commission. to expected is deal The ies. subsidiar- their and AB TeleadressInformation Multicom TA and AB Security AB, Dokumentation Telia AB, Swedtel Telia AB, idation AB,Val- Respons subsidiaries AB, SwediaProsoft AB,Telia Networks ital 2000-fonden for the sale of 51 percent of Telia’s holdings in the Norway, Denmark andFinland were sold. Sweden, in Services Response Direct operations center call the May, of beginning the At products. datacom and telecom reconditionedleases and sells which Telia TradingwasAB divested, subsidiary the February, In environments. IT distributed in gration which handles project managementnator AB, IT and technical inte- shareholding was increased tonearly 14percent. this April, In travelmobile areaof the activein services. AB, Europe Planungs in TicketAnywhereshares the Cochet+Schwarz of percent 8 owns Teliaalso in GmbH. shares all acquiring by Germany Swedish Authority.Competition the of approval the requires agreement The services. of The parties will continue each with to its be owncompetitors, range build and operate networks will for the company UMTS mobile The telephony system. quarter. first the during AB UMTS-nät Svenska company split) (50:50 owned jointly the formed Tele2 and Telia Acquisitions andDivestitures director of Telia Sweden. the and market, skills the for director marketing the director, tions communica- the heads, area business five the management, utive Rudberg withspecialresponsibility for new business. Härenstam, Lars and Jan responsible for Group Development and Human Control; Resources; Financial Corporate of Head and CFO Jacobsson, Bo includes CommitteeExecutive the Nivert, Marianne ExecutiveOfficer Chief to addition In Management. Group and tee Telia Sweden. market, Swedish the on formed been has unit sales common A nationally. inter- and Sweden in markets all across earnings Group’stotal the for within its product Each business area, area Teliais responsible, Equity. and Networks Telia Services, Internet Telia Carrier, national facilitates theGroup’s internationalizationefforts. and orientation Telia’s strengthens industry, the of restructuring lays the ground for improving Telia’s possibilities to take in part the A new Group structure was introduced on new 1 April.The structure New Group Structure Telia signed an agreement in April for the sale of the Brazilian the of sale the for April in agreement an Teliasigned percent 49 previouslycontrolled which Telia, period, the During Telia’s partly owned subsidiary Telia AB Overseas divested its 29 an agreementAt was the made end with of IndustriMarch, Kap- Combi-subsidiary the in 2001 January in sold wereOperations operationsin its expandedNetworks Swedia period, the During inadditiontotheexec- The Group Management teamincludes, Telia’s executive management consists of an Executive Commit- TeliaInter- TeliaMobile, formed: been have areas business Five completed during thefirst sixmonthsof2001. be to estimated is acquisition The offer. the accepted have Eircell, which via Comsource UnLtd will control 35 percent of the shares in KPN, Teliaand shares. 2000 Eircell two every for Vodafoneshares for every one Eircom share.Vodafone’s offer for Eircell will be 0.9478 after which plc, Eircom’s shareholders 2000 will receive one Eircell Eircell 2000 company share incorporated newly of the transfer to the operations entails acquisition The Eircom’s Eircell. acquire operations, will mobile Vodafone that agreement an announced ests in Tess. inter- financial of all Telia’sassumes buyer Theand TeliaOverseas’ Teliavotesin of majorityOverseastogetherthe will maintain Tess. With a limited number of shares with special voting rights,Telia and AB are sellingallshares withlimitedvoting rightsOverseas in Tess. Teliaand AB Telia Americas. Telecomto S/A operatorTess mobile rmrl atiual t Eio en rpre a a associated company. an as reported being Eniro to attributable primarily is decrease The 2000. year full during 30,307 to compared 28,644 The average number of employees fell during the period and totaled Employees er thenumber ofcustomers increased by 1,563,000. year, From ofthis of2000tothefirst thefirst quarter quarter countries. Telia that meant which 4,598,000, cemented itspositionastheleading mobileoperator intheNordic totaled quarter the of end Holding. in 2000isattributable to theacquisitionofshares inFirst National including GPRS high and levelUMTS.The technology, of investment new in investments and networks existing in capacity increasing NetCom. of goodwill in the amount of MSEK 303 following the acquisition of result reflects amortization pared withMSEK563year onyear.The to 1,159,000 from base 1,254,000 customers. customer total their increased com- These panies Russia. northwestern and states Baltic the in panies a result of continued strong customer growth in the operator com- from associated companies increased from MSEK 16 to MSEK 27 as Earnings to MSEK 1,134. improve underlying EBITDA by 34 percent, cent for comparable units. per- 15 wasgrowth Revenue fees. interconnect reduced greatly to Growth in FinlandSweden wasand Norway. somewhat weaker due 3,614.The increased sales resulted from healthy growth in Denmark, External sales rose by 46 percent for to the MSEK mobile operations, Telia Mobile Review ofBusiness Areas n 1 eebr 00 oaoe ru pc n Ero plc Eircom and plc Group Vodafone 2000, December 21 On The number ofmobile customers intheNordic countries atthe Investments for the period totaled MSEK 509 and were aimed at com- 407, MSEK was area business the for income Operating to served Finland and Norway Sweden, in earnings Stronger rfc eutdi erae RU from SEK314to273. resulted indecreased ARPU, traffic, particularly on interconnectperiod Priceof the cuts, preceding year. same the to compared million 79 to million 25 from surged ume SMS message vol- customer per month unchanged at 117 minutes. growing A prepaidaveragesharecardof the customers left traffic volumeper customers. card prepaid and customers subscription tomers viaserviceproviders increased from 48,000to60,000. customers in Sweden increased by 33,000 while the number of cus- the During number the discounts of first on GSM quarter, terminals. the reduce to decided 2000, during customers of stream healthy have also been after affectedthe by the fact that the business area, first price quarter.The level showed Revenuesan 11 percent decline. the during sales net affectedprices retail slashed and fees connect inter- reduced Greatly slowed. has growth of rate The operations. Swedish the for 2,247 MSEK to percent 7.2 by rose sales External jointly owned network company with Tele2 inSweden. the up building on initiated was work quarter, the During 2001. of UMTSservices ontheNorwegiantries tolaunch market attheend telephones are available onthemarket. and the commercialintroduced waslaunch is testing scheduled for pilot the autumn when GPRS Sweden, In 2001. January of end the first GPRSserviceswere inNorway launched at Nordic market.The Com inthefall of2001. will be introduced on the Norwegian market by the subsidiary Net- service the of stage initial An countries. Nordic the within calls for standardizedrate lower, a entails which pan-Nordicservice, mobile At the beginning the lished. of business May, area presented the first network expansion andservicedevelopment alike. shaping opportunities for affectingsynergy and economies of scale, is markets mobile Baltic and Nordic the in position Telia’sstrong netet 0 101 26,017 1,001 1,585 509 14,556 3,396 563 2,994 845 407 4,062 1,134 Investments Operating income Underlying EBITDA Net sales SK20 002000 2000 2001 MSEK netet 9 246 4 505 –475 214 107 49 –69 370 20 183 –144 –494 48 38 23,267 –123 1,669 – 142 471 –71 – – 124 1,108 Investments 905 Underlying EBITDA 177 286 Net sales 10,889 Denmark Mobile telephony, 4,138 237 2,553 Investments 1,035 Underlying EBITDA 2,669 1,194 Net sales Finland Mobile telephony, Investments 12,365 Underlying EBITDA 2,481 Net sales Norway Mobile telephony, 3,614 Investments Underlying EBITDA Net sales Sweden Mobile telephony, externalof which oietlpoy Sweden Mobile telephony, Traffic volume per customer rose during the quarter for both for quarter the during rose customer per volume Traffic coun- Nordic the in operatorfirst the be will area business The Telia Mobile will offer GPRS and UMTS services across the entire wasestab- center billing Nordic a year, this of beginningAt the fwihetra 19 6 442 86 364 159 47 1,655 137 – externalof which 899 8,868 externalof which 2,097 2,247 externalof which externalof which a–a a–a Full Year Jan–Mar Jan–Mar operations from MSEK –123 toMSEK–71. operations from MSEK–123 Lowerperiod productionto 154,000. costs reduced the deficit in the the during 5,000 by grew customers GSM of number The market. high roaming costs. today’s on effect positive a have will which Denmark, in network toMSEK–144. during theperiod from MSEK–69 this had a negativetraffic, impact which on sank underlying EBITDA, interconnect for costs high with Combined costs. recruiting tomer period robust to customer MSEK growth159.The also entailed cus- 34,000 to 331,000 and external net sales grew by 85 percent for the the number of GSM customers rose by On the Danish market, well. External net sales showed robust growth in Denmark and Finland as minals. the on quarter the development of content services for mobile ter- market Norwegian the under thebrand on nameNetCom HomeRun. launched was Mbps, 11 to up speeds percent ofthepreceding from year. thesamequarter 123 up million During116 messages the werequarter, sent, growth. customers 91,000. to of 41,000 by increasedproviders number service through attained the while 854,000, to 4,000 by increased ARPU and minutes 133 to climbed from NOK289to298. 130 from month per customer per volumetrafficincreased market business the on focussharper The principal reason for this is the growing share of business customers. External net sales quarter. increased by 27 percent to MSEK 899.The the during growth earnings robust showedmarket Norwegian The and vouchers. tickets handling for platform a of development the for Anywhere SMSande-mail. nication viachat, Customers use the service service on forthe Internet. easy commu- a mobile communications service that works like today’s ICQ search include TeliaInTouch,GPRS forMobile developed Services quarter. nals. termi- buying for costs including costs, fixed and variable of ution when customers are given to the influence opportunity the distrib- sub- scription is expected toreduce theneedfor discountsonterminals This market. the on launched was Plus, Mobitel subscription, of type new A services. new of development the on concentrated remaining NMT900customers. percent compared to the fourth quarter of 2000 is the release of the erate marketing through reduced discountsonterminals. ings is a result of better cost-effectiveness measures and more mod- improvementmargin inearn- improved from 41to45percent.The the and 1,194 MSEK to percent 15 by climbed EBITDA Underlying improvement. great showed operations Swedish the in Earnings oietlpoy other Nordic countries Mobile telephony, Norway Mobile telephony, External sales rose by 47 percent to MSEK 137 on the Finnish the on 137 MSEK to percent 47 by rose sales External 900 GSM a establishing on quarter the Workduring wasbegun during Telecom Schibsted with cooperation initiated NetCom at transfer data wireless provides which service, HomeRun The healthy continued showed messages SMS of number The customers GSM of number the market, Norwegian the On Teliacompany the investedin Mobile Ticket- period, the During the during launched were services positioning other Several was resources Mobile’s of part substantial a period, the During 10 to percent 8 from churn increased the for reason main The

7 TELIA INTERIM REPORT JANUARY–MARCH 2001 8 TELIA INTERIM REPORT JANUARY–MARCH 2001 moved over to our own infrastructure, which will lead to greatly to lead will which infrastructure, own our be to can over moved traffic service, in is Network Viking the of part American when the Atto largeyear-end, volumes of leased network capacity. due 120 approximatelyMSEK of loss showeda 2000, of spring the led toincreased costs. mean that which has Telia is leasing capacity on a basis, short-term and revenues expected than delayed rollout 14 WeakerAtlantic including of cable, theTAT certain routes, licenses. as well as panies com- sales and technology local establishing for costs with phase build-up a in are operations carrier international The –307. MSEK Underlying EBITDA year foron year. the fourth quarter of 2000 was affected telephony sales. has which risk, high and marginslow with business fromrefrain to Teliadecided has prices. their dumping noware and difficulties cial finan- have market wholesale the on themselves that established have players Several 2001. in changed has market telephony the on theretail market. lower operatorsdelayedEuropeanbroadbandmany since is projected than This respectively. percent, 210 and 40 of sales increased with strong, remained traffic IP and capacity IP on Demand 2000. of period same the to compared percent 9.6 of increase an ations, oper- carrier international the for 740 MSEK to rose sales External ified somewhat. Product offers andcustomerfocus are beingmod- work expansion. whyis which net- Teliaplanned its completing is services, IP-based in the future.Telia anticipates strong future demand on IP traffic and and the carrier market is likelyto drop to out, become consolidated capacity. wavelength Players that lack the financial strength and and endurance are expected network leased on grow will demand ly huge demand on Instead, fiber and ducts is expected to decrease. Theprevious- phase. newcurrentlyThe a marketcarrierenteringis Telia International Carrier -al fax orSMS. e-mail, graphic to paper from directly notes handwritten send to possible the services make it Among other features, Tomato’s mobile portal. Speedy in services integrating for collaboration a established have bile.se. be will services Speedyavailable on www.teliamo- at Tomato’sand The portals mobile services. mobile and entertainment mobile for GroupSpray the in company production a Moby, company the development of mobile services for games with and entertainment the for initiated been has project collaborative A Olivetti Tecnost. was theportal establishedincooperation with InItaly, and Finland. Denmark U.K., the Italy, markets: European four on test-launched Speedybeen Tomato has portal mobile operator-independentThe netet 117 8 6,634 488 4,116 –854 –572 1,147 909 –154 –114 1,002 –453 –354 Investments Operating income Underlying EBITDA Net sales SK20 002000 2000 2001 MSEK fwihetra 4 65 3,012 675 740 external of which Mobile portals The operations of the American ISP AGIS, which which was The acquired operationsin Americanof the ISP AGIS, Underlying EBITDAcompared waswith MSEK –114 MSEK –354 of state The telephony. for somewhat decreased sales External peyTmt n Aoo usdayo ehoois AB, TechnologiesC of subsidiary a Anoto, and TomatoSpeedy a–a a–a Full Year Jan–Mar Jan–Mar capacity andIP-basedproducts inEurope andtheUnitedStates. agreements withCiscofor marketing Telia InternationalCarrier’s IP nal multimedia communication needs. quarter for delivery of a global the IP-based networkduring for Ericsson Ericsson’s with inter- made were Agreements level. wholesale the on services purchase who end-customers also but operators, and providers service only not targeting are sales time, same the At services). (local servers IP of colocation for and (IP-VPN) works for privateduringquarter virtual services the Carrierlaunched net- to satisfy the demand on premium services in IP.Telia International ed atthesametime. agreement transatlanticRostelecom forof with Thesale wasthe capacity expand- route. Moscow–Stockholm the on capacity IP of BalTelecomtelecom Russian sale the the forwith signed werealso agreements quarter, the During market. European the on services IP-based of distribution the for Network Viking the of part pean operator Sprint extending over several years for the use of the Euro- American the with contract major Teliaa signed capacity. network Severalagreementswereof other for sale signed the border. Czech the and Warsawbetween infrastructure of sale the for Poland in a positive effect onearnings. Telia’s own networkwhen capacity dramatically is which broughtdropwill haveinto will service, capacity leased for costs time, same which will and have operators, a Atpositive the impact on revenues. will be able to deliver the network capacity sold to service providers valued atMSEK115. includingFrance andItaly, abroad, capacity network to access Carrier givesInternational Telia which ment was signed during the period with the telecom operator Nets, not through installation of A Telia’sswap agree- own infrastructure. Europe will mainly take place through and fiber and capacity swaps, Russia continue. and states Baltic the Poland, in partners with initiated efforts ning the plan- veloped with consequent huge demand on infrastructure, unde- remains market carrier the where Europe, Eastern In pleted. Switzerland and Austria, Hungary – the will Czech be Republic, com- 18,000 kilometers intheUnitedStates. and Europe in be will kilometers 22,000 which of 2001, of end the by service in network fiber-optic long 40,000-kilometer a have to that means Telia This plans year. the of end the before service into construction under are that or place in already are that networks traffic Telia isfollowing broadband itsnetwork plansfocusedstands firm. onbringing and Internet future for States United the and tive EBITDA onamonthly basisby theendofyear. showingposi- goalof its attain to expect not does Carrier national es inthetelephony operations. net Provider intheUnitedStatesduring theyear. during the first quarter.Telia was awarded the up distinction Best lit Inter- was route Corridor) (East Boston–Miami The costs. reduced In order to strengthen the distribution has channels,Telia signed underwayareorderdevelopment efforts in service and Product Cecomwith agreement Teliaan signed quarter, first the During TeliaCarrier International service, in are installations the When 1,147. MSEK to amounted quarter first the during Investments Southern in Network Viking the of expansion planned The – CentralEurope in initiated ducts and fiber of installation The Europe in platform network high-quality Telia’sa create to aim TeliaInter- market, carrier the of development the Considering Earnings were also affected by reserves for estimated credit loss- ici-wthdntok opce retdI ewrs Invest- networks. IP oriented packet to networks circuit-switched works focused in on Sweden, developing the network structure from the comparison period in2000. during Norway in operations network fixed of sale the from gains capital on and companies associated in earnings of share lower of pared with MSEK 4,226 year on year.The drop in income was a result Com- and Netia in earnings weaker source/Eircom. to extent lesser a to and divestiture of companies in Unisource during the comparison period the primarilyto areattributable 2001 in weaker Theearnings com. network fixed the Unisource/AUCS and Comsource/Eir- operators in the Baltic states, Holdings, Netia mainly comprise companies associated The 2000. of quarter same the in 871 MSEK with pared period. the during Underlying EBITDA maintained fell somewhat and totaled MSEK2,837. was business network fixed the lining marginof customer services in and distribution channels.The during thefirst quarter. percent 2.0 moderate a by fell whole a for Teliaas sales Networks the in sales which meansthatnet external wholesaling businessclimbedby 27percent, quarter, the During sales. wholesale higher through market retail the revenueon lost its compensate partially operators and service means providers.This that Telia Networks can interconnectwork capacity, traffic and other network products from vices climbedby 36percent. ser- value-added other and services IT services, consultant of sales while respectively, percent, 10.9 and percent 5.4 by grew capacity ony andSMS. ony is being increasingly mobile replaced teleph- by electronic mail, to due reduced market shares and partly due to the partly fact that fixed teleph- are volumes lower The 2001. during stabilized has trend price the market, consumer the On percent). (–3.9 volumes percent) andlower traffic able toacombinationofprice cuts(–4.9 attribut-are sales net reduced The year. on yearpercent 8.6 byfell sales net sales, area’s business countries, the of percent Nordic 67 represents which the in market retail the on telephony fixed In wholesale salestooperators and serviceproviders. increased by and market retail the on capacity network and tions communica- data value-addedof increaseduressales and services, ket shares of margin2000.The was sustained by streamlining meas- the impending effects of the slashed prices and reduced retail mar- Telia Networks maintained its margin for underlying EBITDA despite Telia Networks netet 146 4 7,421 749 7,950 39,723 1,436 11,257 9,288 4,226 2,928 8,590 1,127 2,837 Investments Operating income Underlying EBITDA Net sales SK20 002000 2000 2001 MSEK netet 112 2 4,565 720 37,987 11,272 8,782 1,162 2,979 8,141 2,883 30,205 7,626 7,475 Investments Underlying EBITDA Net sales Sweden external of which Major efforts are underway on the development of the fixed net- com- 1,127, MSEK totaled quarter the for income Operating com- –414 MSEK totaled companies associated from Earnings The reduced netsaleswere compensatedby continued stream- The competition on the retail market increases demand for net- On sales the of retail data market, communications and network fwihetra ,1 732 28,897 7,302 7,117 external of which a–a a–a Full Year Jan–Mar Jan–Mar reported positivereported earnings. being reviewed. which continued to show are a operations, deficit during the period, business area’s annual revenues. the in 860 MSEK additional an to lead to expected is 2001 March apply alsofor localcallsasof2February 2002. will preselection carrier with Access Equal that period the during services specific while usingthelower bandfor telephony services. their for lines copper in band frequency higher a lease to operators allow which lines, shared including launched tenance andprovides billinginformation. isresponsible for operation andmain- duces thetelephony service, pro-area business the developedhas area With TeleHost. TeleHost, business the range, ordinary their to added valueand complement For saling companies market looking as to well. offer telephony as a scription. enables an additional ISDN to channel be added to a DuoCom sub- business market. this and makes Unified an Messaging, tion, attractive offering on the func- operator automatic an Digitala, Togetherwith customers. of received on the market and has already been sold to a large number mobile and has IP-based been communication very capabilities, well networks aimed grew at during medium-size the companies, period. panies withhighdemandsonperformance andquality. wasis a launched,which hosting service aimed at e-commerce com- TeliaDedicated Webhostingyear, the of beginning Atthe capacity. to ensure continued demand on data communications and network New products are continuously business launched districts. in order and campuses corporate entire for also but offices, individual for the business area to deliver complete telephony and data solutions and concept umbrella term a for integrated communications is platforms that allow IT-HUS market. business the of share Networks’ before theendofyear. Kalmar– up lit be to expected are routes The Malmö–Kalmar, Kalmar–Stockholm. and Växjö Gothenburg–Jönköping, burg–Örebro, Stockholm–Gothenburg–Malmö– connects Five Copenhagen–Oslo. new fiber-optic routes Gothen- that will be built: Ring, dinavian work was optics, initiated during the fiber-quarter on and Scan- “entrances”to capacity network on demand growing satisfy to order ADSL. for each adapted were stations 7,200 Sweden’s of completed 930 and week were installations broadband 3,000 period, the Atof end the dramaticallyincreased2001. has in capacity delivery TeliaNetworks’ cus- providers. service external to these belong 4,000 Of tomers, quarter. the during LAN and ADSL on based tions was for theexpansion ofbroadband inSweden. part substantial A quarter. the during 1,436 MSEK totaled ments n iln,etra nt ae wr ME 9.Te operations The 98. MSEK were sales net external Finland, In The 221. MSEK were sales net external market, Danish the On 1 of as fee subscription monthly the on increase 20 SEK The decided Agency, Telecomand Post National Swedish the PTS, were products access additional quarter, first the During whole-developedforcontinuouslythe arebeing productsNew On the consumer market,Telia Networks launched a service that anetwork-based exchange withintegrated fixed, Centrex 2000, IP-VPN Planet, Teliaservice introduced newly the for Demand Telia increasing on quarter the during continued were Efforts The nationwide fiber-optic network was further expanded and in The businessarea delivered 26,000broadband Internetconnec-

9 TELIA INTERIM REPORT JANUARY–MARCH 2001 10 TELIA INTERIM REPORT JANUARY–MARCH 2001 sr.ProLane services for users. private networks (Telia ProLane of VPN) and number large a for connections Internet high-speed need that companies at aimed connections fixed on based access broadband vate consumers andsmallbusinesses. a Teliasecurity Antivirus, application is that is quarter specially the adapted to during pri- launched service Another Internet. the over Administration’sregistryRoad SwedishcarsNational the of carsin process to able then are which dealerships car as such businesses by used are services The cards. ID electronic and signatures tronic with services launched at the beginning ty, of the year such as elec- submitting thecard number over theInternet. which without payment a make to card credit a use to Direkt, possible it makes Transaktion Säljabonnemang Telia as such duced intro- were services quarter, the During received and Internet. the oversecurely made be to payments enable that solutions ment there In is electronic huge commerce, demand munications. on pay- electronic commerce and com- hosting (web hotels etc.), (web TV), was great demand on the business market for services in streaming network rose from 78,000to86,000. fixed the in access Internet dial-up with customers of number The quarter. the during customers 8,000 of increase an subscriptions, Internet with customers paying 38,000 and capability, broadband Stofa hadinstalled211,000cable TV connectionswith the quarter, also of end the At Stofa, connections. Internet for demand company increased showed TV cable the through provider broadband during thefirst three months. 711,000 to 687,000 from increased access dial-up with customers Internet of number the market, Swedish the On strong. remained to 822,000 from 918,000 households. quarter the during increased customers band broad- potential of number the and cooperatives, building and ers were connections made perweek attheendofperiod. broadband 3,000 approximately and 48,000 to 27,000 by period the during rose customers broadband paying of number The LAN). and (ADSL broadband of delivery of rate its increasedgradually Telia Services Internet market, Swedish the On The price level was three percent lower thanthepreceding year. for access increased during to the MSEK quarter 436. by 28 percent, primarily attributable to huge Net demand sales for Internet access. Thegrowth is precedingyear. periodthe percent same 25 fromthe up 532, MSEK totaled months three first the for sales net External Telia InternetServices netet 0 0 626 50 2,108 90 –1,008 –994 454 –192 –172 535 –282 –235 Investments Operating income Underlying EBITDA Net sales SK20 002000 2000 2001 MSEK netet 7 0 537 50 1,750 377 –911 67 –163 436 –208 1,819 427 532 Investments Underlying EBITDA Net sales Sweden externalof which Several services were launched in the ProLane product family, product ProLane the in launched were services Several Another high-priority product area is security and confidentiali- There services. offersTeliaInternet-based also Services Internet where thebusinessarea hasoperations asa The Danishmarket, Additionalgeneral own-agreements were property with signed ead o da-p nent ces vr SNad ISDN and PSTN over access Internet dial-up for Demand fwihetra 3 31 1,462 351 432 externalof which a–a a–a Full Year Jan–Mar Jan–Mar development of Telia’s www.startsidan.telia.se, which is one of the of one is which of development Telia’swww.startsidan.telia.se, is a portal the business area April.The at launched the beginning of tent providers and are made accessible on the con- broadband with portal cooperation that in developed are services The munications. data and com- information, news, are mainly within entertainment, developed services The market. consumer Swedish the to adapted specially services broadband developing is Services Internet Telia ProLane ISP)were during thequarter. launched (Telia parties third to access Internet provide that customers for ciation regarding the price increase for group-based subscriptions. group-based for increase price the regarding ciation building cooperatives property and the Swedish Asso- Houseownersowners, with negotiate also will Services Internet Telia tember. vidual connections from the current SEK 250 to SEK 325 as of 1 Sep- why a decision has been made to increase the monthly fee for indi- com hemwillbetransferred to Telia InternetServices. theSwedish cable TV business strengthen thebroadband initiative, In order to further report continued negative earnings during 2001. to expects area business the and –235 MSEK totaled quarter the duringEBITDA Underlying customers. of largestream the handling customer forservices and building help IT desk systems, services for entail costs for which the development of access products and services services, as well Internet-based as for market broadband a up onacontinuous basis. onthebroadband portal will belaunched New typesofbroadband service visitors aswell asregistered users. unique of number the both in increase enormous wasan there tal, Immediately after the launch of etc. the broadband por- e-mail, net, most popular portals in Sweden with a large number of users for Inter- the Brazilian mobile operator Tess. The divestiture is expected to expected is divestiture The Tess. operator mobile Brazilian the during thesecondquarter. completed be to areestimated sales All company. Dutch a to vices Ser- Response companyDirect center call the regardingof sale the AB,Telia Swedtel AB and Agreements were Validationalso AB. made ProSoft Telia AB, TAInformation Teleadress AB, Networks Swedia AB, Respons panies Multicom AB, Security Telia AB, Dokumentation the sale to Industri Kapital of 51 percent of the holdings in the com- content of the directory company Panorama Polska to Eniro and for of2001. the first quarter Sloveniaduring in SI.Mobil company associated the as well as sold were Combinator Teliacompanies and Trading owned wholly The ations andthelistingofdirectory company Eniro. focus efforts in the autumn of 2000 with the sale of some 15 oper- and refine its introduced The TeliaGroup companies. divested the in retain to decided that Teliahas shareholdings the manages and Telia Equityisresponsible for theGroup’s refine andfocus strategy Telia Equity netet 1 205 7,185 2,015 5,419 1,624 19,050 512 –276 126 4,221 155 3,826 204 Investments Operating income Underlying EBITDA Net sales SK20 002000 2000 2001 MSEK fwihetra 110 ,9 6,450 1,590 1,180 externalof which In order to create attractive, competitive broadband offerings, broadband competitive attractive, create to order In Today’s price level for broadband connections is too low. This is This low. Today’stoo is connections broadbandforlevel price building on efforts major making currently is area business The At the beginning of April, Telia divested its financial interests in Teliainterests financial its divested April, of beginningAt the the of sale the for signed were agreements quarter, the During a–a a–a Full Year Jan–Mar Jan–Mar ered.Cs flw rm prtn atvte ws SK –544 MSEK was activities operating from flow Cash year-end). ings MSEK13,517(12,961). earn- retained and year-end), at (36,459 37,015 MSEK was Equity Group contributions from subsidiaries. reduced to due primarily (2,895), 372 MSEK to decreased tax and appropriations before Earnings subsidiaries. to billed was (5,293) andtheGroup’s internalbankingoperations. units, also company parent comprises several Group support executive management The functions, services. network of provides production and basic operation, and construction, development, network fixed for operations Swedish Group’s the contains Stockholm, in The parent company whose BoardTelia of AB, Directors is registered Parent Company primarily are 2000 attributable toincreased in shareholding in Tess. investments substantial These hem. com ings from associatedcompaniesandnon-recurring items. nator. primarily from totaling the MSEK sale 9, of Telia Trading and Combi- 104 in Non-recurringthe precedingitems include year. capital gains ings. while Tessearn- on negativeimpact a had Eniro, within issue share new a and SI.Mobil of sale the from gains capital to attributable chiefly is improvement The year. on year –244 MSEK with pared 31,000. to 9,000 by increased Internet broadband with customers paying tions surged by 59,000 to 252,000 during the number period.The of connec- broadband installed of number The interactiveservices. of ing the cable television network to broadband and the development underlying com EBITDA hem, fell due to major initiatives for upgrad- Within growth. earnings healthiest the showed ProSoft and Credit increase was Swedia Networks,Telia MSEK 97 for comparable units. thecable TV businesscomhemandNeterna. dia Networks, Swe-bystrongest Thegrowth was reported percent. 8 by units ble External net sales ness increased area forduring compara-the year. Telia SatellitandtheRussiancompany tion, Telix. TeliaInnova-Business Telia Kundutbildning, Unite, OverseasGroup, Telia the Kredittjänster, Sergel Credit, Telia Finans, Telia hem, com Service Also and included were InfomediaTelia Partner, Installation. Relacom,Telia Neterna,Telia above-mentioned Systems, companies, employees. months of 2001 and divestitures under contract involve over 10,000 percent. 47.3 which Teliacontrols of Eniro, on offer public a made 2.3 iscomprised ofathree-year loan. while theremaining GSEK equivalent toGSEK4.6was paidincash, amount an price, purchase the Of 2.7. GSEK of gain capital a yield The balance sheet total expanded, to MSEK 94,644 (91,494 at (91,494 94,644 MSEK to expanded, total sheet balance The Net income after appropriations and tax was MSEK 658 (2,155). 4,857 MSEK which of (6,333), 5,640 MSEK were sales Net in 162 MSEK including 512, MSEK to amounted Investments Telia Equity reported operating income of MSEK 155 after earn- MSEK with compared –30, MSEK totaled items Non-recurring com- 247 MSEK totaled companies associated from Earnings The period. the for 78 MSEK by increased EBITDA Underlying The divestitures led to a decline in external net sales for the busi- in addition the to business the Duringarea the included, quarter, three first the and 2000 during completed divestitures The Gialle Pagine Seat company directory Italian the April, 23 On and transferring theinvoicing systemoperations tosubsidiaries. decline in the workforceyear-end is due to streamlining 2000).The ed companies. marily attributable tocapitalinfusionsinsubsidiaries andassociat- pri- were (2,721) 1,458 MSEK totaling investments Other lations. 1,041 (828) in tangible primarily fixed fixed assets, telephony instal- untaxed reserves) improved to52.2percent (51.9percent). Liquidfundswere MSEK593(538). year-end). at (6,463 6,559 MSEK to somewhat, expanded borrowings Net (–6,844). while operating cashflow was MSEK –3,669 (1,312), President andCEO Marianne Nivert 10May 2001 Stockholm, cial position. ures willsustainprofitability. meas- streamlining the with together which stabilize, to expected initiatives. tives for broadband development and international carrier business ket are laying theground for growth insalesandearnings. market and establishment of Telia on the broadbandinternational carrier mar- a of expansion communications, mobile on focus The Outlook for 2001 eurmns f h Seih euiis xhne c o the Act.Accounts Annual Swedish or the Act with Exchange Securities comply Swedish to the of fails requirements report interim this that indicates Nothing has comparisoncome to to our an attention audit. that Areview issubstantially limitedinscope Accountants. Public Authorized of Institute Swedish the by issued ommendations rec- with accordance in report interim this reviewed have We Authorized Public AccountantAuthorized Public The number of employees as of 31 March was 614 (1,056 at (1,056 614 was March 31 of as employees of number The MSEK including (3,549), 2,499 MSEK were investments Total of component equity the (including ratio equity/assets The The ongoing refine and focus efforts will strengthen Telia’s finan- is operations network fixed Swedish the in structure price The initia- for costs by affected be will however, 2001, for Earnings rs on BGna ihgnFilip Cassel Gunnar Widhagen Ernst & YoungAB Torsten Lyth uios Review Report Auditors’ Authorized Public Accountant Authorized Public Accountant Authorized Public AccountantAuthorized Public tchl,10May 2001 Stockholm, 11 TELIA INTERIM REPORT JANUARY–MARCH 2001 12 TELIA INTERIM REPORT JANUARY–MARCH 2001 Group CashFlow Statements Group BalanceSheets Data Quarterly Group IncomeStatements prtn ahflw 306 257 2,9 –699 14 10,715 –26,969 –10,701 10,152 –27,398 –37,121 8,929 –2,597 –36,327 –3,026 –4,306 1,709 –3,512 486 Operating cashflow Cash flow from investing activities Cash flow from operating activities 52,121 54,064 54,799 12,857 13,592 Net sales e noe 21 ,0 12 0 230 ,5 89 ,1 480 1,118 682 2,528 869 682 1,609 3,481 1,755 1,609 1,150 3,040 2,390 3,634 2,505 1,244 4,549 308 12,397 2,445 3,616 3,382 5,218 13,066 172 3,436 3,466 488 2,348 11,771 3,343 7,408 14,887 356 2,305 206 3,260 12,857 291 10,357 267 7,930 13,180 2,857 3,221 13,487 7,658 811 3,180 14,540 502 3,790 13,592 3,348 Net income Income afterfinancialitems Operating income EBITDA Underlying EBITDA Net sales hnei eso iblt 8 4 32 7 1,513 –753 279 1,019 12,429 7,527 –151 322 1,005 6,767 16,480 20,235 210 26,818 688 6,934 9,123 7,242 41 7,527 55 76,604 3,246 16,956 24,425 28,086 13,166 20,876 320 7,826 –1,003 7,623 84 76,604 122,715 513 3,525 4,106 21,014 7,623 1,594 10,733 9,861 –164 7,003 508 122,715 83,305 7,527 1,352 16,726 3,287 24,425 2,862 12,315 26,149 83,305 7,602 127,062 20,235 522 18,567 512 3,609 closingbalance 127,062 Net interest-bearing liability, Change inpension liability Change innetborrowings openingbalance Net interest-bearing liability, 1,286 Cash flow for theperiod Cash flow from financing activities 0.17 0.39 –4 0.30 Total equityandliabilities Non-interest-bearing liabilities 0.62 loans Short-term 4,222 Long-term loans –1,754 1.48 Other provisions 8 0.84 Provisions for pensions Minority shares Equity 10,278 Equity andliabilities 0.10 –1,447 3.50 Total assets 34 Cash andbankdeposits 0.06 5,946 2 5,980 8,179 –606 2.47 2.75 20,915 12,006 0.10 –289 11,717 2,390 3 –1,049 723 21,036 –31,206 –805 0.84 9,435 8,783 –652 291 –208 –14,887 –33,028 –1,197 20,884 Earnings pershare (SEK) –3 8,493 0.10 3,382 3,436 54 –16,326 –33,915 –1,996 5,106 7,128 811 502 –16,581 –7,751 –309 642 4,954 1,510 –3,876 –8,638 –157 Earnings pershare (SEK) 145 –4,131 Net income Minority shares Taxes Income afterfinancialitems Net financialincome/expense Operating income Share ofearningsinassociatedcompanies net Other operating revenues andexpenses, andR&Dexpenses administrative, Sales, Gross income Costs ofproduction urn netet 7 37 7 1,264 971 178 773 18,023 33,318 2,146 307 22,335 1,209 43,807 25,198 21,825 76 33,433 796 2,104 23,576 45,686 26,351 Current investments Receivables Inventories etc. Financial fixed assets Tangible fixed assets Intangible fixed assets Assets SK20 00Mr20 001999 2000 Mar2001 2000 2001 MSEK 1999 MSEK 2000 Mar2001 2000 2001 MSEK SKQ Q Q Q Q Q Q Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 MSEK Non-recurring items & pensions 30 6,937 –116 201 1,316 –7 –273 –362 –542 –542 –564 227 –362 –273 –153 –7 –1,846 1,213 –1,872 642 1,316 –1,890 201 –710 –2,044 –1,836 –759 –116 –1,860 –370 6,937 –2,099 –157 30 –2,427 –2,410 &write-downs amortization Depreciation, Share ofearningsinassociates pensions & Non-recurring items 01 00 1999 2000 2001 a–a a–a p 00 ulYa Full Year Full Year 2000– Apr Jan–Mar Jan–Mar a–a a–a p 00 ulYa Full Year Full Year 2000– Apr Jan–Mar Jan–Mar 1Mr3 a 1Dc31Dec 31Dec 31Mar 31 Mar 828 517 598 32,893 55,988 35,187 58,298 921 395 902 20,369 29,072 23,915 29,291 0120 001999 2000 2000 2001 Geographic Segment Breakdown Areas Group Business Investments 26,017 6,634 7,421 626 7,185 –141 –141 0 7,185 –5,097 –1,086 0 659 7,121 626 3,334 5,419 –1,624 213 –25,489 833 6,197 –1,427 7,421 5 1,624 19,050 341 –1,008 6,450 –24 108 –121 32,613 6,634 2,108 7,950 –994 2,015 7,834 1,819 –4,094 –785 0 144 6,919 –1 –975 26,017 1,353 39,723 –854 11,257 50 –402 30,205 3 2,442 –5,009 58 –353 32,653 –276 4,116 –98 1 1,585 –20 –572 –244 1,488 3,012 104 4,221 398 749 126 2,122 14,556 –192 1,590 3,396 –4,804 130 –35 0 4 20 12,365 454 –29 – 35,910 488 –172 4,226 427 –263 Investments 512 inassociates Equity participation 871 9,363 Operating capital 741 9,288 –262 –143 0 1,001 Operating income 2,928 –154 –2,968 1,603 –1,961 7,626 Share ofearningsinassociates –1 118 pensions & Non-recurring items 90 andwrite-downs amortization Depreciation, 22 909 51 6,052 –20 155 0 –4,423 Underlying EBITDA –238 7,299 563 –114 – External netsales 675 3,300 Net sales –30 247 3,826 2,994 1,436 1,881 775 –1,176 204 845 –282 1,180 16 6 2,481 11 –22 0 –15 535 1,147 –40 1,127 532 34,090 –235 Investments inassociates Equity participation 8,189 Operating capital –266 509 8,590 –414 Operating income –309 8,905 –42 –453 2,837 7,475 Share ofearningsinassociates pensions & Non-recurring items 1 andwrite-downs amortization Depreciation, –32 1,002 Underlying EBITDA 34,381 –1 407 External netsales –354 – 740 Net sales 4,062 2,309 –1,254 27 1,134 3,614 –16 –98 Investments inassociates Equity participation Operating capital Operating income –738 Share ofearningsinassociates pensions & Non-recurring items andwrite-downs amortization Depreciation, Underlying EBITDA External netsales Net sales netet ,5 21 5 76 1,323 726 –294 3,909 211 759 883 5,994 –267 3,037 244 262 281 4,828 –40 –32 923 4,901 703 22 772 3,565 1,555 1,068 –106 4,714 –20 6,094 28 238 475 755 6 23,153 1,765 50 –562 6,026 –4 0 4,244 192 392 11,625 –0 677 7,749 –136 –65 56 885 –173 3,945 14 14 –253 1,942 32,606 –549 –42 –1,607 7,611 24,621 1,772 829 30,007 –131 2,164 Investments –4 31 inassociatedcompanies Equity participation 11,176 Operating capital –3 14,044 Operating income Share ofearningsinassociatedcompanies &write-downs amortization Depreciation, –616 1,034 External netsales 918 230 –1,683 9,477 Number ofemployees Investments 851 in associated companies Equity participation 672 Operating capital Operating income Share ofearningsinassociatedcompanies &write-downs amortization Depreciation, 15,897 External netsales 3,928 657 9,649 Number ofemployees 802 347 14,197 3,188 942 9,103 Number ofemployees 702 4,190 Number ofemployees ubro mlye 2,0 277 6 67 708 637 669 2,767 25,808 Number ofemployees SKMbl are ewrsSrie qiywd total wide Equity Services Networks total Carrier wide Mobile Equity Services Networks total Carrier wide MSEK Mobile Equity Services Networks Carrier MSEK Mobile MSEK Jan–Mar 2000 Jan–Mar 2001 forma)Jan–Dec 2000(pro forma)Jan–Mar 2000(pro forma)Jan–Mar 2001(pro SKSee onre einErp ol total world Europe region total countries world Sweden Europe region countries Sweden MSEK MSEK nentoa nentGop Group Group- Internet Group Group- International Internet Group Group- International Internet International te odcBli eto eto Group Rest of Rest of Baltic Group Other Nordic Rest of Rest of Baltic Other Nordic 47,742 13,298 75,042 12,006 13,087 54,064 54,064 12,758 41,449 12,857 12,857 13,805 82,482 13,592 13,592 12,758 41,449 12,857 29,936 13,805 82,482 13,592 29,868 30,589 29,936 30,589 –1,197 –8,222 –1,836 –2,410 –1,836 –2,410 8,338 4,644 3,382 1,316 3,260 3,659 3,348 4,644 3,382 3,659 –157 –157 642 811 642 811 30 13 TELIA INTERIM REPORT JANUARY–MARCH 2001 14 TELIA INTERIM REPORT JANUARY–MARCH 2001 Notes to the Accounts Notes tothe elsictos 2 –6 1 –2 5 44 – –228 12 –1,322 54 45 253 7,342 –387 –579 2,431 16,084 –115 – 540 21 –128 –119 0 34,801 3,581 –7,261 –36 –18 –40 –31 33,318 4 – –7,352 708 15 – 43,807 –86 854 –54 –1,999 – –255 23,402 59 1,844 123 –46 1,366 –286 0 – 81 2,146 – – –867 –1 25,198 – –417 0 Exchange rate differences Fixed-asset contributions from cable TV customers Write-downs for theperiod/reversals ofwrite-downs forDepreciation &amortization theperiod Reclassifications Operations divested Sales/discards Operations acquired Purchases Opening balance 2: pi,2 a 00 2824000 .0 – – 2,932,757,377 – – 323,840 2,851,200,000 9,603,840 2,851,200,000 8,800,000 8,800,000 480,000 1,036.80 3.20 3.20 1,000.00 1,000.00 – 3.20 3,001,200,000 2,842,400,000 8,800,000 8,800,000 150,000,000 31Dec2000 Share capital, settlementdate16June 2000 New share issue, 20May 2000 324:1 split, 20May 2000 Bonus issue, 31Mar2000 Share capital, 31Dec1999 Share capital, aktvleo utdscrte 2 – – – 613 – –82 – – – 29,344 – – – 32,893 19 – – 95 2 29 32,893 – –231 –6 2,127 –306 –87 – 55,646 29 – – –211 86 –161 – 2,767 – – –315 –181 Net incomefor theperiod Translation differences aftertaxonforward contracts usedasequityhedge Gains/losses oncashflow hedging instruments Market value ofquotedsecurities Differences arising from thetranslation offoreign operations Share ofearningsincompaniespreviously outsidetheGroup Transactions withoutsideparties booked directly toequity Underwriting expenses aftertax, New share issue Dividend Adjusted openingbalance Gains/lossesonfair value andcashflow hedging instruments – Market value ofquotedsecurities – Changes inaccountingpolicies(IAS39): Opening balance netet 058 557 ,6 362 5,170 6,172 –1,802 3,602 1,072 4,741 –50 2,865 4,448 1,292 –1,714 7,103 25,527 –160 1,112 –203 513 137 30,739 10,578 –256 6,988 –107 5,094 –206 26,287 14,274 32 –19 46,469 –9 718 –1,312 219 –6,581 Investments inassociatedcompanies Equity participation Operating capital Operating income Share ofearningsinassociatedcompanies &write-downs amortization Depreciation, External netsales hr aia,3 a 01 ,0,0,0 32 96380 3,001,200,000 9,603,840 3.20 3,001,200,000 33,318 31Mar2001 Share capital, 43,807 45,686 2,146 25,198 582 Closing balance 26,351 7,856 6,630 –1,184 1,492 8,338 266 7,052 628 Closing balance 1,316 408 30 173 3,754 inassociatedcompanies /losses Excluding capitalgains 24,905 Total Capital gains/losses Number ofemployees Year 2000 compliance – – – – –604 –604 –722 – – – 189 –226 – –144 854 – – –144 1,047 – – –176 – 17 – Year 2000compliance expenses /integration Initial publicoffering Common pensioncommitmentsetc. Personnel restructuring SK20 20 19 20 20 1999 2000 2001 1999 2000 2001 MSEK Changes inshare capital Equity Fixed assets Non-recurring itemsandpensions Jan–Dec 2000 MSEK SKSee onre einErp ol total world Europe region countries Sweden MSEK MSEK ubro a au,Saecptl Average number Share capital, Par value, Number of hrs E/hr SK ofshares kSEK SEK/share shares 1Mr 1Dc 1Dc 1Mr 1Dc 31Dec 31Dec 31Mar 31Dec 31Dec 31 Mar nagbefie ses Tangible fixed assets Intangible fixed assets te odcBli eto eto Group Rest of Rest of Baltic Other Nordic a–a a–a p 00 ulYa Full Year Full Year 2000– Apr Jan–Mar Jan–Mar 0120 a 0120 1999 2000 Mar2001 2000 2001 8 136 ,3 856 –781 8,566 7,533 1,316 283 1Mr3 a 1Dc31Dec 31Dec 31Mar 31 Mar 598 283 283 29,344 32,893 32,893 55,988 828 517 598 32,893 55,988 35,187 58,298 0120 001999 2000 2000 2001 9 230 028 4,222 10,278 2,390 291 – 270 – –1,400 12,750 –1,470 – – – – 47,742 13,298 75,042 12,006 54,064 29,868 –1,197 –8,222 at fair value and taken up in the balance sheet. The standard also standard The sheet. balance the in up taken and value fair at fair value. at reported are however, value, fair in changes against hedged are Financialarethat liabilities notheldfor tradingthat and tizedcost. directly toequity. booked is trading of date the to up change value the that means which sale, for available as securities quoted considers Telia amortized cost. their at valued are e.g. participations, and determined, shares reliably unlisted be cannot value fair whose assets and receivables arising Assets fromheld to ownmaturity, lending value. fair at stated be must exceptions certain with assets financial that means standard this of Application 2001. January 1 on effect took Financial Reporting.” “Interim 34 IAS with accordance in prepared was report This den. Swe- in principles accounting accepted generally and law Swedish with accordance in prepared were AB Telia company parent the applying International Accounting Standards accounts (IAS).The for prepared in ActaccordanceAccounts with Annual and the Swedish the most the recent annual Teliareport, Group’s accounts have been Consolidated financialstatements. Accounting Policies otnetast – – – Collateral pledged Contingent assets neetsas neetpi – –4 –4 – – – – – 412 – – – – 15,277 635 –646 15,345 676 –12,218 12,675 412 23,173 –646 15,277 –12,218 12,675 676 13,298 412 15,345 –6,597 – 7,285 – 23,173 15,117 –6,597 489 7,285 – 13,298 15,185 – 489 23,700 13,805 paid Currency swaps, received Currency swaps, interest paid Interest swaps, interest received Interest swaps, Other financialassets Other holdingsofsecurities Participations inassociatedcompanies oa 133 1,324 6,832 165 12 10,114 1,383 6,662 165 35,454 191 164 9,937 11 12,220 35,070 6,832 112 199 10,114 11,831 2,342 12 – –12,855 38,862 995 13,483 36,271 22,158 6,832 10,114 212 –12,668 551 29,278 2,281 –2,085 11 13,462 1,106 36,138 22,031 – 16,217 Total –180 28,284 Other contingent liabilities 39,709 –2,066 212 1,484 FPG/PRI 13,483 551 40,206 22,129 etc. Credit andperformance guarantees, 16,217 Contingent liabilities 28,284 360 Total –180 29,902 –1,408 13,476 Blocked fundsinbankaccounts 39,728 1,484 8,610 22,003 501 40,431 –8,640 –1,408 12,610 360 27,066 2,155 8,610 501 30,604 096 –8,640 –2, 12,595 26,603 437 2,155 Sell foreign currency Buy foreign currency Forward exchange contracts (portfolio) –2,096 437 Liabilities Forward exchange contracts paid Currency swaps, received Currency swaps, interest paid Interest swaps, interest received Interest swaps, loans Short-term Long-term loans Assets Forward exchange contracts SK20 2000 2001 MSEK SKvlevlevlevlevlevalue value value value value value MSEK otnetast,contingent liabilities Contingent assets, Financial instruments less book value of accrued interest –763 –829 –829 –829 34,042 –199 –829 34,758 –551 –763 38,464 –501 book value ofinterest-bearing liabilities less bookvalue offorward exchange contracts less bookvalue ofaccrued interest According to IAS 39, derivatives should be continuously valued continuously be should derivatives 39, IAS to According Financial liabilities will continue to be valued primarily at amor- Measurement” and Recognition Instruments: “Financial 39 IAS For aswell thefirst asin quarter 1Mr 31Dec 31 Mar okMre okMre okMarket Book Market Book Market Book 1Mr20 a 01(r om)31Dec2000 forma) 1Jan2001(pro 31 Mar2001 accounting principles, chiefly regarding the calculation of pension of calculation the regarding chiefly principles, accounting business areas have inthisreport beenrestated pro forma. figures Accordingly, for 1 April the 2001. first quarter of 2001 for the above). “Equity” note the (see equity to directly booked is tax after ance bal- opening the of adjustment accumulated an policies, the changed by affected are that items those for regulations, transitional date. reporting the per as derivatives embedded include that agreements no are for policy There 39. applied IAS with complies investments net for accounting hedge previously The equity. to directly booked are flow cash hedge to used derivatives outstanding in Valuechanges and arethe hedgedcharged hedging, loan, to value the income fair statement. for used derivatives in changes value Net investments. Loans are also used for hedging foreign exchange risks regarding net rates. exchange and rates interest in fluctuations to exposure trol est rate and currency swaps and primarilyforward to contracts, con- inter- as such Teliaderivatives, uses investmentsforeignin entities. net of hedges and hedges flow cash hedged value, fair liabilities in changes against or assets for rules accounting hedge contains agbefie ses ,7 4,235 1,026 4,279 867 Associated companies/companies Indefeasible RightsofUse(IRU) Tangible fixed assets usd h ru 92 145 902 outside theGroup SK20 2000 2001 MSEK Contractual investment obligations wds GAAP. Swedish Pro forma accounts. Inaccordance withthe IAS 39may notbeappliedretroactively. A dfes n eti rset fo Swedish from respects certain in differs IAS A new Group structure was implemented on 1Mr 31Dec 31 Mar ,4 5,406 6,048 15 TELIA INTERIM REPORT JANUARY–MARCH 2001 16 TELIA INTERIM REPORT JANUARY–MARCH 2001 a permit. thou- 1.5 at set sandths of the sales that the operator is has for activities that require fee The PTS. with registration to subject tors opera-other must as Agency’sactivities, the fund to (PTS) Agency sales orincome. nor agencies, its of Telia’sshare net significant a represent companies state, state-owned Swedish the Neither terms. commercial conventionalon ratesmarketand at companies state-ownedfrom business in competition with Likewise,Telia purchases Telia. services Certain government-owned companies conduct commercial terms. conventional on and operators other with competition in panies andstate-owned com- itsagencies, is offered totheSwedish state, TheSwedish state. GAAP. not entailedany new reconciling itemswithU.S. The transitional regulations differ somewhat from IAS39. retroactively.applied be not may 133 FAS used. longer no is rities” Thepreviousitem reconciling secu- quoted “Publicly 133. FAS with accordance in are above) (see 39 IAS to transition the with made principles accounting the to changes The 2000. June 15 after ning begin-year financial a for applied be must Activities” Hedging and Group’s the 2000 annual report. in provided is GAAP U.S. against reconciliation plete GAAP. U.S. ing effects onthenetincomeandequityof Telia Group. 39 above). IAS of description the valuefairhedged in against(cf. changesities derivatives andpublicly quotedsecurities andaccountingfor liabil- in changes value unrealized for accounting to regard with mainly then over theremaining employment period. of either pension obligations or the market and value of plan assets, the value goes outside a to “corridor”equal 10 percent of the greater areitems recognized such onlywhen accordanceIAS, In with tions. Swedishregula-accordancewith in statement income the in nized recog- are expected the than other changed outcome and/or of assumptions Effects assets. plan on return anticipated with along turnover employee and rates discount inflation, raises, pay pated assumptionsmust bemaderegarding antici- to Swedish standards, ments. liabilities and pension expenses and accounting for financial instru- Deferred tax –467 –202 –345 –345 1,233 – –82 –202 56,876 721 293 – 35,706 – 61 –467 1,093 59,500 –219 576 – 44 55,988 10,489 10,278 –140 35,187 as perSwedish GAAP 2,232 2,390 equity Shareholders’ –17 Deferred tax 58,298 Financial instruments 130 243 Pensions equityasperIAS Shareholders’ GAAP Net incomeasperSwedish Deferred tax Financial instruments Pensions Net incomeasperIAS SK20 00 2000 2000 2001 MSEK Related transactions party Eniro. Telia pays annual fees to the Swedish National Post and Telecom otherwise have 2001 of quarter first the during operationsThe FASB 133 Statement “AccountingNo. for Derivative Instruments The application of Swedish accounting principles has the follow- IAS from differ standards Swedish instruments, financial For in When according contrast calculating to pension IAS, liabilities, ei on a atcptn itrs i Eio B Several AB. Eniro in interest participating a owns Telia IAS differs in certain respects from U.S. GAAP. A com- A GAAP. U.S. from respects certain in differs IAS The products Teliaand services Group’srangeof a–a a–a Full Year Jan–Mar Jan–Mar uoe a rsle i a apd aac bten upy and supply between balance warped a in resulted has Europe, in telcos most for outlooks credit worsened generally with bined ing cashflow. negativea operat-and refinancingneeds wereresultof activities a borrowing The kronor. Swedish into swapped been have currencies foreign in denominated borrowings the of Most period. the utilized during also was program, ECP Group’s the through including ing, with bonds borrow- FTN Short-term terms to maturity between four and and ten years. EMTN of form the in borrowing long-term additional on Teliataken has maturity. to term five-year a has and loan is long-term program.The ing MEUR300 in the Group’s EMTN During the first Group quarter,the took a new public Euro loan total- ing interest yieldedanon-cashcapitalgain ofMSEK8. Theof dilution Telia’scompany AB. WirelessCarparticipat- Sweden participating interest yielded a non-cash capital gain of MSEK 245. MSEK gainof capital non-cash a yielded interest participating This dilutionof GermanyTelia’s for payment part initsown shares. value ofMSEK528. infrastructure and network capacity through swapping for a market Teliareceivedhad date, sheet balance the of As valuereceived. the filled all deliveries as per value contract,the delivered can differ from reported as acquisitions or both divestitures.Before parties have ful- not were accounts consolidated the in transactions the value, and As the swapand capacity. contracts concern assets of similar nature swap contracts are ness, signed with other carriers for infrastructure Infrastructure/capacity swaps. cases onconventional commercial terms. all in companies, associated other and these from extent limited MSEK 109. of amount the in Ltd Mobile companyBharti associated Indian the ties outsidetheGroup. bond equaling MSEK 671 on that part of Tess’s borrowing from par- Teliasurety term a had date, reporting the of As operator TessS/A. sition ofthecompany’s stake inEircom. granted primarily sourceto finance totaling the MSEK acqui- 6,459, Com- to loans interest-bearing Teliahad period, the of end the At Comsource in cent. turn owns 35 percent of the shares in Eircom plc. per- 60 ownsother Netherlands the the of KPN ComsourceUnLtd; acquisition oftheremaining shares inPanorama Polska. the pursued not Teliahad date, reporting the per As value. market Eniro anirrevocable optiontoacquire allshares insaidcompany at give companydirectoryPanoramaPolish werethe Polskaacquired, if outstanding shares in the at present 49 percent holding in would, Telia Furthermore, 2001. of Varumärkequarter first the during TIM In accordance Eniro took with possession the of contract, the operations. shares in Eniro’s in used trademarks certain owns which AB, with the active exception in of directory TIMVarumärke operations, subsidiaries those in shares outstanding all Eniro to Teliadivested Eniro’s the listing Stockholm on Stock Stockholmsbörsen, Exchange. for 2000 in Eniro betweenTeliaand established were agreements Financing activitiesandrating Non-cash transactions The com- need for extensive borrowing in the telecom industry, WirelessCar. Eniro. Other. Bharti Mobile. Tess. Comsource/Eircom. Telia owns a participating interest in the Brazilian mobile Brazilian the in interest participating a Teliaowns The associated company Eniro AB acquired operations in operations acquired AB Eniro company associated The In addition,Telia In buys addition,Telia and sells services and products to a nte prnr a etrd no h associated the into entered has partner Another As of the reporting date,Telia had receivables from Telia owns 40 percent of the Irish company Irish the of Teliapercent 40 owns Within the international carrier busi- od’ efre uiso ei.Tersl a htSadr & Standard that was result The of Telia. audits performedMoody’s the sameextent asindicatedby therelative costofborrowing. which meant that the total period, interest costs did not increase to other the general interest rate level the was adjusted downwardhand, during On operators. telecom other most for as extent same the to not still though on impact Telia’sborrowing, of cost relative negativea had also has development This capital. loan for demand emr 14 0 7 6 1 – 1,291 137 – 129 11 1,308 145 244 63 – – 1,330 164 1,745 424 1,348 78 – – 1,935 170 630 1,358 108 2,206 – 120 175 1,361 838 124 2,638 203 175 850 866 3,257 446 854 3,259 485 Other Nordic countries Sweden Cable television Denmark Sweden Internet Sweden ISDN channels Other Nordic countries Norway Sweden Mobile telephony eto ol 7 6 3 1 7 – 7 19 31 69 74 2) Telia InternetServicesandCable TV. Operational information Financial information, Investor Relations, www.telia.com, 1) For information: further Rest ofworld emr n iln 32 6 39 7 11 12 1996 6,032 6,010 1997 181 5,965 1998 275 5,889 1999 339 5,783 2000 362 5,762 2001 372 Denmark andFinland Sweden PSTN Fixed telephony, (‘000) Subscription Trends During the period, the rating institutes Standard & Poor’s and Poor’s & Standard institutes rating the period, the During 2) 1) 1MrFl erFl erFl erFl erFull Year Full Year Full Year Full Year Full Year 31 Mar 9 78 0 4 21 106 231 440 604 738 792 rial effect on Telia’s costofborrowing. Europe and the rating changes are not considered to have any mate- in companies telecom creditworthy most the of Teliaone remains ratings, changed the after even Altogether, institutes. rating both from rating possible highest the at remains borrowing short-term Telia’sfor rating credit The Stable. Outlook with A1 to Aa3 from Moody’s look decided to to Negative. adjust Telia’s long-term rating Poor’s but confirmed changed the Out- Telia’sAA rating, long-term 17 TELIA INTERIM REPORT JANUARY–MARCH 2001 18 TELIA INTERIM REPORT JANUARY–MARCH 2001 warrants. 21,000,000 of the warrants are issued so that Teliamay so issued are warrants the of 21,000,000 warrants. 27,500,000 of maximum a to amount shall warrants detachable of number the and 275,000 SEK of maximum a to amount shall The nominalamount ofthedebentures subscription ofnew shares. warrantsfor detachable with debentures issue to decided Meeting time ofexercise are employed withinthe Telia Group. 2005.This is mainly under 31, the condition that such persons at the 2003 stock options and not not earlier later than than MayMay 31, stock to transfer themto athird party. The 2001. stock 18, Stockholm options shall not 14–May be considered securities the Mayand it shall not period be on possible the Telia-share during the exchange of price quoted age in TeliaAB at a subscription price equaling 115 percent of the aver- share new a of warrantsubscription forone exercise of to tlement enti- carry shall option stock Each options. stock 21,000,000 than affected employee shallreceive options. 1,000stock taxoradministrative for reasons. options legal, stock allot to unsuitable considered is it where tries The offering isnotbeingmadetoemployees inthosecoun- added. A maximum of about 5,000 employees in these companies could be program.options stock the in included be employeesshall manent ening of ownership the occurred per- not later 2002, than January 1, In companies in the Equity business area in which no broad- ership. in the Equity business area that are subject to a broadening of own- ment basis in the Teliaemploy- Group permanent except employees a in those companies on employees all includes This employees. with thefollowing maintermsandconditions; program options employee an implement to Board, the by posal pro- the with accordance in decided, Meeting General Annual The 2001. rities Register Centre) onMay 18, the dividend is expected date, to be paid by VPC (The Swedish Secu- this record 2001.With with a record date of 0.50 Mayper share, 15, SEK of dividend a totaling share, per 0.30 SEK of dividend extra an The Meeting approved a dividend for 2000 of SEK 0.20 per share and new elected members oftheBoard. were Sundewall Caroline and Olofsson Lars Nivert, Marianne Augustsson, Peter reelection. declined had Kark Jan-Åke and Igel Anders Board. the of membersBirgitta reelectedwereJohansson-Hedberg Carlsson, Ingvar Bennet, Carl Petersson, Lars-Eric decisions The made attheMeetingincludedfollowing: 10. May on Meeting General Annual its held Telia Report from the Annual General Meeting Employee options program Dividend Board ofDirectors In order to implement the stock options program, the General the program, options stock the implement to order In allotted the exercise to right the have shall option-holder The more not of total a comprise shall program options stock The each whereby charge, no at allotted be shall options stock The 16,000 about encompass shall program options stock The attention to the need for greater equality between women and men. special devote shall committee The compensation. member Board regarding proposals present and members Board nominate to be The primary purpose ofthecommitteewill Chairman oftheBoard. the plus time, to four time from the Company the from in shareholders largest representatives of consist will which committee, nominating a establish to resolved Meeting General Annual The ber ofoutstandingshares ifallwarrants are exercised. increases. the of price programthe Telia-shareoptions if stock the of result a sold to offset the effect of the costs for social fees that may arise as be to order in issued arewarrants 6,500,000 and program options stock the from arising employees the to commitment the fulfill Nominating committee The total number of warrants will equal 0.9 percent of the num- Definitions

ARPU. Average monthly revenue per subscription. Notation conventions.To conform with Swedish and international standards, Adjusted equity. Reported equity less the proposed dividend. this report applies the following notations. Currencies: Swedish kronor SEK Capital employed. Balance sheet total less non-interest-bearing liabilities US dollars USD and non-interest-bearing provisions reported, and the proposed dividend. euro EUR Churn. Number of customers that have left the company expressed as a per- Prefixes: thousand k centage of the average number of customers. million M Debt/equity ratio. Net interest-bearing liabilities divided by adjusted equity. billion G EBITDA. Earnings Before Interest, Tax, Depreciation and Amortization. Operating capital. Capital employed excluding financial assets but including participations in associated companies and non-interest-bearing accounts Earnings per share. Net income divided by the weighted average number of receivable. shares. Return on equity. Net income expressed as a percentage of average adjusted Equity/assets ratio.Adjusted equity expressed as a percentage of the balance equity. sheet total. Total asset turnover. Net sales divided by the average balance sheet total. Interest coverage ratio. Operating income plus financial revenues divided by financial expenses. Underlying EBITDA. EBITDA adjusted for shares in earnings of associated companies, capital gains/losses (excluding in venture capital operations and Net borrowings. Interest-bearing liabilities less interest-bearing assets but from telecom investments outside the Nordic countries) and common pen- including participations in associated companies. sion obligations. For previous periods, also adjusted for costs of personnel Net interest-bearing liability. Interest-bearing liabilities and provisions less restructuring (including early retirement), year 2000 compliance, as well as for interest-bearing assets but including participations in associated companies. the IPO and preparations for the merger with Telenor. Net cash flow. Increase (–) or decrease (+) in net interest-bearing liabilities. Underlying EBITDA margin (underlying gross margin). Underlying EBITDA expressed as a percentage of net sales. rdcin ei B netrRltosadItlet oprt B nls rnlto:ItrebmSrkjntA.Printing/repr Interverbum Språktjänst AB. English translation: Investor Relations and Intellecta Corporate Telia Production: AB. AB, :Dr rfik.This was report printed on environmentally approved Duro paper. Grafiska. o:

Telia AB (publ), SE-123 86 Farsta, Sweden, Corporate Reg. No. 556103-4249, Registered office: Stockholm