Telenor is developing profitable mobile operations in international growth areas, while maintaining its position as market leader in Norway.

Annual Report 2004 KEY FIGURES (NOK in millions except net income per share)

PROFIT AND LOSS 2004 2003 2002 2001 2000 Revenues 60,752 52,889 48,668 40,604 36,530 Gains on disposal of fixed assets and operations 550 232 158 5,436 1,042 Total revenues 61,302 53,121 48,826 46,040 37,572 Operating expenses 54,700 45,561 49,146 42,863 33,943 Operating profit (loss) 6,602 7,560 (320) 3,177 3,629 Associated companies 718 1,231 (2,450) 8 237 (692) Net income (loss) 5,358 4,560 (4,298) 7,079 1,076 Net income (loss) per share in NOK – basic 3,07 2,57 (2,42) 3,99 0,75

US GAAP Revenues 67,801 52,826 47,879 40,581 36,481 Net income (loss) 5,639 5,036 (3,658) 7,004 1, 082 Net income (loss) per share in NOK – basic 3.22 2.84 (2.06) 3.95 0.76

BALANCE AT 31 DECEMBER 2004 2003 2002 2001 2000 Total fixed assets 71,359 68,346 74,162 66,095 80,881 Total current assets 16,735 17,764 15,296 16,528 12,804 Total assets 88,094 86,110 89,458 82,623 93,685 Shareholders equity 37,594 37,237 33,685 42,144 35,474 Minority interests 4,074 3,646 3,603 3,539 2,706 Total equity and minority interests 41,668 40,883 37,288 45,683 38,180 Total long-term liabilities and provisions 24,294 25,102 26,772 15,866 15,285 Total short-term liabilities 22,132 20,125 25,398 21,074 40,220 Total liabilities 46,426 45,227 52,170 36,940 55,505 Total equity and liabilities 88,094 86 110 89,458 82,623 93,685

US GAAP Total assets 101,171 101,088 97,511 90,129 99,776 Total long-term liabilities 34,882 39,255 33,957 24,758 46,972 Total equity and minority interests 42,430 42,535 35,799 42,944 36,304

CASH FLOW AND OTHER KEY FIGURES 2004 2003 2002 2001 2000 Net cash flow from operating activities 18,991 13,676 12,858 6,993 5,915 Net cash flow from investment activities (13,031) (3,454) (21,727) 20,891 (47,308) Net cash flow from financing activities (8,255) (7,887) 8,641 (24,366) 41,558 Investments: - Capex 1) 12,745 6,454 8,889 11,634 10,421 - Investments in activities 2) 5,809 563 12,411 7,212 40,251 EBITDA 3) 20,821 18,302 13,469 14,250 9,563

RECONCILIATIONS 2004 2003 2002 2001 2000 Net income (loss) 5,358 4,560 (4,298) 7,079 1,076 Minority interests 1,244 490 (358) (721) 66 Taxes 2,244 2,376 (480) 3,897 861 Net financial items (1,526) 1,365 2,366 1,159 934 Associated companies (718) (1,231) 2,450 (8,237) 692 Depreciation and amortization 11,623 10,597 10,236 7,251 5,821 Write-downs 2,596 145 3,553 3,822 113 EBITDA 20,821 18,302 13,469 14,250 9,563

1) Capex is investments in tangible and intangible assets 2) Consists of aquisitions of shares and paticipations including aquisition of subsidiaries and businesses not organized as separate companies 3) Operating profit before depreciation, amortization and write-downs

DISTRIBUTION EXTERNAL REVENUES 2004 DISTRIBUTION EXTERNAL REVENUES 2004

12% Other units 19% Europe (ex. Nordic region) 9% Broadcast

51% Mobile 11% Asia/ 55% Norway operations other countries

28% Fixed 15% Nordic region (ex. Norway) The world is getting smaller Norway Telenor Mobil, Fixed, Broadcast, EDB Business Partner, Satellite Services

Finland Broadcast (Canal Digital)

Sweden Telenor Mobile Sweden, Broadcast (Canal Digital)

Russia VimpelCom 29.9%, Golden Telecom 20.3%

Denmark Sonofon 100%, Broadcast (Canal Digital)

Ukraine Kyivstar GSM 56.5%

Hungary Pannon GSM 100%

Austria ONE 17.5%

Montenegro Promonte GSM 100%

Pakistan Telenor Pakistan 100%

Bangladesh GrameenPhone 62%*

Thailand DTAC 40.3%*

Malaysia Digi.Com 61%

* Includes Telenor’s direct ownership of DTAC and Telenor’s indirect ownership through Telenor’s ownership of UCOM. uoe20 12 1 4 A Europe The Nordic region Te Te CEO JonFredrik Baksaas This isTelenor C ontents: i 26 sia ti te Norway’s largest Te At Exchange. l the third largestcompany TelenorNOK 100billion. is at 31March 2005was Te Te Norway. we employees, 9,750ofthem isted ontheOsloStock l l nrsoeain 8 6 enor’s operations enor in2004and2005 ons provider. l

l enor’s marketvalue as re year-end 2004,the enor Group had21,750 l l ecommunica- enor is

employed outside iaca eiw54 34 42 45 A Financial Review Report oftheBoard ofDirectors toshareholders Information C Group Management A markets. growth inseveral high customer r In 2004,Telenor roaeGvrac 35 orporate Governance cut eeo S 134 82 ccounts Telenor ASA ccounts Telenor Group egistered record- fascaino eeo S 153 154 Elected OfficersandManagement ofTelenorof association ASA Memorandum andarticles Te 147 StandardsFinancial Reporting (IFRS) ofInternational Implementation Au operations. international substantial Te Te Nasdaq. Exchange and on theOsloStock l io’ eot146 ditor’s Report nr–10yas152 enor –150years l enor islisted l enor has

Telenor ASA Annual Report 2004 PAGE 1 This is Telenor Telenor is becoming increasingly international. The company’s strong position in Norway will remain an important platform in Telenor’s future development. AGE 2 P enor ASA Annual Report 2004 enor ASA Annual l Te Telenor ASA Annual Report 2004 PAGE 3 Telenor – online for 150 years

In 2005, we are celebrating Telenor’s 150th anniversary. Looking back allows us to appreciate how growth and lasting value was created. Our history also provides insight into how we may secure the future development of our company.

A pioneering nation ence and skills gained in the Norwegian improvement. By focusing on cost-control Telenor’s history in Norway is a story of telecommunications market to our partners we will counter rising costs relating to fierce receiving technological impulses from the in Europe and later in Asia. competition in mature markets – where we outside world, and developing them within are firmly established – as well as costs the framework of distinctly Norwegian con- From monopoly to competition relating to the development of activities ditions. Building telecommunications net- In Norway, as in other countries, the in emerging markets. works in Norway involved overcoming sig- telecommunications industry came to be nificant challenges. Equally significant were dominated by national monopolies. The Telenor’s strategy is to maintain the com- the gains made with respect to industrial stable and comprehensive frameworks of pany’s leading position in Norway as well development and improved welfare. the monopoly era secured nationwide as developing profitable mobile operations networks and reliable services. in international markets. As a consequence, A look back on Telenor’s 150 years in tele- we have organised our Group Management communications provides ample examples Over the last 20 years, profound changes in order to focus on both existing and of Norwegians pioneering and being quick have taken place in the telecommunica- emerging areas of growth. to adopt new services. In 1880, Telenor tions industry. The monopolies have been introduced commercial telephony, making dissolved, and together with technological The Telenor of today is the result of count- Norway one of the first countries to provide development, new opportunities for inno- less individual efforts to develop the com- such services. Due to the challenging geo- vation, growth, and improved welfare have pany through 150 years. Our organisation graphical characteristics of our country the emerged. It is striking to see how such currently consists of thousands of skilled telephone quickly became an important opportunities are being created through people from various backgrounds, and as tool with respect to strengthening social a combination of global impulses and we continue to develop our core compe-

The CEO ties and commercial development. In 1906, national initiatives. tence we will come to rely increasingly on Telenor became the first company in people from different nationalities.

AGE 4 Europe to connect remote island commu- Today, the telecommunications industry P nities with the mainland via radiotelephony. is exposed to fierce competition. National Customer satisfaction This provided fishermen in the villages of and geographical borders no longer coin- In recent years we have developed a man- Northern Norway with a means of direct cide with those of telecommunications. The agement culture that involves active pursuit communication with the exporters on the same products and services are developed of improvements. We also remain fully com- mainland – an event that contributed and offered in a number of different coun- mitted to enhance customer satisfaction significantly to the rapid development of tries. Another example is how telecommu- and customer perception, an absolute re- Norwegian fish exports, which today are nications solutions are managed and pro- quirement in all the markets where we pro- among the largest in the world. In recent vided across borders. In our international vide services. For Telenor it is essential to enor ASA Annual Report 2004 enor ASA Annual l

Te years we have seen that Norwegian fish commitments we have been able to draw earn the trust of customers, owners, em- exporters have been equally quick to take on our experience and expertise, and this ployees and society in general. up the Internet in their operations. has given us a solid basis for extracting synergies relating to innovation and new By pioneering new technology, Telenor has In 1976, we opened the first satellite con- development. been online for 150 years. We do not cele- nection between the Norwegian mainland brate technological innovation for its own and the oil installations in the North Sea – Telenor is becoming a truly international sake, but for the opportunities it provides. a significant step in the development of company. In 2003 we joined the GSM We are equally excited about the opportu- the Norwegian oil industry. In 1981, Telenor Association, an organisation made up of nities technology will bring us in the future. launched Europe’s first fully automatic the world’s twelve largest mobile operators. mobile network, soon to be followed by the introduction of GSM technology. Norwegian The road ahead customers were quick to take up the new Telenor’s continued growth during 2004 services, and Telenor exported the experi- provides us with a good platform for further Jon Fredrik Baksaas Jon Fredrik Baksaas CEO

Telenor ASA Annual Report 2004 PAGE 5 The CEO Telenor ASA Annual Report 2004 PAGE 6 Telenor in 2004 & 2005 and through ofTelenor theestablishment Pakistan. Pr development gathered momentum through ofSonofonand theconsolidation company. towards mobile becominganinternational activities national This In 2004,Telenor operation tookanother step from withinter- beingaNorwegian Te Goals andvision Strategy oMonte GSM,strong growth atKyivstar GSM,DiGi.comandGrameenPhone, l enor in2004and2005 •I • • • •P and definedmanagementrequirements: Ensure thatlocal business cultures are based oncommonvalues, Telenor’s Codes ofConduct Va •P •A • •A excellenceOperational •C •C • • •C Strategic focus and develop profitable operations inemergingmarkets. mobile international Te our customers’that simplify workday. Te Te Our vision: andthegeneral interest.customers, employees, public partners Te l Empower people Empower Operational excellence Change andconstant renewal Improve efficiencybyextracting synergiesacross operations andgeographic boundaries r in theNordic region markets fixedandmobile Maintain thestronginNorwegian position asinAsiaEurope, aswell Look fornewopportunities forexpansioninemergingmarketsCentral andEastern activities mobile l l l l enor shallbeadrivingforce inrenewing, developingandintroducing newsolutions ntegrity eview oftheproduct portfolio enor’s strategy is to maintain the company’s leading position in Norway inNorway strategy position istomaintainenor’s thecompany’sleading –ideasthatsimplify enor main istocreate through goal of enor’s value for theserving shareholders ue-based leadership ontinued developmentofthebusiness segmentBroadcast TVdistributor astheleading ontinued focus onobtaining economiesofscale intheNordic organisation ontinued emphasisonTelenor’s ”control orexit” strategy asregards theinternational assion forbusiness r chieve excellence withrespectchieve excellence tomarketandcustomer relations

considerable simplification withfocus oftheNordic activities, onsupply processes and epare involving newbusiness thecompanyforchallenges modelsandnewtechnologie 10,000 20,000 30,000 40,000 2004 management ofITsystems toEDB. transfer for ofanextended responsibility Nordic region. Theagreement involveda into oneofthelargestITagreements inthe Te Te inPakistan. telephony for mobile Te licence inPakistan Te 2nd quarter 2004 before taxes ofNOK2.6billion. andagainapproximately NOK 3.1 billion transaction resulted revenues insales of operatorin Greek mobile Cosmote. The Te inCosmoteshares Te 100%. ship interest inSonofonfrom 53.5%to increased Telenor’sThe acquisition owner- of theshares inSonofonfrom BellSouth. Te inSonofonshares Te 1st quarter 2004 l l l l l l l l enor andEDBBusiness Partner entered enor acquired a nationwide license enor acquired license anationwide enor soldtheremaining 9%shareholding enor acquired theremaining 46.5% 0 enor transferedenor IToperations toEDB enor acquired mobile acquiredmobile enor itsremaining sold enor acquiredtheremaining enor – in Norway (inNOKmillions) – inNorway Revenue basedoncompanylocation 00 01 02 03 04 15,000 22,500 30,000 and denselypopulated areas inNorway. of launch, thenetworkopenedin70cities UMTS forcommercialAt services. thetime Te Te l Hungary, Pannon GSM, acquired aUMTS Te in Hungary P 4th quarter 2004 Pr Telenoracquisition, 100%of nowowns GSM inMontenegro. Subsequent tothe operatorthe shares inmobile ProMonte Te ProMonte operator ing mobile GSM Te 3rd quarter 2004 7,500 icense inHungary. annon GSM acquired UMTS-license annon GSMacquiredUMTS-license oMonte GSM. l l l l l enor opened the new mobile network enor openedthenewmobile enor’s companyin mobile whollyowned enor acquired theremaining 55.9%of 0 enor launched UMTSinNorway enor acquiredMontenegro’senor lead- – outside Norway (inNOKmillions) – outsideNorway Revenue basedoncompanylocation 00 01 02 03 04 10,000 15,000 20,000 2005 consumer market. phony product tothe Norwegian Te te Te ducted theofficialopening. Pr Pakistan'snetwork forcommercial services. Te in Pakistan Te 1st quarter 2005 5,000 esident, General Pervez Musharraf, con- l le l l l enor launched itsbroadband tele- 0 ephony inNorway enor launched broadbandenor network openedmobile enor nor Pakistan openeditsGSMmobile No. ofmanyears owy OutsideNorway Norway 00 01 02 03 04

Telenor ASA Annual Report 2004 PAGE 7 Telenor in 2004 & 2005 Telenor ASA Annual Report 2004 PAGE 8 Telenor’s operations Te Broadcast Fixed operations Mobile l enor’s operations e iue Description Key figures netet 8 6 2,769 972 266 809 880 774 (264) (84) No. ofman-years Investments 181 499 companies 1 589 A 3,605 1,229 Operating profit (loss) 4,820 EBITDA 1,495 Revenues 5,211 millions) (in NOK 3,530 7,215 2,161 (5) 6,087 1,896 5,651 8 No. ofman-years Investments companies 50 5,597 A 6,665 Operating profit 20,022 EBITDA 6,277 20,509 Revenues 19,266 millions) (in NOK opne 9 ,3 (2,030) 6,551 12,625 1,639 3,762 6,924 694 14,138 9,335 No. ofman-years 20,346 Investments 23,810 companies 32,952 7,482 A 9,567 Operating profit EBITDA 11,618 Revenues millions) (in NOK ssociated ssociated ssociated ,9 ,3 731 2,531 2,794 ,2 ,2 1,414 5,224 3,027 0420 2002 2003 2004 2002 2003 2004 0420 2002 2003 2004 (475) pressen. Te t Te households andvarious cable networks. vide transport ofTVsignalsfrom broadcasters to Te subscribe tooneorseveral ofour services. Nordic households andactivities than 2.9million f r totheNordicthe largestdistributor ofTVservices (subscriptions). Telenor’ and parts oftheTVvalue chain,allthewayfrom content The business segmentBroadcast hasastake inall market. operators providers andservice inthewholesale Te access, data lines. andleased services and digital (ISDN)telephony, broadband, Internet ness andresidentialmarkets,including analogue vides communications solutionstoboththebusi- market.Telenor totheNorwegian services pro- Te theCzechRepublicandSlovakia. in Sweden, centrated inNorway, withminoroperations bulk ofTelenor’s are con- fixednetworkactivities t ment, managementandsupply ofcommunica- Fixed isTelenor’s business segmentfordevelop- Te becentralfor furtherwill industrialisation to operations, andpreparations themobile between operations. ofsynergies Thecreation mobile developed andshared withinTelenor's of family andonproductsexperience andskills, andservices market are basedonthecompany’s extensive Te operations inEurope andAsia. Te telecommunicationsinternational player. isvital totheGroup'sactivities asan positioning growth. Continued developmentofthemobile isTelenor'sMobile principalfocus area forfuture or TV services intheNordicor TVservices residentialmarket.More esidential market.Canalesidential Digital isthemarketleader ions foraccesscontrol, payment andencryption. ions solutionsbasedonthefixednetwork.The l l l l l l l l enor's future strategy. enor's commitmentsintheinternational mobile enor has ownership interests in 12mobile enor hasownership enor also has a 45% ownership interest inA- enor alsohasa45%ownership 100%ofConax,enor owns whichprovides solu- enor Satellite Broadcasting andNorkringpro- enor alsoprovides abroad range to ofservices providerenor istheleading offixednetwork tr a nsmission (transfer ofsignals)todistribution s TVbrand, Canal Digital, is ol Strategy Goals • • • • • •A •A •C •P • • • • •S • Develop Conax asaninternationalplayer West Nordic astheleading satellite position Strengthen 1° (Digital TVoverterrestrial networks) Secure strongwithinthedevelopmentofDTT marketpositions price Secure possible TVrightsatthelowest high-quality Secure withinpay-TVinFinlandandDenmark marketpositions leading offering andoperational strategy each company’s corporate culture, branding, marketpositioning, service to leverage advantages ofscale andthereby afoundation establish for to the market, providing high quality at competitive prices to themarket,providing atcompetitive highquality Modernise thebroadbandtooffernewservices platformsoastobeable Be thepreferred suppliertotheoperator provider andservice markets r Be themostattractive intheNordic provider offixednetworkservices Serve marginal-ARPU customers and still be profitable marginal-ARPUcustomersServe andstill Meet regulatorychallenges new services egion, bothtothebusiness andconsumer markets ontinue the implementation ofTelenor’s theimplementation ontinue commonstrategic framework r t ssume role intheNordic aleading digital TVmarket ttract andretain valuable customers andincrease ARPUthrough oviding high-quality voice services basedonPSTN,ISDNandIP voiceservices oviding high-quality and out from thecrowd transfer todigital TVtakes place. tohouseholds toofferservices andbroadcasterspositioned whenthe t r Digital TV. ofInternetsales tocable TVcustomers. higher share ofpay-TVcustomers inthecable networks andincreased Revenues are expected toincrease ontheback ofsubscriber growth, a Increased revenues. expected incomingyears. tocontinue TVdistributoras theleading intheNordic region. Thecustomer growth is C Pr systems. ply routines forour customers andstandardise our andsimplify information intheNordic region.in our We fixednetworkactivities enhanceour sup- will ciency through strategic restructuring andbyobtaining advantages ofscale Operational efficiency. andattractiveservices communications solutions forlargeNordic businesses. solutions. Inthebusiness marketTelenor focus will onproviding competitive andbyensuringprovidersof newservices thatservice prefer our broadband beensuredwill through theprovisioncoverage, ofnationwide development ofbroadbandket bycontinuingtostimulatethesale accesses.Thisgrowth Market growth. measures, ofour infrastructure. andsecure utilisation optimal investmentfunds togrowthby channelling areas, introduce efficiency we generate will services growth, balancingthepricepressureance. Newmobile our operations leverage will BestPractise toimprove operational perform- Mature markets. control ofeachcompany. ownership have operations toenhanceoperational performance,andassuch needsto C Emerging markets. acquisition candidatesacquisition andGreenfield opportunities. New opportunities. market approach,from benefiting economiesofscale andsynergies. egion meansthataffected adigital households must choosebetween errestrial network,satellite orcable TV. Telenor Broadcast is favourably ontrol orexit. ustomer growth. ofitable investments.

see onbasicvoiceservices. The shutdown of the analogue terrestrialThe shutdown networkintheNordic Te Te Te l l enor aims to exert industrial ownership ofitsmobile enor aimstoexertindustrial ownership C enor will secureenor will profitable growth inthebroadband mar- l Te ontinue todevelopthebusiness segmentBroadcast Te enor actively exploitsrevenueenor actively andcostsynergies Broadcast iscommitted topursue agrowth strategy. l l enor will enhanceorganic growthenor will through acommon enor continuously monitorsmarkets,potential Te Te l enor alsoaimstosecure highoperational effi- l enor will alsosecureenor will profitable investments,

Telenor ASA Annual Report 2004 PAGE 9 Telenor’s operations Telenor ASA Annual Report 2004 PAGE 10 The world wants wireless communi- cation. Telenor will create growth by strengthening the company’s international positions in emerging mobile markets. AGE 11 P enor ASA Annual Report 2004 enor ASA Annual l Te Telenor ASA Annual Report 2004 PAGE 12 The Nordic region at Sonofon,Denmark Head ofConsumer Division Pet er Berg Nordic mobile operations.Nordic This mobile extracting synergiesfrom our “We astrong focus have on The Nordic region Head ofConsumer DivisionatSonofon our profitability,” saysPeter Berg, wi ll be crucial inorder toimprove .

Telenor ASA Annual Report 2004 PAGE 13 The Nordic region Telenor ASA Annual Report 2004 PAGE 14 The Nordic region The Nordic region Te w in2004.This industry the Nordic mobile There in waswidespread consolidation mainly onlowprices. playersareSmaller alsocompeting, w bynewinternationalplayers challenged providers,the otherleading Telenor is r Te and theyare alsofiercely competitive. most advanced and mature intheworld, marketsare amongthe The Nordic mobile market The Mobile ator intheNordic region, andalongwith as particularly notable inDenmark. notable as particularly accesstotheNordicanting markets. l l enor alsocontributed tothistrend ope- enor isthesecondlargestmobile t officesolu- as videostreaming andmobile To officesolutions. andmobile e-mail surfing, videostreaming,and video,web ofmusic an increase inthedownloading Internet, andTelenor alsoexpectstosee vices include MMS,games andmobile Currently,from fixedtomobile. theseser- the maingrowth enginetobemigration In thismature market,Telenor anticipates tothemarkets. bring more stability It isassumed will thatsuch consolidation providerby acquiring theservice CBBMobil. ions, highernetworkspeeds,through the

promote more advancedsuch services, Head ofCustomer Support &Supply at theConsumer Market,Norway Lise Heidal As intheNordic region.activities Te Operator). Virtual Network agreement (Mobile secured UMTSaccessthrough anMVNO Telenor InSweden, bid forthislicense. has an auction.Telenor considermakinga will in offeraUMTSlicense inDenmarkwill ities in Norway. Thetelecommunications author- became thefirstoperator tolaunch UMTS a pan-Nordic platformforproduct and re be EDGE andUMTStechnologies, will qu l

enor hasstarted arestructuring ofits part ofthisprocess, Telenor isbuilding ired. InDecember2004,Telenor ”Telenor is stepping up the rollout of ADSL in Norway, and will, at year-end 2005, provide broadband access to 90% of Norway’s population. We are determined that con- tinued customer growth should not impair our commitment to quality in our supplies and our day-to-day operation,” says Lise Heidal, head of Customer Support & Supply at the Consumer Market in Norway.

service development. Telenor’s main goal in for mobile subscriptions are not subject Sonofon the Nordic region is to develop an efficient to regulation, and may vary from 6 to 24 Sonofon is the second largest mobile ope- Nordic product platform, with competitive months. The long lock-in periods contribute rator in Denmark. Telenor became part local organisations. This will allow Telenor to to reduced churn, and new players are owner in 2000 and acquired full ownership strengthen its Nordic activities, while simul- struggling to win market shares. of the company in February 2004. taneously creating a platform of expertise More information: www.sonofon.dk to support further expansion outside the Through its djuice brand Telenor has Nordic countries. launched a web-based low-price alterna- Telenor in Sweden tive. In the business market, Telenor AB In Sweden Telenor offers mobile services In the Nordic region, Telenor will seek to provides mobile telephony bundled with to both the consumer market, through the retain and strengthen its market positions, other Telenor products and services (fixed djuice brand, and to the business market, improving its reputation, while also continu- network and data services). through the Telenor brand. ing the effort to extract synergies and More information: www.telenor.se reduce costs. Denmark A large number of operators and service The fixed network market Norway providers are currently operating in the There are important similarities between The number of active SIM cards in Norway Danish market, and the competition is Norway, Sweden and Denmark as regards is now higher than the population figures. fierce. The National IT and Telecom Agency the development of the telephony and The extremely high mobile penetration only accepts a six-month lock-in period for broadband markets. The migration from imposes new and tough demands on the GSM customers, and this has resulted in fixed to mobile telephony now appears to existing market players. Danes changing their mobile operator more move faster than previously anticipated.

frequently than their counterparts in other Telenor also expects the trends that we region The Nordic The new and smaller players are aiming European countries. have observed in recent years to continue. to win market shares primarily by compet- Traditional voice traffic will migrate to AGE 15 ing on price. Telenor recognises that this Telenor expects continued growth in the mobile and IP telephony, and data traffic P trend involves generally lower prices in the mobile market, in spite of very high mobile will migrate to broadband. In addition, we markets, and has reduced the prices of its penetration, primarily because more Danes expect the reduced number of accesses products and services during the year. are likely to make the move from fixed to to cause falling subscriber revenues. Telenor expects the positive development mobile. in the subscription base to continue. Overall, Telenor expects to see reduced Further migration from the fixed network Telenor also registers a growing demand revenues from fixed telephony in the Nordic to the mobile network will also create for simple products in the Danish market, region, while broadband revenues are enor ASA Annual Report 2004 enor ASA Annual new growth in the mobile traffic. but customers are simultaneously taking expected to increase. The majority of l Te up more advanced mobile services such Telenor’s revenues from the fixed market As the first operator in Norway, Telenor as mobile Internet and MMS. are generated in Norway. launched its UMTS network in December 2004. The new network offers higher In the business market Telenor expects to Telenor has concentrated its activities speeds, and will involve opportunities see a growing demand for mobile e-mail in the Nordic region under a pan-Nordic for new content and more advanced and other business services. management. This will contribute to meet services. the demand for Internet-based broadband Telenor Mobil and telephony services in the residential, Sweden Telenor Mobil is Norway’s leading provider business and wholesale markets. In Sweden the mobile penetration has of mobile services. The company provides exceeded 100%. There are currently around services to both the consumer and business Telenor aims to prepare for an optimal 20 players offering mobile subscriptions in markets. transfer to IP telephony, to modernise the Sweden, four of which dominate the market. More information: www.telenormobil.no broadband platform and to secure cost- Handset subsidies are high. Lock-in periods effective operations. Telenor ASA Annual Report 2004 PAGE 16 The Nordic region ca Te Sweden in March 2005. intheresidentialmarket phony services IP telephony. Telenor introduced IPtele- migration from traditional to telephony w has thegreatest growth andwe potential, its broadband marketshare. Thissegment Te services. sive web to basisinfrastructure tomore comprehen- market,from access wholesale Norwegian ed tooperators providers andservice inthe markets. Awiderange isprovid- ofservices offered toboththebusiness andresidential v broadband, Internet access,data services, logue anddigital telephony (PSTN/ISDN), C market. totheNorwegian network services Te Norway The Nordic region aktadfxdntoksrie to ser market andfixednetworkservices both data communications tothebusiness Te phony, DSLandIP-basedcommunication. business market,andtele- to theSwedish the traditional fixednetworkinDenmark. phony asaninteresting to supplement transport capacity. Telenor seesIPtele- to support Sonofon’s requirements for thefixednetwork develop awayofenabling beto phony commitmentsinDenmarkwill forTelenor’sAn important challenge tele- commitments. support themobile primarily Te Denmark market. residential their products totheSwedish providers toservice thatsell band services providers. We alsooffervoiceandbroad- alue-adding services and leased lines are lines alue-adding andleased services ommunications involvingana- solutions ant tomeetthedemandcreated by 200 400 600 800 l l l l l t enor provides telephony, data communi- enor isstrongly committed toincreasing providerenor istheleading offixed enor isthesecondlargestsupplierof enor’s inDenmark fixednetworkactivities 0 ion, broadband andadvanced networks r C egion 2000–2004(thousands) able TVsubscribersintheNordic 00 01 02 03 04 vice logue transmission is expected togenerate ofana- theshutdown DTH. Nevertheless, to households cable thatalready have or to represent alow-endsegmentcompared logue terrestrial transmission are believed Households thatcurrently dependonana- r As tochange tocable,have DTHorDTT. the analogue terrestrial network will relyholiday homes)thatsolely on number of asanunknown (as well households period, some2.5million 2008and2010.During that between countries isexpected tobecompleted trial networksineachoftheNordic oftheanalogue terres-The shutdown play). of broadband andtelephony (triple TV packages toalsoinclude offers extended, from supply oftraditional r attractive housing cooperatives. The towincontractsare competing with In thecable TVmarket,theplayers households. 1.5million in excessof25%,equalling Te vision (DTT)subscribers inFinland. market, andDigital Terrestrial Tele- vision (DTH)subscribers intheNordic and “Direct-to-Home” satellite tele- C P TV network. TV signalsviaNorkring’s analogue that singularlyrely onreceiving households the 500,000Norwegian l approximatelymarket, serving 2.9mil- provider totheNordic ofTVservices Te The TVmarket ion Nordic households, notcounting ange of the competition isnowbeing ange ofthecompetition epresents newgrowth opportunities. anal Digital. Thisincludes cable ay TVisthetarget marketfor l l

enor currently hasamarketshare enor Broadcast isthelargest a consequence, theanalogue shutdown Marketing Director inCanalMarketing Digital Katarina Brixéus Sverige AB,Sweden bution, cable andsatellite, alsoincluding brand. Thefullrange ofTelenor's TV distri- by Telenor. Canal Digital isTelenor’s TV in theNordic countries and100%owned C Distribution intheNordicindustry region. a majorgrowth potentialforthepayTV anal Digital TVdistributor istheleading “Telenor is the leading TV distributor in the Nordic region with more than 2.9 million households served. Canal Digital is Telenor's TV brand, and we want to offer our cus- tomers the best TV content, freedom of choice and simple TV services”, says Katarina Brixéus, marketing director at Canal Digital Sweden AB. The Nordic region The Nordic AGE 17 P enor ASA Annual Report 2004 enor ASA Annual l Te

DTT in Finland, is coordinated in one organi- Transmission Telenor Satellite Broadcasting is the leading sation. Canal Digital is the Nordic region’s Norkring is Norway’s largest distribution provider of satellite transmission services largest distributor of broadcast signals, and company for terrestrial broadcasting of to the Nordic market, our main competitor more than 2.9 million Nordic households sound and images. The company owns and being the internationally based SES Global. are, directly or indirectly, receiving TV operates all the large terrestrial broadcast- signals from Canal Digital. ing transmission stations in Norway. More information: www.canaldigital.com More information: www.norkring.no No. of ADSL subscriptions in Norway No. of GSM subscriptions in Norway DTH subscribers in the Nordic region (in thousands) (in thousands) 2000–2004

400 3,000 800

300 2,250 600

200 1,500 400

100 750 200

0 0 0 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04

NORWAY Population (2004, in millions) 1) 4.6 Inflation 2004 estimate (%) 1) 0.5 Land Area (sq KM) 1) 323,758 Telecom revenues (% of total GDP, 2001) 2) 3 Population per sq KM 1) 14 Mobile revenues (% of total GDP, 2001) 2) 0.8 Population growth (% average 1999–2003) 1) 0.7 Mobile telephony penetration (%), 2004 102 Population in Urban areas (2003, % of total) 1) 76.5 Fixed line penetration (%) 2003 2) 71 GDP per head (US$) 2004 estimate 1) 50,755 TV Households (in millions) 2 GDP per head (US$ PPP) – 2004 estimate 1) 37,637 DTH market share (%) 73 Real GDP growth 2004 estimate (%) 1) 3.0 Source: 1) EIU (Economist Intelligence Unit) 2) ITU (International Telecom Unit)

TELENOR MOBIL (NORWAY) 2004 2003 2002 2001 2000 No. of mobile subscriptions (NMT + GSM) (in thousands) 2,645 2,364 2,382 2,307 2,199 No. of GSM subscriptions (in thousands) 2,623 2,327 2,330 2,237 2,056 – of which prepaid (in thousands) 1,228 1,099 1,115 1,027 911 Traffic minutes per GSM subscription per month, generated and terminated 195 188 180 181 173 Average revenue per GSM subscription per month (ARPU): 339 339 346 340 338 No. of SMS and content messages (in millions) 2,129 1,926 1,692 1,373 902 Market share GSM (%) 56 57 61 61 66 Churn rates for contract subscriptions (%) 15.2 21.4 17.5 12.5 12.7 The Nordic region The Nordic FIXED – NORWAY Retail market AGE 18 P No. of PSTN subscriptions (in thousands) 1,182 1,308 1,467 1,545 1,680 No. of ISDN subscriptions (lines in thousands) 1,449 1,682 1,828 1,766 1,590 PSTN/ISDN generated traffic (mill. minutes) 13,026 15,385 17,345 19,085 19,560 Market share of PSTN/ISDN generated traffic (%) 69 69 72 73 73 No. of internet subscriptions residential market Norway (in thousands) 527 457 427 394 377 – of which ADSL (in thousands) 286 163 90 23 - No. of ADSL subscriptions business market Norway (in thousands) 40 14 4 1 - enor ASA Annual Report 2004 enor ASA Annual l BROADCAST – NORWAY Te Subscribers with DTH pay TV (in thousands) 308 274 261 212 171 Cable TV subscribers (in thousands) 399 382 371 360 357 Households in small antenna TV networks (in thousands) 178 159 177 170 171

DENMARK Population (2004, in millions) 1) 5.4 Real GDP growth 2004 estimate (%) 1) 2.0 Land Area (sq KM) 1) 43,075 Inflation 2004 estimate (%) 1) 1.2 Population per sq KM 1) 125 Telecom revenues (% of total GDP, 2001) 2) 2.6 Population growth (% average 1999–2003) 1) 0.4 Mobile revenues (% of total GDP, 2001) 2) 0.6 Population in Urban areas (2003, % of total) 1) 85.5 Fixed line penetration (%), 2003 2) 67 GDP per head (US$) 2004 estimate 1) 44,619 TV Households (in millions) 2.4 GDP per head (US$ PPP) – 2004 estimate 1) 30,943 Satellite dish market share (%) 33 Source: 1) EIU (Economist Intelligence Unit) 2) ITU (International Telecom Unit) aktsaeGM()2 3--- - - 42 - - - 84 594 - 2000 - 23 99 671 - 2001 84 - 669 27 109 - 2002 88 638 124 285 2003 - 660 2004 462 1,112 1,286 SWEDEN Households insmallantenna TVnetworks(inthousands) Subscribers withDTHpayTV(inthousands) BROADCAST –DENMARK telephony penetrationMobile (%) Market share GSM(%) Av Tr – ofwhichprepaid (inthousands) subscriptions(inthousands) No. ofmobile SONOFON (DENMARK) RACS ILN 0420 0220 2000 35 1 2001 42 2002 15 44 2003 2 2004 46 50 43 - 164 74 - - 286 2000 231 - 337 89 2001 297 2002 285 90 54 334 2003 Households insmallantenna TVnetworks(inthousands) 251 106 Subscribers withDTHpayTV(inthousands) 349 81 2004 BROADCAST –FINLAND 300 Source: 105 GDP perhead(US$)2004estimate P P P Land Area (sqKM) P FINLAND Households insmallantenna TVnetworks(inthousands) C Subscribers withDTHpayTV(inthousands) BROADCAST –SWEDEN telephony penetrationMobile (%) subscriptions(inthousands) No. ofmobile TELENOR MOBILESWEDEN Source: GDP perhead(US$PPP)–2004estimate GDP perhead(US$)2004estimate P P P Land Area (sqKM) P 2,000 4,000 6,000 8,000 beT usrbr i huad)25222021- 201 200 222 225 able TVsubscribers(inthousands) opulation inUrbanareas (2003,%oftotal) opulation growth (%average 1999–2003) opulation persqKM opulation (2004,inmillions) opulation inUrbanareas (2003,%oftotal) opulation growth (%average 1999–2003) opulation persqKM opulation (2004,inmillions) fi iue e S usrpinprmnh eeae n emntd1519--- - - 149 175 affic minutes perGSMsubscriptionmonth,generated andterminated rg eeu e S usrpinprmnh(RU:2826--- - - 256 248 erage revenue perGSMsubscription month(ARPU): 0 (lines inmillions) 2000–2004 ISDN subscriptionsinNorway 00 1) 2) 1) EIU (EconomistIntelligence Unit) ITU (International Telecom Unit) EIU (EconomistIntelligence Unit) 01 1) 1) 02 1) 1) 03 1) 1) 04 1) 1) 1) 1) 1) 1) 1) 1,200 1,800 2,400 600 0 Norway 2000–2004(inmillions) Norway andcontent messagesin SMS 00 449,964 304,473 01 34,711 29,355 38,726 68.8 83.6 0.3 5.2 0.3 9.0 17 20 02 Co ooo Dnak , .8 27 1.286 (%) 5,4 (millions) (millions) T Sonofon (Denmark) owned by Telenor lnrMbl See)90151 105 9,0 (Sweden) elenor Mobile aelt ihmre hr % 38 2.2 Satellite dishmarket share (%) TV Households(inmillions) Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) GDP perhead(US$PPP)–2004estimate 50 4.3 Satellite dishmarket share (%) TV Households(inmillions) Fixed linepenetration (%),2002 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) 03 pne ouainsbcitosshare subscriptions Population mpanies elecom revenues (%oftotalGDP, 2002) 04 12,000 18,000 24,000 6,000 1) 1) 0 2000–2004 (minutes inmillions) PSTN/ISDN generated traffic inNorway 2) 00 1) 1) o fmbl Market No. ofmobile 01 2) 2) 1) 02 03 04 28,450 0.2 3.1 0.7 3.2 0.5 2.0 74

Telenor ASA Annual Report 2004 PAGE 19 The Nordic region Telenor ASA Annual Report 2004 PAGE 20 Europe Europe of Pannon GSM,Hungary Chief FinancialOfficer Gábor Kocsis Financial OfficerofPannon GSM. operational saysGáborKocsis,Chief excellence, helpusment insynergyprojects achieve will with otherTelenor companiesandinvolve- cross-border cooperationStimulating marketsharesolid andbrand position. “Our aimistodevelopPannon’s

Telenor ASA Annual Report 2004 PAGE 21 Europe Telenor ASA Annual Report 2004 PAGE 22 Europe the firstphaseofitsUMTSnetwork devel- January 2005,Pannon GSMembarkedon of Pannon GSM’s GSMnetwork.In existing qu The companyalsoacquired GSM-1800fre- one ofthreeinHungary. UMTSlicenses In December2004,Pannon GSMacquired approximately 10%oftotal revenues. In 2004,non-voicerevenues accounted for of Hungary’s mostpopulartelevision shows. includingcontent videostreaming services, P we of 2004,10%Pannon GSM’s customers launched inNovember2003.At theend youth segmentthrough thedjuice brand, The companyhasalsofocused onthe t integrated, all-inclusive telecommunica- Officeproduct offering line, with itsMobile tomer segment.Pannon GSMhassucceded (SMEs) andontheattractive high-endcus- ing onsmallandmedium-sized enterprises has pursued asegmented approach, focus- In order toensure Pannon profitability GSM was 34%. marketshareestimated atyear-end2004 operators inHungary, andPannon GSM’s P P to becentringoncustomer retention. The struggleformarketshares nowseems mately inthemarket. 60,000newadditions a with ing, its saturation, subscriptiongrowth isflatten- marketnearing With theHungarian mobile attheendof2003. pared to7.4million com- subscriptions, 8.1million ket counting in Hungary exceeded80%,withatotal mar- At Hungary Europe ions solutionstothebusiness market. annon GSMhasalsointroduced advanced annon GSMisthesecondlargestofthree annon GSM

encies, which will improve theutilisation encies, whichwill re the end of 2004 the mobile penetration the endof2004mobile

djuice subscribers. monthly netgain ofapproxi- re t youth subscrip- segmenttheirtailor-made brand on1September 2004,offeringthe packages. Kyivstar launched thedjuice include thedistribution offavourable start Kyivstar’s effortstoacquire newsubscribers subscriptions. million 2004, entering 2005withatotal of6.3 than doubleditscustomer baseduring end of2004was46%.Thecompanymore Kyivstar’s estimatedmarketshare atthe K opment ofnewservices. stimulate uptake, usage andthedevel- furtherin pricereductions, whichwill w operators,the twolargestnationwide as between increase. Thefierce competition communicationfor mobile isexpected to showing astrong growth andthedemand The Ukrainian grossproduct domestic is subscribers duringof fixedline theyear. beginning of2005,surpassing thenumber Ukraine atthe reached almost14million 2004. Thetotal number in ofsubscriptions beginning of2003,to29%atyear-end penetration risingfrommobile 8%atthe significantly inthepastfewyears,with marketinUkraineThe mobile hasgrown Ukraine More www.pgsm.com information: share. held a100%ownership company, andhas,sinceFebruary 2002, Te operatorsis oneofthree mobile inHungary. P the risingdemandforhigherdata speeds. network withEDGEtechnology tomeet focused onupgrading GSM itsexisting opment project. Pannon GSMhasalso ions. Thenumber ofdjuice subscriptions annon GSM was established in1993and annon GSMwasestablished ell asotherplayers,isexpected toresult yivstar GSM yivstar ached one million inDecember,ached onemillion merely l enor contributed tothefounding ofthe Head ofHuman Resources at Kyivstar GSM,Ukraine Oksana Korolenko GSM has finalised interconnectionGSM hasfinalised agree- orinternationally.in thecountry ProMonte direct interconnection withotheroperators adopted. There are noformalobstacles for Montenegrin Telecommunications was Law munications andanew wasestablished In December2000,anAgency forTelecom- and ahighunemployment rate. is dominated bymoderate economicgrowth The macroeconomic situationinMontenegro Matav. we 51% oftheshares inTelecom Montenegro Inthebeginningof2005 Internet services. which alsoprovides fixedtelephony and byTelecomMonet isowned Montenegro, in Montenegro: ProMonte GSMandMonet. operatorsThere mobile are twolicensed end of2003. comparedsubscriptions, to427,000atthe r in Montenegro wasapproximately 78%, At Montenegro www.kyivstar.netMore information: share of56.5%. ownership in1998,andcurrentlyowner holdsan operator inUkraine. Telenor became part Kyivstar GSMisthesecondlargestmobile advanced are services indemand. the fourth quarter, suggestingthatmore mately 6%ofKyivstar’s total revenues in in thecourse of2004,generating approxi- Non-voice revenues more thandoubled due tohighsubscriberprimarily uptake. Kyivstar’s revenues increased in2004, at themassmarket. Kyivstar launched several aimed initiatives the third andfourth quarters oftheyear three andahalfmonthsafter launch. In epresenting afigure of482,000registered

re the end of 2004, the mobile penetration the endof2004,mobile

sold totheHungarian operator in Ukraine”, says telecommunicationsGSM asthemost‘easyandenjoyable’ operator wide coverage wantour customers andwe toseeKyivstar brand inUkraine. Kyivstar GSMshallprovide nation- to continuedevelopthestrongest mobile increasestantially our customer baseand “Our aimforKyivstar GSMistosub- launched mobile data overGPRS launched services mobile Montenegrin Theoperator population. mately 71%ofthecountry, and98%ofthe Pr le a 58%marketshare andisthemarket Pr ProMonte GSM Te Mobtel, thereby pricesfrom obtaining lower ments withMonetandtheSerbianoperator ader inMontenegro. At theend of2004, oMonte GSM’s networkcovered approxi- oMonte GSM,hasat year-end2004 l ecom Montenegro. Oksana Korolenko , HeadofHuman Resources atKyivstar GSM. in Russia grew by104%.At year-end mobile subscriptions In 2004,thenumber ofmobile Russia www.promonte.comMore information: Aug ofProMontea 100%ownership GSMin became in1996andacquired partowner Montenegro’s operator. firstmobile Telenor in1996andwas GSM wasestablished EDGE during firsthalfof2005.ProMonte in July2004.ProMonte GSMplans tolaunch u st 2004. le in Russia, onlymarginallybehindthe market VimpelCom isthesecond largestoperator for further good. growth are still far from saturated.still Theopportunities theregional marketsaredecreasing, while The subscriptiongrowth inMoscowisnow the regions thepenetration reached 43.5%. in the penetration wascloseto100%while than 74.4 InMoscow, subscriptions. million penetration more was51.2%,counting ader.

Telenor ASA Annual Report 2004 PAGE 23 Europe Telenor ASA Annual Report 2004 PAGE 24 Europe and came intoforce on26November2004. and VimpelCom–Region wascompleted VimpelCom26.6%. Themergerbetween shareshare of of29.9%,andavoting held, attheendof2004,anownership Te the entireterritoryofKazakhstan. St. Petersburg. VimpelCom alsocovers City ofMoscow, theMoscowRegionand including the people), (136million ulation covers approximately 94%ofRussia's pop- The VimpelCom Group's portfolio license VimpelCom in2004 Europe aktsaeGM()3 63 - - - - 38 - 63 36 - - 73 34 - 1,910 80 2,023 2,450 1,991 2,618 2,770 telephony penetrationMobile (%) Market share GSM(%) Av Tr – ofwhichprepaid (inthousands) subscriptions(inthousands) No. ofmobile P Source: GDP perhead(US$)2004estimate P P P Land Area (sqKM) P HUNGARY NO S HNAY 0420 0220 2000 2001 2002 2003 2004 ANNON GSM(HUNGARY) opulation inUrbanareas (2003,%oftotal) opulation growth (%average 1999–2003) opulation persqKM opulation (2004,inmillions) fi iue e S usrpinprmnh eeae n emntd131113-- - 113 111 123 affic minutes perGSMsubscriptionmonth,generated andterminated l rg eeu e S usrpinprmnh(RU:161510-- - 180 165 176 erage revenue perGSMsubscription permonth(ARPU): enor became in1999,and partowner 2) 1) EIU (EconomistIntelligence Unit) ITU (International Telecom Unit) 1) 1) 1) 1) 1) 1) have beenissuedhave intheRussian market. t UMTSnetworkwasdevelopedand A pilot several regions intheNorth-West District. VimpelCom launchedin EDGEservices denselypopulatedselected areas. In2004, wide GPRScoverage, andEDGE/UMTSin VimpelCom’s strategy istoprovide nation- subscriptions). (26.6 million VimpelCom’s marketshare was34.7% At year-end2004, of allnewadditions. share ofnewsubscriptions,acquiring 38% In 2004,VimpelCom wonthelargest ested during 2004.No UMTSlicences 10,280 93,030 64.8 10.0 -0.3 108 Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) GDP perhead(US$PPP)–2004estimate elecom revenues (%oftotalGDP, 2002) 10,000 15,000 20,000 F 1996. Y itssecuritiescompany tolist ontheNew in Russia. VimpelCom wasthefirstRussian and operates under theBeeLinebrand VimpelCom in1992, wasestablished VimpelCom 5,000 or morewww.vimpelcom.com information: ork Stock Exchange(NYSE),inNovember 1) 0 in consolidated companies(inthousands) subscriptionsoutsideNorway No. ofmobile 2) 00 1) 01 2) 2) 1) 02 03 04 15,180 2.0 5.6 6.8 3.9 35 fwihpead(ntosns ,3 ,0 ,7 - 2000 - - 2001 - 1,472 2002 2,503 2003 1,856 5,532 2004 3,037 6,252 Tr – ofwhichprepaid (inthousands) subscriptions(inthousands) No. ofmobile KYIVSTAR GSM(UKRAINE) Source: GDP perhead(US$)2004estimate P P P Land Area (sqKM) P UKRAINE RMNEGM(OTNGO 0420 0220 2000 58 2001 2002 - 235 - 2003 - 2004 279 - 49 8 47 14 45 telephony penetrationMobile (%) Market share GSM(%) 29 Av Tr – ofwhichprepaid (inthousands) subscriptions(inthousands) No. ofmobile PROMONTE GSM(MONTENEGRO) Source: GDP perhead(US$)2004estimate P P P Land Area (sqKM) P MONTENEGRO telephony penetrationMobile (%) Market share GSM(%) Av opulation inUrbanareas (2003,%oftotal) opulation growth (%average 1999–2003) opulation persqKM opulation (2004,in millions) opulation inUrbanareas (2002,%oftotal) opulation growth (%average 1998–2002) opulation persqKM opulation (2004,inmillions) fi iue e S usrpinprmnh eeae n emntd8 74 - - 49 57 84 affic minutes perGSMsubscriptionmonth,generated andterminated affic minutes perGSMsubscriptionmonth,generated andterminated rg eeu e S usrpinprmnh(RU:9 417-- - erage revenue perGSMsubscriptionmonth(ARPU): 107 94 90 erage revenue perGSMsubscription month(ARPU): 3) 1) 2) 1) 2) Annual Report2003,Agentel (Agency fortelecommunications inMontenegro) Serbia andMontenegro Statistical Office EIU (EconomistIntelligence Unit) CBCG (Central BankofMontenegro) ITU (International Telecom Unit) 1) 1) 1) 1) 1) 1) 1) 1) 1) 1) 1) 1) C yvtrGM(kan)4. ,5 45 6,252 (%) 47.2 (inmillions) Pr (inmillions) Kyivstar GSM(Ukraine) P owned by Telenor no S Hnay 0027034 2,770 10.0 annon GSM(Hungary) maisPplto usrpin share subscriptions Population ompanies mneGM(otngo . 7 58 279 0.7 omonte GSM(Montenegro) 603,700 13,812 1,420 2,378 -12% 0.62 68.5 47.2 -1.0 0.6 45 78 Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004 estimate (%) GDP perhead(US$PPP)–2004estimate Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) elecom revenues (%oftotalGDP, 2002) elecom revenues (%oftotalGDP, 2002) o fmbl Market No. ofmobile ------1) 1) ------2) 3) 1) 1) 2) 3) 2) 3) 1) 5,930 4.3% 3.0% 12.0 28% 106 203 1.2 4.5 9.0 23

Telenor ASA Annual Report 2004 PAGE 25 Europe Telenor ASA Annual Report 2004 PAGE 26 Asia A sia Pr Loong Tuck Weng oduct Management, DiGi’s Headof Malaysia Head ofProduct ManagementatDiGi.Com. innovative products atfair prices“,saysLoongTuck Weng, mer andsmart solutions toitscusto-offers simple withTelenor’smarket. Inline strategy, DiGi inthe of strengthening itsposition scriber growth withthekeyobjective “DiGi isfocused onprofitable sub- s through transparent pricingstructures and

Telenor ASA Annual Report 2004 PAGE 27 Asia Asia “GrameenPhone wants to develop its position as the number one mobile opera- tor in Bangladesh. Our ability to rapidly adjust to competitive changes and market dynamics will be key in achieving the objective of continued market leadership in combination with strong financial performance,” says Kafil H.S. Muyeed, Deputy Director of Marketing Divison at GrameenPhone. sia A AGE 28 P enor ASA Annual Report 2004 enor ASA Annual l Te

Malaysia Consolidation ensured that the number of that a nationwide coverage requirement Growth in the Malaysian mobile market Malaysian mobile operators was reduced would be imposed in Malaysia, to be is expected to continue at a rapid pace, from five to three in 2003. The market is achieved by year-end 2006. spurred on by lower prices, improved net- becoming increasingly competitive, driven work coverage and new services. At the by aggressive marketing campaigns and DiGi.Com end of 2004, the total number of sub- innovative new products. DiGi.Com is one of three GSM operators in scriptions was 14.6 million; or a mobile Malaysia. At year-end 2004, DiGi’s market penetration of 57%, compared to 44% In May 2004, the Ministry of Energy, Water share was 22%. In the course of 2004 alone, at year-end 2003. and Communication (MEWC) announced and in the spite of fierce competition, DiGi Kafil H.S. Muyeed Deputy Director of Marketing Division at GrameenPhone, Bangladesh

Mobile data continued to gain Phone and the second largest operator momentum, generating 16% of DiGi was launched in the fourth quarter of 2004. mobile revenues in the fourth quarter. In addition, GrameenPhone signed 36 inter- national roaming agreements during the As part of the company’s commitment year, bringing the total number of such to mobile data growth DiGi opened agreements to 230 at year-end. the country’s first high speed mobile network, and has successfully capita- GrameenPhone continued to focus on lised on EDGE technology to provide extending network coverage and capacity a range of new and exciting products and on improving the quality of its services. and services. Such services include GrameenPhone more than doubled its Mobile TV and M-gaming, as well as number of base stations during the year, high-speed data packages. Today providing coverage to 52% of the popula- DiGi offers the country’s most com- tion by year-end 2004. prehensive EDGE functionalities, focusing on main cities, tourist hubs GrameenPhone launched commercial and on the most heavily trafficked mobile services in 1997 and is the largest routes. of four mobile operators in Bangladesh. Telenor holds a 62% ownership share in Telenor has a 61% ownership share the company. in DiGi.com. The company is listed on More information: www.grameenphone.com sia

the Stock Exchange in Kuala Lumpur. A More information: www.digi.com.my Thailand The Thai mobile market underwent a period AGE 29 Bangladesh of strong growth in 2001 and 2002. Since then P The Bangladeshi mobile market grew the growth rate has been flattening. At the end rapidly in 2004. However, the growth of 2004, the mobile penetration was estimated potential is still significant, with mobile at 43%, which amounts to a total number of penetration at year-end 2004 at a subscriptions of 27 million. modest 2.8%, and a fixed line pene- tration of only 0.7%. At the end of The increased number of operators in the Thai 2004 there were four mobile operators mobile market has led to significantly tougher enor ASA Annual Report 2004 enor ASA Annual in the country, three GSM and one competition, especially in the Bangkok area, l Te CDMA operator. which is the stronghold of a number of smaller players, as well as of the three major mobile With growing interest from large operators. This has led to a further reduction international players, the struggle for in tariffs and the introduction of selective acquired more than one million subscrip- market shares is expected to intensify in handset subsidies. tions, securing new revenue growth and coming years. increased market shares. In August 2004, the Thai Senate established GrameenPhone the country’s first independent telecommuni- DiGi has positioned itself as an attractive GrameenPhone is the leading operator in cations regulator, The National Telecom and innovative mobile operator offering Bangladesh with a market share of 62% at Commission (NTC). NTC will be responsible for advanced easy-to-use services and the end of 2004. The company more than granting new licenses and for other liberalisa- easy-to-understand tariffs. doubled its subscriptions base in 2004. tion schemes that are set to take place in the telecommunications industry. This is perceived Interoperable SMS between Grameen- as another step on the road to deregulation Telenor ASA Annual Report 2004 PAGE 30 Asia u cept waspromoted through an“easyto succesful withitsHappybrand. Thecon- In theprepaid segment,DTAC hasbeen businesses. market forsmallandmedium-sized duced newoffersforcustomers inthe ages forpost-paidcustomers andintro- company successfully launched newpack- throughout 2004.Inthepastyear, the in2003,andcontinued efforts initiated re are met.Thecompanyhascontinuedto approach toensure thatindividual needs andinnovationwithasegmentedservices In 2004,DTAC hasfocused oncustomer share. DTACpetition, hasmaintained itsmarket subscriptions.Despite fierce com- million 7.8 at theendof200429%,equalling withanestimatedmarketshare Thailand DTAC isthesecondlargestoperator in DTAC force. as anewinterconnection regime comesinto r NTC’s role, asareduced feeisdue to licence and operators are expected tobenefitfrom A offer nationwide MMSusage.offer nationwide to only prepaid in Thailand subscription The Happysubscriptionhasalsobeenthe rate flat nationwide andpersecondtariffs. eplace thepresent revenue sharingsystem nderstand” tariff system, offeringa ap thebenefitsofitsintensive post-paid sia cur nately pre-paid, with95%ofallcustomers ThePakistaniservices. marketispredomi- three ofwhichare currently offeringGSM P With Telenor Pakistan entering themarket, Te market penetration of5.2%. the endofyear represents anoverall end 2003.Thetotal subscriber baseat growth atyear- of139%,up from 3.3million December alone.Thisamounts toanannual reported were inthemonthof additions subscriptions. Astaggering 700,000new totalyear withanestimated of7.9million was registered throughout 2004,endingthe Healthysubscriberopportunities. growth emerging phase,withsignificant growth inan The Pakistani marketisstill mobile P www.dtac.co.thMore information: (through UCOM)40.3% oftheshares. of 2004held,directly andindirectly Te company wasfounded inAugust 1989. on theSingapore Stock Exchange.The ra To in 2005. to investinnetworkcapacity andquality continue stations andthecompanywill its networkin2004,adding630newbase DTAC hasgreatly of improved thequality akistan now counts six mobile operators,akistan nowcounts sixmobile akistan t l t l ing under thebrand nameDTAC, islisted enor entered in2000,andattheend al Access Communication (TAC), ope- r enor Pakistanenor ently onpre-paid subscriptionplans. More www.telenorpakistan.com information: u launched platform,were full multimedia witha services, 2005, commercial mobile intheworld.On15Marchlargest country inhabitants, isthesixth with its150million inPakistan, GSMlicence nationwide which, 2004,TelenorOn 14April wonthebidfora mand formore advancedismet. services toensureEDGE functionality thatthede- P enue growth intheyearsahead.Telenor high customer uptake andsubstantial rev- company expectsthisstrategy toresult in customer toaclear focus,In addition the to itscustomers. margin andensure superior coverage quality requirementsthe license withacomfortable r firmly committed topursuing anaggressive fourth yearofoperation. Telenor Pakistan is age to70%ofPakistan's bythe population t A 12,000 18,000 24,000 ollout strategy, ittomeet enable whichwill erms, Telenor Pakistan shallprovide cover- 6,000 nder thenameTelenor Pakistan. akistan alsoplanstointroduce GPRSand ccording toTelenor Pakistan’s licence 0 ownership interests inmillions) 2000–2004 (basedonTelenor’s proportional subscriptionsoutsideNorway Mobile 00 01 02 03 04 IICM(AASA 0420 0220 2000 2001 2002 2003 1.519 2004 2.101 1.616 3.067 2.207 3.242 Av Tr – ofwhichprepaid (100%inthousands) subscriptions(100%inthousands) No. ofmobile DIGI.COM (MALAYSIA) Source: GDP perhead(US$)2004estimate P P P Land Area (sqKM) P MALAYSIA aktsaeGM()6 26 069 0,2 70 0,5 69 0,9 49 62 1,3 2000 279 62 191 2001 2,8 563 464 2002 899 769 2003 2.092 2004 1.141 Source:: 19 GDP perhead(US$)2004estimate 2.388 P P 36 P 20 Land Area (sqKM) P P 44 22 telephony penetrationMobile (%) 57 Market share GSM (%) Av Tr – ofwhichprepaid (100%inthousands) subscriptions(100%inthousands) No. ofmobile GRAMEENPHONE (BANGLADESH) Source: GDP perhead(US$)2004estimate P P P Land Area (sqKM) P BANGLADESH telephony penetrationMobile (%) Market share GSM(%) AKISTAN opulation inUrbanareas (2003,%oftotal) opulation growth (%average 1999–2003) opulation persqKM opulation (2004,in millions) opulation inUrbanareas (2002,%oftotal) opulation growth (%average 1998–2002) opulation persqKM opulation (2004,inmillions) opulation inUrbanareas (2002,%oftotal) opulation growth (%average 1998–2002) opulation persqKM opulation (2004,inmillions) 20% 40% 60% 80% fi iue e S usrpinprmnh eeae n emntd1716189 176 167 affic minutes perGSMsubscriptionmonth,generated andterminated fi iue e S usrpinprmnh eeae n emntd24372836256 316 298 317 244 affic minutes perGSMsubscriptionmonth,generated andterminated 0% rg eeu e S usrpinprmnh(RU:1017152 117 110 erage revenue perGSMsubscription month(ARPU): rg eeu e S usrpinprmnh(RU:16161210260 190 172 136 106 erage revenue perGSMsubscriptionmonth(ARPU): atr uoe Asia/Pacific Eastern Europe ore taeyAayis aur 05Source: Strategy 2005 Analytics, January Source: Strategy 2005 Analytics, January Ac 01 tual andexpected penetration (%) W 02 senErp Central/ estern Europe 2) 1) 2) 1) 2) 1) 03 ITU (International Telecom Unit) EIU (EconomistIntelligence Unit) ITU (International Telecom Unit) ITU (International Telecom Unit) EIU (EconomistIntelligence Unit) EIU (EconomistIntelligence Unit) 04 05 1) 1) 1) 06 1) 1) 1) 07 08 1) 1) 1) 09 10 1) 1) 1) 1) 1) 1) 1) 1) 1) 1,000 250 500 750 0 atr uoe Asia/Pacific Eastern Europe in GSMusers(inmillions) A 01 ctual andexpected development W 02 senErp Central/ estern Europe 03 330,113 796,095 147.570 153.7 4,520 04 38.8 23,4 59.4 25.5 520 193 420 915 135 2.2 1,5 2.4 77 05 06 07 Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004 estimate (%) GDP perhead(US$PPP)–2004estimate Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) GDP perhead(US$PPP)–2004estimate Fixed linepenetration (%),2003 revenuesMobile (%oftotalGDP, 2002) T Inflation 2004estimate (%) Real GDPgrowth 2004estimate (%) GDP perhead(US$PPP)–2004estimate elecom revenues (%oftotalGDP, 2002) elecom revenues (%oftotalGDP, 2002) elecom revenues (%oftotalGDP, 2002) 08 09 10 1) 1) 1) 2) 2) 2) 1) 1) 1) 2) 2) 2) 2) 2) 2) 1) 1) 1) 10,580 2,210 1.500 2,6 5.0 1.4 7.7 2.7 0.5 2.4 7.4 6.3 0,5 0,5 1,1 6,0 5,5 18

Telenor ASA Annual Report 2004 PAGE 31 Asia Trust is essential. Telenor’s ambition is to be a leader in integrating social responsibility in its operations. AGE 32 P enor ASA Annual Report 2004 enor ASA Annual l Te Telenor ASA Annual Report 2004 PAGE 33 Group Management

From left: Stig Eide Sivertsen, Jan Edvard Thygesen, Arve Johansen, Jon Fredrik Baksaas, Torstein Moland and Morten Karlsen Sørby.

JON FREDRIK BAKSAAS ARVE JOHANSEN JAN EDVARD THYGESEN has served as President and Chief Executive has served as Senior Executive Vice President has served as Executive Vice President since Officer since 21 June 2002. Mr. Baksaas joined since 1999. Since 2000 he has held the position 1999. From January 2005, he has served as us in 1989 and served as Deputy Chief Execu- as head of Telenor’s International mobile oper- Chief Executive Officer of Sonofon. In 2004, tive Officer between 1997 and 21 June 2002. ations. Mr. Johansen joined us in 1989 and has he held the position of Executive Vice President Mr. Baksaas has also held positions as Director held a number of positions in Telenor, including and General Manager of Telenor Nordic Mobile. of Corporate Finance, Executive Vice President, Chief Executive Officer of Telenor International Since joining us in 1979, Mr. Thygesen has held

Group Management Group and Chief Executive Officer of TBK AS. Before AS. Prior to joining Telenor, Mr. Johansen was various positions, including Executive Vice joining us, he held finance-related positions at employed by EB Telecom as Executive Vice President of Telenor Mobil, President of Telenor Aker AS, Stolt- Nielsen Seaway and Det Norske President, by the Norwegian Institute of Invest AS, Executive Vice President of Telenor AGE 34 P Veritas. Mr. Baksaas is also a board member of Technology as research engineer and by ELAB. Bedrift AS and President of Telenor Nett AS. Svenska Handelsbanken AB and Aker Kværner Mr. Johansen received a M.Sc in electrical He has also served as President of Esat Digi- ASA, and a member of the counsel of Det engineering (telecommunications) from the fone and Televerket. Mr. Thygesen received a norske Veritas. Mr. Baksaas received a M.Sc Norwegian Institute of Technology and partici- B.Sc in electronics and telecommunications from the Norwegian School of Economics and pated in the Program for Management from the Norwegian Institute of Technology. Business Administration and has attended the Development at the Harvard Business School. Program for Executive Development at IMD in STIG EIDE SIVERTSEN Lausanne, Switzerland. MORTEN KARLSEN SØRBY has served as Executive Vice President since enor ASA Annual Report 2004 enor ASA Annual l has served as Executive Vice President since 1999. He is head of Telenor’s Broadcast opera- Te TORSTEIN MOLAND January 2003. Since January 2005 he has held tions. Mr. Sivertsen joined the Company in has served as Senior Executive Vice President the position as head of Telenor’s Nordic mobile 1997 as the Director of Finance and chief since 2000 and Chief Financial Officer of Telenor and fixed operations. Mr. Sørby joined us in accountant for Telenor Link AS. Mr. Sivertsen since 1997. Prior to joining us in 1997, Mr. Moland 1993 and has since held a number of senior previously held positions as Chief Executive served as Governor of the Central Bank of positions in Telenor, including Deputy Chief Officer of Nettavisen AS and Chief Financial Norway and as Executive Vice President and Executive Officer of Telenor Mobile and Officer of Petroleum Geo-Services ASA and Chief Financial Officer of Norske Skog. He had General Manager of Telenor International AS. Schibsted ASA. Mr. Sivertsen holds elementary previously served at the Norwegian Ministry of He has previously worked at Arthur Andersen and supplementary degrees in law from the Finance, where he worked on economic policy, & Co in Oslo. Mr. Sørby holds a M.Sc in Business University of Bergen and a Master of Business and later as the secretary of state to the Prime Administration and is a state licensed public Administration from Durham University. Minister. Mr. Moland received an honors degree accountant (Norway). He also has qualifica- in economics from the University of Oslo and tions from IMD, Lausanne. engaged in additional studies at the Massachusetts Institute of Technology. the activities are subject to. the activities within theframework requirements oftheregulations, andrecommendations ofgoodcorporateprinciples beendevelopedindependently, governancehave for value andtrustworthiness, creation andforaccesstocapital. Telenor’s ra among thecompany’s theCorpo- owners, means openinteraction andcooperation In thiscontext goodcorporate governance and Socialresponsibility Good Corporate Governance, Ethics Te C r and internal controls tofinancial relating (SOA), whichincludes strictrequirements Nasdaq, Act andtheSarbanes-Oxley by theSecurities ExchangeCommission and withregulationspromulgatedcompliance onNasdaq involves Listing exchange rules. andUSstock with bothNorwegian issuer ofshares thecompanymust comply Exchange andNasdaq intheUS.As an Te tries where theGroup conducts business. asthecoun- applicable aswell inNorway Te achieving asuccessful development. bepivotal in will organisation a pliable and restructuring. employeesand Flexible involvechanges industrial developmentwill and business ethics.Social,competitive trating onvalue-based and leadership – values bepromoted thatwill byconcen- in informed decisions.Telenor alsofocuses on that interested tomake maybeable parties emphasisingtransparencyinformation, so provides bothfinancialandnon-financial panies. Whensubmittingreports, Telenor Earning publictrust forallcom- isessential hensive way. ested inanintegrated parties andcompre- porate governance,includes alltheseinter- re The presentation givenherein isseekingto authorities andsocietyingeneral, etc. cu suchparties astheGroup’s employees, asotherinterestedManagement, aswell eporting. dividual responsibility andpersonalintegritydividual responsibility te fl l l stomers, suppliers,creditors, public enor’s shares are listed ontheOsloStock enor issubjectandregulations torules ect thatTelenor, whenengaging incor- l

A enor considersgoodcorporate requirement governancetobeanecessary orporate Governance ssembly, theBoard andGroup has developedaninteractive, computer- comply withtheCodes ofConduct, Telenor In order tomakeiteasierunderstand and operational control. companiesofwhichTelenornational has andinter- implemented attheNorwegian During 2004 theCodes ofConduct were onbehalfofTelenor.and anyoneacting members, managers,employees,hired staff t nature inques- andextent oftheviolation adapted result insanctions will tosuit the Fa businessdemands formeeting objectives. they areand faced withcompetition should proceed work, when,intheirdaily the standards forhowindividual employees contain specificandpractical andset rules, in allaspectsoftheGroup’s They activities. important forsecuring goodbusiness ethics C agement toolforTelenor’s The activities. adopted bytheBoard andare akeyman- Te bi company’s are basedonresponsi- activities anchored andthatthe intheorganisation ensure thatTelenor’s values are firmly long-term value theBoard creation will created bythecompany. Inorder tosecure v Experience showsthatTelenor’s established mutually understood. r v and structures whichcan efficientlysecure the existence ofinternalprocedures rules, Management isresponsibleforensuring for goodcorporate governance.TheGroup ject are included inthe overall framework mendations towhichthecompanyissub- However, requirements rules, andrecom- areprinciples formulated independently. Te esponsibilities are clearly setout are and clearly esponsibilities ion. TheCodes ofConduct applytoBoard alues are closelyconnected withthevalues alue andwhere creation, i.a.authority and odes ofConduct coverareas whichare li l l il enor’s Codes ofConduct been have enor’s good corporate governance ty andgoodbusiness practice atalllevels. ure

to complywiththeCodes ofConduct ensuring acommonbusiness ethicsplat- Group inthefightagainst involve corruption most important measures employedbythe t ate andworkstoprevent corruption corrup- norms.Telenorinternational nottoler- will compromising adopted ethical or principles business indemandingmarketswithout toachievesuccessthat itispossible in Te ethics issues represent achallenge. countries andbusiness in whichcorruption Te viduals from different partsoftheGroup. composedofindi- Officer andisotherwise Co to Telenor’s Group Management.The authority, but maymakerecommendations The Council hasnodecision-making matters relatingtoethicsandreputation. ent forum whichcan bringup fordiscussion Group. TheEthical Council isanindepend- promotewill ethical awareness withinthe C On thebasisofcompany’s values and during thefirstquarter of2005. Group’s companies otherinternational beimplementedatthe of 2004,andwill Nordic companiesduring thefinalquarter gramme atTelenor’s wasimplemented r advice indifficult andalways situations, employees shouldalwaysseekhelpand back provided intheprogramme isthat C on theirunderstanding oftheCodes of individual provide participants advicebased t with anethical intheir work situa- dilemma employees around theworld whoare faced video inquiriesreceived from fictitious difficulty. are presented Thedilemmas as of ethical ofvarying degrees of dilemmas employees are confronted withanumber based training programme whereby eport irregularities.Thetraining pro- ion at all levels oftheorganisation. The ion atalllevels ion, whichtheyneedhelpresolving. The odes ofConduct, Telenor’s Ethical Council onduct. Arecurring inthefeed- element l l u enor’s toillustrate mayserve activities enor currently conducts business in ncil ischaired bytheChiefExecutivencil

Telenor ASA Annual Report 2004 PAGE 35 Corporate Governance Telenor ASA Annual Report 2004 PAGE 36 Corporate Governance u In 2005Telenor thework continue will found onwww.telenor.com/csr/ of otherfactors. Morecan information be ensure asanumber safeproducts, aswell our surrounding environment, our effortsto employees, our relationshiptonature and treat our concern themannerinwhichwe just goodbusinessThey ethicsatalllevels. business conductible involvemore than Te conducts business. inthecountriesindustry where Telenor contribute tosecure sustainable trade and simply toprotect Telenor’s reputation, but These effortsare therefore notundertaken r and ensuring thatethical issues maybe involvingethicalwith situations dilemmas, managers andemployeesinhowtodeal operational control, training ofindividual form atallcompanieswhere Telenor has C Te Business ethicshasfeatured prominently in authorities andotherinterested parties. joint venture public partners,competitors, to Telenor’s customers, employees, owners, r goals oflong-term value Such creation. ment tosuccessfully achievetheGroup’s l systematically atall toinstall responsibility healthy corporate culture. Telenor works responsibleand development ofapositive, good corporate governanceandforfurther provide Telenor withasound platform for Internal andexternalprocedures rules subsidiaries.international alsobeimplementedat will nal rules and strategic Theadapted direction. inter- driven management,operational excellence Te alsotakeadaptations intoaccount will efficient Corporate LevelControls. The control involvesgood, offinancialreporting One such requirement tointernal relating controls tofinancialreporting. relating ments placinggreater focus oninternal beadapted will tonewUSrequire-nal rules ested During parties. 2005,Telenor’s inter- ofotherinter- expectations as thejustified both Telenor’s requirements own aswell da training andcontrol mechanismsare up to evels oftheGroup’s –arequire- activities aised anddiscussed inallunits intheGroup. esponsibility isalsoimportant inrelation esponsibility ndertaken toensure thatguidelines, l l l orporate Governance te enor’s efforts toensure sociallyrespons- enor’s workonsocialresponsibility. enor’s requirements relating tovalue-

and adequate, andthattheymeet vo Shareholders whoare unabletoattend may A and accords withthecompany’s of Articles aspossible, is setasclosetothemeeting for discussion. forregistration Thedeadline holders tomakedecisionsabout allitems prepared share- insuch awayastoenable w C agenda papers,including theNomination and theBoard. Theshareholders receive placeforshareholders meeting effective aims toensure thattheAGMremains an cise theirrightsbyattending theAGM,and as manyshareholders toexer- aspossible ny’s highest authority. Telenor encourages the shareholders. TheAGMisthecompa- company’s other bodieswhoare electedby andbythosemembersofthe Meeting through thecompany’s Annual General interests ensured areThe owners’ primarily Meeting (AGM) Owners’ interests –AnnualGeneral u Tr Te through ofTrade theMinistry andIndustry. shareholder –theKingdomofNorway 50% ofTelenor byonesingle isowned and operative corporate bodies.More than agement relates tothesebodiesasactive company’s various bodies,andthatman- rightsandcontrol throughownership the whenexercising their their responsibilities are awareIt isimportant of thattheowners corporate governanceatTelenor. interests formanintegral partofgood and societyingeneral. Accordingly, such ers, e.g.employees,customers, creditors The Board alsoensures theinterests ofoth- attends totheinterests oftheshareholders. v By pursuing ofcreating itsmainobjective pany’s AGM. C A of intheArticles AGM bystipulating ensure independentchairmanshipofthe company hasadopted procedures to appears ontheagenda oftheAGM.The CommitteeNomination whenanelection so are therepresentatives whositonthe ny’s auditor are present attheAGM,and Industry’s ofTelenor ownership istosecure expressed ofTrade aimoftheMinistry and alue for owners, theBoardalue ofTelenor forowners, ndue overthecompany. influence The ommittee’s recommendations, two atleast orporate Assembly shallchairthecom- ssociation, i.e.three daysssociation, before theAGM. ssociation thattheChairmanof ssociation eeks priortotheAGM.Agenda papersare ade andIndustrydoesnotexertany l te enor is of the opinion that the Ministry of enor isoftheopinionthatMinistry

by proxy. TheBoard andthecompa- positions. ofvaluesisation innon-critical ownership TV distributor inNorway, asthereal- aswell development ofBroadcast astheleading Strategic alsoinvolvescontinued direction expansion opportunities,mainlyinmobile. Nordic defined markets,andselective expansionin opportunities formobile also involvesacommitmenttoseeknew or undesirable togain operational control. It ofwhichitisimpossible dispose ofactivities strategy, whereby seekto thecompanywill It alsocomprisesTelenor’s “control orexit” geographical withinlimited ownership areas. companywithlong-term industrial mobile development ofTelenor asaninternational of factors, themainonebeingfurther Strategic directioncomprisesanumber ofTelenor’sof therealisation goals. agement, asbeingimportant inrespect t focus areas, i.e.strategic opera- direction, The Group’s strategy three identifies main Annual Report.Seepage153. and mainstrategies are presented inthe A of Theobjectclause oftheArticles Articles. li its stated andmainstrategies objectives the company’s ofAssociation,and Articles Te management model A cerned. nature oftheindividual companiescon- thedistinctive and diversityreflecting the Board shallensure capacity expertise, of made attheAGMandcomposition decisions andresolutions shallbe owner ofTradeMinistry andIndustry’s ownership, shareholders, transparency withrespect to (2001–2002), including treatment equal of Pp. 9and52–59ofWhite Paper no.22 Cf. relatingtogoodownership. principles ship managementshallbebasedon10 ofTradeThe Ministry andIndustry’s owner- and 52ofWhite Paper no.22(2001–2002). cf. toownership, relating Pp.9 principles issubjectIndustry defined tomore clearly c White Paper no.22(2001–2002).Inits cf.anchoring oftheactivities, P. 119of valueoptimal andtosecure national ional excellence andvalue-drivenional excellence man- e withintheframework provided bythe apacity asowner, ofTrade theMinistry and ssociation andthecompany’sssociation objectives ctivities, strategic focusareas and l enor’s setout are in clearly activities management capacity, management This process provides ofoverall details Leadership DevelopmentProcess (TLDP). demands andbusiness results; Telenor d develop andreward managersinaccor- integrated process designedtoevaluate, re togeneralin 2005.Inaddition management has operational becompleted control will international companiesofwhichTelenor theserequirementsImplementing atthe groups atTelenor’s companies. Norwegian byallthemanagement and reviewed ment requirements incorporated were into conducts business. In2004,thesemanage- markets andcultures inwhich theGroup and alsotake intoaccount thedifferent framework formanagementatTelenor, agement requirements thus definethe should developwithinTelenor. Theseman- be developedandhowindividual managers company’s ofmanagementshould style stitute aframework tohowthe relating Te re in accordance withTelenor’s management t business plan,andalsofortheircontribu- cial results assetout inthecompany’s contributions inrespect ofachievingfinan- managers shouldberewarded fortheir V withnewareascontinued offocus in2005. tomer-oriented company. Thisworkis towards andmore amore cus- simplified effort wasfocused ondevelopingTelenor t a considerable amount ofworkwasunder- Nordic region andinternationally. In2004 operations market,the inthedomestic more, italsoinvolvesafocus onoptimising ofproductsfection andprocesses. Further- as simplification, standardisation andper- customerand clearer aswell orientation, Operational involvesstronger excellence Themostimportant oftheseindexesare Indexes,FTSE4GoodandStorebrand’s theDowJonesSustainability “BestinClass indexes. B aken toimprove efficiency. Thisoverall ion tothedevelopmentoforganisation ance withTelenor’s leadership own alue-driven managementmeansthat ased onevaluations ofitssocial,ethical andenvironmental performance,Telenor islistedandhighlyranked onprestigious i qu qu l enor’s managementrequirements con- irements, Telenor hasinitiatedan irements. countries. to assetmanagersin14 beensold have 51 licenses each industry. Sincelaunch, the investableuniverse from in leaders the sustainability in-class approach comprising followsabest- Indexes” family The “DowJonesSustainability improvements inequity andcash flow investmentopportunities.Recent esting shares andinter- shouldbeseenasliquid 2004, must beseeninthiscontext. Telenor chases oftreasury shares, undertaken in and increased share value. Telenor’s repur- should comeintheformofcash dividends Such return riskprofiles. ments withsimilar equal toalternativeinvest- ments atleast shareholders withareturn ontheirinvest- ofprovidingsponds withtheobjective its predictable dividendpolicy. Thiscorre- bydrawingbest served up along-term and TheBoard thatTelenorprofile. believes is company’s strategy objectives, andrisk that thecompany’s equity isadapted tothe ers meansacontinuous focus onensuring Te C t andundermeetings thecompany’s incen- up inBusinessfollowed Reviews,atBoard and role asanemployer. Thesematters are c as Telenor’s inthemarket,its position number ofnon-financialparameters such t parameters such asoperating profits, capi- toanumberThis applies offinancial r model under whichtargets are setand Te in2005. becompleted will 70% ofallmanagersatTelenor. Theprocess foraround2004, TLDPwasimplemented r thediversity managers, andalsoreflects relatingtocareerdetails for objectives TLDPalsoprovidesmanagement positions. asarealso identified, candidates forfuture re t Under thisprocess, candidates forkeyposi- which Telenor recruits relevant expertise. te esults followed up inasystematicmanner.esults followed toe.g.genderandnationality.elating In al yieldandcash flow. toa Italsoapplies ive system. ions arealongwiththetraining identified, apacity for innovation, internalapacity forinnovation, procedures ompany capitalanddividends qu ams, key positions –andtheextentams, keypositions to l l enor’s value goalofcreating foritsown- enor hasestablishedamanagement ired to fill such positions. Talents suchired positions. tofill are those companies. to facilitate investmentin standards,ponsibility and r panies thatmeetglobally ur has beendesignedtomeas- The FTSE4GoodIndexSeries ecognised corporate res- e theperformanceofcom- est. Board membersmust notparticipate in of anyvested interests ofinter- orconflicts informtheirsuperiors initiative, at theirown Group’s Codes ofConduct, individuals shall, shareholders. Inaccordance withthe introduce guidelinesforits and will similar B t ent thirdwhensignificant parties transac- v submitted totheAGM.Telenor prepares inaworkingdocument indetail outlined shareholders. Thereasons be forsuch will mon interests ofthecompanyandits such bebasedonthecom- proposals will when undertaking capital expansions,then shareholders bewaived rights ofexisting pose totheAGMthatpre-emptive Stock Exchange.IftheBoard wishestopro- chases oftreasury shares take placeonthe also reflected inthefact thatTelenor’s pur- equal treatment ofshareholders. Thisis strictly adheresrelatingto totheprinciple status through oneclassofshares. Telenor All Telenor shareholdersthesame have B notradinghave restrictionsintheformof Te close relatives/friends of shareholders andtransactions with Tr one year, theAGMinMay2005. i.e.until also granted issue authority foraperiodof rised theBoard torepurchase shares and dends pershare. In2004theAGMautho- evengrowthatively inannual ordinarydivi- profits, andthecompanyisaimingforarel- annual to40–60%ofnormalised amounting shareholders tobepaidannual dividends attheAGMin2004.Theaimisfor policy accounted foranamendmenttodividends anticipated capital requirements, theBoard B as through therepurchaseas well ofshares. holders intheformofincreased dividends, Telenorenable totransfer value toshare- ions take place between thecompanyand ions take placebetween alue assessmentssubmitted byindepend- ased onTelenor’s and financialposition oard membersorcloserelatives/friends, etc. limitations, oard consent,ownership ansferral rights,equaltreatment l enor’s shares are freely transferable and social performance. le BEST INCLASSstatus for earned companies thathave isawarded tothe cellence Storebrand's symbolofex- ading environmental and nternational ”.

Telenor ASA Annual Report 2004 PAGE 37 Corporate Governance Telenor ASA Annual Report 2004 PAGE 38 Corporate Governance C A members andalternates totheCorporate t totheAGMrecommenda-for submitting CommitteeThe Nomination isresponsible bodies. the remuneration tomembersofthese A poses candidates totheCorporate Committeemembers. TheNomination pro- from theBoard’s shareholder-elected withproposalselected members,inline by theCorporate Assembly’s shareholder- d CommitteeThe Nomination worksinaccor- C Management shallnotbemembersofthe elected. TheCEOormembersoftheGroup general managementandthosewhoare the needforindependenceinrespect of ers’ interests shouldberepresented andto given i.a.tothefact thatbroad sharehold- Committee,Nomination consideration is memberstothe When appointing foratwo-yearperiod. elected members andalternates. Membersare C member iselectedbyandfrom the members are electedbytheAGMandone Committee.chairs theNomination Two the Corporate Assembly isamemberand r members whoare shareholders orwhorep- CommitteeThe Nomination consistsoffour ofAssociation. the Articles CommitteeNomination are included in regardingAGM. Further stipulations the d committee issetupnomination inaccor- committee, but anomination a ny tohave requirementIt isnotalegal forthecompa- Nomination committee Executive Officer. totheChief The samealsoapplies member concernedare opentoquestion. other reasons thequalifications ofthe or financialinterests inthematter, oriffor considered strong tohave vested personal mean thatthememberconcernedmust be them oranyoftheircloserelatives/friends, which, due relevance totheirparticular to discussions ordecisionsrelatingtoissues C esent theshareholders. TheChairmanof ions onthechoiceofshareholder-elected ance with instructions thatareance withinstructions laiddown ance withresolutions determined bythe orporate Assembly the choiceofshare- ommittee. orporate Assembly’s shareholder-elected ssembly, andrecommends tothe ssembly andtotheBoard. Italsoproposes orporate Governance A included inthecompany’s of Articles of theBoard bytheAGMand are laiddown oftheCorporatecomposition Assembly and concerningthe areas. Further stipulations inlimited,but important making powers The Corporate Assembly alsohasdecision- ment ofcompanybusiness. body whichsupervisestheBoard’s manage- body,Norwegian asupervisory isprimarily T Directors. C Pu and remuneration directors, composition,independence The corporate assembly andboardof Recommendations. 7 oftheNorwegian proposals totheCommittee withItem inline re of theCommittee are, andalsoinformation company’s about website whothemembers Te C is dealtwithseparately bytheNomination The Board’s annual self-evaluation report proposals totheChairmanofBoard. CommitteeNomination forwards these holder-elected Board members.The women. and four oftheten Board membersare fifteen membersoftheCorporate Assembly c Telenor’smeeting needsforexpertise, and Board, emphasisisalsoplacedon Telenor’sappointing Corporate Assembly sentation ofTelenor’s shareholders. When shall bemadeup toensure abroad repre- The Corporate Assembly andtheBoard B Te are electedfrom andbytheemployees. elected bytheshareholders andthree two years.Sevenofthesemembersare members whoare electedforaperiodof The Board ofDirectors hasatotal often are selectedfrom andbytheemployees. these members,withalternates, andfive tenof twoyears.Theshareholders of elect members whoare appointed foraperiod The Corporate Assembly hasatotal of15 apacity andbalanceddecisions.Six ofthe he Corporate Assembly, whichisadistinctly orporate Assembly andaBoard of ommittee. oard. ssociation. ga l l rsuant to Norwegian law,rsuant toNorwegian Telenor hasa enor will provide onthe information enor will enor’s CEOisnotamemberofthe r ding deadlines forthesubmission of ding deadlines Financial Statements. ber ofshares are included inNote 28in the shares inthecompany. ofthenum- Details ny’s managementare encouraged toown although Board membersandthecompa- B The companydoesnotprovide loansto interests shallbeapplied. sions forvested interests of andconflict est situationsarise,thecompany’s provi- Should vested interests orassociated inter- shareholder. independent ofthecompany’s main bers shall,forallmaterial respects, be company. Theshareholder-elected mem- substantial business withthe relations ti other membersortheCEO,closefamily c bers, emphasisisplacedontherelevant shareholder-elected mem- When electing oftheworkinvolved. complexity r B based ontheCorporate Assembly’s, the C by theshareholder-elected membersofthe Committeethe Nomination isdetermined by thelatter. Remuneration formembersof by theCorporate Assembly isdetermined neration forBoard memberswhoare elected A Remuneration formembersoftheCorporate consolidated accounts. Annual Reportunder Note 28ofthe sub-committees, are specifiedinthe ononeoftheBoard’s forsitting payable r pany. Remunerations tothe additional performance orshareinthecom- options not receive feesthataretoprofit linked by thecompanyinrecent yearsandc)do committees, notbeenemployed b)have insub- members orfeesforparticipation C t members a)donotreceive extra remunera- Furthermore, theshareholder-elected in theAnnual ReportandAccounts. company’s Board membersare highlighted andcapacityment. Theexpertise ofthe independent ofthecompany’s manage- C The shareholder-elected membersofthe esponsibilities, expertise, hours workedand expertise, esponsibilities, egular directors’ fees,intheformoffees ion from thecompanybeyondfeesfor andidate cross-relations with nothaving orporate Assembly. Allremunerations are orporate Assembly membersandBoard orporate Assembly andoftheBoard are es to the CEO, or having orrepresentinges totheCEO,orhaving ssembly isdetermined bytheAGM.Remu- oard membersorGroup Management, oard’s Committee’s andtheNomination Chairman oftheCommittee. TheVice bers. TheChairmanoftheBoard isalso the of three shareholder-elected Board mem- Te onthembytheBoard. specially bestowed otherthanpowers decision-making powers, committees anyindependent donothave sub-committees beensetup. have These order toprocess specificissues. Twosuch sub-committees beensetup whichhave in The Board can choosetoprepare issues in workandexpertise. of itsown The Board undertakes annual assessments w B who can actwhentheChairmanof The Board haselectedaDeputy Chairman andwork. ofresponsibility apportionment internalpetent managementwithclear for ensuring thatthecompanyhasacom- the company. TheBoard isalsoresponsible strategies, business plansandbudgets for to thedegree necessary, fordetermining and procedures, theBoard isresponsible, In accordance withthesaidguidelines competence. and evaluation oftheBoard’s and activity ontheusemation ofsteering committees ofcorporateprinciples governance,infor- ethical guidelinesandgenerally accepted d ensures are run thatactivities inaccor- establish amanagementsystem that dentiality, to competence, responsibility preparation ofagendas, privacy andconfi- to theBoard include forthe regulations The guidelinesandprocedures thatapply for Telenor ASA. accordance withguidelinesandprocedures r B tostatutoryIn addition requirements, the strategy andimplementation. w Annually theBoard adoptsaplanforits supervise thecompany’s management. the operation, to including aresponsibility company andtheproper organisationof r Pu The workoftheBoard ofDirectors egulations for the Board, as well asin fortheBoard,egulations aswell forthemanagementof esponsible ance withthecompany’s core values, oard toorought isunable the notlead oard worksinaccordance withspecial ork oftheBoard. ork withspecialemphasisonobjectives, l rsuant to Norwegian law,rsuant toNorwegian theBoard is enor’s Remuneration Committee consists suring thatthecompanyandGroup are Te of operations atTelenor ASAandinthe charge oftheday-to-day management The ChiefExecutive Officer(CEO)isin The ChiefExecutive Officer C pany, including theGroup’s values and those provisions whichapplytothecom- has goodinternal controls inrespect of The Board shallensure thatthecompany by theCorporate Assembly. should, inaccordance withthelaw, bemade AGM, exceptinsuch cases where decisions bedecidedbythe will oftheactivities sale Tr after becomesknown. theofferinquestion without such beingapproved bytheAGM prevent ofsuch theimplementation offers rights oradoptothermeasures designedto shares, theBoard notexercise itsissue will an offerissubmitted forthecompany’s for thecompany’s operations orshares. If seek toprevent orimpedeanyoffersmade B As C of accounts, control andaudits. TheAudit complaints from theemployeesinrespect r dures foradvance approval oftheauditor’s r r evaluation ofthecompany’s financial financial risks.Thisshallinclude athorough standing andevaluating operational and year, under- forthepurpose ofidentifying, C accordance withUSstandards. TheAudit re been approved bytheBoard tomeetthe members from theBoard, oneofwhichhas Te 2004. ra r r B mally twiceannually. Onbehalfofthe The Committee shallmeetasrequired, nor- membersforaperiodoftwoyears. elected shall beelectedbytheBoard’s shareholder- member. TheCommittee’s third member Chairman oftheBoard isalsoaCommittee emuneration, of andalsothehandling auditing,andestablishedproce-eporting, internal controleporting, offinancial emuneration tomanagers.TheRemune- emuneration for totheCEOandpolicy odes ofConduct. ommittee in2004. heldsevenmeetings ommittee per normallymeetsixtimes oard ofTelenor not,without just will cause, oard, theCommittee evaluates thetotal ansactions which in reality involve the ansactions t qu l l

ion Committee in heldtwomeetings enor Group, andisresponsibleforen- enor’s Audit Committee consistsoftwo re irements ofbeingaFinancialExpertin ga r ds offersforthecompany, the provide anassessmentoftheeffectiveness Beginning in2006,theCEOandCFO shall ny’s 302). financialreporting(SOASection u and anyirregularitiescommitted byindivid- changes inthecompany’s internal controls qu hensive personaldeclaration relating tothe Te with theannual reportingtotheSEC(20-F), given highpriorityatTelenor. Inconnection Risk managementandinternal control are C etc. thecompany’sbetween seniormanagers and coordination ing follow-up ofactivities and AGM.Thisalsoincludes strategy, ongo- it ly dealt withintheGroup Management’s week- fundamental matters tothecompanyare Issues ofimportant strategic, financialor key business areas atTelenor. andfunctions The Group Managementconsistofheads of Group Management governance. with Telenor’s ofgoodcorporate principles its functions,shallbemadeinaccordance subsidiaries, oftheboard, suchand election At C re provided thattheissues donot inquestion representative insubsidiaries,be anowner and running ofthecompany, theCEOwill As for theCEO. pursuant totheguidelinesandprocedures the Telenor Group beendrawnup have Guidelines ontheexercise ofauthority in toreport totheBoard.obligation be determined bytheBoard andtheCEO’s the CEO,CEO’s submission ofissues to of interests, thepowers ment ofownership ment oftheTelenor Group, themanage- cedures fortheCEO,coveringmanage- The Board hasdevisedguidelinesandpro- C and decisionsadopted bytheBoard, the d organised, run anddevelopedinaccor- als withacentral inthecompa- function ance withthelaw, ofAssociation Articles ems fortheBoard, theCorporate Assembly orporate Assembly ortheAGM. orporate Assembly andtheAGM. ontrol functions qu

meetings, including thepreparationmeetings, of l

ality of financial reporting, major offinancial reporting, ality the election tothe boards ofTelenor’sthe election enor’s CEOandCFOsubmit acompre- a partoftheday-to-day management ire thattheyarebytheBoard, handled

Telenor ASA Annual Report 2004 PAGE 39 Corporate Governance Telenor ASA Annual Report 2004 PAGE 40 Corporate Governance processing ofsuch matters. the investmentcriteria tobeused in the t relevantsists ofmemberswhohave exper- agement, ischaired bytheCFOandcon- c C C subsequently bereturned totheInvestment The evaluation ofsuch investmentsshall dealt withbytheInvestmentCommittee. Investmentsofacertain sizeareactivities. of ments, including andsales acquisitions qu The InvestmentCommittee shallprovide C to theCEOandinsomecases totheAudit t withinternalcompliance steering direc- through random including testing, ensuring of general steering andcontrol functions risk managementandprovides follow-up The Group Auditor helpstoensure good the CEO. ager. TheCompliance Officerreports to r of theGroup’s Codes ofConduct shouldbe r withTelenor’s doesnotconflict isation own t binding directionsissued bypublicauthori- with applicable law, andlegally regulations ance thatthecompanyactsinaccordance The Compliance assur- Officergivesquality as whenrequired. accounts andtheAnnual Report,aswell withreviewsconnection ofthequarterly C relevant TheDisclosurehave expertise. by theCFO,andconsistsofmemberswho ments are met.TheCommittee ischaired follow-up andhelpstoensure thatrequire- issues guidelinesforreporting,provides for financialreporting.TheCommittee company’s efforts tomeettherequirements The Disclosure Committee supports the priority project. has implementedacomprehensive high of31December2006,Telenorthe deadline thestrictUSrequirementsimplement by r of Telenor’s internal controls of itsfinancial C eported totheCompliance Officerorman- Anybreaches andguidelines. egulations 404).Inorder (SOASection to eporting ise. The company has devised a policy for ise. Thecompanyhasdevisedapolicy ions. TheGroup Internal Auditor reports ies, andthatinternal conduct intheorgan- apacity totheCEOandGroup Man- ommittee, in anadvisory whichfunctions ommittee forafinalanalysis.The ommittee andtheBoard. peryearin ommittee meetsfivetimes orporate Governance ality assuranceality ofthecompany’s invest- C upand arebytheCompensation followed ees are approved inadvance bytheAGM and share allocation schemesforemploy- The frameworks schemes tooption relating practicessation atTelenor. future strategy andguidelinesforcompen- w in2004.Theresultsimplemented ofthis three upperofmanagementwere levels overall practices compensation among the ence standards inorder tomapandassess C are submitted totheCompensation grammes andshare-based schemes,etc., r which affectthecompany’s executive andschemes mendations relating topolicy bers oftheGroup Management.Recom- staff managerswhoreport toothermem- and theirmanagementgroups,as aswell managers ofthecompany’s business areas ofthe informed aboutlevels thesalary The Compensation Committee isalsokept discussed bytheCompensation Committee. proposals before theyare implemented,are asamendment directly totheCEO,aswell relating toexecutivesation whoreport Thetotalsitu- benefits atameeting. salary turn determines theCEO’s andother salary r ers theCEO’s totalandpresents salary its fits. TheCompensation Committee consid- pensionsandotherbene- based incentives, salaries, bonuses andcommission,share- company’s chiefexecutives, including basic totalforthe formulating compensation B ing withtheCompensation Committee, the v which contributes towards thelong-term and employeesonthebasisofperformance Te Executive remunerations sidiaries andfinancialinvestments. the capital structure andfinancingofsub- as andcounterprofit liquidity risks, aswell Group’s capital structure, debt structure, r Te Te w Telenorfunction, Finance.Telenor Finance the companyhassetup acentral finance control ofthecompany’s financialaffairs, In order toensure overall managementand emuneration policy, including bonus pro- totheBoard,ecommendations whichin tointerestelating andcurrency risks,the alue intheGroup. creation Through work- ommittee. Allaspectsrelatingtoremuner- ommittee. Work designedtoobtain refer- oard helpstoensure independencewhen ork will formthebasisforformulating ork will orks inaccordance withtheguidelinesof l l l enor wishestoreward itsexecutives enor Board, whichdetermines rules enor’s Finance Policy, adopted bythe r and theorganisation.Bycomparing the relatingtoindividualambitions employees several toolsused for achievingTelenor’s simplification. The IVSprocess isoneof c prises targets andmanagement,human nal value-creation (IVS)whichcom- survey Each yearemployeesrespond toaninter- Strategic Focus andManagementModel). ment (TLDP, cf. aboveunder Activities, at managersandmanagementdevelop- beendirectedefforts in2004have primarily adopted strategic focus, thecompany’s ofitsemployees.Asexpertise aresult ofthe Te expectations. important tomeetmarketdemandsand managersandemployeesis between process. Goodcooperationimplementation company’s employeesintheplanningand aspect oftheseprocesses istoinvolvethe predictable andfair manner. Animportant that allrestructuring isimplementedina changes. Telenor toensure worksactively organisation whichisgoodatmaking siderable demandsinitscapacity asan thecompanyissubjectedditions, tocon- provide forvalue under creation such con- Te Inorder participant. for also anactive to technological developmentsinwhichitis change, andthecompanyalsohastorelate inmarketswhichare subjectactivities to advantage.petitive Telenor isengaged in enjoy theirworktobeanimportant com- Te also protected agreements. bycollective at anearlystage, etc.Theseinterests are t dismissalprotec-and workingconditions, which concerncompanytransfers, wages visions intheWorking Environment Act elected bytheemployees),andpro- C right tomembershipoftheBoard andthe C sions intheAct toPublic relating Limited ees’ interests are protected bytheprovi- law,In accordance withNorwegian employ- Employees Financial Statements. in theAnnual Reportunder Note 28inthe for othermanagerialemployeesare shown fortheCEOandtotal remunerationsations esults oftheannual IVSsurvey withTLDP, ion, information andtalks withemployees ion, information apital, process capital, and innovation orporate Assembly, etc.(representatives whichconcernthe ompanies (Norway), l l l enor placesemphasisondevelopingthe and enor tomaintain itscompetitiveness enor regards employeeswho skilled u the follow-up oftheboards ofthebusiness qu Business Review istheGroup’s internal Reviews are conducted quarterly. accounting. Business ReviewsandFinancial andregulationsfor with USprinciples from(effective 2005)andinaccordance including standards 2004) andinternational standardswith Norwegian (up toand r ofquarterly reports, annualThe compilation ments inaccordance withUSregulations. accounting andfinancialreportingrequire- Nasdaq, Telenor issubject tofurther As r foritsfinancial principles accounting Group isthereby tointernational adapting corresponding figures from 2004.The fromeffective thefirstquarter of2005,with t inaccordanceits reporting withInterna- ments must bemet.TheGroup conduct will accounting andfinancialreportingrequire- law,In accordance withNorwegian strict A during thecourse of 2005. beimplemented considered andwill and improvement measures are being presentedsurvey were inNovember2004, t environment alsowithrespect toproduc- to suggest improvements totheworking and efficiency. Employeesare encouraged ofproductivity andhighlevels satisfaction been madetoensure ofjob- highlevels qu surveys. Emphasishasbeenplacedonthe up inanumberbeen closelyfollowed of F environment. Themannerinwhichthe throughation newworkformsinadynamic for employeestoparticipateinvalue cre- F Employees shouldenjoytheirwork.The and jobsatisfaction. to worksolutions Te particular. employees ingeneral andmanagersin of improvement measures withrespect to a basisisachievedfortheimplementation vailing strategicvailing andvalue objectives drivers. and follow-up ofresults basedonthe pre- eports and20-Fshallbeinaccordance eporting. ional Financial Reporting Standardsional FinancialReporting (IFRS), ivity andefficiency. Theresults ofthelast ornebu worksforemployeeshas solution ornebu solution represents anopportunity nits. Thepurpose isthestrategic control ccounting andreporting l

arterly results follow-up,to additional ofwhethersufficientestion effortshave enor aims to be a leader withrespectenor aimstobealeader a consequence ofbeinglistedon side theAGM.Seewww.telenor.com/ir/ company’s shareholders ismaintained out- ensuresfunction thatcontact withthe shareholders. Telenor’s InvestorRelations we onTelenor’sshareholders ismadeavailable tothecompany’sdends etc.Information sentations andthepaymentofanydivi- the publication ofinterim reports, openpre- da market. Eachyear, Telenor announces the to equaltreatment ofplayersintheshare and inaccordance withrequirements relating mat pa The Board provides guidelinesforthecom- Information andcommunications for thefinalchoiceofsupplier. asthemaincriterioncosts (LCC)shallserve re f w relatescompetition tothesigningofframe- regardless ofwhetherornotsuchpetition, all procurement shouldbesubject tocom- Te guidelines andprocedures forprocurement. withtheGroup’smade inline established t confident oftheintegrity ofTelenor’s selec- for contracts withTelenor shouldalwaysbe treatment competing Suppliers ofsuppliers. Te ment measures. engaged incontinuous workonimprove- and marketsurveys seriously, andis choice. Thecompanytakes itsreputation ensure thatTelenor remains thepreferred aspromised,ity todeliver isrequired to munications needs,combinedwiththeabil- ner. Agoodunderstanding ofpeople’s com- re t thatcustomersessential beoffered solu- focus oncustomers. Telenor itis believes maintain astrong andwill that simplify”, Te C financial reporting. and toprovide assurance quality ofthe for external reportingandpresentations, insuchsituations awayastoformthebasis is toanalysetheeconomicandfinancial of theGroup’s business areas. Thepurpose Financial Reviewsare conducted witheach ar as possible, andprovidedar aspossible, thattechnical ion process. Allchoicesofsuppliersare ions that fulfil theircommunicationsions thatfulfil ustomers andsuppliers ork agreements orproject purchases. As qu qu l l l t ny’s reportingoffinancialandotherinfor- bsite asitissent to the atthesametime enor hasanadoptedwhereby aprinciple enor iscommittedandfair toimpartial enor iscommitted tothevision“Ideas es ofimportant eventssuch astheAGM, ion basedonopennessandtransparency, irements are met, the lowest life cycle life irements are met,thelowest irements andbetter inasimpler man- l statutory workandremuneration auditing the auditor’s remuneration dividedinto At which are notattended bymanagement. auditor andAudit Committee holdmeetings In accordance withUSrequirements, the nesses. propose measures toamendsuch weak- andwill purpose weaknesses, ofidentifying nal controls onanannual basis,withthe audit review function thecompany’s inter- The auditor andthecompany’s internal control routines etc. riskareas, internal principles, accounting the auditor’s viewofthecompany’s le t deal withtheFinancialStatements. Inaddi- Au 2004. Theauditor ofthe attends meetings worktotheAuditauditing Committee in features inaplanfortheexecution ofthe The company’s auditor presented themain pendence andobjectivity. a number ofrequirements, including inde- annual writtenthathemeets confirmation The auditor provides theBoard withan workforthecompany.auditing carriedperiod ofoneyearafter having out c is afurther requirement, andtheauditor u informed, onaquarterly basis,ofallwork re carriedservices out bytheauditor isa P the typeofworkauditor can undertake. ments forauditing,including restrictionson Telenorulations, issubject tostrictrequire- andUSreg-In accordance withNorwegian Auditor inked tootherdefinedwork. ion, theauditor attends Board at meetings annot beemployedbythecompanyfora ndertaken bytheauditor. Partner rotation rior approval from theAudit Committee of ast onceayeartoreview thereport on qu

dit Committee andBoard that meetings the AGM,Board givesanaccount of irement. TheAudit Committee iskept

Telenor ASA Annual Report 2004 PAGE 41 Corporate Governance Telenor ASA Annual Report 2004 PAGE 42 Information to shareholders Te t C Information tothestock market ment opportunity. andattractiveappear asaliquid invest- v of acash totheadded dividendinaddition Thereturnprofile. shallbemadeintheform t equal toalterna-investment thatisatleast to giveitsshareholders areturn ontheir Te Shareholder policy toshareholdersInformation PognCaeBn 77030UA0.44% USA 0.47% 0.51% 0.47% 0.45% GBR 0.54% USA 7,700,300 0.81% NOR 0.78% FRA USA NOR 8,203,069 9,000,000 NOR 0.79% 8,285,860 7,849,701 9,490,000 X 0.59% 14,250,000 GBR 13,593,380 T X 0.84% T USA 0.82% T 1.37% 13,829,403 USA 1.42% 0.92% SWE T 2.21% 10,369,182 USA JPMorgan ChaseBank X GBR Credit Agricole Indosuez Crayon NOR 14,683,312 USA X The NorthernTrust 14,296,957 Co. Storebrand Livsforsikring 23,935,009 X 5.39% 24,876,033 Bank ofNewYork 16,071,694 X 38,659,400 JPMorgan ChaseBank X State Street USA Bank&ClientOmnibus X 53.99% Vital Forsikring ASA The NorthernTrust 31.12.04 &Co. NOR Orkla ASA 94,390,278 Citizenship Banken Skandinaviska Enskilda 31.12.04 T X 944,626,908 JPMorgan ChaseBank Banken Skandiniviska Enskilda Nominees Mellon BankASAgent JPMorgan ChaseBank JPMorgan ChaseBank F State Street Bank&Trust Co. ofTradeThe Ministry andIndustry Name ofshareholder 20 LARGEST SHAREHOLDERS be keptinformedofsignificant developmentsintheGroup. Through substantialviaseveral information channelsthe stock marketshall Te ional stock marketshashighpriorityat ive investmentswithacorresponding risk lergfne 31380NR3.61% NOR 63,193,800 olketrygdfondet tlohr378101 22.74% 100.00% 397,821,061 1,351,875,98677.26% 1,749 697,047 46,380 otalt number ofshareholders (pr31.12.04) otal numberofshares otal other otal lnrAA 45170NR0.83% NOR 14,571,700 elenor ASA alue oftheshares. TheTelenor share shall ontact with the Norwegian andinterna- ontact withtheNorwegian l l enor, andthecompanywishes tohave enor’s is long-term objective primary l enor seeks to have acloseandtrustingrelationshipwithitsshareholders.enor seekstohave held withinvestorsinEurope andintheUS. qu qu es. Telenor presents itsresults atitshead- Stock Exchangeandthrough press releas- provided totheOslo intheformofnotices andinternationalmarketsis Norwegian shareholders andotherplayersinthe thatmaybeimportantInformation to basis foranaccurate share valuation. about thecompanyinorder toformthe sufficient shallhave information given time son beingthatthefinancialmarketsatany other playersinthestock market.Therea- an opendialogue withitsshareholders and arter. regularare Inaddition, meetings arters atFornebu outside Osloevery ubro Ownership Number of shares share up buy shares, witha20%cash discount, for giventheopportunity to than 90%,were ship share directly orindirectly isgreater subsidiaries inwhichTelenor ASA’s owner- employees inTelenor ASAandin Norwegian among Telenor employees,allpermanent To Share programme foremployees employees inDecember2004. issued aspartoftheShare Programme for Fr t shares. TheBoard maywaive thepre-emp- through issuance ofup to87,460,049 with anamount up to NOK524,760,294, authorised toincrease theshare capital 1July2005,theBoard ofDirectorsUntil is Authorisation toissuenewshares minimum of34%. t shareholding through structural transac- Industry isalsoauthorised todilute its ofTrade than51%.The Ministry lower and its shareholding inTelenor, although no ofTradeMinistry andIndustry mayreduce Parliament the (Storting), the Norwegian shares. Pursuant givenby toauthorisation with54%ofthe owner is thelargestsingle through ofTrade theMinistry andIndustry, State, since year-end2002.TheNorwegian of10% is anincrease inforeign ownership approximately 22.6% ofthetotal stock. This owned citizenship) (not holdingNorwegian investors shareholders. Non-Norwegian privateshareholders. Ofthese,44,798were At Ownership structure closely analyseTelenor’s activities. Leading stockbrokers andabroad inNorway qu to andincluding 19November2005 (share price during thelast30days oftrade, up ive rightsofshareholders tosuch shares. interestions, reducing toa itsownership om theseshares, 97,736 newshares were

otation NOK 58.84), be at least 12% NOK58.84),beatleast otation year-end 2004,Telenor had46,380 encourage long-term shareholding to NOK7,500.Shouldtheaverage share As Share capitalandtreasury each allocated 46bonus shares. programme foremployeesin2003were takenemployees having partintheshare On 16December2004,2,016ofthe is NOK42.80pershare. price thediscount,deducting theeffective closing priceon19November2004.After price ofNOK53,50pershare, whichwasthe allocatedThey were 140shares eachata offered shares tookadvantage oftheoffer. Around 27%oftheemployeeswhowere manent employeesofTelenor. hold theallocated per- shares andare still 2,500, provided, however, thattheystill allocated “profit bonus shares” forNOK for shares be ontheterms ofthisofferwill t including 19November2004(share quota- during thelast30days oftrade up toand higher thanacorresponding average price to theshareholders onthedate ofthe General bepaidon6June 2005 will Meeting bedeterminedSuch atthe dividendaswill distributed for2004. that adividendofNOK1.50pershare be per share. TheBoard ofDirectors proposes even annual growth dividend intheordinary that theGroup beaimingforarelatively will annual40-60% ofnormalised profits, and dend toitsshareholders whichisequal to Te B and expected capital requirements, the On thebasisofTelenor’s financialsituation Dividends 14,571,700 shares. nominal value ofNOK 6.TheGroup holds into 1.749.697.047 shares, eachwitha a share capital divided ofNOK10.5billion, ion NOK 52.54), those having subscribed ion NOK52.54),thosehaving oard ofDirectors hasdecidedthat l

enor’s istodistribute objective adivi- of 31December2004,Telenor ASAhad DISTRIBUTION OFSHARESAS31.12.04 K16750315% 4% 116,755,023 5% 15% 28,534,215 37,897,316 119,765,920 28% 34% T The rest oftheworld The NordicRegion(outsideNorway) Europe (outside theNordicregion) UK 219,719,496 Norway USA 267,826,469 C GEOGRAPHIC DISTRIBUTION OFFREE-FLOATING SHARESASOF31.12.04 Industry, whichisTelenor’s largestshare- sented ofTrade bytheMinistry and repre-July 2005.TheKingdomofNorway 1 ing shares. until isvalid Thisauthorisation pany toacquire up to 10%oftheoutstand- May 2004,approval wasgivenforthecom- At financial situation. potential investmentopportunitiesandits considerations bebasedonTelenor’s will topaymentsofdividends.Suchaddition shares inperiodswithhighcash flow, in Te Repurchase ofownshares Exchange from Monday 23May2005. exclusive ofdividendsontheOsloStock General betraded Theshares Meeting. will tl704849100% 790,498,439 otal utyNme fsae floating shares Numberofshares ountry

l the Annual General (AGM)6 Meeting enor will considerrepurchasingenor will ofown 000019466981 .%131370674.4% 1,301,347,056 0.0% 14 10,000,001–944,626,908 ,0,0–000001202 1,7,6 17.7% 310,074,366 0.2% 112 1,000,001–10,000,000 0,0–,0,0 7 .%9,2,0 5.4% 94,823,904 0.6% 274 100,001–1,000,000 ,0–0,0 ,9 08 810721.6% 28,190,772 10.8% 4,999 1,001–100,000 –,0 0918.%1,6,4 0.9% 15,260,949 88.4% 40,981 1–1,000 nevlsaeodr hrhles of share shareholders shareholders shares Interval T tl4,8 0.0 1,749,697,047 100.00% 46,380100.00% otal ubro hr falNme Ownership Number Share ofall Number of vo r holder, toparticipate inTelenor’s isobliged As corresponding toNIBOR+1%. for such shares inthemarket,plus interest w of Trade thevolume equalling andIndustry of redemptionpayanamount totheMinistry r Industry’s percentage ownership inTelenor ofTradeconsequence theMinistry and a proportionate partofitsshares. As a shares approved bytheauthorisation, Te an average share priceofNOK50.22. Te grantedwith theauthorisation bytheAGM, epurchase of own sharesepurchase programme ofown by emains unchanged. Telenor atthetime will eighted average ofthepriceTelenor paid l l t

enor hasrepurchased 2.51%ofthe enor hasacquired 20,559,900shares at of 31March 2005,andinaccordance ing foraproposal toredeem andcancel Share offree

Telenor ASA Annual Report 2004 PAGE 43 Information to shareholders Telenor ASA Annual Report 2004 PAGE 44 Information to shareholders u The share isalsolistedonNasdaq intheUS Stock Exchangeunder theticker codeTEL. The Telenor share islistedontheOslo Tr Exchange. company quoted ontheOsloStock which makesTelenor ASAthethird largest at 31December2004wasNOK96.2billion, 29% increase invalue.The marketvalue as Inclusive ofdividends,thisamounted toa pricewasNOK55.00. end, thequotation wasNOK43.40.At year- and thelowest qu w At Share priceperformance 8 May2003torepurchase shares. own givenattheAGMon with theauthorisation Tr 14,531,792 shares of from theMinistry shares andthrough redemptionof through cancellation of40,913,172 own pany’s share capital byNOK332,669,784 shareholders approved toreduce thecom- At 2004. programmestock ownership inNovember used368,200 shares intheemployee were total number ofrepurchased shares, own Industry’s proportionate part.Ofthe including ofTrade theMinistry and toshareholdersInformation nder theticker codeTELN,where itistrad- as quoted atNOK43.50.Thehighest ade andIndustry. Thiswasinaccordance ade

otation duringotation theyearwasNOK56.50, the outset of2004,theTelenor share the AGMon6May2004,Telenor’s adjustment ofthecostpriceshares orupward gains, makeadownward sales t t taxIn accordance regula- withNorwegian Risk adjustment (VPS). Depository Centralto theNorwegian Securities after theshareholding hasbeenreported c name can Voting beused forvoting. rights law, onlyshares registered intheowner's shareholder rights.Pursuant toNorwegian C Public TheNorwegian Limitedsion laws. conces- those stipulatedintheNorwegian beyond restrictions anyownership not have share carries onevote. TheGroup does Te V Exchange is200shares. the Telenor share ontheOsloStock shares perday oftrading. Around lotfor Stock Exchangefortheyearwas7.7million v Oslo Stock Exchange.Theaverage trading v TelenorIn 2004,1.9billion shares atatotal Chase Bank. shares. Thecustodian bankisJPMorgan ADR share corresponds tothree Norwegian ed through Telenor’s ADRprogramme. One axation in Norway must, in Norway whencalculatingaxation ions, such shareholders asare subject to alue of NOK 95 billion were traded were alue onthe ofNOK95billion an beexercised thantwo noearlier weeks olume forTelenor shares ontheOslo ompanies Act regulates theexercising of oting rightsandownership l enor hasoneclassofshares andeach www found ontheTelenor IRwebsite: on shareholder related matters can be –continuouslyMore updated information – t A-/A2 forcorresponding longandshort- Te r at A2/P1forlongandshort-term financing In July2004,Telenor wasrated byMoody’s Rating RISKregulations. Norwegian t Shareholders whoare notsubject totaxa- 2006. 1January until notbepublished will share. ThefinalRISKamount for2004 has beencalculated atNOK-1.39per correspondingpreliminary figure for2004 2003 wasNOK-0.93pershare, andthe issued Telenor shares. TheRISKamount for assessed capital, dividedbythenumber of based onthechangeinTelenor’s retained, The RISKamount iscalculated annually original costofshares bytaxed profits). with a“RISK”amount (adjustment of espectively. AlsoinSeptember 2004, erm financing. ion in Norway areion inNorway notaffected bythe l enor wasrated byStandard &Poor at .telenor.com/ir B oard ofDirectors Report ofthe 2004

Telenor ASA Annual Report 2004 PAGE 45 Report of the Board of Directors Telenor ASA Annual Report 2004 PAGE 46 Report of the Board of Directors amounted to 52.7 million, anincreaseamounted of to52.7million, in whichTelenor interests hasownership total number ofsubscriptionsincompanies t customerpromoting growth initsinterna- Throughout 2004,Telenor hasfocused on 2004. acquired on8December aUMTSlicence subsidiaryofTelenor,GSM, awhollyowned ship ofthecompany. InHungary, Pannon Montenegro, thereby owner- acquiring sole operatorin themobile ProMonte GSMin Te now standing at62%.InAugust 2004, share inGrameenPhone inBangladesh, two occasions increased itsownership ony inPakistan. Telenor Inaddition, hason teleph- formobile licences new nationwide 2004,TelenorApril acquired oneoftwo C operatorshareholding intheGreek mobile During theyear, Telenor’s remaining 9% ofthecompany. ownership acquiring sole operator SonofoninFebruary 2004,thereby r extended in2004.Telenor acquired the pany’s was portfolio mobile international withTelenor’sIn line strategy, thecom- on theOsloStock Exchange. but weaker, however, thanthemainindex stronger thantheaverage forthesector, Te ly 15%,compared to2003. orapproximate-a growth ofNOK8.2billion, representingamounted toNOK61.3 billion, ning of2005isstrong. Revenues in2004 Te of Broadcast’s TVactivities. ascontinueddevelopment markets, aswell ti company,mobile withastrong Nordic posi- gy ofdevelopingTelenor asaninternational The workoftheBoard isbasedonastrate- Report oftheBoard ofDirectors and value creation. increase basisforcontinued has provided inprofits thecompanywithasolid Growth inoperating revenues andinnumbers ofsubscriptionsduring theyear simultaneously market. retainingwhile itsstrong intheNorwegian position In 2004,Telenor operator consolidated asaninternationalmobile itsposition emaining shares intheDanishmobile ional mobile portfolio. At year-end,the portfolio. ional mobile osmote wassold.At heldin anauction on in the mobile andfixednetwork services on inthemobile le l l enor’s share performancein2004was enor’s atthebegin- financialsituation nor purchased theremaining shares the Nordic market. Broadcast retained itsstrongin position growth inprofits andimproved margins. Ac during 2004. end-user marketincreased by149,000 number ofTelenor ADSLsubscribers inthe broadband (ADSL)inNorway, andthe ADSL. There isasignificant demandfor telephony and Internet dial-up tomobile a migration from fixedtelephony and r Fixed networkoperations suffered afall in EDB Business Partner. Group’s IToperations andtransfer themto an agreement toconcentrate theTelenor qu improving operational efficiency. Inthefirst Te w 2004, Telenor openeditsUMTSnet- Mobil as atthebeginningof2003.InDecember whichisapproximatelyscriptions, thesame market share, measured interms ofsub- ket share. At year-end,Telenor hada56% Telenor’s andtostabilise satisfaction mar- much hasbeendonetoimprove customer As in theregion. ment tosecure development asatisfactory whichisarequire- portfolio, Nordic mobile with respect synergiesinthe tocreating CBB. Aconsiderable efforthasbeenmade Sonofon, alsoacquired provider theservice of toacquiringfullownership in addition intheDanishmarket,Telenorposition has, operations. Inordermobile toimprove its strengthening andcoordinatingitsNordic During 2004,Telenor theworkof continued companyintheworld. mobile This makesTelenor largest thetwelfth compared toyear-end2003. 17.9 million evenues. Underlying developmentsreveal ork forcommercial operations. l

arter of2004thecompanyentered into t enor continued topursueenor continued itsstrategy of re ivities atBroadcastivities profitable, with were ga r ds the Norwegian mobile market, mobile ds theNorwegian 2004. and afurther 695,000shares on14April shares on30March 2004 170million selling holding inTelenor from 62.6%to54% by State reducedThe Norwegian itsshare- authority shares topurchase isgiven. own furthermore, request thatarenewed byTelenorowned itselfbecancelled, and, the Board propose thatTelenor will shares At ing remains unchanged. of itsshares sothattheState’s sharehold- scheme bycancelling aproportionate part committed inthis repurchase toparticipate ty asTelenor’s largestshareholder, remains State, initscapaci-market. TheNorwegian has acquired 20,559,900shares intheopen 31March 2005thecompany then anduntil a repurchase authority wasgranted. Since open market.At theAGMheld6May2004 the companytorepurchase shares inthe The Board for hasalsotaken theinitiative as ofMonday 23May. Oslo Stock Exchangeexclusive ofdividend The company’s belistedonthe shares will ny’s shareholders onthedate oftheAGM. bepaidon6June 2005,tothecompa- will 2003. Thedividenddetermined attheAGM year, compared toNOK1.00pershare for per share bepaidforthe2004financial (AGM)thatadividendofNOK1.50 Meeting The Board proposes totheAnnual General share. growth inannual ordinarydividendper company aimstoensure arelativelyeven annual the profit.normalised Inaddition, shareholders to40–60%of equivalent dividend tobepaidthecompany’s ments, theBoard hasproposed anannual capital andanticipated situation require- OnthebasisofTelenor’sowners. financial Te

l the forthcomingAGMon20May2005, enor ASA’s goalistocreate value forits THORLEIF ENGER BJØRG VEN JOHN GIVERHOLT was elected to the Board on 1 October 2001 was elected to the Board on 1 October 2001. was elected to the Board on 8 May 2003. He is and was made Chairman on 6 March 2003. He is She is a solicitor with attendance rights at the presently Chief Financial Officer of Ferd AS and Chief Executive Officer of Yara International ASA. Supreme Court in Norway, and since 1980 has has previously held leading positions in Arthur He began working for Norsk Hydro in 1973 and been a partner in the law firm, Haavind Vislie, in Andersen, Actinor, Norsk Hydro, DnB and Orkla. has held a number of positions in the company. Oslo. She is Chairman of the Appeal Board of the He has a B.Sc. from the University of Manchester, Mr. Enger is a member of ABB’s corporate assem- Oslo Stock Exchange and the Appeal Board for England and is a state authorized public account- bly. He has a doctorate in structural engineering Public Acquisitions. Ms. Ven is substitute judge ant in Norway. from the University of Colorado. at the EFTA court in Luxembourg and Chairman of the Board of NOS ASA.

At year-end, Telenor ASA had 46,380 ments were followed up in separate eva- the disposal of a 9% shareholding in shareholders. The company’s ten largest luation reports. Cosmote. owners represented 71.4% of the shares. The company’s share capital amounted Results Telenor’s operating profit for 2004 amount- to NOK 10.5 billion, distributed between Key figures ed to NOK 6,602 million, compared to NOK 1,749,697,047 shares. Telenor’s shares are The Telenor Group’s net income for 2004 7,560 million in 2003. Compared to 2003, listed on the Oslo Stock Exchange and amounted to NOK 5,358 million, equalling the operating profit in 2004 was adversely Nasdaq. NOK 3.07 per share. The corresponding affected by write-downs. The result from figure for 2003 was NOK 4,560 million, associated companies amounted to a profit As at 31 December 2004, Telenor’s shares equalling NOK 2.57 per share. of NOK 781 million, compared to NOK 1,231

were quoted at NOK 55.00 per share on the million in 2003. The drop in profit was main- of Directors Report of the Board Oslo Stock Exchange, compared to NOK Profit before taxes and minority interests ly due to sales gains in 2003. This was 43.40 at year-end 2003 (an increase of for 2004 amounted to NOK 8,846 million, partly offset by increased net income at AGE 47 27%). Telenor’s market value was NOK 96.2 compared to NOK 7,426 million in 2003, VimpelCom in Russia, reduced losses at P billion at year-end 2004, compared to NOK and was adversely affected by special items Bravida and lower depreciation and write- 78.5 billion at the end of 2003. (gains and losses on disposals, write-downs, downs of excess values compared to 2003, expenses relating to workforce reductions following Sonofon’s consolidation as a sub- During the same period, the Dow Jones and loss contracts) amounting to a total of sidiary, effective from 12 February 2004. European Telecom Index was up by 10%, NOK 0.4 billion. The profit in 2003, on the Net financial items increased by NOK 2,891 and the OSE Benchmark Index by 36%. In other hand, was positively affected by a million to NOK 1,526 million in 2004. This 2004, Telenor shares were among the most total of NOK 1.1 billion. Adjusted for special improvement was mainly due to a realized enor ASA Annual Report 2004 enor ASA Annual traded on the Oslo Stock Exchange. items, the profit before taxes and minority gain of NOK 2.6 billion before taxes from l Te interests increased by NOK 3.0 billion com- the sale of the remaining 9% of the shares During 2004, Telenor communicated pared to 2003, to NOK 9.3 billion in 2004. in Cosmote. actively with the financial market, providing This increase was largely attributable to accurate information to shareholders, thus increased revenues without corresponding Current and deferred income taxes totalled ensuring that all essential information rele- increases in expenses and reductions in NOK 2,244 million in 2004, equal to 25.4% vant to the external evaluation of the com- depreciation. In 2004, write-downs of of the result before taxes and minority pany was published in accordance with around NOK 2.6 billion were undertaken, interests. An increased tax rate relating to current rules and guidelines. mainly relating to Sonofon in Denmark. the depreciation and write-down of good- Also in 2004, a gain of NOK 2.6 billion will, where deferred tax assets were not Throughout 2004, the Board closely moni- before taxes was realized as a result of the entered in the accounts, was offset by the tored Telenor’s strategic development. The sale of Telenor’s remaining 9% shareholding realization of tax losses and reduced Board also placed particular emphasis on in the previously associated mobile compa- deferred tax on retained earnings in inter- follow-up of results, cost-reduction work ny Cosmote. In 2003, a gain of NOK 1.5 bil- national companies. As a result of tax and investment issues. Previous invest- lion before taxes was realized, also from losses carried forward in Norway, current Report of the Board of Directors

JØRGEN LINDEGAARD HANNE DE MORA was elected to the Board on 1 October 2001. He was elected to the Board on 18 June 2002. Her is the Chief Executive Officer of the airline compa- work experience includes Den norske Creditbank ny SAS. Lindegaard’s background is in the in Luxembourg and Procter & Gamble in Geneva telecommunications industry, and since 1975 he and Stockholm. She has been a partner with has held managerial positions at Fyns Telefon A/S, McKinsey & Company since 1996. Since June København Telefon A/S and TeleDanmark A/S. He 2002, she has run her own management resource was Chairman of the Board of Sonofon Holding A/S firm in Switzerland. She has an MBA from the IESE until 2004. Mr. Lindegaard is a telecommunications Business School in Barcelona. engineer and a member of The Academy for Technical Sciences in Denmark and Norway.

taxes in 2004 were related to foreign subsidiaries.

The minority interest share of net income was NOK 1,244 million in 2004, compared to NOK 490 million in 2003. The results in 2003 and 2004 were mainly related to Kyivstar and GrameenPhone.

Cash flow from operational activities in- creased by NOK 5.3 billion in 2004 to NOK 19.0 billion, mainly as a result of increased Comments relating to the operations revenues and revenues from DSL failed revenues. The consolidation of Sonofon Mobile operations to compensate for the reduced income also contributed positively. This increase In 2004, total revenues increased by NOK from PSTN/ISDN. was also due to lower payments on financial 9,142 million to NOK 32,952 million. This items and taxes in international subsidiaries was mainly due to the consolidation of Following the migration to mobile traffic and accrual items. In 2004, Telenor invested Sonofon and ProMonte GSM, as well as and the increased use of ADSL (where NOK 18.5 billion, of which NOK 12.7 billion favourable growth in other operations as traffic volumes are not measured), the was capital expenditure. Investments out- a result of an increase in the number of number of traffic minutes in the fixed side Norway amounted to NOK 13.9 billion. subscriptions. The operating profit was network in the Norwegian market fell by Capital expenditure increased by NOK 6.3 reduced by NOK 2,197 million in 2004, to approximately 15% in 2004. Fixed Norway’s

Report of the Board of Directors Report of the Board billion, mainly related to international NOK 3,027 million. The 2004 operating market share measured in traffic minutes mobile operations where network capacity profit was adversely affected by the con- has, however, remained stable at 69% has increased as a result of a substantial solidation and write-down of Sonofon and since year-end 2003. AGE 48 P subscriber growth. Capital expenditure also a loss contract at Telenor Mobile Sweden. included the acquisition of a mobile licence The remaining activities showed positive The increased operating profit at Fixed in in Pakistan and a UMTS licence in Hungary results. The results from associated com- 2004 compared to 2003 was mainly gener- at a total cost of NOK 2.4 billion, and a NOK panies and jointly controlled activities ated in Norway, and was related to reduced 0.6 billion investment in a stake in a new showed a profit of NOK 694 million in 2004, write-downs, partly offset by reduced EBITDA. satellite. compared to NOK 1,639 million in 2003. The 2003 profits included a gain from the Broadcast At year-end 2004, Telenor’s total assets sale of shares in Cosmote. This was partly Total revenues increased by NOK 527 mil- enor ASA Annual Report 2004 enor ASA Annual l amounted to NOK 88.1 billion and its equity offset by an increase in net income at lion to NOK 5,347 million in 2004, primarily Te ratio (including minority interests) was VimpelCom in Russia, as well as lower as a result of increased prices and an in- 47.3%, compared to NOK 86.1 billion and depreciation and write-downs of excess crease in subscriber numbers. The overall 47.5% respectively in 2003. Net interest- values compared to 2003 as a result of number of subscribers with satellite dish bearing liabilities totalled NOK 19.2 billion, the consolidation of Sonofon. and cable TV increased by 81,000, reaching an increase of NOK 1.4 billion during the a total of 1,448,000. Subscribers in house- year. In the opinion of the Board, Telenor’s Fixed holds with small antenna TV networks in- financial position is satisfactory. Total revenues were reduced by NOK 1,243 creased by 114,000, reaching 1,212,000. million, to NOK 19,266 million in 2004. This Pursuant to Section 3-3 of the Norwegian reduction was partly due to Telenor’s sale In 2004, the operating profit amounted to Accounting Act, we confirm that the of shares in Comincom/Combellga on 1 NOK 589 million, compared to NOK 181 accounts have been prepared on the basis December 2003, and the fact that part of million in 2003. This improvement was due of a going concern assumption. Managed Services was transferred to to increased operating revenues attribut- EDB Business Partner on 1 May 2004. able to subscriber growth, an increase in Furthermore, the increase in wholesale prices and reduced depreciation. Further- Tr Pr ti The Board proposes thefollowingalloca- before taxes bepaidout. AGM thatadividendofNOK1.50pershare The Board ofDirectors proposes tothe the yearamounted toNOK4,656million. ent companyTelenor ASA’s netincomefor before taxes, thepar- of NOK2,000million F Allocations up attributable gains tosales andthewinding 2003. Thisimprovement wasprimarily in an operating lossofNOK488million in2004,compared to to NOK169million profits amountedating forOtherActivities posal ofunits in2003and2004.Total oper- t Thereduc- toNOK10,318million. million, To Other Activities city. c we more, rental costsforsatellite capacity Environment carried (HSE)reviews were Group. Atotal of72 Health,Security and w making continuous improvements to the prevention andfollow-up of subcontractors, issues assickness absence,ergonomics,fire persistently andsystematically withsuch Throughout 2004Telenor hasbeenworking Wo Non-financial information NOK14,038million. totalled ut Af To ion inrevenues was mainly due tothedis- ollowing thereceipt ofGroup contributions apacity was being replaced by own capa-apacity wasbeingreplaced byown ons (inNOKmillions): orking environmentwithin the atalllevels nfre oohreut 2,053 ansferred tootherequity able equity asat31December2004 able t vsosfrdvdns2,603 ovisions fordividends t ta 12

re er theseallocations, Telenor’s distrib- 0 3 6 9 al revenues reduced were byNOK493 of activities. rking environment (in NOKbillions) C l

apex inNorway r educed aspreviously satellite leased 00 01 02 03 04 4,656 in 2004,Telenor wasonceagain classified –ensured– our that socialresponsibilities to ethics,theenvironment andsocial issues Te E isunderway.portfolio system throughout Telenor’s international thisenvironmentalmenting management r energy consumed at Telenor’s was activities the accounts showthattheamount of integral partofitsmanagementsystem and Te travelconsumption, andinstallations. impact caused bysuch factors asenergy effort ismadetoreduce theenvironmental t of theGroup’s sizeanditsextensive activi- the environment islow, although byvirtue The direct impactofTelenor’s on activities Ex alsorecorded.and 8nearaccidents,were which didnotresult inabsencefrom work, serious. Afurtherof whichwere 16injuries, recorded,in absencefrom workwere none pared to2003.In2004,14injuries resulting r Te absence rate of4.5%wasregistered at these areas in2004.Asickness continued ment ageintheGroup. Improvements in special requirements andraise theretire- w absence, ensure better adaptation ofthe ment isdesignedtohelpreduce sickness w 2003topromotein April amore inclusive es inNorway, Telenor signedanagreement T r employees completedtraining programmes Group’s companies.During 2004,1,715 out inorder tomonitorthesefactors atthe educed during 2004.Theworkofimple- eduction of0.5percentageeduction pointscom- totheworkingenvironment. elating ies inanumber ofcountries, anactive ogether withanumber ofmajorenterpris- thical indexes thical orking environment foremployeeswith (anIAagreement).orking life Thisagree- l l l 12 t enor’s workandinvolvementwithrespect enor’s environmental isan accounting enor’s whichisa activities, Norwegian 0 3 6 9 ernal environmenternal (in NOKbillions) C apex outsideNorway 00 01 02 03 04 o fmnyas2,0 1,5 22,100 19,450 18,5547,017 21,300 20,900 (2,450) (320) 20,82118,30213,469 1,231 7,560 61,30253,12148,826 718 No. ofman-years 6,602 Investments Associated companies Operating profit (loss) EBITDA Revenues (in NOKmillions) Key figures 2002–2004,Telenor Group nications Act) in the Norwegian market. nications Act) intheNorwegian C afforded bytheAct relatingtoElectronic t The Board recognises theimportance of r r altered framework represent conditions a At the markets. in the developmentofhealthycompetition and Telenor seekstocontribute actively to inallcountries, fortheauthorities challenge playingfieldsisamajor opment oflevel is subject toindifferent markets.Thedevel- r Te mattersRegulatory management. t IVSmonitorshuman capi-managers, while t (IVS). TLDPisatoolforsystematicevalua- Pr the Telenor Leadership Development therefore introduced twoglobalprocesses, Te business andwhoactinaccordance with managers whodisplayastrong passionfor andmotivated employeesand skilled Te E at www.telenor.com/csr/ Te r w F distinction. aw the FTSE4Goodindex.Telenor wasalso Indexesand the DowJonesSustainability among thebestcompaniesinEurope on evenues and profitability. risk,andcouldaffectTelenor’segulatory ent regulatoryframeworks whichtheGroup refer to in2004,please esponsibilities aking advantage oftheopportunities al, process resources of andthequality ion, developmentandremuneration of or further information aboutor further Telenor’s information ommunications Commu- (theElectronic xpertise andtraining xpertise ork ontheenvironment andsocial ocess (TLDP)andInternal Value Creation

l l l l arded theStorebrand ‘BestinClass’ the same time, market intervention and marketintervention the sametime, enor’s are adapted activities tosuit cur- enor’s Codes ofConduct. Telenor has enor aimstoattract andretain highly enor’s website SocialResponsibility 0420 2002 2003 2004

Telenor ASA Annual Report 2004 PAGE 49 Report of the Board of Directors Report of the Board of Directors

LISELOTT KILAAS was elected to the Board on 8 May 2003. She is presently managing director of Zenitel ASA. She has previously held leading positions in the oil industry, PA Consulting Group and Stento AS and is currently a board member of Norges Bank. She holds a M.Sc. from the University of Oslo and an MBA from the International Institute for Management Development (IMD) in Lausanne.

This is essential to ensure the harmonisa- Ministry of Transport and Communications’ tion of regulatory measures in the EEA area offer to renew its GSM900 licence with through the ongoing process of analysing appurtenant conditions. Under an agree- and adopting future regulatory require- ment with the Ministry of Transport and ments. It is difficult to develop a well-func- Communications, Telenor is committed to tioning telecommunications market if indi- providing offers for stipulated services vidual players in Norway are subject to reg- throughout the country. ulations more extensive and detailed than those applicable in other European coun- Telenor has highlighted the importance of tries. The fact that players with similar mar- regulatory matters in its international port- ket positions have been subject to different folio. Of particular interest with respect to regulations, as evident from fixed and mobile achieving more stable framework conditions those members elected by the employees, interconnections in the Norwegian market, is the adaptation of the EU’s legal frame- are employed by Telenor or engaged in remains an obstacle to achieve a healthy work to accommodate the new member work on behalf of Telenor. The Board of development in the market. states in Eastern Europe. Regulatory devel- Telenor works in accordance with guidelines opments in other countries seeking closer for its work and procedures. The Board Certain aspects of the current regulatory integration with Europe are also being undertook an assessment of its activity and regime subject Telenor to controls that do affected, although in an indirect way. competence in 2004. Thirteen Board meet- not appear to promote reorganisation and Outside Europe, WTO membership and ings were held in 2004. innovation in the telecommunications mar- adjustments thereto are important with kets. Such regulations represent elements respect to acquiring stable framework con- Organisation and personnel

Report of the Board of Directors of Directors Report of the Board of uncertainty with respect to the profita- ditions in Telenor’s international portfolio. At the end of 2004, Telenor had 21,750 bility of Telenor’s investments in networks employees (20,900 man-years), whereof and service development. They also involve Increased regulation of mobile operators is 12,000 were employed in Norway and 9,750 AGE 50 P considerable socio-economic costs. In the expected both within and outside Europe, outside Norway. This is an increase of 1,450 longer term this could serve to weaken e.g. with regard to contributions to the USO man-years compared to year-end 2003. incentives to make future investments in Fund, the introduction of mobile number Norwegian infrastructure and service portability and terms for interconnections. Telenor has in 2004, as in recent years, development. However, Telenor looks Telenor will therefore continue to work implemented a number of changes favourably upon the signals from the actively to achieve optimal regulatory designed to ensure optimal efficiency in Norwegian parliament (Storting) and framework conditions for its portfolio of its activities. A major reorganisation was the telecommunications authorities with companies outside Norway. undertaken of Telenor’s IT activities, includ- enor ASA Annual Report 2004 enor ASA Annual l respect to securing long-term incentives ing a concentration of the Group’s IT opera- Te for investing in infrastructure in the Good corporate governance tions under EDB Business Partner. Measures Norwegian market. Telenor’s Board and The Board makes a considerable effort to designed to coordinate functions in management expect that this will be fol- ensure that Telenor has a good corporate Telenor’s mobile activities in the Nordic lowed up in the detailed formulation of the governance system and refers to a sepa- region were also introduced. Norwegian Post and Telecommunications rate chapter on this issue. Authority’s new regulations, due to appear Telenor has set aside significant resources in 2005. Composition and work of the Board in order to provide for employees affected None of the shareholder-elected Board by the organisational restructuring. When- Norway has low telecommunications rates, members or members of the Corporate ever workforce reductions have been and Norway is a pioneer in developing fixed Assembly were up for election in 2004. required, suitable financial support schemes and mobile communications services. In Einar Førde died on 26 September 2004. and advisory services have been employed. December 2004, Telenor opened its UMTS A new Board member will be elected by In January 2004, Telenor was admitted to network for commercial operation, and the the Corporate Assembly on 7 April 2005. the employers’ organisation NHO (the company has accepted the Norwegian None of the Board members, other than Confederation of Norwegian Business and secure equal opportunities. development intheGroup’s effortsto pared to2003,representing apositive improvement of5percentage points com- l inTelenor’spositions topfour management men. As at31December2004,24%ofthe womenand61% were employees inNorway At Equal opportunities Nordic region. andfixednetworkoperations inthe mobile l separate managementarea wasestab- Te operations. To andreinforce simplify growth international continued initsmobile Nordic region, ensure andatthesametime inthe strengthen anddevelopitsactivities restructuringorganisational inorder to At t agreements withour personnelorganisa- wage nies entered intonew collective During 2004,Telenor’s compa- Norwegian to theNHOanditscontractual parties. wageagreement applicable the collective to theNHO,Telenor isnowcomprisedi.a.by A By switchingfrom NAVO (theNorwegian and companiesexposedtocompetition. that includes otherinternationalcompanies Te Industry) andthetrade Abelia. association ment) inOslo. SchoolofManage- BI(theNorwegian høyskolen educated asabusiness economistatHandels- nical Telecom College ofNorwegian andwasalso hasatechnicalStavn education from theTech- employee representative forNITOinTelenor. Mr. SocietyofEngineers)and NITO (theNorwegian (Pension Fund), memberoftheexecutive board of He isaboard memberofTelenor Pensjonskasse in 1974 andhasheldvarious engineeringpositions. employee representative. Mr. Stavn joinedTelenor totheBoardwas elected on20June 2000asan HARALD STAVN evels were heldbywomen.Thisisan evels were ished, effective from 2005,for 26January ished, effective ions. ssociation ofPublicly Companies)ssociation Owned

l l the endof2004,39%Telenor’s the beginningof2005,Telenor madean enor’s intheNordic position market,a enor hasthereby joinedanorganisation offered training toboard relating work. who are appointed toour boards are Group’s companies.Representatives own r improve oftheBoard thecomposition with w opportunity onwhichtheBoard basesits In accordance ofequal withtheprinciples of Telenor women,and60%men. ASAwere In 2004,40%ofthemembersBoard t par- different partsoftheorganisationwill gramme. In2005,eightnewwomenfrom pated intheNHO’s Female Future pro- In 2004,ninewomenfrom Telenor partici- integrity andrespect. employees conduct themselveswith an inclusive workingenvironment where attractive andprofessional workplacewith which emphasisethatTelenor shouldbean set out intheGroup’s Codes ofConduct, organisation andamongmanagers.Thisis withinthe diversityaspossible skilled important totheeffortofattaining asmuch c A t employmentandover- job types,part-time to differences inrespect ofqualifications, due formen,primarily thanthesalary lower The average forwomenis annual salary is anengineer. tradeNorwegian union EL&ITForbundet. He is agroup employeerepresentative forthe a board memberofTelenor Nett.Mr. Salomonsen operations engineer. From 1995to2000,hewas v began workingforTelenor in1973. Hehasheld as anemployeerepresentative. Mr. Salomonsen w PER GUNNARSALOMONSEN espect to gender and expertise inthe espect togenderandexpertise icipate inthisprogramme. ime. arious inTelenor, positions mostrecently as ultural background, ageandgenderis as electedtotheBoard on1November2000 chieving agoodbalancewithrespect to ork, measures to beenimplemented have up of individual ofan projects inthelight ments inorder toassessthedevelopment and evaluation ofthecompany’s invest- sequently undertaken asystematicreview er riskassessment.TheBoard hasalsosub- provides agoodbasisforundertaking prop- and abroad, theBoard thatthis believes authoritiesathome includes theNorwegian an extensive contact network,which nomically to developedareas. Inaddition eco- inless and managementofactivities c has gradually up built considerable practi- r new investments,andcontinuously in risk factors thoroughly with inconnection The Board andmanagementassesssuch businessacceptable limits. risk picture isalwaysconfinedwithin and reduce riskfactors, sothattheoverall ments themeasures required tomanage important toensure thattheGroup imple- As must formpartoftheGroup’s core expertise. then riskassessmentandmanagement confidence ofshareholders andinvestors, to besuccessful andinspire thenecessary ing marketsinEastern Europe andAsia is risks. IfTelenor’s growth strategy inemerg- of regulatory, financialandpolitical legal, Te Risk factors subsequently studied business andmanagement. T C ta since 1997.Sheisthegroup employeerepresen- and ofTelenor Pensjonskasse (Pension Fund) as aboard memberofTelenor Plus since1995 began workingforTelenor in1962andhasserved 2000 asanemployeerepresentative. Ms.Tystad totheBoardwas elected ofdirectors on20June IRMA TYSTAD espect of existing investments.TheGroupespect ofexisting echnical Telecom College ofNorwegian andhas al experiencerelatingtotheestablishment ommunications). Ms.Tystad isagraduate ofthe t l

da ive forKommunikasjonsforbundet (Unionof enor’s are exposedtoanumber activities f ar astheBoard isconcerned,it t ed riskpicture.

Telenor ASA Annual Report 2004 PAGE 51 Report of the Board of Directors Telenor ASA Annual Report 2004 PAGE 52 Report of the Board of Directors exchange rates. Financialinstruments are r Te markets. mature andemerging between portfolio vestments outside bydividingits Norway ance theriskpicture withrespect toin- the companyhasmadeanefforttobal- When makinginternationalcommitments, projects, etc. matters, partnerrisksinjointventure cur countries, such aspolitical developments, posed toparticularriskfactors incertain t breaches oftelecommunications regula- w adopted bytheregulatoryauthorities,as andresolutionsof newandamendedrules t ofuncer- andelement A majorchallenge ent countries inwhichTelenor operates. the political threats presented inthediffer- ofchangesin to personalsafetyinthelight Te Report oftheBoard ofDirectors elating tochangesininterestelating andforeign ainty in the Norwegian marketismadeup ainty intheNorwegian ions. Theinternationalmarketsare ex- ell as civil actions basedonalleged actions ell ascivil l l enor isexposedtofinancialmarketrisks enor continuestoaddress issues relating r ency changes, legal issues,ency changes,legal regulatory Hanne deMora B B Harald Stavn oard member oard member Chairman oftheBoard ofDirectors Thorleif Enger Thorleif Pe r Gunnar Salomonsen Jørgen Lindegaard B B oard member oard member the company’s opera- internationalmobile operating revenues andEBITDA,drivenby with agoodbasisforcontinuedgrowth in in2004hasprovidedsubscriptions Telenor Strong growth inoperating revenues and makeinthefuture.choices we decisive importanceand tothepriorities Nordic beof region. Thisdevelopmentwill operationsfrom our outside mobile the and financialprofits are expected tocome centage ofTelenor’s operating revenues growth andanincreasing tocontinue, per- GrameenPhone. We expectthissubstantial substantial growth atKyivstar, DiGi.Com and operation inPakistan asthrough aswell Sonofon andProMonte GSM,thegreenfield has beendonethrough of theconsolidation company. mobile truly international This tobecominga with internationalambitions, operationthe road from beingaNorwegian In 2004,Telenor hastaken afurther step on Outlook for2005 fl measures tomaintain adequate financial The Group hasimplementedthenecessary employed inorder toreduce such risks. exibility. Oslo, 31March 2005 Vice-chairman oftheBoard ofDirectors B B Liselott Kilaas oard member oard member Irma Tystad Bjørg Ven r B may alsoaffecttheGroup’s results. The Po extent affectthefigures reported inNOK. à-vis othercurrencies toanincreasing will exchange rate krone vis- oftheNorwegian t enues andprofits are generated byopera- A growing share ofTelenor’s operating rev- are alsoexpected. Increased toUMTS investmentsrelating P w expected in2005,due tosubstantial net- ofcapitalHigh levels expenditure are operations. mobile in theinternational and create value through growth continued synergies, especiallyintheNordic activities, the company’s inNorway, position obtaining The Board continueitseffortstodefend will 2004, exclusive ofspecialitems. profit developmentin2005,compared to t espect totheseissues. ions outside Norway. Fluctuations inthe ions. Overall, Telenor expectsapositive akistan, GrameenPhone andDiGi.Com. oard will remain particularly vigilant with remainoard particularlyvigilant will ork investmentsatKyivstar, Telenor li ti c al risks,including regulatoryrisks, Jon Fredrik Baksaas Pr B John Giverholt oard member esident &CEO and Accounts 2004 Financial Review qiy137 147 StandardsFinancial Reporting (IFRS) ofInternational Implementation 85 Au 138 Notes tothefinancialstatements 134 Equity C B Statement ofprofit andloss 89 Te Notes tothefinancialstatements 54 A 82 Equity C B Statement ofprofit andloss Te Financial Review s lwsaeet 136 statements ash flow 84 statements ash flow lneset 135 83 alance sheet alance sheet cutn rnils86 principles ccounting l l io’ eot146 ditor’s report enor ASA: enor Group:

Telenor ASA Annual Report 2004 PAGE 53 Financial Review and Accounts 2004 FINANCIAL REVIEW

INTRODUCTION The actual amounts and the timing of our capital expenditure may vary substantially from our estimates. The following discussion should be read in conjunction with our consolidated financial statements, which have been prepared Concurrent with the increase in our capital expenditure, we in accordance with Norwegian GAAP, which differ in certain generated significant and increased cash flows from our operations respects from US GAAP. For a reconciliation of the material in 2004 and received payments for the sale of shareholdings. differences between Norwegian and US GAAP, you should However, our net debt increased slightly during 2004 due to the read note 32 to our consolidated financial statements. consolidation of Sonofon. Our current strategic focus is on pre- serving our market shares and continuing to streamline and realize Due to the growth of our international mobile operations, we synergies across our operations. have determined that, commencing with the fiscal year ended 31 December 2004, Telenor Mobile can no longer be presented as For an overview of the results of our mobile operations , Fixed one segment and has identified those mobile operations that due and Broadcast, you should read "Results of Operations – Mobile to their increased significance for Telenor should be reported as operations – Overview", "Results of Operations – Telenor Fixed separate segments. The new segments are: Telenor Mobil (Norway); – Overview" and "Results of Operations – Telenor Broadcast – Sonofon (Denmark); Pannon GSM (Hungary); DiGi.Com (Malaysia); Overview". Kyivstar (Ukraine); GrameenPhone (Bangladesh); and Other mobile operations/eliminations, which comprises Telenor Mobile Sweden, Promonte GSM (Montenegro),Telenor Pakistan as well as elimina- RESULTS OF OPERATIONS – GROUP tions of Group Internal trade between our mobile operations. REVENUES We are exposed to risks and uncertainties which could have a External revenues excluding gains on disposal of fixed assets and material adverse effect on our business, financial condition, liquidity, operations increased by 14.9% in 2004 compared to 2003. In 2004, results of operations or prospects. Such risks and uncertainties 52% of our external revenues derived from our mobile operations, relate to, among other things: compared to 43% in 2003. Part of the increase in external revenues • increased competition; in the Mobile operations was due to the consolidation of Sonofon • the political, economic and legal environment in the foreign and ProMonte GSM. In addition, there was an underlying growth in countries in which we operate; the Mobile operations both in Norway and especially abroad. The • our exposure to currency exchange rate fluctuations, when increase in revenues in Telenor Mobil – Norway compared to 2003, reporting in Norwegian Krone; was primarily due to the increase in number of subscriptions. We • regulatory developments both in and outside Norway. experienced increased competition, also abroad, especially in the more mature markets, such as Denmark and Hungary, with a decrease in our market share. Several markets experienced high GROUP OVERVIEW growth in number of subscriptions. In 2004, our group results improved. Profit before taxes was NOK 8,8 billion in 2004 compared to NOK 7.4 billion in 2003. Profit External revenues in Fixed decreased by 7.2% in 2004 compared to before taxes in 2004 included net epxenses for gains and losses, 2003, primarily due to the sale of our operations in Fixed – Russia workforce reductions, loss contracts and write-downs of approxi- as of 1 December 2003 and the sale of parts of our Operating

Financial review mately NOK 0.4 billion compared to an income in 2003 of approxi- Services business to EDB Business Partner as of 1 May 2004. mately NOK 1.1 billion. The underlying improvement, taking into Adjusted for this, external revenues in Fixed – Norway decreased account these gains and losses, expenses for workforce reductions slightly in 2004 compared to 2003 due to a decrease in the number

PAGE 54 PAGE and loss contracts and write-downs, was primarily due to increased of subscriptions, partially offset by increased sales of ADSL and revenues from our international mobile operations. increased sales in the wholesale market.

Our international mobile operations, especially those in emerging External revenues in Broadcast increased by 12.3%, primarily due markets, experienced a significant growth in 2004 and are increas- to increased number of subscribers, partially offset by reduced ingly important for our business and results of operations. In 2004, revenues from analog satellite transmission. we consolidated Sonofon and ProMonte GSM as a result of the acquisition of the ownership interest in each of these two com- EDB Business Partner's external revenues increased by 3.1% panies which we did not already own. In our Norwegian fixed-line partially due to the acquisition of the Operating services business, Telenor ASA Annual Report Telenor 2004 operations, a mature market with increased competition, we experi- effective 1 May 2004, from Fixed Norway. External revenues from enced a slight decrease in our revenues. However, our operating Other business units decreased by 15.5% primarily due to disposals profit margin in Fixed Norway increased due to reduced deprecia- of operations and decreased revenues in Satellite Services. tion and amortization charges. In Broadcast, we increased our number of subscribers, revenues and EBITDA. Gains on disposal of fixed assets and operations in 2004 were primarily the sale of parts of the Telecom business of EDB Business We increased our capital expenditure in 2004 compared to 2003 Partner and the sale of our subsidiaries Venture III AS, Securinet AS primarily due to the expansion of the network capacity of our inter- and Transacty AS. Gains on disposal of fixed assets and operations national mobile operations as a consequence of strong growth in in 2003 were primarily due to sales of properties in corporate func- the number of subscriptions. Capital expenditure in 2004 included tions and Group activities and the disposal of businesses in most NOK 2.4 billion for the purchase of a licence for mobile telephony in business areas. Pakistan and a UMTS licence in Hungary and NOK 0.6 billion for the acquisition of an ownership interest in a new satellite. High capital The table below shows our revenues broken down by operations in expenditure is expected for 2005, where capital expenditure in and outside Norway. Our proportional share of revenues from our proportion of revenues is expected to be in line with or exceed the associated companies and joint ventures are not included in our 2004 level. Capital expenditure is expected to be driven by consid- consolidated revenues. Some of our international operations are erable network investments in Kyivstar, Telenor Pakistan, Grameen- carried out in associated companies and joint ventures, especially Phone and DiGi.Com. In addition, we expect further UMTS investments. mobile operations. The revenues in the table for consolidated companies are based on company location and do not include the selling companies are reversed as a change in own work capi- gains on disposal of fixed assets and operations. Revenues outside talized for the Group. Own work capitalized in 2004 was in line with Norway have increased in recent years due to the increased number 2003. However, the construction of Mobile and Broadcast networks, of consolidated foreign entities as well as underlying growth in performed by our Fixed business area increased in 2004 compared existing operations, especially in our mobile operations. Effective to 2003. The increase was offset by decrease in work on long-lived from 12 February 2004, we consolidated Sonofon in Denmark, and assets in other business areas and the sale of parts of the Telecom effective from 12 August 2004 we consolidated ProMonte GSM in business of EDB Business Partner where the capital expenditure Montenegro. This was partially offset by reduced revenues from now is purchased from external parties. Fixed – Russia and Nextra International due to the disposal of these operations in 2003. Salaries and personnel costs (see note 6 and 7) Purchase and sale of companies had a minor effect on the NOK in millions 2004 2003 2002 increased total salaries and personnel costs in 2004 compared Consolidated revenues to 2003. Norway 33,461 33,409 33,085 Outside Norway 27,291 19,480 15,583 Salaries and holiday pay increased, primarily due to general wage Total revenues excluding gains 60,752 52,88948,668 increases and increased number of employees in our mobile operations as a consequence of increased activity.

OPERATING EXPENSES Social security tax varies as a percentage salaries and holiday See the notes to the consolidated financial statements for a further pay between the years, primarily due to different rates for social specification of operating expenses. security tax in different countries.

Costs of materials and traffic charges (see note 4) The number of full-time equivalent employees at 31 December Traffic charges – network capacity consist primarily of traffic 2004 increased by approximately 1,450 compared to 31 December charges for providing fixed and mobile services. Of the increase in 2003. The number of full-time equivalent employees outside of traffic charges – network capacity costs in 2004 compared to 2003, Norway increased by approximately 2,050. In Norway we reduced approximately NOK 1.1 billion was due to the net effect of pur- the number of full-time equivalent employees by approximately chased and sold companies, primarily the consolidation of the 600. The increase outside of Norway was primarily due to the con- formerly associated company Sonofon. In addition, traffic charges solidation of Sonofon and ProMonte and the establishment of our – network capacity costs increased primarily due to an increase in operations in Pakistan. The decrease in Norway was primarily due to the nmber of subscriptions in our mobile operations. Traffic charges sale of businesses, including the sale of parts of the Telecom busi- – network capacity costs decreased in our Fixed business area, ness in EDB Business Partner. The purchase and sale of businesses primarily due to decreased traffic in Norway and reduced termi- in 2004 increased the total number of our full-time equivalent nation charges for traffic to the mobile networks in Norway. employees by approximately 1,000. The average number of full- time equivalent employees was estimated to be approximately 450 Traffic charges – satellite capacity are primarily related to sales lower in 2004 compared to 2003. of satellite broadcasting services (Broadcast) and satellite mobile services and satellite capacity services (Satellite Services). Rent of Increased pension costs in 2004 compared to 2003. In 2004, Telenor

satellite capacity in Broadcast was reduced due to price reductions joined the employers’ association NHO and our agreement-based Financial review and the purchase of our ownership interest of a new satellite. early retirement plan (AFP) was transferred to NHO. AFP through NHO is a multiemployer plan. Until the administrator of the plan is

Our mobile operations and Broadcast business area in the aggregate able to calculate Telenor’s share of assets and liabilities in this plan, 55 PAGE generated approximately three-fourths of our total costs of materi- Telenor have to account for this plan as a contribution plan, as als etc. in 2004, primarily due to sales of customer equipment in opposed to a defined benefit plan. Due to the change to AFP our mobile operations and TV-program fees and equipment in through NHO, in 2004 we expensed the remaining non-amortized Broadcast. The net effect of purchased and sold companies, pri- prior service costs related to the previous AFP arrangement and marily the acquisition of Sonofon, increased our costs of materials expensed AFP-pension premiums, partially offset by a reduction of by approximately NOK 0.7 billion in 2004. In addition, the increase the previously recognized AFP-liability. These changes contributed in the costs of materials etc was due to increased sales of Set-top to increased costs for AFP of approximately NOK 25 million in 2004 boxes in Broadcast and handsets in our mobile operations. We also compared to 2003. Telenor ASA Annual Report Telenor 2004 increased our cost of materials for building of networks coordinated by our Fixed business area for use within Telenor and consequently In 2004, Telenor joined the employers’ association NHO and our taken to income through the line item “own work capitalized” (see agreement-based early retirement plan (AFP) was transferred to below). NHO. AFP through NHO is a multiemployer plan. Until NHO is able to calculate Telenor’s share of assets and liabilities in this plan, Own work capitalized (see note 5) Telenor have to account for this plan as a contribution plan, as Own work capitalized is presented as a separate caption and is opposed to a defined benefit plan. Due to the change to AFP not netted against the related expenses in the profit and loss through NHO, we expensed the remaining non-amortized prior statement. The various Group companies consolidated in Telenor service costs related to the previous AFP arrangement and perform work on their own long-lived assets, which is capitalized, if expensed AFP-pension premiums, partially offset by a reduction of appropriate. The Group companies expense the related costs in the the previously recognized AFP-liability. These changes contributed line items costs of materials, salaries and personnel costs, or other to increased costs for AFP of approximately NOK 25 million in 2004. operating expenses as appropriate. The costs that are capitalized are then reversed as change in own work capitalized. Several com- During 2004, long-term interest rates in Norway were reduced panies in the Group perform work on and deliver long-lived assets and we reduced our estimated discount rate as of 31 December to other Group companies. The purchasing company capitalizes 2004 accordingly. This contributed to an increase in the estimated these long-lived assets. For the Group as a whole this is regarded net present value of our pension obligations and non-amortized as a change in own work capitalized and the expenses recorded in actuarial losses as of 31 December 2004. However, the increase in non-amortized actuarial losses was offset by the effect of The increased expenses for workforce reduction and loss contracts changing the method of accounting for AFP and a higher than of NOK 0.6 billion 2004 compared to 2003 was primarily due to pro- estimated return on pension plan assets, primarily due to the vision of NOK 562 million for the estimated loss on the MVNO con- increase in share prices. tract (Mobile Virtual Network Operator) in Telenor Mobile – Sweden. You should read note 11 to our consolidated financial statements Starting from 2005, we will report according to the International for additional information about costs for workforce reductions and Financial Reporting Standards (IFRS). As a transition effect we will loss contracts. record our non-amortized actuarial losses to equity in our IFRS accounts as of 1 January 2004. In the IFRS calculation we also Increased costs for concession fees were primarily related to expect to reduce our discount rate as of 1 January 2004 and increased costs for Universal Service Obligations in DiGi.Com, 31 December 2004, which will increase the estimated fair value partially offset by a reduction in these costs for Pannon GSM of our pension obligations and our actuarial losses as of 1 January in 2004 compared to 2003. 2004. As a consequence of this, we expect that amortization of actuarial losses will decrease in the coming years, starting from Losses on disposal of fixed assets and operations the comparable IFRS-figures for 2004, compared to the current Losses on disposal of fixed assets and operations totaled NOK 74 Norwegian GAAP figures. You should read "Critical Accounting million in 2004. Losses on disposal of fixed assets and operations estimates under Norwegian GAAP" and note 7 to our consolidated totaled NOK 229 million in 2003, of which the disposal of Nextra financial statements for additional information about our pension International companies contributed NOK 176 million. costs. Depreciation, Amortization and Write-downs Other operating expenses (see note 8–11) (see note 14 and 15) Other operating expenses increased by approximately NOK 2.4 NOK in millions 2004 2003 2002 billion, or 18.9%, in 2004 compared to 2003. The consolidation Depreciation of tangible assets 7,753 7,986 7,624 of Sonofon contributed to this increase by approximately Amortization of goodwill 939 686 1,002 NOK 1 billion. Amortization of other intangible assets 2,931 1,925 1,610 Total depreciation and amortization 1) 11,623 10,597 10,236 Costs for marketing, sales commissions and advertising increased Write-downs of tangible assets 282 104 424 by approximately NOK 1.5 billion, of which approximately NOK 0.4 Write-downs of goodwill 2,194 16 2,632 billion due to Sonofon. The increase was primarily due to the signifi- Write-downs of other intangible assets 120 25 497 cant increase in the number of new subscriptions, primarily in our Total write-downs 2,596 145 3,553 mobile operations, but also in our Broadcast business area. Total depreciation, amortization and write-downs 14,21910,742 13,789 The table below shows the breakdown of expenses for workforce reductions and loss contracts by operations in 2002, 2003 and 2004.

Specification of expenses for workforce reductions and loss contracts

Financial review NOK in millions 2004 2003 2002 Total Mobile operations 630 (21) 120 Fixed 86 6 311

PAGE 56 PAGE Broadcast 5 7 65 EDB Business Partner 33 223 111 Other business units 28 38 122 Corporate functions and Group activities 116 34 272 Eliminations 47 Total 1) 898 287 1,048 1) This line item corresponds to the same line item in other operating expenses in note 8, except for 2002, where NOK 66 million related to previously granted pension benefits in Teleservice is included in Telenor ASA Annual Report Telenor 2004 "salaries and personnel costs".

1) Specification of depreciation of tangible assets, amortization of goodwill and amortization of other intangible assets in 2002, 2003 and 2004:

2004 2003 2002 Other Other Other Tangible Intangible Tangible Intangible Tangible Intangible NOK in millions assets Goodwill assets assets Goodwill assets assets Goodwill assets Total Mobile 3,147 678 2,247 2,674 400 1,234 2,232 509 1,038 Fixed 3,174 (105) 399 3,774 (95) 431 3,858 134 374 Broadcast 603 192 92 755 197 78 679 133 32 EDB Business Partner 242 158 1 223 151 1 224 166 3 Other business units 267 30 75 305 34 152 359 60 163 Corporate functions and Group activities 326 - 58 355 - 29 362 - - Eliminations (6) (14) 59 (100) (1) - (90) - - Total 7,753 939 2,931 7,986 686 1,925 7,624 1,002 1,610 Increased amortization of goodwill and other intangible assets In addition, amortization of net excess values increased in 2004 in 2004 compared to 2003 was primarily due to the consolidation compared to 2003 due to the consolidation of Sonofon. of Sonofon. Reduced depreciation of tangible assets in 2004 com- pared to 2003 was primarily due to reduced capital expenditure We also focus on operating profit (loss) before the effects of amor- over the latest years in our Norwegian Fixed networks business tization, depreciation and write-downs. We refer to this measure and our Broadcast business. Telenor Mobile Norway also showed as "EBITDA" because under Norwegian GAAP operating profit is reduced depreciation. This was partially offset by the net effect reported in our consolidated income statement before taxes and of purchased and sold businesses of approximately NOK 0.3 billion, net financial items. In addition, operating profit includes amounts and increased depreciation due to increased capital expenditure attributable to minority interests but does not include results from in our foreign mobile operations. associated companies or joint ventures which are accounted for using the equity method and included in net income. We believe As of 31 December 2004 we wrote down goodwill in Sonofon by that providing EBITDA enhances an understanding of our operating NOK 2,190 million. In 2004 the Danish market was characterized activities and the performance of the individual units because it by intense competition and price reductions. Our assessment of the provides investors with a measure of operating results that is write-down of goodwill in Sonofon was due to Sonofon’s slower than unaffected by amortization and depreciation related to acquisitions expected growth and a review of our expectations of the company’s and capital expenditures, differences in capital structures, e.g. book growth potential as of year-end 2004. The assessment of the fair value of tangible and intangible assets, among otherwise compara- value was based on various valuation methods, with assistance of ble companies or investments in and results from associated com- external valuations experts. In addition, we wrote-down equipment panies. We believe that EBITDA is also an indicator to demonstrate by NOK 215 million related to our transmission network in Sonofon, to what extent operational business activities generate earnings based on expected cash flows. We also made write-downs of NOK which are available to reduce net debt or to finance investments. 75 million, of which NOK 61 million was other intangible assets, as a consequence of the reduced expectations for our mobile business EBITDA is not a measurement of financial performance under in Sweden. If, among other things, market values decline and mar- generally accepted accounting principles. You should not consider ket conditions deteriorate, we may have to continue to perform EBITDA as an alternative to operating profit, net income or cash impairment tests, as well as the annual impairment test of goodwill flow from operating activities. Since other companies may not according to US GAAP. You should read "Critical Accounting calculate EBITDA in the same way, our EBITDA figures are not nec- Estimates under Norwegian GAAP " for additional information essarily comparable with similarly titled figures of other companies. on our impairment tests. For a reconciliation of EBITDA to net income, see note 3 to our consolidated financial statements. OPERATING PROFIT (LOSS) AND EBITDA Our operating profit (loss) in the period 2002 to 2004 was affected Our EBITDA increased in 2004 compared to 2003 due to the by gains and losses on sales of fixed assets and operations, expenses underlying increase in revenues and the positive effect of the for workforce reductions and loss contracts as well as write-downs, consolidation of companies. as illustrated below. We believe that information about and discus- sion of these items may explain in part the development of our You should read "– Results of Operations " for a more detailed operating performance in this period. discussion of operating profit and EBITDA. Financial review NOK in millions 2004 2003 2002 Operating profit 6,602 7,560 (320) ASSOCIATED COMPANIES (SEE NOTE 16)

Of which: 57 PAGE Gains on disposal of fixed assets NOK in millions 2004 2003 2002 and operations 550 232 158 Telenor's share of 1) Losses on disposal of fixed assets Net income (loss) after taxes 912 329 341 and operations (74) (229) (147) Amortization of Telenor's net excess values (266) (579) (862) Expenses for workforce reductions Write-downs of Telenor's excess values - (26) (1,965) and loss contracts 1) (898) (287) (1,048) Net gains on disposal of ownership interests 32 1,507 36 Write-downs of tangible Net result from associated companies 718 1,231 (2,450) and intangible assets 2) (2,596) (145) (3,553) 1) The figures are partially based on our management's estimates in Telenor ASA Annual Report Telenor 2004 Total gains, losses, expenses for connection with the preparation of our consolidated financial state- workforce reductions and loss ments. Our consolidated profit and loss statement contains only the contracts and write-downs (3,018) (429) (4,590) line item "net result from associated companies". Our share of the 1) For a breakdown of our expenses for workforce reductions and loss other items shown in the table is not included in our consolidated contracts, you should read "Other operating expenses". financial statements, but this information is set forth in note 16 to our 2) For a breakdown of our write-downs, you should see note 14 to our consolidated financial statements. Net excess values are the differ- consolidated financial statements. ence between our acquisition cost and our share of equity at the time of the acquisition of the associated companies. Our operating profit in 2004 was to a large extent affected by gains and losses, expenses for workforce reductions, loss contracts and The results from associated companies were influenced by our write-downs. We discuss these items above under "Revenues", acquisitions, disposals and consolidation of subsidiaries in 2002, "Operating expenses" and "Depreciation, amortization and write- 2003 and 2004 and by our write-downs in 2002. Pannon GSM was downs". The decrease in our operating profit in 2004 compared consolidated as a subsidiary as of 4 February 2002, Canal Digital to 2003 was to a large extent affected by these items. Adjusted was consolidated as a subsidiary as of 30 June 2002 and Kyivstar for these items, most of our operationsincreased operating profit was consolidated as a subsidiary as of 1 September 2002. Extel was in 2004 compared to 2003 primarily due to growth in revenues. sold at the end of 2002 and StavTeleSot at the beginning of 2003 to VimpelCom-Region. On 30 April 2003, we announced the sale As of 26 February 2004, we sold our remaining shareholding in of a 9% shareholding in Cosmote and, as a result, Cosmote is no Cosmote for NOK 3.1 billion and we recorded a gain on sale of longer accounted for as an associated company. In February 2004, financial assets of approximately NOK 2.6 billion before taxes we disposed of our remaining interest in Cosmote. We acquired 37% related to this transaction. In 2004, some write-downs, primarily in of Glocalnet AB as of 31 December 2002 and 20.4% of Golden Venture-companies, were reversed due to increased market values. Telecom as of 1 December 2003. Sonofon and ProMonte was con- solidated as subsidiaries as of 12 February and 12 August 2004, On 28 January 2005, we sold our 6.9 million shares in Intelsat for respectively. a price of 18.75 US Dollar per share. We recorded a gain before taxes of approximately NOK 386 million in 2005. The increase in net income after taxes from associated companies in 2004 compared to 2003 was primarily due to the growth in VimpelCom and reduced losses in Bravida ASA. At the end of 2004, INCOME TAXES (SEE NOTE 13) Bravida ASA disposed of parts of its businesses, including the The corporate income tax rate in Norway is 28.0%. Note 13 to Telecom business that was transferred from Telenor in 2000. our consolidated financial statements shows our effective tax rate Bravida ASA recorded a gain on sale in 2004, but also incurred (income taxes as a percentage of profit before taxes) reconciled expenses for loss contracts and employee termination. In 2003 the to the Norwegian tax rate of 28.0% results in Bravida ASA were affected by restructuring charges and write-downs. You should read note 13 “Income Taxes” to our consolidated financial statements and "Critical Accounting Estimates under The decrease in amortization of Telenor's net excess values in 2004 Norwegian GAAP – Income Taxes" for additional information about compared to 2003 was primarily due to Sonofon being consolidated income taxes. as a subsidiary from 12 February 2004. As of 31 December 2004, we did not record the potential tax Net gains on disposal of ownership interests in 2003 primarily income related to the tax loss on the sale of shares in Sonofon related to the sale of shares in Cosmote. Holding A/S in 2001 within the Telenor Group, the tax loss on the sale of Telenor Business Solutions AS in 2003 within the Telenor Group or the RISK adjustment we have claimed on the tax base FINANCIAL INCOME AND EXPENSES (SEE NOTE 12) values of the shares in Cosmote in 2003. You should read note 13 The decrease in interest income in 2004 compared to 2003 was “Income Taxes” to our consolidated financial statements for addi- due to a lower level of interest-bearing financial assets and tional information about these sales. reduced interest rates. The decrease in interest-bearing financial assets was primarily due to repayment of debt, the acquisition of In 2004, the increased effective tax rate due to amortizations and Sonofon, the share buy-back and the payment of dividends. write-downs of goodwill that are not tax deductible was offset by tax losses on the sale and liquidation of shares and a reduction in Interest expenses decreased in 2004 compared to 2003 due deferred tax on undistributed earnings. to lower interest-bearing liabilities on average during 2004 and reduced interest rates. The decrease in interest bearing liabilities In 2003, we recorded deferred taxes on undistributed earnings was primarily due to repayment of debt at maturity. in certain subsidiaries and associated companies outside Norway

Financial review as we expect to receive dividends from them. The effective tax rate Total interest expenses reflect our composition and structure of was also affected by negative results from certain associated liabilities with floating rate, fixed rates and higher interest rates companies and subsidiaries outside Norway and amortization

PAGE 58 PAGE on liabilities in some subsidiaries with external financing. Average and write-downs of goodwill, on which deferred tax assets have interest rates for Telenor ASA’s debt instruments were slightly not been recognized. This was partially offset by tax losses upon reduced in 2004, primarily due to the reduction in the duration of decisions for liquidation and disposal of several companies. our debt portfolio. This was partially offset by external financing of subsidiaries with higher interest rates. You should read note 20 to our consolidated financial statements for further information about MINORITY INTERESTS interest rates and duration of our debt portfolio. The increase in During 2004, we increased our ownership interest in GrameenPhone capitalized interest occurred primarily in our international mobile and Kyivstar, from 51.0% to 62.0% and from 55.3% to 56.5%, operations due to a higher level of capital expenditure. respectively. At the end of 2004, we sold 20% of our subsidiary Telenor ASA Annual Report Telenor 2004 Telenor Venture IV AS. The main reason for the difference between Net foreign currency loss in 2004 was primarily due to cash the changes in the minority interests in the balance sheet and management activities, foreign currency- denominated debt minority part of net income for 2004 were the effects of currency in subsidiaries and operational exposures. fluctuations, dividends paid by some of the companies and changes in our ownership interest in some of the companies. RESULTS OF OPERATIONS MOBILE OPERATIONS

The following tables sets forth selected financial data for our seg- NOK in millions 2004 2003 2002 ments for the period 2002–2004. The eliminations reported in these External revenues 31,565 22,483 19,079 tables are primarily related to intra group transactions. Internal revenues 1,382 1,327 1,267 Gains on disposal of fixed assets NOK in millions 2004 2003 2002 and operations 5 - - Revenues excluding gains on disposal Total revenues 32,952 23,810 20,346 of fixed assets and operations Telenor Mobil – Norway 11,734 10,909 10,695 External costs of materials and traffic charges 8,680 5,481 5,020 Sonofon – Denmark 4,393 - - Internal costs of materials and traffic charges 874 770 725 Pannon GSM – Hungary 5,864 5,370 4,505 Total costs of materials and traffic charges 9,554 6,251 5,745 DiGi.Com – Malaysia 3,953 3,176 2,715 Own work capitalized (72) (97) (69) Kyivstar – Ukraine 4,346 2,634 708 Salaries and personnel costs 2,695 1,917 1,898 GrameenPhone – Bangladesh 2,202 1,536 1,589 Other external operating expenses 8,119 5,170 4,330 Other mobile operations/eliminations 455 185 134 Other internal operating expenses 1,026 997 960 Total mobile operations 32,947 23,810 20,346 Losses on disposal of fixed assets Fixed 19,256 20,500 20,008 and operations 12 5 - Broadcast 5,346 4,800 3,607 Depreciation and amortization 1) 6,072 4,308 3,779 EDB Business Partner 4,235 4,270 4,338 Write-downs 2) 2,519 35 2,289 Other business units 3,460 4,154 5,040 Total operating expenses 29,925 18,586 18,932 Corporate functions and Group activities 2,089 2,184 2,116 Eliminations (6,581) (6,829) (6,787) Operating profit 3,027 5,224 1,414 Total revenues excluding gains 60,752 52,88948,668 Associated companies 694 1,639 (2,030) Gains on disposal of fixed assets Net financial items 873 (2,182) (2,050) and operations 550 232 158 Profit before taxes and minority interests 4,594 4,681 (2,666) Total revenues 61,302 53,121 48,826 1) Includes amortization of Telenor’s net excess values by*) 1,844 906 924 NOK in millions 2004 2003 2002 2) Includes write-downs of Telenor’s Operating profit (loss) 1) net excess values by*) 2,190 - 2,138 Telenor Mobil – Norway 3,213 3,115 3,008 *) Net excess values are the difference Sonofon – Denmark (3,248) - - between our acquisition cost and our share Pannon GSM – Hungary 453 379 297 of equity at acquisition of subsidiaries. DiGi.Com – Malaysia 785 374 (2,003) Kyivstar – Ukraine 1,989 1,093 251 EBITDA 11,618 9,567 7,482 GrameenPhone – Bangladesh 1,095 843 631 Depreciation and amortization 6,072 4,308 3,779 Other mobile operations/eliminations (1,260) (580) (770) Write-downs 2,519 35 2,289 Total mobile operations 3,027 5,224 1,414 Operating profit 3,027 5,224 1,414

Fixed 2,794 2,531 731 Financial review Broadcast 589 181 (475) Operating profit/Total revenues (%) 9.2 21.9 6.9 EDB Business Partner 524 (4) (409) EBITDA/Total revenues (%) 35.3 40.2 36.8

Other business units 113 (120) (736) 59 PAGE Corporate functions and Group activities (468) (364) (931) Investments: Eliminations 23 112 86 – Capex 9,427 3,667 3,731 Total operating profit (loss) 6,602 7,560 (320) – Investments in businesses 4,711 95 8,894 1) Amortization and write-downs of Telenor’s net excess values are included in each segment. No. of man-years (end of period) 9,335 6,924 6,551 – Of which abroad 7,767 5,201 4,673 EBITDA NOK in millions 2004 2003 2002 Revenues Telenor ASA Annual Report Telenor 2004 Telenor Mobil – Norway 4,283 4,262 4,330 NOK in millions 2004 2003 2002 Sonofon – Denmark 680 - - Telenor Mobil – Norway 11,734 10,909 10,695 Pannon GSM – Hungary 2,092 1,924 1,586 Sonofon – Denmark 4,393 - - DiGi.Com – Malaysia 1,732 1,295 1,022 Telenor Mobile Sweden 223 127 81 Kyivstar – Ukraine 2,581 1,573 403 Pannon GSM – Hungary 5,869 5,370 4,505 GrameenPhone – Bangladesh 1,313 1,001 757 DiGi.Com – Malaysia 3,953 3,176 2,715 Other mobile operations/eliminiations (1,063) (488) (616) GrameenPhone – Bangladesh 2,202 1,536 1,589 Total mobile operations 11,618 9,567 7,482 Kyivstar – Ukraine 4,346 2,634 708 Fixed 6,277 6,665 5,597 ProMonte GSM – Montenegro 200 - - Broadcast 1,495 1,229 499 Other including eliminations 32 58 53 EDB Business Partner 924 399 348 Total revenues 32,952 23,810 20,346 Other business units 524 408 178 Corporate functions and Group activities (81) 23 (569) Eliminations 64 11 (66) Total EBITDA 1) 20,821 18,302 13,469 1) See note 3 for the reconciliation of EBITDA to net income for the group. EBITDA different operations, but tend to be higher in markets with fierce NOK in millions 2004 2003 2002 competition and high pressure on prices. Regulatory factors, for Telenor Mobil – Norway 4,283 4,262 4,330 example restrictions on lock-in periods, may also affect churn Sonofon – Denmark 680 - - levels. The importance of minimizing churn tends to increase as Telenor Mobile Sweden (725) (114) (77) penetration increases and customer growth slows down. Pannon GSM – Hungary 2,092 1,924 1,586 DiGi.Com – Malaysia 1,732 1,295 1,022 During the period 2002 to 2004, we optimized our capital expendi- GrameenPhone – Bangladesh 1,313 1,001 757 ture without reducing the quality of our mobile networks operations. Kyivstar – Ukraine 2,581 1,573 403 This was due in part to the realization of important synergies across ProMonte GSM – Montenegro 91 - - these operations, such as global contracts and framework agreements Other including eliminations (429) (374) (539) and continued focus on sharing best practices for network utilization Total EBITDA 11,618 9,567 7,482 and optimization. Capital expenditure has been and will continue to be driven by considerable network investments in emerging Overview markets. For example, capital expenditure in DiGi.Com is expected The results from our mobile operations in 2002, 2003 and 2004 to increase significantly due to requirements of national coverage were affected by the consolidation of: in 2005 and 2006. In addition, in 2004 we acquired a UMTS license • ProMonte as a subsidiary effective from 12 August 2004, when in Hungary and we expect further UMTS investments in the future. we increased our ownership interest in the Montenegrin operator from 44.1% to 100%. Fluctuations in currency exchange rates between the Norwegian • Sonofon as a subsidiary effective from 12 February 2004, when Krone and the functional currencies of our mobile operations could we increased our ownership interest in the Danish operator from affect our reported earnings and the value in Norwegian Krone of 53.5% to 100%. the investments. For example, in 2003 the significant strengthening • Kyivstar as a subsidiary effective from 1 September 2002, when of the Norwegian Krone against the US Dollar and other currencies we increased our ownership interest in the Ukrainian operator linked to the US Dollar had an adverse effect on the results of from 45.4% to 54.2%. As of May 2003, our ownership interest operations of, and the value of our investment in, our mobile sub- increased to 55.4% and as of April 2004, our ownership interest sidiaries DiGi.Com (Malaysia), Kyivstar (Ukraine), whose functional in Kyivstar increased further to 56.5%. currency in 2003 was the US Dollar, and GrameenPhone • Pannon GSM as a subsidiary effective from 4 February 2002, (Bangladesh) when reported in Norwegian Krone. when we increased our ownership interest in the Hungarian operator from 25.8% to 100%. TELENOR MOBIL – NORWAY On 14 April 2004, Telenor acquired a license for mobile telephony in Pakistan. Telenor secured a 15-year license, renewable on NOK in millions 2004 2003 2002 application, for USD 291 million. Telenor launched mobile services External revenues in Pakistan on 15 March 2005. December 2004, Pannon GSM Mobile outgoing traffic 3,845 3,712 3,880 was awarded a UMTS license for 15 years with an option for an Mobile incoming traffic 541 455 389 additional 7.5 years for NOK 630 million. Roaming 1) 1,182 1,224 1,220 Total traffic 5,568 5,391 5,489 1) 2)

Financial review In 2004, in our more mature markets, particularly Norway, Denmark SMS, MMS and content services 1,595 1,537 1,530 and Hungary, penetration rates for mobile telephony services con- Subscriptions and connections 1,533 1,216 1,350 tinued to increase, but we experienced increased competition and Customer equipment 589 722 616

PAGE 60 PAGE challenges to our market position. As a consequence of increased Service providers and other 1,220 773 456 competition, operators in mature markets tend to shift their focus Total external revenues 10,508 9,639 9,441 from the acquisition of new customers to customer retention, Internal revenues 1,226 1,270 1,254 reducing churn and stabilizing market shares. In 2004, this have Gains on disposal - - - resulted in increased costs related to sales, marketing and commis- Total revenues 11,734 10,909 10,695 sions and, more generally, in increased pressure on margins. In addition, operators in mature markets tend to focus on increased Total operating expenses 8,521 7,794 7,687 average usage and revenues per subscriber as the main source of Operating profit 3,213 3,115 3,008 potential growth by introducing new and attractive services. We Telenor ASA Annual Report Telenor 2004 further believe that our constant focus on improving the opera- EBITDA 4,283 4,262 4,330 tional efficiency of our mobile operations will contribute to improv- Depreciation and amortization 1,056 1,147 1,207 ing or at least stabilizing overall profitability in mature markets. Write-downs 14 - 115 Operating profit 3,213 3,115 3,008 In our emerging markets, particularly Bangladesh, Pakistan and Ukraine, which still offer a significant growth potential and are Operating profit/Total revenues (%) 27.4 28.6 28.1 characterized by low penetration rates, we continue to focus prima- EBITDA/Total revenues (%) 36.5 39.1 40.5 rily on acquiring new subscribers. Typically, new customers tend to be prepaid subscribers. The average revenue per new subscription Investments tends to be lower than the average revenue per existing subscription. – Capex 973 500 750 In addition, we seek to improve the cost efficiency of our operations – Acquisition of businesses 52 - - in the emerging markets by realizing economies of scale and sharing the best practices created across our international mobile No. of man-years (end of period) 1,413 1,602 1,713 operations. No. of subscriptions (in thousand) 2,645 2,364 2,382 1) Compared to previously reported external revenues SMS services Both in our mature and emerging markets we have seen trends from abroad (roaming) have been reclassified from “Roaming” to towards price reductions, due to regulatory reasons or as a conse- “SMS, MMS and content services” quence of intensified competition. Churn levels vary between our 2) Includes terminated SMS Operating profit and EBITDA – Telenor Mobil – Norway Operating expenses – Telenor Mobil – Norway Operating profit in 2004 increased by 3.1% compared to 2003. NOK in millions 2004 2003 2002 Depreciation, amortization and write-downs of tangible and intan- External costs of materials and traffic charges 2,291 2,127 1,872 gible assets decreased due to a decrease in capital expenditure Internal costs of materials and traffic charges 867 775 722 during 2003 and first half of 2004. EBITDA increased slightly in 2004 Total costs of materials and traffic charges 3,158 2,902 2,594 compared to 2003, whereas the EBITDA margin decreased. This Own work capitalized (23) (33) (52) decrease was primarily due to increased operating expenses in Salaries and personnel costs 884 936 1,064 connection with increased sales, retention and marketing activities Other external operating expenses 2,593 2,019 1,970 due to the fierce competition. Other internal operating expenses 839 823 789 Losses on disposal of fixed assets Revenues – Telenor Mobil – Norway and operations - - - Our estimated market share for GSM subscriptions as of 31 December Depreciation and amortization 1,056 1,147 1,207 2004 was 56.3% compared to 56.8% as of 31 December 2003. Write-downs 14 - 115 During the same period, mobile penetration in Norway increased Total operating expenses 8,521 7,794 7,687 from 90% to approximately 102%, calculated by dividing the total number of SIM cards by population. The average revenue per user Increased operating expenses in 2004 compared to 2003 were was stable compared to 2003. Revenue increased in 2004 com- primarily due to the increase in costs of materials and traffic pared to 2003 due to the increased number of subscriptions. This charges and costs related to sales, marketing and commissions. was partly offset by price reductions due to increased competition. Costs of materials and traffic charges in 2004 increased compared In 2004, external revenues from outgoing mobile traffic in Norway to 2003 due primarily to the increase in outgoing traffic (voice and increased primarily due to the increase in the number of subscrip- SMS) terminating in other telecom operators' networks in Norway. tions and changes in the mix of subscriptions and higher average minutes per user (AMPU). Price reduction and free airtime during Salaries and personnel costs decreased in 2004 compared to 2003 the summer prepaid campaign partly offset these effects. due to the reduced number of employees resulting from the trans- fer of employees to other areas within Telenor. External revenues from incoming mobile traffic increased in 2004 compared to 2003, due primarily to an increase in traffic volume Other operating expenses increased in 2004 compared to 2003 from subscribers of other mobile operators. This was partly offset due primarily to increased costs related to sales, marketing and by reduced prices on terminating traffic fom February 2004. commissions. In 2004, this increase was due primarily to our increased focus on customer retention as a result of increased A small increase in external revenues from roaming in 2004 was competition. Rent and other cost related to properties increased. due to increased traffic volume from subscribers of foreign operators Costs related to support and maintenance-agreements to GSM, visiting Norway (inbound roaming) and minutes from Norwegian GPRS and UMTS also increased due to higher capital expenditures subscribers abroad (outbound roaming). and increased activities.

In 2004, external revenues from subscriptions and connections Depreciation and amortization decreased in 2004 compared to increased compared to 2003 due to migration of customers from 2003 due to reduced capital expenditure in 2003 and the first half

lower priced subscription plans and prepaid to postpaid plans of 2004. In addition, the expected useful life of parts of our IT- Financial review generating higher revenues. We also experienced an increase system portfolio increased, resulting in lower depreciations in 2003. in supplementary fees from business subscriptions. Capital expenditure in 2004 was significantly higher than in 2003

and we expect this will increase depreciation in 2005. 61 PAGE In 2004 external revenues from SMS, MMS and Content services were in line with 2003. The number of messages increased by 239 Capital expenditure – Telenor Mobil – Norway million to 2,165 million in 2004 compared to 2003. The increase was Capital expenditure was higher in 2004 compared to 2003 due to offset by lower average prices, primarily due to an increase in the increased investments in EDGE and UMTS equipment throughout number of free messages and reduced prices. The number of SMS the year. In addition, Telenor Mobil continued to increase coverage messages terminating from other operators increased by approxi- and capacity for the GSM-network. mately 68 million to approximately 618 million in 2004 compared to 2003. Telenor ASA Annual Report Telenor 2004

Revenue from service providers increased by NOK 326 million from 2003 to 2004. This was due to increased number of sub- scribers of service providers. Our external revenues from sales of customer equipment are derived primarily from sales of handsets and computer equipment through our own distributors. These external revenues were relatively stable compared to 2003. SONOFON – DENMARK Operating expenses – Sonofon (ownership interest 100% as of 31 December 2004) 1) NOK in millions 2004 2003 2002 External costs of materials NOK in millions 2004 2003 2002 and traffic charges 2,090 - - Mobile related revenues 3,369 - - Internal costs of materials Other revenues 1,024 - - and traffic charges 33 - - Total revenues 4,393 - - Total costs of materials and traffic charges 2,123 - - Total operating expenses 7,641 - - Own work capitalized (30) - - Operating (loss) (3,248) - - Salaries and personnel costs 586 - - Other external operating expenses 1,032 - - EBITDA 680 - - Other internal operating expenses 2 - - Depreciation and amortization 1,523 - - Losses on disposal of fixed assets Write-downs 2,405 - - and operations - - - Operating (loss) (3,248) - - Depreciation and amortization 1) 1,523 - - Write-downs 2) 2,405 - - EBITDA/Total revenues (%) 15.5 - - Total operating expenses 7,641 - - 1) Includes amortization of Telenor’s Capex 388 - - net excess values by*) 880 - - No. of man-years (end of period) 1,343 - - 2) Includes write-downs of Telenor’s No. of subscriptions (in thousand) 1,286 - - net excess values by*) 2,190 - - 1) The table shows figures included in the accounts for Telenor from the *) Net excess values are the difference between our acquisition cost and date of consolidation. our share of equity at acquisition of subsidiaries.

The preceding table shows figures included in the accounts for Operating expenses exclusive depreciation and amortization of Telenor from the date of acquisition. We consolidated Sonofon as Telenor’s net excess values and write-downs of Telenor’s net excess a subsidiary effective 12 February 2004, when we increased our values increased by approximately NOK 522 million from 2003 to ownership interest in the company from 53.5% to 100%. The follow- 2004, primarily due to high costs of customer acquisition activities ing discussion and analysis of Sonofon's results of operations is based and, in particular, customer retention activities. In connection with on Sonofon’s financial statements for the years ended 31 December Telenor's annual impairment test of entities containing goodwill, 2003 and 31 December 2004, as prepared by Sonofon, which we the market value of the mobile company Sonofon in Denmark have adjusted to conform materially with Norwegian GAAP. We at the end of 2004 has been assessed to be lower than the book believe that such information provides a more useful measure of value. This has led to a write-down of NOK 2.4 billlion, of which comparative financial performance for a period when we had not NOK 2.2 billion was goodwill. yet consolidated Sonofon. However, such information does not purport to represent what the actual results of operations would Capital expenditure – Sonofon have been had Sonofon been consolidated from 1 January 2003 In 2004, capital expenditure was in line with 2003. and is not necessarily indicative of our future operating results.

Financial review Operating profit (loss) and EBITDA – Sonofon TELENOR MOBILE SWEDEN Operating loss in 2004 was NOK 274 million exclusive depreciation (ownership interest 100% as of 31 December 2004) and amortization of Telenor’s net excess values and write-downs of

PAGE 62 PAGE Telenor’s net excess values. EBITDA decreased compared to 2003 NOK in millions 2004 2003 2002 due to the high costs of customer acquisition and, in particular, Total revenues 223 127 81 retention activities. In addition, the increase in traffic offset only in Total operating expenses 1,072 265 166 part the price reductions resulting from increased price competition Operating (loss) (849) (138) (85) in 2004 and 2003. Expenses for workforce reduction had a negative impact on Sonofon’s operating loss and EBITDA. In 2004 there was a EBITDA (725) (114) (77) write-down of NOK 2.4 billlion, of which NOK 2.2 billion was goodwill. Depreciation and amortization 49 24 8 Write-downs 75 - - Revenues – Sonofon Operating (loss) (849) (138) (85) Telenor ASA Annual Report Telenor 2004 Total revenues for 2004 increased compared to 2003. The increase in revenue was due to increased traffic, which resulted both from an Capex 17 79 16 increase of 276,000 in the number of subscriptions in 2004 and a No. of man-years (end of period) 16 21 17 stable development in average minutes per user. The increase was No. of subscriptions (in thousand) 105 81 54 partially off-set by increased competition, which resulted in lower subscription fees, and discounts on handsets sold in connection The Norwegian Krone depreciated against the Swedish Krone by 5% with customer acquisition. in 2004 compared to 2003.

In May 2004, Sonofon purchased the service provider CBB, previously Operating loss and EBITDA – Telenor Mobile Sweden a service provider on Sonofon’s network, which added approximately Operating loss and EBITDA loss increased in 2004 compared to 180,000 prepaid subscriptions to the Sonofon subscription base. 2003, primarily due to provision for an estimated loss of NOK 562 As a result, revenues from retail subscriptions increased from 2003 million on the MVNO contract in Sweden in 2004. In 2002, Telenor to 2004, while revenue from wholesale decreased. entered into a MVNO contract to purchase capacity in a mobile network in Sweden, which partly included fixed prices, as an alter- Sonofon’s market share of GSM subscriptions at 31 December native to the existing service provider agreement. Following price 2004 was estimated to be 27%. The estimated mobile penetration reductions in the Swedish market and reduced expectations in in Denmark at 31 December 2004 was 88%. respect of future earnings potential, the loss was estimated as the difference between expected future economic benefits and unavoidable costs in the contract. Further, the book value of NOK The Norwegian Krone depreciated against the Hungarian Forint by 75 million as of 31 December 2004 on all fixed assets was written 5% in 2004 compared to 2003. down to zero. Operating profit and EBITDA – Pannon GSM Depreciation and amortization increased in 2004 compared to Operating profit and EBITDA increased in 2004 compared to 2003 2003, due to depreciation and amortization related to the phasing due to higher traffic as a result of a 10% increase in average usage out of the service provider operation. per subscription. The operating profit margin (operating profit as a percentage of total revenues) increased due to reduced depreciation Revenues – Telenor Mobile Sweden and amortization, while the EBITDA margin were in line with the Revenues increased during the 2004 compared to 2003 , due pri- corresponding margins in 2003. marily to increased traffic resulting from an increase in the number of subscriptions. The change in the subscription composition, from Revenues – Pannon GSM service provider customers in 2002 to MVNO customers in 2004, In 2004, Pannon GSM had a 9.3% increase in revenues measured also contributed to increased average revenue per subscription in NOK compared to 2003 (3% measured in local currency). This because termination revenues for MVNO customers are included growth was primarily due to increased traffic resulting from an in the revenue basis. increase in average usage per subscription in 2004. The fact that the proportion of customers with postpaid subscriptions increased Operating expenses – Telenor Mobile Sweden during 2004 contributed to this increase. General reduction in NOK in millions 2004 2003 2002 prices partially off-set the increase in usage, and average revenue External costs of materials and traffic charges 200 65 48 generated per subscriber were in line with 2003. Most of the Internal costs of materials and traffic charges 45 7 - 152,000 net subscriptions increase in 2004 occurred close to year Total costs of materials and traffic charges 245 72 48 end. Own work capitalized - - - Salaries and personnel costs 17 23 11 Pannon GSM's market share of GSM subscriptions in Hungary at Other external operating expenses 655 131 94 31 December 2004 was 34% compared to 36% at 31 December 2003. Other internal operating expenses 31 15 5 The reduction was due to increased competition. At 31 December Losses on disposal of fixed assets 2004, the mobile penetration in Hungary had increased to 80% and operations - - - compared to 73% at 31 December 2003 (penetration figures are Depreciation and amortization 49 24 8 now based on 3 months active usage for prepaid for all operators Write-downs 75 - - in Hungary). Total operating expenses 1,072 265 166 Operating expenses – Pannon GSM Excluding the provision for loss in 2004, operating expenses in 2003 NOK in millions 2004 2003 2002 and 2004 consist primarily of costs of materials and traffic charges. External costs of materials and traffic charges 2,243 2,048 1,754 Internal costs of materials and traffic charges 5 2 2 Capital expenditure – Telenor Mobile Sweden Total costs of materials and traffic charges 2,248 2,050 1,756 Capital expenditure decreased in 2004 compared to 2003 because Own work capitalized - - - investment in MVNO operations was completed in 2003. Salaries and personnel costs 378 385 298

Other external operating expenses 1,125 1,001 865 Financial review Other internal operating expenses 22 10 - PANNON GSM – HUNGARY Losses on disposal of fixed assets

(ownership interest 100% as of 31 December 2004) and operations 4 - - 63 PAGE Depreciation and amortization 1) 1,618 1,535 1,274 NOK in millions 2004 2003 2002 Write-downs 21 10 15 Mobile related revenues 5,499 5,005 4,187 Total operating expenses 5,416 4,991 4,208 Other revenues 370 365 318 1) Includes amortization of Telenor’s Total revenues 5,8695,370 4,505 net excess values by*) 683 646 574 Total operating expenses 5,416 4,991 4,208 *) Net excess values are the difference between our acquisition cost and Operating profit 453 379297 our share of equity at acquisition of subsidiaries. Telenor ASA Annual Report Telenor 2004 EBITDA 2,092 1,924 1,586 Operating expenses increased by NOK 0.4 billion in 2004 compared Depreciation and amortization 1,618 1,535 1,274 to 2003 primarily due to increased costs of materials and traffic Write-downs 21 10 15 charges as a result of increased traffic terminating in other operators' Operating profit 453 379297 networks. Other operating expenses increased in 2004 compared to 2003 as a result of higher marketing costs and higher commissions Operating profit/Total revenues (%) 7.7 7.1 6.6 related to the increased sales of contract subscriptions. Depreciation EBITDA/Total revenues (%) 35.6 35.8 35.2 and amortization increased in 2004 compared to 2003 as a result of a higher level of capital expenditures in 2004. Capex 1,166 644 825 No. of man-years (end of period) 1,384 1,499 1,523 Capital expenditure – Pannon GSM No. of subscriptions (in thousand) 2,770 2,618 2,450 Capital expenditure increased by NOK 0.5 billion in 2004 compared to 2003, primarily due to our investment in a UMTS license in The preceding table shows figures included in the accounts for December 2004 and to the upgrading of the GSM network to EDGE Telenor from the date of acquisition. We consolidated Pannon GSM functionality. as a subsidiary effective 4 February 2002, when we increased our ownership interest in the company from 25.8% to 100%. DIGI.COM – MALAYSIA Operating expenses – DiGi.Com (ownership interest 61.0% as of 31 December 2004) NOK in millions 2004 2003 2002 External costs of materials and traffic charges 904 801 730 NOK in millions 2004 2003 2002 Internal costs of materials and traffic charges 3 3 3 Mobile related revenues 3,437 2,713 2,273 Total costs of materials and traffic charges 907 804 733 Other revenues 516 463 442 Own work capitalized (6) (7) (3) Total revenues 3,953 3,176 2,715 Salaries and personnel costs 212 197 194 Total operating expenses 3,168 2,802 4,718 Other external operating expenses 1,095 886 760 Operating profit (loss) 785 374 (2,003) Other internal operating expenses 13 1 9 Losses on disposal of fixed assets EBITDA 1,732 1,295 1,022 and operations - - - Depreciation and amortization 947 903 875 Depreciation and amortization 1) 947 903 875 Write-downs - 18 2,150 Write-downs 2) - 18 2,150 Operating profit (loss) 785 374 (2,003) Total operating expenses 3,168 2,802 4,718 1) Includes amortization of Telenor’s Operating profit/Total revenues (%) 19.9 11.8 nm net excess values by*) 118 123 296 EBITDA/Total revenues (%) 43.8 40.8 37.6 2) Includes write-downs of Telenor’s net excess values by*) - - 2,138 Capex 920 1,043 1,457 *) Net excess values are the difference between our acquisition cost and No. of man-years (end of period) 1,549 1,450 1,443 our share of equity at acquisition of subsidiaries. No. of subscriptions (in thousand) 3,242 2,207 1,616 Operating expenses increased in 2004 compared to 2003 due The Norwegian Krone appreciated 5% against the Malaysian Ringgit primarily to increased costs of materials and traffic charges result- in 2004 compared to 2003. ing from the higher traffic volumes generated by the higher number of subscriptions, as well as increased Universal Service Obligation Operating profit and EBITDA – DiGi.Com provisions and commission expenses as a result of higher gross Operating profit and EBITDA measured in NOK and in local currency sales revenues. increased in 2004 compared to 2003 due to the increase in rev- enues, which more than offset the increase in operating expenses. Capital expenditure – DiGi.Com Depreciation and amortization increased due to a higher level of Capital expenditure decreased by NOK 0.1 billion (0.04 billion capital expenditure in the recent years. The EBITDA margin was if measured in local currency) in 2004 compared to 2003 due to strengthened through increased revenues and economies of scale, reduced prices for network-related equipment. With coverage although this was partially offset by increased costs of materials expansion planned for 2005, capital expenditure will increase in and traffic charges as a result of the increased customer base. 2005. The operating profit margin increased even more due to the fact that depreciations and amortizations comprise of a smaller portion of operating expenses. KYIVSTAR – UKRAINE (ownership interest 56.5% as of 31 December 2004)

Financial review Revenues – DiGi.Com In 2004, DiGi.Com had a 24% increase in revenues measured in NOK in millions 2004 2003 2002 NOK compared to 2003. Measured in local currency, the increase Mobile related revenues 4,278 2,569 681

PAGE 64 PAGE was 30%. The increase in revenues was primarily driven by higher Other revenues 68 65 27 traffic volumes and an increase of 1,035,000 in the number of Total revenues 4,346 2,634 708 subscriptions in 2004. However, on average each subscription Total operating expenses 2,357 1,541 457 generated less revenue as new customers and customers with Operating profit 1,989 1,093 251 prepaid subscriptions reduced the average number of call minutes and revenues per subscription. However, non-voice revenues EBITDA 2,581 1,573 403 increased considerably and represented 14.6% of mobile revenues Depreciation and amortization 592 480 152 in 2004 compared to 13.4% in 2003. This was primarily driven by Write-downs - - - increased SMS volumes. Other revenues, primarily coming from Operating profit 1,989 1,093 251 Telenor ASA Annual Report Telenor 2004 DiGi.Com's international carrier business, increased in 2004 compared to 2003 due to higher traffic volumes. Operating profit/Total revenues (%) 45.8 41.5 35.5 EBITDA/Total revenues (%) 59.4 59.7 56.9 DiGi.Com's market share of GSM subscriptions in Malaysia at 31 December 2004 was estimated to be 22% compared to 20% Capex 2,608 979 329 at 31 December 2003. During 2004, the mobile penetration in No. of man-years (end of period) 1,880 1,269 994 Malaysia increased from 44% to 57%. No. of subscriptions (in thousand) 6,252 3,037 1,856

The preceding table shows figures included in the accounts for Telenor from the date of consolidation. In 2002, we increased our ownership interest in Kyivstar from 45.4% to 54.2% and consolidated Kyivstar as a subsidiary effective 1 September 2002. As of May 2003, our ownership interest increased to 55.4% and as of April 2004, our ownership interest in Kyivstar increased further to 56.5%. The functional currency for Kyivstar is the Ukrainian Hryvnia. Until Capital expenditure – Kyivstar 1 May 2004, the US Dollar was the functional currency for Kyivstar. Capital expenditure increased in 2004 compared to 2003 as a Effective as of 1 May 2004, when the company changed its nominal consequence of high subscription growth and also to improve prices from US Dollar to local currency, the Ukrainian Hryvnia (UAH) mobile coverage. was adopted as the functional currency. The Norwegian Krone appreciated against the US Dollar by 5% in 2004 compared to 2003. The Norwegian Krone appreciated against the Ukrainian GRAMEENPHONE – BANGLADESH Hryvnia by 4% in 2004 compared to 2003. The UAH has been (ownership interest 62.0% as of 31 December 2004) generally stable against the US Dollar during the latest years. The change in functional currency had no material effect on our results NOK in millions 2004 2003 2002 in 2004. Mobile related revenues 2,194 1,529 1,203 Other revenues*) 8 7 386 Operating profit and EBITDA – Kyivstar Total revenues 2,202 1,536 1,589 Operating profit increased by 82% measured in Norwegian Krone Total operating expenses 1,107 693 958 and by 91% measured in local currency in 2004 compared to 2003. Operating profit 1,095 843 631 EBITDA increased by 64% measured in Norwegian Krone and by 72% measured in local currency in 2004 compared to 2003. The EBITDA 1,313 1,001 757 increase was due to increased revenues, which more than offset Depreciation and amortization 215 158 126 the increase in operating expenses. Write-downs 3 - - Operating profit 1,095 843 631 Revenues – Kyivstar In 2004, the company had a 65% increase in revenues measured Operating profit/Total revenues (%) 49.7 54.9 39.7 in Norwegian Krone (a 73% increase if measured in local currency) EBITDA/Total revenues (%) 59.6 65.2 47.6 compared to 2003. The increase in revenues was due primarily to increased traffic resulting from an increase of 3,215,000 subscrip- Capex 1,318 429 342 tions in 2004. However, on average each subscription generated No. of man-years (end of period) 1,147 829 692 marginally less revenue as the customer base consisted of pro- No. of subscriptions (in thousand) 2,388 1,141 769 portionally more prepaid subscribers than in the previous year. *) With effect from the third quarter of 2002, Government royalty and In addition, the company reduced its prices in the spring of 2004. license fees collected by GrameenPhone on behalf of the Government Such price reduction was due to increased competition in the authority have been excluded from ‘other revenues'. With effect from Ukrainian market. Increased usage was offset by a decrease in 1 January 2003, sales of handsets by GrameenPhone are regarded as average prices. commission sales and are therefore excluded from revenues and costs of materials. These changes contributed to a significant decrease in Kyivstar's market share of GSM subscriptions in the Ukraine at "other revenues" and “costs of materials” in 2003 but had no effect on 31 December 2004 was estimated to be 45% compared to 47% at profits. 31 December 2003. During 2004, the estimated mobile penetration in the Ukraine increased from 13.7% to 29.2%. In December 2003, Telenor increased its ownership interest in GrameenPhone from 46.4% to 51.0%. In October 2004, we

Operating expenses – Kyivstar increased our ownership interest in GrameenPhone to 55.5% and Financial review NOK in millions 2004 2003 2002 in December 2004 further increased our ownserhip interest to 62%. External costs of materials and traffic charges 646 276 92 The Norwegian Krone appreciated against the Bangladeshi Taka by

Internal costs of materials and traffic charges 5 - - 7% in 2004 compared to 2003. 65 PAGE Total costs of materials and traffic charges 651 276 92 Own work capitalized - - - Operating profit and EBITDA – GrameenPhone Salaries and personnel costs 183 89 25 Operating profit and EBITDA increased in 2004 compared to2003, Other external operating expenses 920 684 179 due to higher traffic as a result of the increase in the number of Other internal operating expenses 11 12 9 subscriptions, which more than offset the increase in operating Losses on disposal of fixed assets expenses. Depreciation and amortization increased in 2004 com- and operations - - - pared to 2003 due to a higher level of capital expenditure during Depreciation and amortization 1) 592 480 152 2004. Telenor ASA Annual Report Telenor 2004 Write-downs - - - Total operating expenses 2,357 1,541 457 Revenues – GrameenPhone 1) Includes amortization of Telenor’s Measured in Norwegian Krone, mobile-related revenues increased net excess values by*) 130 137 54 by 44% in 2004 compared to 2003 (53% increase in local currency) *) Net excess values are the difference between our acquisition cost and due to increased traffic resulting from an increase of 1,247,000 in our share of equity at acquisition of subsidiaries. the number of subscriptions. However, each new subscription generated on average less revenue than existing subscriptions and Operating expenses increased in 2004 compared to 2003 due pri- prepaid subscriptions, who are the main growth segment, generated marily to the increased number of subscriptions. Costs of materials less traffic and revenue. This resulted in a decline in average revenue and traffic charges increased significantly as a result of higher traffic per subscription. volume and the introduction of the new interconnection regime in September 2003. In addition, advertising costs and commission GrameenPhone's estimated market share in Bangladesh at expenses increased in 2004 compared to 2003 due to increased 31 December 2004 was 62% (including both GSM and CDMA competition and the high number of new customers. The number subscriptions), which was unchanged from 31 December 2003. of man-years also increased in 2004, thus leading to an increase During 2004, the estimated mobile penetration in Bangladesh in salaries and personnel costs. increased to 2.8% from 1.3% at end of 2003. Operating expenses – GrameenPhone January 2003 and is not necessarily indicative of our future NOK in millions 2004 2003 2002 operating results. External costs of materials and traffic charges 245 164 524 Internal costs of materials and traffic charges - - - Operating profit and EBITDA – ProMonte GSM Total costs of materials and traffic charges 245 164 524 Operating profit and EBITDA increased in 2004 compared to 2003 Own work capitalized - - - due to higher traffic as a result of the increase in the number of Salaries and personnel costs 75 51 42 subscriptions, which more than offset the increase in operating Other external operating expenses 539 309 266 expenses. Other internal operating expenses 22 6 - Losses on disposal of fixed assets Revenues – ProMonte GSM and operations 8 5 - In 2004, revenues increased by 3.4% measured in local currency Depreciation and amortization 215 158 126 due to increased traffic resulting from an increase of 38,000 in the Write-downs 3 - - number of subscriptions. However, on average each subscription Total operating expenses 1,107 693 958 generated less revenues due to reduced average number of call minutes and revenues per subscription. Operating expenses increased in 2004 compared to 2003 due to primarily the increased number of subscriptions. Costs of materials ProMonte’s market share of GSM subscriptions at 31 December 2004 and traffic charges increased more than revenue due to the intro- was estimated to be 58% compared to 56% at 31 December 2003. duction of the interconnect regime with revenue sharing between the mobile operators. Advertising costs and commission expenses Operating expenses – ProMonte GSM increased as a result of the increase in competition and the high NOK in millions 2004 2003 2002 number of sales. Salaries and personnel costs, as well as operation External costs of materials and traffic charges 57 - - and maintenance expenses, increased due to the enlarged opera- Internal costs of materials and traffic charges - - - tion. Depreciation and amortization increased in 2004 compared Total costs of materials and traffic charges 57 - - to 2003 due to increased capital expenditure during 2004. Own work capitalized - - - Salaries and personnel costs 15 - - Capital expenditure – GrameenPhone Other external operating expenses 34 - - Capital expenditure increased in 2004 compared to 2003 as a Other internal operating expenses 3 - - consequence of high subscription growth and due to the expansion Losses on disposal of fixed assets of the network to improve coverage. and operations - - - Depreciation and amortization 1) 68 - - Write-downs - - - PROMONTE GSM – MONTENEGRO Total operating expenses 177 - - (ownership interest 100% as of 31 December 2004) 1) 1) Includes amortization of Telenor’s net excess values by*) 33 - - NOK in millions 2004 2003 2002 *) Net excess values are the difference between our acquisition cost and Mobile related revenues 189 - - our share of equity at acquisition of subsidiaries. Other revenues 11 - -

Financial review Total revenues 200 - - Operating expenses increased in 2004 compared to 2003. A decrease Total operating expenses 177 - - in costs of materials and traffic charges was partly offset by an Operating profit 23 - - increase in advertising costs and commission expenses as a result

PAGE 66 PAGE of increased competition. Costs of materials and traffic charges EBITDA 91 - - decreased in 2004 compared to 2003 due to to reduction in inter- Depreciation and amortization 68 - - connect tariffs (new interconnect agreements with Monet and Write-downs - - - Telecom). Operating profit 23 - - Capital expenditure – ProMonte Operating profit/Total revenues (%) 11.5 - - Capital expenditure decreased in 2004 compared to 2003 due EBITDA/Total revenues (%) 45.5 - - to reduced prices for network-related equipment. Telenor ASA Annual Report Telenor 2004 Capex 16 - - No. of man-years (end of period) 224 - - OTHER INCLUDING ELIMINATIONS No. of subscriptions (in thousand) 279 - - 1) The table shows figures included in the accounts for Telenor from the NOK in millions 2003 2002 2001 date of consolidation. EBITDA (429) (374) (539) Depreciation and amortization 5 61 137 In 2004, we increased our ownership interest in ProMonte from Write-downs - 7 9 44.1% to 100% and consolidated ProMonte as a subsidiary effective Operating (loss) (434) (442) (685) 12 August 2004. The following discussion and analysis of ProMonte’s results of operations is based on ProMonte’s financial statements Investments for the years ended 31 December 2003 and 2004, as prepared by Capex 2,021 (7) 12 ProMonte, which we have adjusted to conform materially with No. of man-years (end of period) 380 254 169 Norwegian GAAP. We believe that such information provides a more useful measure of comparative financial performance for a period Other mobile units include the greenfield operation in Pakistan, and when we had not yet consolidated ProMonte. However, such infor- costs related to the management and administration of Telenor's mation does not purport to represent what the actual results of international mobile operations and eliminations of internal trade operations would have been had ProMonte been consolidated from between the mobile operations. The EBITDA loss increased in 2004 compared to 2003 primarily due TELENOR FIXED to operating costs related to the operations in Pakistan. The EBITDA loss for the operation in Pakistan was NOK 78 million in 2004. NOK in millions 2004 2003 2002 The significant increase in capital expenditure in 2004 compared External revenues 17,430 18,787 18,338 to 2003 was due primarily to the purchase of a licence for mobile Internal revenues 1,826 1,713 1,670 telephony in Pakistan. Gains on disposal of fixed assets and operations 10 9 14 Total revenues 19,266 20,509 20,022 ASSOCIATED COMPANIES AND JOINT VENTURES External costs of materials and traffic charges 3,731 3,903 3,649 NOK in millions 2004 2003 2002 Internal costs of materials and traffic charges 1,327 1,529 1,626 Telenor's share of 1) Total costs of materials and traffic charges 5,058 5,432 5,275 Net income after taxes 857 608 612 Own work capitalized (132) (117) (110) Amortization of Telenor's net excess values (163) (534) (798) Salaries and personnel costs 3,490 3,650 3,577 Write-downs of Telenor's excess values - (15) (1,884) Other external operating expenses 2,881 3,140 3,966 Gain on disposal of ownership interests - 1,580 40 Other internal operating expenses 1,667 1,714 1,685 Net result from associated companies 694 1,639 (2,030) Losses on disposal of fixed assets 1) These figures are partly based on our management's estimates in and operations 25 25 32 connection with the preparation of our consolidated financial state- Depreciation and amortization 1) 3,468 4,110 4,366 ments. Our consolidated profit and loss statement contains only the Write-downs 2) 15 24 500 line item "net result from associated companies". Our share of the Total operating expenses 16,472 17,978 19,291 other items shown in the table is not included in our consolidated financial statements but this information is set forth in note 16 to our Operating profit 2,794 2,531 731 consolidated financial statements. Net excess values are the differ- Associated companies 50 8 (5) ence between our acquisition cost and our share of equity at acquisi- Net financial items (438) (736) (297) tion of the associated companies. Profit before taxes and minority interests 2,406 1,803 429 1) Includes amortization of Telenor's The results from associated companies were affected by: net excess values by*) (102) (76) 157 • The sale of Extel in 2002, and the sale of Stavtelesot, OniWay 2) Includes write-downs of Telenor's and 9% of the shares in Cosmote in 2003. net excess values by*) - - 160

• Pannon GSM, Kyivstar, Sonofon and ProMonte GSM being EBITDA 6,277 6,665 5,597 accounted for as subsidiaries effective 4 February 2002, Depreciation and amortization 3,468 4,110 4,366 1 September 2002, 12 February 2004 and 12 August 2004, Write-downs 15 24 500 respectively. Operating profit 2,794 2,531 731

Our associated mobile companies, particularly VimpelCom in Russia Operating profit/Total revenues (%) 14.5 12.3 3.7 and DTAC in Thailand, experienced a significant increase in their EBITDA/Total revenues (%) 32.6 32.5 28.0

customer base in 2004 and in 2003. Financial review Investments Amortization of Telenor's net excess values decreased in 2004 – Capex 1,791 1,867 3,260 compared to 2003 due to the consolidation of Sonofon. – Investments in businesses 105 294 270 67 PAGE

Adjusted for associated companies sold or becoming subsidiaries, No. of man-years (end of period) 5,651 6,087 7,215 net income after taxes increased by NOK 0.3 billion in 2004 com- – Of which abroad 643 652 1,583 pared to 2003, primarily due to VimpelCom. *) Net excess values are the difference between our acquisition cost and our share of equity at acquisition of subsidiaries. Gains on disposals in 2003 were related to the sale of Stavtelesot in January 2003 and the sale of 9% of the shares in Cosmote in April Revenues 2003. In February 2004, we sold the remaining 9% of the shares in NOK in millions 2004 2003 2002 Telenor ASA Annual Report Telenor 2004 Cosmote with a gain before tax of NOK 2.6 billion reported as a part Norway 17,518 18,189 18,281 of financial items. Sweden 1,692 1,603 1,073 Russia 1) - 703 682 Other 175 162 149 Eliminations (119) (148) (163) Total revenues 19,266 20,509 20,022

EBITDA NOK in millions 2004 2003 2002 Norway 6,271 6,512 5,489 Sweden 8 (56) (100) Russia 1) - 215 228 Other 6 (8) (23) Eliminations (8) 2 3 Total EBITDA 6,277 6,665 5,597 Operating profit (loss) FIXED – NORWAY NOK in millions 2004 2003 2002 Norway 3,025 2,720 1,157 NOK in millions 2004 2003 2002 Sweden (167) (198) (333) Business market – fixed network Russia 1) - 71 70 Subscriptions and connections Other (64) (71) (166) – analog (PSTN)/digital (ISDN) 1,062 1,240 1,335 Eliminations - 9 3 Subscriptions and connections Total operating profit 2,794 2,531 731 – ADSL/Internett 264 226 194 1) 11 months in 2003. On 1 December 2003, we exchanged the shares Fixed to fixed traffic domestic, excluding in our consolidated subsidiary Comincom/Combellga (Russia) for an traffic to service providers (ISP) 496 625 776 ownership interest in the listed company Golden Telecom, which is Traffic to Internet service providers (ISP) 63 116 170 reported as an associated company Traffic to mobile 633 647 666 Traffic abroad 148 159 180 Owerview Other traffic 536 621 669 In 2004, our market share of retail subscribers (PSTN/ISDN) as well Total fixed network business market 3,202 3,634 3,990 as our revenues from retail subscribers both decreased, partially offset by an increase in wholesale revenues. The decreased market Residential market – fixed network share and revenues was primarily a consequence of increased Subscriptions and connections competition, including competition from service providers to whom – analog (PSTN)/digital (ISDN) 2,621 3,060 3,026 we provide telephony access (PSTN/ISDN) on a wholesale basis. Subscriptions and connections In spite of the increased competition from other fixed operators and – ADSL/Internett 1,051 815 543 service providers for PSTN/ISDN and DSL services, we maintained Fixed to fixed traffic domestic, excluding a stable market share for fixed telephony traffic and increased our traffic to service providers (ISP) 933 1,061 1,190 market share for DSL subscriptions. The increase in revenues from Traffic to Internet service providers (ISP) 347 445 520 DSL and the wholesale market offset only in part the decrease in Traffic to mobile 1,023 1,069 1,144 retail revenues due to reduced subscription and connection rev- Traffic abroad 229 250 279 enue as a result of declining market share for telephony access Other traffic 497 630 660 and the decrease in the market as a whole and traffic revenues Total fixed network residential market 6,701 7,330 7,362 due to migration of voice traffic to mobile traffic and data traffic to IP (ADSL). Other retail revenues Leased lines 301 329 341 Compared to 2003, Fixed’s results were also affected by the sale of Data services (frame relay, ATM, Comincom/Combellga (Russia) to Golden Telecom on 1 December lan-lan, datapak) 854 836 828 2003 and the sale of parts of the Managed Services business from Managed Services (Operating Services) 454 726 679 Fixed to EDB Business Partner with effect from 1 May 2004. Other 509 377 388 Total other retail revenues 2,118 2,268 2,236 Operating profit and EBITDA Total retail revenues 12,021 13,232 13,588 Operating profit increased in 2004 compared to 2003 due to

Financial review decreased depreciation, amortization and write-downs. In 2004, Wholesale market – fixed network we recorded costs for workforce reductions and loss contracts Sale to service providers and operators 711 249 107 totaling NOK 86 million, compared to NOK 6 million in 2003. Domestic interconnect 608 643 629

PAGE 68 PAGE International interconnect 329 339 340 Transit traffic 993 1,038 1,027 Leased lines 614 631 647 Other wholesale 393 277 194 Total wholesale market – fixed network 3,648 3,177 2,944 Total external revenues 15,66916,409 16,532 Internal revenues 1,844 1,776 1,749 Gains on disposal of fixed assets and operations 5 4 - Telenor ASA Annual Report Telenor 2004 Total revenues 17,518 18,189 18,281 Total operating expenses 14,493 15,469 17,124 Operating profit 3,025 2,720 1,157

EBITDA 6,271 6,512 5,489 Depreciation and amortization 3,244 3,773 3,919 Write-downs 2 19 413 Operating profit 3,025 2,720 1,157

Operating profit/Total revenues (%) 17.3 15.0 6.3 EBITDA/Total revenues (%) 35.8 35.8 30.0

Investments – Capex 1,473 1,568 2,919 – Investments in businesses 2 1 11

No. of man-years (end of period) 5,000 5,440 5,653 Operating profit and EBITDA – Fixed – Norway Other wholesale revenues increased in 2004 compared to 2003 Compared to 2003, the results in 2004 were affected by the sale of primarily due to increased sales of local loop unbundled subscrip- part of the Managed Services business from Fixed to EDB Business tions. The number of local loop unbundled subscription sold at the Partner with effect from 1 May 2004. The transferred business end of 2004 was 145,000, an increase of 65,000, compared to provided services in connection with the operation of the IT systems 80,000 at December 2003. to other Telenor companies and to external customers. Internal revenues – Fixed – Norway Operating profit increased in 2004 compared to 2003 due to Increased sales of leased lines and contractor work to Telenor Mobil decreased depreciation, amortization and write-downs, partially and Broadcast offset the decrease in sales of managed services offset by decreased EBITDA. Deprecation and amortization due to the sale of parts of our Managed Services business to EDB decreased due to write-downs in earlier years, decreased capital Business Partners as of 1 May 2004. expenditure and the impact of the sale of part of the Managed Services business to EDB Business Partner. Decreased EBITDA in Internal revenues consist of intra group sales of network capacity, 2004 compared to 2003 was due to the sale of part of the Managed leased lines and interconnections, primarily to Telenor Mobil – Services business to EDB Business Partner, partially offset by Norway, sales of other wholesale products, such as co-location and reduced operating costs. We expensed NOK 71 millions to workforce contractor work, and sales of managed services and data services, reductions and loss contracts in 2004. primarily to Fixed-Sweden.

External revenues – Fixed – Norway Operating expenses – Fixed – Norway Business and residential market NOK in millions 2004 2003 2002 External subscription and connection revenues from PSTN/ISDN External costs of materials and traffic charges 2,562 2,545 2,759 decreased in 2004 compared to 2003 due to transition to sales of Internal costs of materials and traffic charges 1,327 1,583 1,704 access lines on a wholesale basis and a decrease in the number of Total costs of materials and traffic charges 3,890 4,128 4,463 subscriptions in the market as a whole. Own work capitalized (116) (103) (96) Salaries and personnel costs 3,150 3,189 3,175 Increased external revenues from ADSL and Internet subscriptions Other external operating expenses 2,659 2,792 3,563 were due to the increase in the number of ADSL subscriptions. Other internal operating expenses 1,640 1,682 1,658 The number of ADSL subscriptions (business and residential) was Losses on disposal of fixed assets 326,000 at 31 December 2004, an increase of 149,000 compared and operations 24 (11) 29 to the end of 2003. Depreciation and amortization 1) 3,244 3,773 3,919 Write-downs 2) 2 19 413 Reduced external traffic revenue in 2004 compared to 2003 Total operating expenses 14,493 15,469 17,124 was due to an approximately 15% (approximately 15% in both 1) Includes amortization of Telenor's the business – and residential market) decrease in total traffic net excess values by*) 2923 in Telenor’s fixed network (total market) measured in minutes. 2) Includes write-downs of Telenor's The decrease in traffic resulted from migration of fixed voice traffic net excess values by*) --89 to mobile traffic and of data traffic from dial-up Internet to ADSL. *) Net excess values are the difference between our acquisition cost and our share of equity at acquisition of subsidiaries.

Telenor’s market share measured in traffic minutes was 69% Financial review in December 2004 (72% in the business market and 68% in the Total cost of materials and traffic charges decreased in 2004 com- residential market), the same as in December 2003. pared to 2003 due to decreased traffic, especially traffic to Internet

service providers (ISP) and fixed to mobile traffic, decreased prices 69 PAGE Other external retail revenues for termination in mobile networks from 1 February 2004 and the Due to the sale of parts of our Managed Services business from Fixed impact of the sale of parts our Managed Services business from to EDB Business Partners as of 1 May 2004, the external revenue Fixed to EDB Business Partners as of 1 May 2004. from managed services declined in 2004 compared to 2003. Revenues from other retail products such as sales of equipment, Salaries and personnel costs decreased in 2004 compared to 2003 maritime radio services increased in 2004 due to new contracts and due to the decline in the number of man-years as a result of the increased revenues from our Internet portal services. sale of parts of our Managed Services business to EDB Business Partners as of 1 May 2004 and to pension obligations being Telenor ASA Annual Report Telenor 2004 Wholesale market recognized as income due to a change in accounting treatment Increased revenues from sales to service providers and other of pensions in the Telenor group. This decrease was partly offset operators in 2004 compared to 2003 were due to a growth in sales by a general increase in salaries. of unbundled telephony access (PSTN/ISDN) lines and ADSL. The number of PSTN/ISDN lines sold on a wholesale basis was 438,000 Costs related to workforce reductions and loss contracts increased at December 2004, an increase of 208,000 lines, compared to 230, by NOK 71 million in 2004 compared to 2003. 000 lines at the end of 2003. The number of ADSL subscriptions sold on a wholesale basis was 91,000 at December 2004, an Depreciation and amortization decreased in 2004 compared to increase of 35,000, compared to 56,000 at the end of 2003. 2003 due to reduction in capital expenditure in 2002–2004 and External revenues from domestic interconnections decreased the impact of the sale of parts our Operating Services business in 2004 compared to 2003 due to decline in the number of fixed from Fixed to EDB Business Partners as of 1 May 2004. access lines and reductions in interconnection prices. Capital Expenditure – Fixed – Norway Decreased revenues from international interconnection and transit Decreasing capital expenditure in 2004 compared to 2003 was due traffic were due to price and volume reductions. to declining demand for fixed network services, improved efficiency, e.g. in the use of capital, and reduced equipment prices. FIXED – SWEDEN Total costs of materials and traffic charges increased in 2004 com- pared to 2003 due to provisioning for an ongoing dispute between NOK in millions 2004 2003 2002 telecom operators in Sweden regarding termination regimes prior External revenues 1,588 1,517 983 to 2001. In addition we had expenses related to loss contracts and Internal revenues 99 81 76 increased ADSL site costs. Gains on disposal of fixed assets and operations 5 5 14 Depreciation and amortization increased in 2004 compared to Total revenues 1,692 1,603 1,073 2003 due to growing ADSL capital expenditure in 2004. Total operating expenses 1,8591,801 1,406 Operating (loss (167) (198) (333) FIXED – RUSSIA EBITDA 8 (56) (100) Telenor sold its shareholding in Comincom/Combellga on 1 December Depreciation and amortization 164 141 218 2003 in exchange for shares in the listed company Golden Telecom. Write-downs 11 1 15 Comincom/Combellga was consolidated as a subsidiary until 1 Operating (loss) (167) (198) (333) December 2003. Golden Telecom was accounted for as an associ- ated company from this date. Telenor had an ownership interest n Investments Golden Telecom of 20.3% at 31 December 2004. – Capex 279 85 84 – Investments in businesses 93 13 257 FIXED – OTHER COUNTRIES No. of man-years (end of period) 455 443 551 Fixed – Other Countries comprises our fixed networks and Internet activities in the Czech Republic and Slovakia. Increased revenues In December 2003, after acquiring slightly more than 90% of the from retail and wholesale of ADSL and reduced operating expenses shares in Utfors AB, we initiated a compulsory acquisition procedure resulted in a positive EBITDA and reduced operating loss i in 2004 in accordance with Swedish law for the remaining outstanding compared to 2003. shares of Utfors, and launched a cash offer to purchase the remaining outstanding shares in Utfors in order to accelerate the process. After the expiration of the tender period under the cash TELENOR BROADCAST offer at the end of January 2004, we owned 100% of the shares in Utfors AB. Overview In 2004, the results of our Broadcast business area were positively Operating (loss) – Fixed – Sweden affected by continued growth in the numbers of subscribers, price The decrease in operating loss in 2004 compared to 2003 was increase for DTH services and reduced cost of leased satellite primarily due to increased revenues from sales of voice traffic capacity. and data services, which offset the increased operational expenses primarily due to the roll out of DSL. The increase in depreciation In September 2004, we purchased an ownership interest in a new and amortization in 2004 compared to 2003 was due to increase satellite, Intelsat 10-02, to replace our formerly leased capacity in capital expenditure connected with the roll out of DSL. with our own satellite transponders. The investment reduced our

Financial review costs of materials and traffic charges and increased depreciation Revenues – Fixed – Sweden within Transmission. The increase in revenues in 2004 compared to 2003 was primarily

PAGE 70 PAGE due to the increase in sales of voice traffic on a wholesale basis and data services. In addition, a one-time impact of non-recurring NOK in millions 2004 2003 2002 revenue of sales of data services on a wholesale basis and a prepaid External revenues 5,211 4,641 3,366 sale of capacity for delivery in the future where the delivery obliga- Internal revenues 135 159 241 tion was terminated. The increase in revenues offset the impact of Gains on disposal of fixed assets termination of volume contracts related to internal interconnect and operations 1 20 (2) and reduced sales of telephony services on a wholesale basis. Total revenues 5,347 4,820 3,605

Operating Expenses – Fixed – Sweden External costs of materials and traffic charges 2,072 1,934 1,477 Telenor ASA Annual Report Telenor 2004 NOK in millions 2004 2003 2002 Internal costs of materials and traffic charges 98 92 94 External costs of materials and traffic charges 1,084 1,047 626 Total costs of materials and traffic charges 2,170 2,026 1,571 Internal costs of materials and traffic charges 110 93 69 Own work capitalized (10) (18) (32) Total costs of materials and traffic charges 1,194 1,140 695 Salaries and personnel costs 576 570 609 Own work capitalized (16) - - Other external operating expenses 864 734 700 Salaries and personnel costs 296 294 236 Other internal operating expenses 251 271 252 Other external operating expenses 184 198 222 Losses on disposal of fixed assets Other internal operating expenses 26 18 20 and operations 1 8 6 Losses on disposal of fixed assets Depreciation and amortization 1) 886 1,030 844 and operations - 9 - Write-downs 1) 20 18 130 Depreciation and amortization 1) 164 141 218 Total operating expenses 4,758 4,639 4,080 Write-downs 1) 11 1 15 Total operating expenses 1,8591,801 1,406Operating profit (loss) 589181 (475) 1) Includes amortization and write-downs of Telenor's net excess values by*) (104) (143) 31 *) Net excess values are the difference between our acquisition cost and our share of equity at acquisition of subsidiaries. Cont. 2004 2003 2002 DISTRIBUTION Associated companies 1 (84) (264) Net financial items (471) (909) (812) NOK in millions 2004 2003 2002 Profit (loss) before taxes External revenues and minority interests 119(812) (1,551) DTH 2,917 2,528 1,099 1) Includes amortization and write-downs Cable TV 986 888 742 of Telenor's net excess values by*) 243 256 161 SMATV 382 335 252 Other 15 10 55 EBITDA 1,495 1,229 499 Total external revenues 4,300 3,761 2,148 Depreciation and amortization 886 1,030 844 Internal revenues 9 13 16 Write-downs 20 18 130 Gains on disposal of fixed assets Operating profit (loss) 589181 and (475) operations 1 20 (2) Operating profit (loss)/Total revenues (%) 11.0 3.8 nm Total operating expenses 4,310 3,794 2,162 EBITDA/Total revenues (%) 28.0 25.5 13.8 Total operating expenses 4,168 3,870 2,740 Investments Operating profit (loss) 142 (76) (578) – Capex 243 252 384 – Investments in businesses - 14 2,385 EBITDA 749 686 19 Depreciation and amortization 592 754 541 No. of man-years (end of period) 774 809 972 Write-downs 15 8 56 – Of which abroad 222 210 226 Operating profit (loss) 142 (76) (578)

Revenues Operating profit/Total revenues (%) 3.3 nm nm NOK in millions 2004 2003 2002 EBITDA/Total revenues (%) 17.4 18.1 0.9 Distribution 4,310 3,794 2,162 Transmission 1,211 1,277 1,457 Investments Other 461 354 326 – Capex 120 112 235 Eliminations (635) (605) (340) – Investments in businesses - - 2,369 Total revenues 5,347 4,820 3,605 No. of man-years (end of period) 373 416 563 EBITDA NOK in millions 2004 2003 2002 Operating profit (loss) and EBITDA – Distribution Distribution 749 686 19 In Distribution, we had an operating profit in 2004 of NOK 142 million Transmission 685 554 581 compared to an operating loss of NOK 76 million in 2003. Both Other 61 (10) (102) operating profit and EBITDA increased primarily due to subscriber Eliminations - (1) 1 growth and price increases for DTH services. Depreciation and Total EBITDA 1,495 1,229 499 amortization decreased due to fully depreciated assets. *) Net excess values are the difference between our acquisition cost and

our share of equity at acquisition of subsidiaries. Revenues – Distribution Financial review External revenues in Distribution in 2004 increased by 14% Operating profit and EBITDA compared to 2003 primarily due to a higher number of subscribers,

Operating profit and EBITDA increased in 2004 compared to 2003 price increases for DTH services and a weakening of the Norwegian 71 PAGE primarily due to subscriber growth, increased prices for DTH, and Krone against the Swedish Krona. reduced costs for leasing satellite capacity and the replacement of formerly leased satellite capacity with our own satellite The number of our DTH Pay-TV subscribers was 824,000, an transponders from September 2004. Depreciation and amortization increase of 8% compared to 31 December 2003. The number of decreased in 2004 compared to 2003 due to fully depreciated fixed our Cable TV subscribers increased by 20,000 to 624,000 in 2004. assets within Distribution. The numbers of SMATV households was 1,212,000 at 31 December 2004, an increase of 8.6% compared to 31 December 2003. Telenor ASA Annual Report Telenor 2004 Operating expenses – Distribution NOK in millions 2004 2003 2002 External costs of materials and traffic charges 1,883 1,591 1,075 Internal costs of materials and traffic charges 481 480 233 Total costs of materials and traffic charges 2,364 2,071 1,308 Own work capitalized - (8) (16) Salaries and personnel costs 256 263 274 Other external operating expenses 710 570 452 Other internal operating expenses 230 204 125 Losses on disposal of fixed assets and operations 1 8 - Depreciation and amortization 1) 592 754 541 Write-downs 1) 15 8 56 Total operating expenses 4,168 3,870 2,740 1) Includes amortization and write-downs of Telenor's net excess values by*) 243 255 160 *) Net excess values are the difference between our acquisition cost and our share of equity at acquisition of subsidiaries. Total operating expenses in Distribution increased in 2004 com- Operating expenses – Transmission pared to 2003 primarily due to subscriber growth and increased NOK in millions 2004 2003 2002 marketing costs as a result of increased competition. External costs of materials and traffic charges 135 287 354 Internal costs of materials and traffic charges 15 45 70 Salaries and personnel costs in 2004 decreased compared to 2003 Total costs of materials and traffic charges 150 332 424 primarily due to workforce reductions in 2003. Own work capitalized (7) (7) (10) Salaries and personnel costs 159 159 194 Other operating expenses in 2004 increased primarily due to Other external operating expenses 90 90 152 subscriber growth and increased marketing costs as a result of Other internal operating expenses 134 149 116 increased competition. Losses on disposal of fixed assets and operations - - - Depreciation and amortization in 2004 decreased compared Depreciation and amortization 276 266 290 to 2003 primarily due to fully depreciated set-top boxes. Write-downs 1 7 41 Total operating expenses 803 996 1,207

TRANSMISSION In 2004, costs of materials and traffic charges in Transmission decreased compared to 2003 due primarily to reduced prices for NOK in millions 2004 2003 2002 leased satellite capacity and the replacement of leased satellite External revenues capacity with our own satellite transponders from September 2004. Satellite Broadcasting 317 352 655 Norkring 471 464 455 Depreciation and amortization increased in 2004 compared to Total external revenues 788 816 1,110 2003, primarily due to our investment in satellite transponders Internal revenues 423 461 347 on the new satellite, Intelsat 10-02. Gains on disposal of fixed assets and operations - - - Other Total revenues 1,211 1,277 1,457 Other primarily consists of Conax, which offers conditional access systems (such as smart cards) and the corporate functions of Total operating expenses 803 996 1,207 Broadcast. Operating profit 408 281 250 Positive EBITDA in 2004 compared to EBITDA loss in 2003 was EBITDA 685 554 581 primarily due to increased external revenues in Conax and reduced Depreciation and amortization 276 266 290 costs within corporate functions. Write-downs 1 7 41 Operating profit 408 281 250 Capital Expenditure Capital expenditure increased in 2004 compared to 2003 due to the Operating profit (loss)/Total revenues (%) 33.7 22.0 17.2 purchase of an ownership interest in a new satellite, Intelsat 10-02, EBITDA/Sum driftsinntekter (%) 56.6 43.4 39.9 in September 2004. This capacity replaces the former leased capacity from Intelsat.

Financial review Investments – Capex 735 116 115 Associated Companies – Investments in businesses - - - NOK in millions 2004 2003 2002

PAGE 72 PAGE Telenor's share of 1) No. of man-years (end of period) 220 222 252 Net income (loss) after taxes 18 10 (138) Amortization of Telenor's net excess values (11) (22) (55) Operating profit and EBITDA – Transmission Write-downs of Telenor's excess values - - (71) In 2004, operating profit and EBITDA in Transmission increased Loss on disposal of ownership interests (6) (72) - compared to 2003 primarily due to reduced prices for leasing of Net result from associated companies 1 (84) (264) satellite capacity and the replacement of formerly leased capacity 1) The figures are partly based on our management's estimates in con- with our own satellite transponders on Intelsat 10-02 from nection with the preparation of our consolidated financial statements. September 2004. The consolidated profit and loss statement contains only the line item Telenor ASA Annual Report Telenor 2004 "net result from associated companies". Telenor's share of the other Revenues – Transmission line items in the table is not included in our consolidated financial External revenues in Transmission decreased in 2004 compared statements but this information is set forth in note 16 to our consoli- to 2003 due to the phasing out of analog transmission via satellite. dated financial statements. Net excess values are the difference between our acquisition cost and our share of equity at acquisition of the associated companies.

We consolidated Canal Digital as a subsidiary as of 30 June 2002 and, therefore, the results for our associated companies in Broadcast are not comparable for the period 2002 to 2003.

In 2003 and 2004, the associated companies in Broadcast consisted primarily of Otrum ASA and APR Media Holding AS.

During 2003, we transferred our 29.1% ownership interest in A-Pressen ASA to APR Media Holding AS in return for a 44.8% ownership interest in APR Media Holding AS. We recorded a loss of NOK 72 million in connection with the transaction. OTHER UNITS Revenues Revenues excluding gains decreased by 1% in 2004 compared EDB BUSINESS PARTNER to 2003, adjusted for businesses divested and discontinued total (ownership interest 51.8% as of 31 December 2004) revenues in 2004 increased by 9% compared to 2003. In the IT Operation area, revenues increased by 11% in 2004 compared NOK in millions 2004 2003 2002 to 2003, primarily due to revenues from the Managed Services External revenues 3,311 3,210 3,383 business , acquired as of 1 May 2004. Revenues in the Banking & Internal revenues 924 1,060 955 Finance area increased as a result of increased sales of software Gains on disposal of fixed assets and high activity level for the consultancy business, in particular in and operations 295 19 3 the second half of 2004. Revenue in the Telecom area declined due Total revenues 4,530 4,2894,341 to the divestment of the System Integration, which represented a Total operating expenses 4,006 4,293 4,750 large portion of the business area. Operating profit (loss) 524 (4) (409) Associated companies - (13) (5) Operating Expenses Net financial items (44) (71) (86) NOK in millions 2004 2003 2002 Profit (loss) before taxes and Costs of materials and traffic charges 355 370 393 minority interests 480 (88) (500) Own work capitalized (1) - - Salaries and personnel costs 1,660 1,753 1,862 EBITDA 924 399 348 Other operating expenses 1,592 1,761 1,738 Depreciation and amortization 400 375 393 Losses on disposal of fixed assets Write-downs - 28 364 and operations - 6 - Operating profit (loss) 524 (4) (409) Depreciation and amortization 400 375 393 Write-downs - 28 364 Investments: Total operating expenses 4,006 4,293 4,750 – Capex 233 210 167 – Investments in businesses 1,076 95 88 Operating expenses in 2004 decreased compared to 2003 due to NOK 223 million was expensed in 2003 for workforce reductions Total full-time equivalent and loss contracts and the effects of cost reduction programs. employees (period end) 3,008 2,477 2,760 Consulting services, operations, maintenance and rent of hardware – Of which outside Norway 512 266 308 and software and other IT-services that are billed to our customers are included in other operating expenses and not as costs of mate- Overview rials and traffic charges. EDB Business Partner ASA is listed on the Oslo Stock Exchange. EDB Business Partner encompasses the former Telenor Costs of materials decreased in 2004 compared to 2003 due to Programvare and EDB ASA, which were consolidated effective reduced revenues and changed business mix. as of 1 May 1999. The figures are affected by the acquisitions of Managed Services business from Fixed (1 May 2004) and Apoteket The reduction in salaries and personnel costs in 2004 compared AB (1 April 2004) within IT Operations and Incatel AS (1 May 2003) to 2003 was due to the decrease in the number of employees

within Telecom. The Consulting area was discontinued as from 1 July following the implementation of certain restructuring measures. Financial review 2003 and the System Integration area within Telecom was divested The reduction as a result of the divestment of System Integration as from 25 March 2004. was offset by the acquisition of Managed Services business from

Fixed. 73 PAGE EDB Business Partners' main area of business is the Nordic strategic outsourcing industry. The company focuses on retaining current There were no write-downs of goodwill in 2004. Write-downs of and receiving new larger long-term outsourcing contracts. goodwill in 2003 was NOK 16 million.

The effects of cost reducing measures implemented in 2002, 2003 Capital Expenditure and 2004 had a positive impact on the results of EDB Business Capital expenditure 2003 and 2004 related primarily to investments Partner in 2004. in computer hardware and software for the mainframe platform within the IT Operations area. In 2004, part of the capital expendi- Telenor ASA Annual Report Telenor 2004 Operating profit (loss) and EBITDA ture related to the replacement of equipment used in IT operations Operating profit increased in 2004 compared to 2003 primarily due outsourced from our customers. to improved cost efficiency and gains from the disposal of System Integration (part of the Telecom area). EBITDA increased in 2004 Investments in businesses compared to 2003 due to improved profitability in the IT Operations Investments in businesses included four acquisitions in 2004. In the and Bank & Finance areas, while the Telecom area experienced second quarter, Apoteket AB and Managed Services business from reduced earnings due to the divestment of parts of its business. Fixedwere acquired for a total of NOK 400 million. As of 31 December In 2004 we recorded total expenses of NOK 33 million for workforce 2004, two other acquisitions. EDB Business Partner took over IBM’s reductions and loss contracts compared to NOK 223 million in 2003. activities in the area of IT operations and application services for The IT Operations area continued to show improved profitability Norwegian customers in the local government sector, distribution as a result of increased revenues, primarily from the acquisition of and industry for a total consideration of NOK 485 million. In addition, Managed Services business from Fixed, and cost efficiency. EBITDA EDB Business Partner acquired Capgemini’s infrastructure manage- in the Banking & Finance area increased as a result of the cost ment operations in Sweden and Norway for a total consideration of reducing measures and revenue growth that was in line with the NOK 191 million. market. In the Telecom area, EBITDA decreased due to the sale of System Integration and to reduced revenues from the remaining parts of the business area. OTHER BUSINESS UNITS Overview In 2003, we completed the integration of the operations of SAIT NOK in millions 2004 2003 2002 and COMSAT Mobile Communication in Satellite Services. In 2004, External revenues 2,979 3,539 4,255 the sub-units Satellite Services and Satellite Networks were Internal revenues 481 615 785 merged into one unit under the name of Satellite Services. In 2004, Gains on disposal of fixed assets Teleservice was sold to Telenor Venture and is now included in the and operations 135 51 - Other section. Total revenues 3,595 4,205 5,040

External costs of materials and traffic charges 1,361 1,527 2,017 SATELLITE SERVICES Internal costs of materials and traffic charges 164 214 265 The decrease in revenues in Satellite Services in 2004 compared Total costs of materials and traffic charges 1,525 1,741 2,282 to 2003 was primarily due to the strengthening of the Norwegian Own work capitalized - 1 (2) Krone against the US Dollar, increased downwards pressure on Salaries and personnel costs 870 1,088 1,465 prices on many of the Inmarsat products in 2004 and reduced Other external operating expenses 467 580 854 accruals for project revenue. Other internal operating expenses 188 210 237 Losses on disposal of fixed assets The strengthening of the Norwegian Krone (NOK) against the and operations 21 177 26 US Dollar adversely affected revenues measured in NOK from the Depreciation and amortization 1) 372 491 582 operations in all of the countries in which Satellite Services operates. Write-downs 1) 39 37 332 Total operating expenses 3,482 4,325 5,776 The decrease in operating profit in 2004 compared to 2003 was due to the appreciation of the Norwegian Krone against the US Dollar, Operating profit (loss) 113 (120) (736) reduced sales and margins on many Inmarsat products as well as Associated companies (32) (318) (132) reduced accruals for project revenues. In addition, the results in Net financial items (27) (314) (943) 2003 were positively affected by the profit from the sale of our Profit (loss) before taxes Polish activity. and minority interests 54 (752) (1,811) 1) Includes amortization and write-downs Capital expenditure in 2004 (NOK 158 million) related primarily to of Telenor's net excess values by*) 37 40 99 investments in Sealink equipment and to the technical up-grade of our operations at the land earth stations. Investments – Capex 215 235 301 In addition to further strengthening our position in the retail part – Investments in businesses 200 30 771 of the value chain, we acquired a 100% ownership interest in GMPCS Personal Communications (US) and Neratek AS (Norway) No. of man-years (end of period) 1,127 2,244 3,541 and an additional 5% of World Wide Mobile Communications AS – Of which abroad 357 1,076 2,075 (Norway/UK) for a total consideration of NOK 142 million in 2004, *) Net excess values are the difference between our acquisition cost and reported as investments in businesses. We now own 45% of the our share of equity at acquisition of subsidiaries. shares in World Wide Mobile Communications AS. Financial review Revenues NOK in millions 2004 2003 2002 SOFTWARE SERVICE

PAGE 74 PAGE Satellite Services 2,385 2,566 2,764 The agreement with Computer Associates (CA) was transferred Nextra International - 272 725 to EDB Business Partner in July 2004 and, as a result, revenues Software Services 60 121 185 decreased in 2004 compared to 2003. Itworks - - 188 Other 1,150 1,241 1,194 The operating loss in 2004 was due to the transfer of the agreement Eliminations (3) 5 (16) with CA to EDB Business Partner and the discontinuation of Total revenues 3,595 4,205 5,040 Software Services.

EBITDA Telenor ASA Annual Report Telenor 2004 NOK in millions 2004 2003 2002 OTHER Satellite Services 410 554 412 Other includes principally Telenor Venture (which as of 1 October Nextra International 13 (195) (155) 2004 includes Teleservice) and Telenor International Business. Software Services (18) 33 62 Teleservice are included in the comparable figures. Itworks - - (16) Other 119 16 (125) Revenues in Telenor Venture decreased in 2004 compared to 2003 Total EBITDA 524 408 178 primarily due to disposals of subsidaries and ownership interests in companies. Reduced revenues in Teleservice in 2004 compared to Operating profit (loss) 2003 were primarily due to the disposal of operations. As of 1 January NOK in millions 2004 2003 2002 2004, the MeetAt operations were transferred to the business area Satellite Services 108 234 139 Fixed and parts of the operations outside Norway were sold. Nextra International 13 (220) (260) A reduced total market for directory enquiry services also con- Software Services (87) (86) (372) tributed to reduced revenues, partially offset by increased prices Itworks - - (23) as of 1 June 2004 and increased market share. Revenues in Telenor Other 79 (48) (220) International Business decreased in 2004 compared to 2003 due Total operating profit (loss) 113 (120) (736) to disposals of subsidiaries. The operating profit in 2004 compared to the operating loss in 2003 compared to 2003. NOK 73 million of the restructuring costs was was primarily due to gains on disposals of subsidiaries and owner- caused by the assembling of most of Teleors IT-operations in EDB ship interests in companies. The operating profit in Teleservice in Business Partner. These costs are reported as a part of Corporate 2004 compared with the operating loss in 2003 was a result of Functions and Group Activities and are a part of an efficiency increased prices, reduced expenses and increased market share improvement program. This transaction also increased other oper- ating expenses. Net gains on disposals of properties decreased by NOK 51 million. On the other hand expenses on owned properties CORPORATE FUNCTIONS AND GROUP ACTIVITIES and hired consultants were reduced.

NOK in millions 2004 2003 2002 Capital Expenditure External revenues 256 229 247 Capital expenditure decreased in the period 2002 to 2004, due Internal revenues 1,833 1,955 1,869 primarily to the completion of our head office at Fornebu outside Gains on disposal of fixed assets Oslo during 2002. and operations 104 133 143 Total revenues 2,193 2,317 2,259 WORKING CAPITAL External costs of materials and traffic charges 57 38 43 Internal costs of materials and traffic charges 21 13 - Working capital (current assets less short-term liabilities) was Total costs of materials and traffic charges 78 51 43 negative by NOK 5.4 billion as of 31 December 2004 and negative Own work capitalized (3) (2) (7) by NOK 2.4 billion as of 31 December 2003. Installments on Salaries and personnel costs 884 781 875 interest-bearing liabilities to be paid during the next 12 months are Other external operating expenses 1,129 1,193 1,608 classified as short-term interest-bearing liabilities and contribute Other internal operating expenses 155 263 226 to the negative working capital. This is a change in the classification Losses on disposal of fixed assets compared to previous years, and the comparative balance sheet and operations 31 8 83 figures as of 31 December 2003 have been adjusted accordingly. Depreciation and amortization 1) 384 384 362 We believe that taking into consideration our established credit Write-downs 1) 33 - facilities and having due regard for our sources of liquidity reserves Total operating expenses 2,661 2,681 3,190 (including committed credit facilities), credit rating and access to capital markets, we have sufficient liquidity and working capital to Operating (loss) (468) (364) (931) meet our present and future requirements. Our capital resources Associated companies 3 (2) (1) are described below. Net financial items 1,646 2,846 1,929 Profit before taxes and minority interests 1,181 2,480 997 LIQUIDITY EBITDA (81) 23 (569) Depreciation and amortization 384 384 (362) You should read the cash flow statement in our consolidated Write-downs 3 3 - financial statements. Operating (loss) (468) (364) (931)

NOK in millions 2004 2003 2002 Financial review Investments Aggregated cash flow statement – Capex 234 253 1,064 Net cash flow from operating activities 18,991 13,676 12,858

– Investments in businesses 54 93 56 Net cash flow from investment activities (13,031) (3,454)(21,727) 75 PAGE Net cash flow from financing activities (8,255) (7,887) 8,641 No. of man-years (end of period) 1,008 888 1,077 Effect on cash and cash equivalents – Of which abroad 22 20 21 of changes in foreign exchange rates (268) 45 (347) Net change in cash and cash equivalents (2,563) 2,380 (575) This area comprises real estate, research and development, strategic Cash and cash equivalents 1 January 7,644 5,264 5,839 group projects, internal insurance company, group treasury, interna- Cash and cash equivalents 31 December 5,081 7,644 5,264 tional services and central staff and support functions. Net cash flow from operating activities increased in 2004 compared Telenor ASA Annual Report Telenor 2004 In 2004 EBITDA decreased due to increased pension cost and reduced to 2003 by NOK 5.3 billion, primarily due to increased revenues. The gain on property sales. This was partly offset by decreased other oper- consolidation of Sonofon as of 12 February 2004 also contributed to ating expenses. this increase. We paid income taxes of NOK 3.1 billion 2003. In 2004, we paid income taxes of NOK 1.7 billion, of which NOK 0.6 billion was Revenues payment of taxes on the gain on sale of VIAG Interkom in 2001. Gains on disposal of fixed assets and operations in 2003 and 2004 Payments of income taxes occurred primarily in Mobile companies were due primarily to sales of properties and some subsidiaries. outside Norway. We do not expect to pay income taxes in Norway in 2005 due to tax losses carried forward of approximately NOK 5 billion Operating (loss) and EBITDA as of 31 December 2004 and because income taxes in Norway are EBITDA decreased by NOK 104 million in 2004 compared to 2003. paid in the year subsequent to the fiscal year. Our net interest- Changed accounting treatment of our agreement based early bearing liabilities were lower during 2004 than during 2003, which retirement pension plan in the group increased pension costs contributed to reduced payments of interest and increased cash by more than NOK 100 million in Corporate Functions and Group flow from operating activities. We had a positive effect in 2004 Activities. The total effect for the group was slightly negative. compared to 2003 from changes in accruals in the indirect method. Internal reorganization in Telenor during 2004 increased the number This was primarily due to the provision for a loss on the MVNO- of employees in this unit, but the salaries and personnel costs are contract in Sweden which did not involve any cash payment in 2004. primarily covered by the service receivers. Expenses for workforce Net cash payments from investment activities increased by reductions and loss contracts increased by NOK 82 million in 2004 approximately NOK 9.6 billion in 2004 compared to 2003. Telenor’s cash payments for capital expenditure and investment in business- INVESTMENTS es increased in 2004 compared to 2003 by approximately NOK 5.1 billion and NOK 5.8 billion respectively. Payments for acquisitions of NOK in millions 2004 2003 2002 businesses (net of cash acquired) in 2004 included the acquisition Fixed networks 2,153 2,099 3,001 of the remaining shares in Sonofon Holding A/S. The difference Mobile networks 4,175 2,487 2,205 between our reported capital expenditure of NOK 12.7 billion and Properties 233 546 2,840 payments of NOK 11.6 billion was primarily due to the acquisition Support systems (office and computer of Mobile telephony licenses in Hungary and Pakistan where some equipment, software, cars etc.) 2,159 1,991 3,042 of the license fees will be paid in future periods. Payments for Other intangible assets 2,654 81 455 acquisitions of businesses of NOK 6.3 billion were higher than the Satellites 636 - - reported figure of NOK 5.8 billion in 2004. At the time of purchase of the remaining shares in Sonofon we also took over the share- Work in progress (net additions) and other 735 (750) (2,654) holder’s loan on Sonofon, and the corresponding payment of NOK Total Capital expenditure (Capex) 1) 12,745 6,454 8,889 0.8 billion was classified as payment for acquisition of business. Investments in businesses 2) 5,809 563 12,411 Telenor received approximately NOK 0.8 billion in 2004 from sales Total 18,554 7,017 21,300 of businesses (net of cash transferred), primarily for the disposals 1) Capital expenditure (Capex) is investments in tangible and intangible of some subsidiaries. This was NOK 1.5 billion lower than in 2003, assets. when we received cash payments of NOK 2.3 billion upon sale of 2) Investments in businesses are acquisition of shares and participa- shares in associated companies, primarily Cosmote. You should tions, including acquisition of subsidiaries and businesses not organ- read "Investments" for further information about Telenor’s invest- ized as separate companies. ments in 2004 and note 1 “Acquisitions and Disposals” to our con- solidated financial statements for more information about our major In 2005, we expect high levels of capital expenditure. In addition, acquisitions and disposals of businesses. Our remaining shares in capital expenditure as a proportion of revenues is expected to be Cosmote were sold in 2004 and we received cash payment of in line with or exceed that of 2004. Such trends are expected to NOK 3.1 billion, included as part of sale of other shareholdings. result from considerable network investments in Kyivstar, Telenor Furthermore, we received NOK 0.2 billion from the sale of our shares Pakistan, GrameenPhone and DiGi.Com. In addition, we expect in New Skies Satellites B.V. as well as payments of NOK 0.6 billion further UMTS investments. The actual amounts and the timing of from some other investments, primarily repayment of equity from our capital expenditure may vary substantially from our estimates. Inmarsat Group Holdings Ltd. We also received NOK 0.3 billion from the sale of fixed assets in 2004, primarily sale of properties. NOK 0.2 Our capital expenditure in 2004 amounted to NOK 12.7 billion, billion was paid for other investments in 2004. which was an increase of NOK 6.3 billion compared to 2003. The increase was primarily due to the increased investment in network In 2004, we made net cash payments of NOK 4.3 billion on our capacity of our international mobile operations due to strong interest-bearing liabilities due to cash inflows from operating activi- growth in the number of subscriptions. In 2004, the most significant ties exceeding net cash outflow from investment activities. Telenor investments in mobile networks were in Kyivstar (NOK 2 billion), paid dividends of NOK 1.8 billion to the shareholders of Telenor ASA Grameen (NOK 0.8 billion) and DiGi.Com (NOK 0.7 billion). In addition, in 2004 and our subsidiaries paid NOK 0.2 billion to the minority capital expenditure in other intangible assets in 2004 included NOK interests, primarily in Kyivstar. The corresponding figures in 2003 2.4 billion for the purchase of a license for mobile telephony in

Financial review were NOK 0.8 billion and NOK 0.1 billion respectively. In addition, Pakistan and a UMTS license in Hungary and NOK 0.6 billion for the Telenor paid NOK 2.0 billion in 2004 for the buy back of own shares. purchase of an ownership interest in a satellite in Broadcast.

PAGE 76 PAGE Our cash and cash equivalents decreased by approximately NOK Of our total capital expenditure in 2004, NOK 3.8 billion was invested 2.6 billion during 2004 to NOK 5.1 billion as of 31 December 2004, in Norway and NOK 8.9 billion outside Norway, primarily in our mobile due to the factors mentioned above. Our cash and cash equivalents subsidiaries. Of our investments in businesses in 2004, NOK 5.0 billion were negatively affected by approximately NOK 0.3 billion in 2004 was outside Norway. when measured in Norwegian Krone, primarily due to the weakening of the US Dollar compared to the Norwegian Krone. The table below lists our most significant investments in businesses and the acquisition cost, including capital contributions to our associated companies, for each of the last three years. Telenor ASA Annual Report Telenor 2004 NOK in millions 2004 2003 2002 Telenor’s off balance sheet arrangements primarily consist of guar- Sonofon Holding A/S 3,639 - - antees issued in connection with our operations. You should read European Telecom Luxembourg note 25 to our consolidated financial statements for more informa- SA (Promonte) 541 - - tion about our contractual obligations and note 23 for our pledges GrameenPhone Ltd 298 86 - andf guarantees. You should read "Capital resources" and note 20 CBB AS 147 - - to our consolidated financial statements for additional information Nordialog 52 - - on our interest-bearing liabilities. Kyivstar G.S.M. JSC 35 8 294 Pannon GSM RT - - 7,906 In addition we have some interest rate derivatives to manage the VimpelCom (incl VimpelCom-Region) - - 432 interest rate risk of the debt portfolio. For interest rate derivatives OniWay - - 217 that qualify for hedge accounting under Norwegian GAAP, Telenor ONE GmbH (Connect Austria) - - 44 does not recognize unrealized changes in fair value due to changes Purchase of IT-operations in in interest rates, see note 20 and 21 to our consolidated financial EDB Business Partner 738 - - statements for more information. We also have some associated GMPCS Personal Communications Inc. 85 - - companies that according to US GAAP are defined as ”Variable Neratek AS 42 - - Interest Entities” that are not consolidated, see note 32 to our Bravida ASA 27 82 91 consolidated financial statements for more information. COMSAT Mobile Communications - - 743 Utfors AB 70 13 153 In addition, we entered into cross border QTE leases for telephony OJSC Comincom/Combellga - 217 - switches, GSM Mobile network and fixed-line network in 1998, 1999 OJSC Golden Telecom - 63 - and 2003. You should read note 15, 20, 21, 23 and 32 to our con- Glocalnet AB - - 102 solidated financial statements for additional information on our QTE Canal Digital - - 2,166 leases. Other 135 94 263 Total investments in businesses 5,809563 12,411 CAPITAL RESOURCES In 2004, exchanges of shares in some associated companies owned by Telenor Venture amounting to approximately NOK 69 million were We will use cash flow from operations, debt, equity financing and not reported as investments in businesses in the preceding table. proceeds from potential disposals of assets to finance our future investments. You should read note 20 and 21 to our consolidated financial statements for additional information on our interest bear- INFORMATION ABOUT CONTRACTUAL ing liabilities, note 23 for pledges, note 28 and 29 for share option CASH PAYMENTS AND OFF BALANCE SHEET plans and the employee stock ownership program and note 30 for ARRANGEMENTS equity financing. You should also read note 30 for information on the authority to the Board of Directors to acquire own shares and our The following table shows our contractual obligations and commercial agreement with the Kingdom of Norway regarding buyback of shares. commitments as of 31 December 2004. Telenor ASA issues debt in the domestic and international capital

Contractual Cash Payments markets primarily in the form of commercial paper and bonds. Telenor Financial review Payments due ASA uses its Euro commercial paper program, U.S. commercial paper Less than program, Euro medium term note program and three domestic "open

1 year 2–3 4–5 Over bond programs" with different maturities. In order to have satisfactory 77 PAGE NOK in millions Total (2005) years years 5 years access to these external sources of financing in terms of both volume Interest-bearing liabilities 23,144 3,660 9,349 5,752 4,383 and price we should maintain a satisfactory credit rating. Our long Finance lease obligations 1,449 331 434 565 119 term and short-term credit rating is currently A2/P-1 from Moody's Committed purchase and A-/A-2 from Standard & Poor's, both with stable outlook. obligations 1) Rent of premises 4,534 737 1,151 928 1,718 In order to secure satisfactory financial flexibility, in 2003 we estab- Rent of cars, office lished a committed syndicated revolving credit facility of Euro 1.5 equipment etc 131 63 61 7 - billion with maturity in 2008. In accordance with our financing policy, Telenor ASA Annual Report Telenor 2004 Rent of satellite and this committed credit facility should be available to serve at any time network capacity 2,479 1,052 407 288 732 as refinancing source for all of our outstanding commercial paper. IT-related agreements 1,260 372 365 439 84 Other contractual At the General Meeting held on 6 May 2004, our shareholders obligations 860 565 196 62 37 resolved to grant a new authority to the board of directors to Committed investments 1) increase the share capital up to NOK 524.760.294 through issuance Properties and equipment 2,791 2,478 223 60 30 of up to 87.460.049 ordinary shares of NOK 6 nominal value each. Other contractual The board's authority supersedes the authorization given at the investments 13 13 - - - General Meeting of 8 May 2003 and is valid until 1 July 2005. contractual cash obligations 36,661 9,271 12,186 8,101 7,103

Guarantees (expire) 2,169 48 1,964 - 157 1) The table does not include agreements under which we have no binding obligation to purchase or future investments required under the UMTS licenses awarded to us in Norway and Hungary. MARKET RISK The model underlying the sensitivity analysis includes derivatives as well as cash and short-term money market investments and Please refer to note 20 and 21 of the consolidated financial state- borrowings, short- term interest-bearing investments, commercial ments for a description of funding and financial risk management paper and bonds. The fair values of our equity investments or cash activities in Telenor. flows from these assets are not taken into account. As such the analysis does not show our total net exposure to financial market Sensitivity analysis risk. We adopted sensitivity analysis as the approach to quantify market risk. The assumptions used in the model for partial movements in risk factors are not based upon empirical observations. Correlations Fair values have been estimated in conjunction with the principles between different exchange rates, short and long-term interest described in note 21 to our consolidated financial statements. rates as well as the interest rates of the different currencies in the portfolio are not taken into account. As a result, the total effects Interest rate risk is quantified by change in fair value given a 10% of deficiencies in the assumptions implicit in the model might be parallel shift in interest rate curves. Exchange rate risk is quantified substantial and the hypothetical gains and losses calculated do not by change in fair value from a 10% change in spot rates against the express management's expectations of future changes in fair value. Norwegian Krone. Changes in market volatilities will change the fair value of option instruments. Volatility risk is quantified by change in fair value from a 10% change in implied volatilities.

2004 Book value Fair value Volatility of as of as of Interest rates Exchange rates options NOK in millions 31.12.04 31.12.04 -10% 10% -10% 10% -10% 10% Foreign exchange derivatives 727 967 39 (38) (111) 111 - - Interest rate derivatives 54 26 28 (24) (28) 28 (10) 10 Net interest-bearing liabilities 1) (19,854) (21,180) (265) 260 2,277 (2,277) - - Total (19,073) (20,187) (198) 198 2,138 (2,138) (10) 10

2003 Book value Fair value Volatility of as of as of Interest rates Exchange rates options NOK in millions 31.12.03 31.12.03 -10% 10% -10% 10% -10% 10% Foreign exchange derivatives 940 1,515 62 (61) (576) 576 - - Interest rate derivatives 49 (26) (8) 11 (32) 32 (10) 10 1)

Financial review Net interest-bearing liabilities (18,800) (20,147) (287) 280 2,034 (2,034) - - Total (17,811) (18,658) (233) 230 1,426 (1,426) (10) 10 1) Includes interest-bearing liabilities and Cash and short-term money market investments. PAGE 78 PAGE Telenor ASA Annual Report Telenor 2004 As of 31 December 2004, the interest rate sensitivity was reduced evaluations, including estimates of future performance, revenue compared to 31 December, 2003. The duration of interest bearing generating capacity of the assets, assumptions of the future market liabilities decreased, resulting in a decrease in the quantified interest conditions and the success in marketing of new products and serv- rate sensitivity. As of 31 December 2004, the exchange rate risk ices. Changes in circumstances and in management's assumptions quantified in this analysis increased compared to 31 December may give rise to impairment losses in the relevant periods. 2003. The portfolio of foreign currency denominated financial instruments increased in this period. The risk arising from changes Goodwill is reviewed based on an estimated fair value of the in option volatilities is insignificant due to the small volume of reporting unit it refers to. Fair value of the reporting unit is based options in the portfolio. on quoted market share price (adjusted to reflect a control premi- um for those subsidiaries in which we have effective control) or discounted cash flows of the reporting unit where quoted market CRITICAL ACCOUNTING ESTIMATES UNDER share price is not available. U.S. GAAP prescribes a two-phase NORWEGIAN GAAP process for impairment testing of goodwill. The first phase screens for impairment by comparing fair value to the book value of the Certain amounts included in or affecting our financial statements reporting entities. If the fair value is less than the book value the and related disclosure must be estimated, requiring us to make second phase measures the impairment. When an impairment is assumptions with respect to values or conditions which cannot identified, the carrying amount of goodwill is reduced to its esti- be known with certainty at the time the financial statements are mated fair value of the reporting unit. prepared. A "critical accounting estimate" is one which is both important to the portrayal of the company's financial condition For the impairment test in accordance with U.S. GAAP, we use and results and requires management's most difficult, subjective undiscounted cash flows, except for goodwill. This did not result in or complex judgments, often as a result of the need to make esti- any material difference from the results of our impairment test in mates about the effect of matters that are inherently uncertain. We accordance with Norwegian GAAP for the years ending 31 December evaluate such estimates on an ongoing basis, based upon historical 2004, 2003 and 2002. results and experience, consultation with experts, trends and other methods we consider reasonable in the particular circumstances, In 2004 we made some write-downs, primarily related to Sonofon as well as our forecasts as to how these might change in the future. in Denmark due to its slower than expected growth and a review of our expectations of the company’s growth potential as of year-end Revenue recognition 2004. Write-downs in 2003 were not significant. In 2003, we experi- The main part of our revenues is based on usage (traffic etc) or enced an increase in the market value of our assets and invest- periodic subscriptions. We have many subscribers and offer a ments. On the other hand, during 2002 the market value of telecom number of different services with different price plans. We provide companies and assets decreased significantly. Consequently, in discounts of various types, often in connection with different 2002, we made substantial write-downs of tangible assets, goodwill campaigns. We also sell wholesale products to other operators and and other intangible assets, associated companies and joint ven- vendors within the different countries and across the borderlines. tures and other investments. We have to make a number of estimates related to recognizing revenues. To some extent we have to rely on information from other Depreciation and amortization operators on amounts of services delivered. For some services, the Depreciation and amortization is based on management estimates

other parties may dispute the prices we charge. We then make of the future useful life of tangible and intangible assets. Estimates Financial review estimates of the final outcome. may change due to technological developments, competition, changes in market conditions and other factors and may result

Impairment in changes in the estimated useful life and in the amortization or 79 PAGE We have made significant investments in tangible assets, goodwill depreciation charges. Technological developments are difficult to and other intangible assets, associated companies and joint ven- predict and our views on the trends and pace of development may tures and other investments. These assets and investments are change over time. Some of our assets and technologies, in which tested for impairment when circumstances indicate there may be we invested several years ago, are still in use and provide the basis a potential impairment. Factors we consider important which could for our new technologies. For example, our copper cables and infra- trigger an impairment review include the following: structure in our fixed networks are used as the basis for the rollout • Significant fall in market values; of our ADSL technology and lines. In our mobile business, the • Significant underperformance relative to historical or projected development and launch of UMTS technology and services have Telenor ASA Annual Report Telenor 2004 future operating results; been slower than the telecommunications industry anticipated a • Significant changes in the use of our assets or the strategy for few years ago. In addition, in our Norwegian operations we have our overall business; reduced our capital expenditure in the “old” technology during the • Significant negative industry or economic trends. the latest years, as we have been able to utilize our previous capital expenditure more efficiently. We review the future useful life of The principles for impairment testing are described in the accounting tangible and intangible assets periodically taking into consideration policies. For tangible and intangible assets, the assessment is made the factors mentioned above and all other important factors. In based on the estimated recoverable amount, which is the higher of case of significant changes in our estimated lives, depreciation estimated discounted future cash flow and sales price less cost to and amortization charges are adjusted prospectively. As of 1 January sell. When such amounts are less than the carrying amount of the 2005 we made some changes in our estimated useful lives for some asset, a write-down to the estimated recoverable amount is recorded. of our assets, primarily an increase in estimated useful lives.

If quoted market prices for an asset or a company are not available, Business combinations or the quoted market prices cannot be regarded as fair market We are required to allocate the purchase price of acquired compa- value due to low trading liquidity, fair market value is determined nies to the tangible and intangible assets acquired and liabilities primarily using the anticipated cash flows discounted at a rate assumed based on their estimated fair values. For our larger acqui- commensurate with the risk involved. Estimating fair values of sitions, we have engaged independent third-party appraisal firms assets and companies must in part be based on management to assist us in determining the fair values of the assets acquired and liabilities assumed. Such valuations require management to make is recognized in the profit and loss statement over an estimated significant estimates and assumptions. The significant purchased average remaining service period of 12 years and any amount in intangible assets recorded by Telenor include customer contracts, excess of 15% is recognized over a shorter period of 5 years. Our brands and licenses. The significant tangible assets include primarily actuarial losses as of 31 December 2004 were estimated to be networks. approximately NOK 1.0 billion, on level with 31 December 2003. The increase due to a reduced discount rate was offset by the Critical estimates in valuing certain tangible and intangible assets effect of changing in the financing of our agreement based early include but are not limited to: future expected cash flows from retirement plan (AFP). You should read "Results of Operations customer contracts and licenses, replacement cost for brand and – Group – salaries and personnel costs" and note 7 to our consol- for tangible assets. Management's estimates of fair value are based idated financial statements for additional information about the upon assumptions believed to be reasonable, but which are inher- change in our AFP arrangement. Our actuarial losses related ently uncertain and unpredictable and, as a result, actual results primarily to our Norwegian defined benefit plans and constituted may differ from estimates. approximately 19% of the estimated fair value of our pension benefit obligations as of 31 December 2004. Income taxes We record valuation allowances to reduce our deferred tax assets The increase in our actuarial losses in previous years was primarily to an amount that is more likely than not to be realized. Our due to the reduction in our discount rates, a lower than estimated valuation allowances relate primarily to our foreign operations. actual return on plan assets due to the reduction in share prices in Furthermore, we have not recorded deferred tax assets that may the period 1999 to 2002, that was partially offset by a higher than be realized upon possible future disposal of subsidiaries and asso- estimated return in 2003 and 2004, and higher salary increases and ciated companies, until a liquidation or sale has been decided. pensions adjustments than we had originally estimated in the period While we have considered future taxable income and feasible tax 1999 to 2002. Our key assumptions for our defined benefit plans planning strategies in determining the amount of our valuation are evaluated each year. Our Norwegian plans constitute the major allowances, any difference in the amount that we ultimately may part of our pension plans. In 2003 and 2004, the long-term interest realize would be included as income in the period in which such a rates in Norway were reduced and, consequently, we reduced our determination is made. discount rates and our expected return on plan assets during each year. The decreased discount rate increased the estimated fair We have realized significant tax losses on shareholdings, both value of our pension obligations.Our assumptions are found in note through liquidation and sale of shares to third parties and between 7 to our consolidated financial statements. Changes in these companies in our group. Even though we believe that these tax assumptions, as well as deviations from these assumptions and losses are tax deductible, in 2002 the Norwegian tax authorities other actuarial assumptions, may affect the estimated net present challenged our evaluations in connection with one of our transac- value of our net pension obligations, actuarial gains and losses and tions. Our accounting policy is that we make provisions to cover future years pension expenses. for changes in our in tax assessments, pending the outcome of our appeal against these decisions. You should read note 13 and 24 You should also read "Results of Operations – Group – salaries to our consolidated financial statements for additional information and personnel costs" for additional information about changes on the challenge by the Norwegian tax authorities. when we implement IFRS from 2005. Our estimated pension expenses for 2004 according to IFRS was approximately NOK 826

Financial review In December 2004, the Norwegian Parliament enacted new tax million, compared to NOK 932 million in our Norwegian GAAP rules. You should read note 13 to our consolidated financial state- accounts for 2004. Of these, our defined benefit plans amounted ments for additional information on the new rules and the transi- NOK 685 million (IFRS) and NOK 791 million (Norwegain GAAP),

PAGE 80 PAGE tional rules. Generally, when new rules are introduced there may respectively. As of 31 December 2004, we estimate our pension be disagreements on the interpretation of the new rules and the expense for 2005 for our Norwegian defined benefit plans to be transitional rules. approximately NOK 830 million according to IFRS.

Pension costs, pension obligations and pension plan assets The table below shows an estimate of the potential effects of Calculation of pension costs and net pension obligations (the dif- a one-percentage point change in our key assumptions for our ference between pension obligations and pension plan assets) are defined benefit plans in Norway according to Norwegian GAAP. made based on a number of estimates and assumptions. Changes in, and deviations from, estimates and assumptions (actuarial gains The following estimates and our estimated pension expense for Telenor ASA Annual Report Telenor 2004 and losses) affect fair value of net pension liabilities, but are not 2005 are based on facts and circumstances as of 31 December recorded in our financial statements unless the accumulated effect 2004. Actual results may materially deviate from these estimates. of such changes and deviations exceed 10% of the higher of our pension benefit obligations and our pension plan assets at the beginning of the year. From 10% up to 15%, the excess amount a hw bv 20 4 5 20 9)9 9 (160) (70) 190 90 90 (410) 40 (90) 500 (410) (40) INFLATION (210) 220 500 (90) proceedings. legal on information additional 250 for statements financial consolidated our to 24 noteread should (220) 220 You probable. considered not was becauseaccruedpreviouslyit been not has that matter a for accrue or matter 110 any for accrued 340 (540) have we amount the decrease or increase to usrequire may (220) factors these in changes or events Unanticipated loss. of amount the of estimate reasonable a make to ability the and 150 outcome (280) 660 unfavorablean of probability of degree the factors, other among (540) significantuncertainty.to subject are which Weof comes evaluate, (110) out- the claims, and proceedings legal variousWe to subject are 890 660 proceedings Legal (830) 890 1) (830) above shown (as losses actuarial of amortization to due effect including cost benefit periodic Net losses actuarial of amortization to due Expenses losses actuarialUnrecognized liabilities Pension in: Changes millions in NOK was 1.3%, 2.5% and 0.4% respectively.0.4% and 2.5% 1.3%, was 2004 and 2003 2002, December 31 ended years the during index price consumer the by measured as Norway in Inflation inflation. by affected substantially been not have years recent in results Our One-percentage point change point One-percentage +1% 1) icutCmesto Sca euiyadjustments Security Social Compensation Discount rate rate base amount to pensions to amount base rate rate -1% 1) +1% respectively, under Norwegian GAAP. respectively,Norwegian under million, 5,358 NOK and million 4,560 NOK million, (4,298) NOK to, respectively,compared as million, 5,639 NOK and million 5,036 NOK million, (3,658) NOK been have would 2004 and 2003 2002, December 31 ended years the GAAP,for U.S. (loss) Under income net statements. financial consolidatedaudited our to 32 note in described are equity shareholders and income net our affecting GAAP U.S. and GAAP Norwegian between significantdifferences The 2004. and 2003 December 31 of as equity shareholders' our of and 2004, and 2003 2002, December 31 ended years the for income net our of reconciliation Wea prepared have severalrespects. in GAAP,GAAP U.S. from Norwegian differs which underprepared been have statements financial consolidated Our COMPAREDGAAP GAAP NORWEGIANU.S. WITH 1) -1% 1) +1% 1) -1% 1) +1% 1) Annual -1% 1)

Telenor ASA Annual Report 2004 PAGE 81 Financial review Telenor ASA Annual Report 2004 PAGE 82 Consolidated statement of profit and loss Telenor Group Write-downs 14, 15 14, 5 9 8, 15 14, interestsminority and taxes before (loss) Profit 7 6, items financial Net items financial of write-downs) and (loss gain Net currencyloss Net expenses Financial 4 income Financial Associatedcompanies (loss) Operatingprofit 2 Totaloperatingexpenses Write-downs Note amortization and Depreciation operations and assets fixed of disposal on Losses expenses operating Other costs personnel and Salaries capitalized work Own trafficcharges and materials Costsof Operatingexpenses Totalrevenues operations and assets fixed of disposal on Gains Revenues amounts share per except millions, NOK In December Telenor January–31 1 Group CONSOLIDATEDSTATEMENT LOSS AND PROFIT OF Net income (loss) per share in NOK (diluted), excluding treasury shares treasury excluding (diluted), NOK in share per (loss) income Net shares treasury excluding (basic), NOK in share per (loss) income Net (loss) income Net interests Minority interestsminority before (loss) Profit Taxes Financial income and expenses and income Financial 12 16 13 2 60,752 61,302 54,700 11,623 10,021 16,070 14,873 (1,534) (1,244) (2,244) 8,846 1,526 6,602 5,358 6,602 2,651 2,596 2004 (557) 3.06 3.07 496 718 550 (87) 74 28948,668 52,889 31148,826 53,121 55149,146 45,561 30412,485 13,094 05710,236 10,597 25613,188 12,506 135 (2,366) (1,365) 203 (1,833) (2,023) 236 480 (2,376) ,3 (2,450) 1,231 ,2 (5,136) 7,426 (320) 7,560 ,6 (4,298) (4,656) 4,560 5,050 ,6 10,104 9,561 032002 2003 51 (567) (571) 40 358 (490) .7(2.42) (2.42) 2.57 2.57 2 147 229 4 3,553 145 8 567 586 158 232 3(789) 73 1 (311) (1) CONSOLIDATED BALANCE SHEET Telenor Group at 31 December

In NOK millions Note 2004 2003

Assets Deferred tax assets 13 2,999 3,850 Goodwill 15 12,963 9,224 Other intangible assets 15 10,001 5,536 Tangible assets 15 37,676 35,722 Associated companies 16 6,428 10,166 Other financial assets 16 1,292 3,848 Total fixed assets 71,359 68,346

Inventories 596 504 Current receivables, etc. 17 10,165 9,232 Short-term investments 18 893 384 Cash and cash equivalents 27 5,081 7,644 Total current assets 16,735 17,764

Total assets 88,094 86,110

Equity and liabilities Shareholder’s equity 37,594 37,237 Minority interests 4,074 3,646 Total equity and minority interests 41,668 40,883

Liabilities Provisions 19 3,120 1,645

Long-term interest-bearing liabilities 20, 21 20,602 22,703 Long-term non-interest-bearing liabilities 22 572 754 Total long-term liabilities 21,174 23,457

Short-term interest-bearing liabilities 20 3,991 3,059 Short-term non-interest-bearing liabilities 22 18,141 17,066 Total short-term liabilities 22,132 20,125

Total equity and liabilities 88,094 86,110 Consolidated balance Group Consolidated sheet Telenor

Assets pledged 23 8,752 8,148 Guarantee liabilities 23 2,169 2,557 83 PAGE Contingent liabilities 24 Telenor ASA Annual Report Telenor 2004 Oslo, 31 March 2005

Thorleif Enger Bjørg Ven Chairman of the Board of Directors Vice-chairman of the Board of Directors

Hanne de Mora Jørgen Lindegaard Liselott Kilaas John Giverholt Board member Board member Board member Board member

Harald Stavn Per Gunnar Salomonsen Irma Tystad Jon Fredrik Baksaas Board member Board member Board member President & CEO Telenor ASA Annual Report 2004 PAGE 84 Consolidated cash flow statement Telenor Group e fcs eevd27 27 subsidiaries in minorities to dividends and equity of Payment back buy Share interests minority from inclusive shares, of issuance fromProceeds overdraftsin change Net liabilities short-term on Payments liabilities long-term on Payments liabilities short-term fromProceeds liabilities long-term fromProceeds Note activitiesinvestment from flow cash Net investments other for Payments investments other of sale fromProceeds cashreceived of net cashtransferred of net companies, associated and subsidiaries of sale fromCash receipts assets intangible and Purchase tangible of assets intangible and tangible of sale fromProceeds operatingactivitiesfrom flow cash Net duties public and taxes of Payment activities operating to related payments and proceeds Other paid etc. Interest received etc. Interest deductions tax and taxsecurity social pensions, employees, to Payments expenses operating other of and services and goods of suppliers to Payments services and goods of sale fromProceeds millions in NOK December Telenor January–31 1 Group CONSOLIDATEDSTATEMENTFLOW CASH Net cash flow from operatingactivitiesfrom flow cash Net accruals other in Change activities operating to relating not losses (gains)Currency pensions paid and expensed between Difference expenses prepaid and payable accounts in Changes customersfrom prepayments and receivable accounts in Changes inventories in Changes companies Associated write-downs and amortization Depreciation, items financial of write-downs including loss (gain) Net Taxespaid interestsminority and taxes beforeProfit Taxes interests Minority income Net 1) December 31 at equivalents cash and Cash January 1 at cashequivalents Cashand equivalents cash and cash in change Net ratesexchange foreign in changes of cashequivalents cashand on Effect activities financing from flow cash Net dividends of Payment Cash payments on purchase of subsidiaries and associated companies, associated and subsidiaries of purchase on Cashpayments Reconciliation 1) (13,031) (11,613) (30,639) 18,991 18,991 61,107 14,219 (2,563) (8,255) (2,020) (6,044) (6,281) (1,660) (1,428) (9,280) (3,127) (1,516) (1,764) 8,846 5,081 2,486 3,960 2,244 1,244 5,358 7,644 2004 (207) (209) (718) (268) (765) 849 263 913 323 362 237 387 (43) (22) (79) 47 55 57 2,1)(25,056) (25,714) 36612,858 13,676 36612,858 13,676 32850,480 53,208 07213,789 10,742 344 (21,727) (3,454) 787 8,641 (7,887) 312 (549) (3,122) 490 (10,140) (4,990) (9,098) (6,536) (1,948) (1,629) (3,111) (9,643) (2,494) (9,400) 107 597 (1,097) 2,450 (1,231) 323 (2,050) (480) (3,283) (2,376) ,8 (575) 2,380 ,2 (5,136) 7,426 5,264 7,644 ,6 (4,298) 4,560 5,839 5,264 ,2 191 2,327 796 1,318 ,1 1,593 1,017 ,7 271 1,072 032002 2003 34 (1,069) (334) (142) (131) 56 (12,232) (506) 40 (358) (490) (621) (799) 1 164 311 7 19,567 779 2 210 523 3 359 126 134 119 7)391 (78) 9)- (91) 7)778 (76) 2200 32 5(347) 45 7 - (7) (39) 3 -20 Dividends for the year 2004 and adjusted and 2004 year the for Dividends aclaino hrs 5,4,6)6(3)(,5)--144, 1,484 - 26 - 4.560 (1,152) (658) 19 (332) 6 37.237 (169) (4,298) (55,444,964) 4,560 (2,052) 22 9,978 (658) 4 18,656 10,824 shares of Cancellation 6 33,685 6 (4,298) back buy Share 15 (169) Translationadjustments 2003 year the for dividends 595,109 1804,021,281 (2,868) 4 2004 year the for income Net 7,268 2003 December 31 of as Balance 6 42,144 18,634 GrameenPhoneLtd. (169) interest owership Increased 10,820 Comincom/Combellga 695,520 (145) 6 interest owership Increased issue share Employee Translationadjustments 13,023 Dividends 1,803,426,172 18,619 2003 year the for income Net 10,816 2002 December 31 of as Balance 6 AS CanalConsolidationDigital issue share Employee Translationadjustments Dividends 1,802,730,652 2002 year the for income Net 2001 December 31 of as Balance Telenorgroup CONSOLIDATEDSTATEMENTS EQUITY SHAREHOLDERS’ OF aeo hrsadsaeiset mlye ,2,3 5--1 59 37,594 (687) 18 (2,560) - 12,804 17,539 - 10,498 NOK in share per Dividend 6 shares) treasury (exclusive diluted Averagefully shares of number shares) treasury (exclusiveAverage basic shares of number 35 1,749,697,047 6 1) 2004 December 31 of as Balance 6 companies associated in adjustments Equity ProMonteinterestGSM owership Increased GrameenPhoneinterestLtd owership Increased 1,120,730 employees to issue share and shares of Sale Equity available for distribution as dividends from Telenor ASA was NOK 14,038 million as of 31 December 2004. December 31 of as million 14,038 NOK Telenorfromwas dividends ASA as distribution for available Equity equity.shareholders’ dir recorded been has consolidation and agreement the between period the in calculatedexpenses and valuesfinancing excess net company’sthe of 50% 2001, June in AS CanalDigitalacquire to agreement the into entering of time the at operations of results transferthe to Due control. Telenor and effective obtained completed was AS CanalDigital of 50% remaining the of acquisition of As AS. CanalDigital of consolidation the with connection in million 658 NOK by decreased equity shareholders’ the 2002, In 2003. in equity shareholders’ the against directlyrecorded was goodwill beside in increaseComincom/Combellga subsidiariesThe GrameenPhonethe Ltd. and in interests Telenorownership 2003, its increasedIn BravidaASA. VimpelComand to related year the for companies associatedequity. shareholders’in adjustmentsthe againstEquity directlyrecorded were owned already th on values excess net the and shares, the of calculated100% for were values excess Net completed. was ProMonteGSM, of owner TelecomEuropean of Luxshares remaining the of acquisition equity.the shareholders’ 2004 the againstIn directlyrecorded and othe allocated to were values excess Net GrameenPhoneLtd. subsidiary the in interests Telenorownership 2004, its increasedIn etc. shares of number about information further for 30 note See Adjusted dividends for the year 2003 related to purchase of shares in the market prior to the Annual General Meeting for 2004. for GeneralMeeting Annual the to prior market the in shares of purchase to related 2003 year the for Adjusteddividends 1) of shares (NOK) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK (NOK) shares of ubraon aia aia eut ajsmnsSae Total Shares adjustments equity capital capital amount Number ------62--62----164--164---- o hr pi te tr Other paid Share Nom te Cumulative Other 1,749,326,657 1,747,864,560 250 (2,590) - - (2,590) 176 (1,776) (1,776) ,5 5,358 - - 5,358 79 (799) (799) 18 (168) - - (168) 3)(39) (35) (39) (35) 2004 1.50 nlto Tr anslation ,7,5,3 1,774,637,008 1,774,637,008 1,775,755,932 1,775,340,935 273 (2,723) (2,723) 58 (508) - (508) 1 816 816 of risk for the company’sthe for risk of 032002 2003 .00.45 1.00 30 June 2002, the 2002, June 30 loss, amortization of amortization loss, embourg S.A, the S.A, embourg r intangible assets intangible r 2004 were primarily were 2004 200 (2,020) (2,020) easury net excess values excess net ectly against the against ectly e shares Telenorshares e

Telenor ASA Annual Report 2004 PAGE 85 Consolidated statements of shareholder's equity Telenor Group Telenor ASA Annual Report 2004 PAGE 86 Summary of significant accounting principles Telenor Group Reporting Standards”(IFRS). Reporting 45 Financial “International the with accordance in statements financial its prepareTelenorFrom 2005, 32. will note in forth set 3,646 are assets equity,totalshareholder's and revenues(loss), income net Group's the on effects related the and differences The GAAP). (US principles accounting generallyStatesacceptedUnited from 19 GAAP.respects,differ,certain in principles accounting Group's The 4,074 Norwegian with accordance in preparedareGroup) (the sidiaries sub- its Telenorand for statementsASA financial consolidated The (5) 1,131 formation. its to (358) incident those than other tions opera-no conducted and liabilities or assets no Telenorhad of AS, 888 - 998 acquisition its to prior Telenorcapital - and, shareidenticalas AS with Telenorformed Telenorof was sharesASA. issuedASA the of all for 1,191 Telenorexchange Telenorthe in to Group,for ASA company holding 490 (43) Telenorrenamed (subsequentlyformer Communicationsthe AS), 136 Telenorof sharesAS the 895 of all contributed Government Norwegian 1,255 the 2000, TelenorOctober the In Group.for company holding the as - - 47 act to 2000 July Telenorin formed ASA Government Norwegian The 1,244 18 134 GAAP). (Norwegian (555) 51 principles accounting generallyaccepted Norwegian with comply to adjustmentsrequired for Administration,Stateexcept (6) 68 15 Norwegian the of records final the in recorded as valuescarrying their transferredat were - liabilities 31.12.03 and assets 1994, October (67) (26) 31 on company public a as established Telenorwas When AS 256 General (30) 187 14 31.12.04 (32) 28 588 TelenorGroup 2002 (loss) 20. PRINCIPLES ACCOUNTING 448 SIGNIFICANT SUMMARYOF - 39.0 - 12 48.2 2003 (loss) 43.5 Telenorsubsidiary the in shares the of Telenor20.0% 2004, sold December of end the At JSC. GSM Kyivstar in 56.5% to interest 528 2004 (loss) Telenor2004, inc April In GramenPhoneLtd. in 62.0% to interest Telenorownership 2004, its increasedof quarter fourth the In - - 49.9 Total 31.12.04 Other 162 TelenorVenture AS IV ASA PartnerBusiness EDB GrameenPhoneLtd.38.0 DiGi.Combhd 283 JSC GSM Kyvistar Comincom/Combellga OJSC TelenorVenture ASA II TelenorVenture AS 411 millions in NOK interestsMinority eliminated. been have balances significantand transactionsintercompanyAll acquisition. every capitalizedfor is interest majority the for equity.shareholders’goodwill the of againstIncrease recorded is purchaseshare subsequent and consolidation of time the between liabilities and assets identifiable of value in Increase purchase.shareprevious the since passed has time long a cantlyor signifi- increased has valuefair small, arepurchases successive the separatelytreatedarepurchaseswhen share Successive ownership. 50% Telenorthan morewhen has generallyexists control Effective obtained. is control effective date the from consolidated are Subsidiaries control. effective Telenorhas which ASA in sidiaries Group’sThe sub- Telenorincludeand accounts ASA consolidated principles Consolidation share in % net income net income net income balance sheet balance sheet balance sheet balance income net income net income net % in share Minority part of part of part of interests in the interests in the interests in the interestsin of part of part of part Minority 0---52- ioiyMnrt ioiyMnrt Minority Minority Minority Minority Minority at the time of delivery of the equipment when the delivery of the of delivery the when equipment the of delivery of time the at recognized are services with together delivered are which ment equip- of sale from Revenuescustomers. to delivered areproducts when recognized are equipment customer of sale from Revenues revenues.such exceeded have fees connection with To associatedhandling. ordercosts date, for expenses and work installation of primarily consist costs the revenues, connection line fixed Forthe package. information customer new printed the of cost the cardand SIM the of cost check, credit for costs commission, distributor of payment first the of primarily consist revenues tion connec- incurred.mobile Costsincurredcosts relatedto related of extent the to sale of time the at recognized are subscriptions new of sale the from received are that fees connection from Revenues use. actual the on based revenue as recorded and cardsdeferred are phone prepaid to relatedRevenues period. subscription the over revenue as recognized are ADSL, including fees, subscription while trafficactual on based recognized arerevenues interconnection trafficand revenues services, based network other and services lite satel- distribution, TV telephony,lines, leased mobile ForPSTN/ISDN, equipment. customer and software of sale and IT-operations, services, satellite and bution distri- TV for fees services, network data for fees networks, leased and lines leased for fees fees, interconnection fees, connection and subscription trafficfees, of comprised primarily are Revenues recognition Revenue assessment. individual an on based life, economic useful estimated the over basis straight-line a on amortized is Goodwill combinations. business incurredin liabilities and acquired assets intangible and tangible of net of valuefair the over price purchase the of excess the represents Goodwill Goodwill or written down through allocating results to the minority interests. minority the to resultsallocatingthrough down written or amortized is subsidiary the in equity recorded the and valuefair at measuredinterests minority the between difference The interests. minority as valuefair at recordedare subsidiary a in shares of sale and transactions equity subsidiary's a frominterests minority in Increases cost. at for accountedtemporaryarenature a of be to considered Investments method. equity the using for accountedare significant influence exercises and 50% to 20% of normally interest ownership equity Telenoran which has in entities and ventures joint in Investments reased its ownership its reased VentureAS. IV Research and development costs are expensed as incurred.as expensed are costs development and Research developmentcosts and Research costs. personnel and salaries as classified is period the for cost pension net The years. 5 over statement loss and profit the in recognized are 15% above Accumulatedeffects period. service remainingaverage estimated the over statement loss and profit the in recognized is amount excess the 15% and 10% between is accumulatedeffect the When recorded. not is year the of beginning the at assets plan pension and obligations benefit pension of higher the of 10% than less is that losses) or gains (actuarial assumptions actuarial from deviations and assumptions in changes estimates, in changes of Accumulatedeffect years). (12 period service remainingaverage estimated the over recognized are plans pension in changes to due obligations pension the in Changes value.fair their at valuedare assets plan Pensiondate. sheet balance the at benefits futurepension accrued of valuepresent the at valuedare plans benefit Defined Pensions basis. net a on reportedarerevenues services, or products of suppliers of behalf on broker or agent an as acts only TelenorHowever,when services. or products of vendors to expenses separateof recordinga with grossreported normally are Revenues completion. of percentage the with line in period development the over recognized arecustomersspecifically for developed software from Revenues delivered. when recognized are licenses software from Revenues contracts.term-based for contractperiod the over basis linear a on contracts,and volume-based for use actual of basis the on recognized are services operatingfrom Revenues recognized. are services fromrevenue when recognized is equipment fromrevenue services, of sale separatedthe cannotfrombe equipment of delivery the If services. the of delivery separatedthe canfrombe equipment shareholder's equity.shareholder's of component a as reportedare entities, foreign in investments net of hedges as effective proven and designated instruments financial on losses and gains the and adjustments,translation resulting The period. reporting the ratesfor exchange average the translatedareusing resultsrates and exchange year-end using translatedare liabilities and assets Krone, Norwegian currenciesto localfromventures) joint and companies associated (subsidiaries, entities foreign for statements financial translating When business. conducts primarily entity the which currencyin the in maintained areoperationsforeignGroup's the of statements financial The investments net for accounting hedge and Foreign translation currency applied. is accounting hedge unless period, the for items financial to charged is loss or gain resulting rates.The exchange end translatedcurrenciesperiod areusing foreign in denominated instruments Financial transactions. the of time the ratesat exchange prevailing the using Krone Norwegian translatedcurrenciesTransactionsareforeigninto involving Foreigntransactions currency payments. lease minimum of valuepresent the at valuedare liabilities capital lease The assets. fixed capitalizedas are ownership of obligations and rights the all substantially with Group the provide which leases, Finance Leases incurred.as expensed are trainingcosts, and maintenance as well as stage, project preliminary Coststhe incurredduring projects. software the to time devoting employees for costs payroll and services and material of costs direct external includes This amortized. capitalizedand are softwareinternal-use with associated costs development Direct Softwarecosts financial items. financial under reflected loss or gain resulting the with value market their at recordedare criteria hedging the meet not do that Derivatives period. hedging original the over income to amortized and deferredoutstanding, remains position such that extent the to or position, hedged the of termination the with conjunction in terminated when income in recognizedcontractsare hedge of termination on losses and Gains accounting. hedge for eligible is transaction hedged the that providedtransactions,related the as time same the at income in recognized and deferred are commitments firm of hedges as designated are contractsthat exchange foreign on losses and Gains loss. or gain exchange foreign as recordedarevalue fair in changes and market to Foreignmarked contractscurrencyareforward item. hedged the of valuecarrying the in included and loss or gain exchange foreign as recordedare liabilities or assets interest-bearing of hedges as designatedcurrency swaps on rate effects Exchange basis. portfolio a on conducted primarily is liabilities interest-bearing on rateinterestrisk respectively.expense, of or Hedge income interest as accrued are liabilities interest-bearing of hedge a as effective and designated are currencyratethat interestcross swaps and rateinterest swaps under received or paid be rates.interestto Amounts in changes to duevalue fair in changes unrealizedrecognize Telenor not does accounting, hedge for qualify Forthat rateinterestderivatives hedged. being position the offset substantially which effects statementgeneratefinancial hedges the that requirement a is It hedge. the of lifetime the during effectiveness hedge sufficient of assessment as well future,as the in effective be will hedge the that expectations justifies that documentation prospective involves This criteria. correlation pre-defined meet must instruments the accounting, rates.interestrateshedge To and exchange for qualify in fluctuations to exposure its manage Telenorto derivatives uses rates.interest in changes to duevalue fair in changes recognizeTelenor not does Forliabilities interest-bearing commitments firm and liabilities interest-bearing for accounting hedge and Derivatives less. or months three of maturity original with paper commercial and ratebonds fixed deposits, cash,bank include cash equivalents Cashand equivalents Cashcash and sheet. balance the of date the of as regulation and ratestax enacted the company,on parent based the to funds of transferon taxation estimated the on based companies associated and subsidiaries foreign in calculatedundistributedearnings on are taxes Deferred decided. is liquidation or into entered been has agreement sales a until recorded not are companies associated or subsidiaries of liquidation or sale upon realized be will which assets tax Deferred utilized. be will assets tax the that not than likely more is it extent the to sheet balance the in recordedare assets tax Deferred used. areundiscounted amounts and date sheet balance the ratestaxat enacted The carriedforward. losses tax including purposes, tax for and statements financial the in liabilities and assets of amountcarrying the between temporarydifferences all for allocationcalculatedfull are with liabilities and assets tax Deferred Taxes ments is charged to income for the period. the for income to charged is ments remeasure-these from resulting loss or gain The period. reporting the ratesfor exchange averagetranslated the areusing items loss and profitrate. Other exchange year-end the remeasuredat are items sheet balance Other acquisition. of date the rateat exchange the currencyusing functional remeasuredto are depreciation localrelatedcurrency,in and reporting assets financial fixed with and highly-inflationary as defined countrieslocated in For entities

Telenor ASA Annual Report 2004 PAGE 87 Summary of significant accounting principles Telenor Group Telenor ASA Annual Report 2004 PAGE 88 Summary of significant accounting principles Telenor Group ulig:3–4% 6–8% 10–20% basis. straight-line a on mainly life, useful economic expected the over amortized are assets Intangible 10–33% 20–33% Buildings: installations: supply power and Cable switches: to relatedTransmission equipment and equipment other and switches at software equipment, computerSatellites, software: equipment, and machinery Office rates: following the using lives useful economic expected their over basis straight-line a on depreciated part, most the for Tangibleare, assets recorded. is recoverableamount estimated to down write- a asset, the of amountcarrying the than less are amounts such When sell. to cost less price sales and future cashflows discounted estimated of highest the is which recoverableamount, estimated on based made is assessment recoverable.The be not may amountcarryingcircumstances their indicatein that changes when assessed is assets intangible and tangible of Impairment construction. under assets capitalizedon been has Interest amortization. and accumulateddepreciation less historicalcost carriedat are assets Tangibleintangible and amortization and Tangibledepreciation assets, intangible assets, incurred.as expensed are commissions sales and marketing costs, Advertising commissions sales marketingand costs, Advertising method. average weighted or FIFO the using determined Costis price. market or cost of lower the at valuedare Inventories Inventories appropriate.where evaluations party third and companies similar of values market available), (if prices share quoted cashflows, temporary,discountedincluding considered, areseveral factors than other is decline the if occurredand has value in decline a if evaluating When companies. individual the forecastsfor earnings revised or values market in fall a indicatedby be may This able. recover- be not may investments the of amountcarrying the that circumstancesindicatein changes when assessed is Impairment recognized. is temporarydecline a than other is which value in loss a ventures, joint and companies associated in Forinvestments temporary.not is value in fall the if valuefairor, lower, estimated if historicalcost at valued areventures joint and companies associated in shares excluding investments, other and shares Long-term value.fair curr Other cost. original the than valuefair estimated lower a have holdings aggregatedthe if made only arevalue book the in adjustments whole, a as managed and currentassets as classified Forshares Investments recorded as an increase in shareholders equity.shareholders in increasefromPayments an as recorded programare ownership stock employee the or plan option the Telenorunderby issuedASA are which shares, for employees from Paymentsissued. are shares bonus when or given is discount the when costs personnel and salaries as recorded been program have ownership stock employee the in Discounts period. option mated esti- the over recorded is options on taxsecurity Social expensed. not grantaredate of as values intrinsic no with Options periods. option estimated the over recognized is expense compensation grantedare they when values intrinsic have that options Forshare programownership stock employee and options Share timeframe.reasonable a within removals planned and known to limited are obligations retirement Asset obligations retirement Assets ent shares are valued at the lower of cost and estimated and cost of lower the at valuedare shares ent (IFRS) Standards Reporting Financial International of Implementation areas. business Fixed and Norway Mobile our mainly affected changes Comparablereclassified.restated. These arefigures were 2002 for write-downs in million 101 NOK and amortization in million 648 NOK made. was assets intangible to assets tangible from systems supportadministrative in software reclassificationof a 2003, In separatesegments. reportableas operations significantmobile the disclosing by presentation segment Telenorthe 2004, changed In Comparablerestated.2003. arefigures December 31 of as million 2,673 NOK by liabilities short-term increased reclassificationThis liabilities. interest-bearingshort-term to liabilities interest-bearinglong-term from reclassified were months 12 next the within maturity with liabilities interest-bearing 2004, In classification in Changes estimates. those from differ could resultsActual period. reporting the during expenses and revenue of amounts reported the and statements financial the of date the at liabilities and assets contingent of disclosure the as well as liabilities, and assets of amountsreported the affect that assumptions and mates esti- make to management requires principles accounting accepted generallywith accordance in statements financial preparationof The estimates of Use In addition, presentation and note disclosures will be affected. be will disclosuresnote and presentation addition, In declared. is it before equity to deduction as recorded not are dividends that and equity shareholders’ against charged are losses actuarial net that are 2004 January 1 of as equity shareholders’ the on significanteffects most The impairment. for annually reviewed but amortized not is goodwill that is 2004 year the for GAAP Norwegian to compared Telenor’son IFRS significanteffect to most according The income net interests. Minority • assets. tax and taxes Deferred • Translationadjustments. • is it before equity to deduction as recorded not Dividends; • payments. Share-based • ratediscountused. the including Pensions, • hedge including derivatives and liabilities investments, Financial • depreciation, including assets Tangible intangible and • Goodwill. • combinations. Business • costs. related partially and Revenue • for: accounting the includingseveral items, affect will IFRS of implementation The below. mentioned those beside occur may differences material other consequently and 2005, during changed be may IFRS to according principles accounting final The IFRS. with accordance in principles accounting the and principles accounting current Telenor’s between differences the of evaluation an Telenormade has 2004. for figurescomparable with reports quarterly 2005 the in IFRS to according reporting be Telenor IFRS. will follow to required be also will companies listed Norwegian agreement (EEA) Area Economic European the to 2005.Due by Standards(IFRS) Reporting Financial International with accordance in ments state- financial consolidated their prepare EU the within companies listed puclicly that require (EU) Union European the of Regulations option plans are recorded as an increase in minority interests. minority in increase an as recordedare plans option subsidiaries the under issued are which shares, for employees declared. accounting. obligations. retirement asset and write-downs, and amortization Acquisition of Sonofon Holding A/S in 2004 in A/S SonofonHolding of Acquisition tosA wdn83Tlcmuiain7 25 years 4–20 70 years 10 188 period consolid of date the at assumed liabilities and acquired assets the of valuesfair estimated the summarizes table following The 66 value acquired. liabilities and assets of valuesfair the of 379 147 Telecommunication e experts’ financial independent on based been has price purchase the of allocation The parties. the between negotiations after 168 f a on based set was valuecash. The in paid was and billion 3.6 NOK approximately was aggregateprice purchaseThe markets. of in activities coordinatedfrom stemming synergies of advantagetake to operationsyears Telenor's of 4-20 controlof gainstrategy part to 8.3 years 5–35 price 85 (FWA)Access Technology”.Wireless acquisit “Fixed This on based market business the to primarily access Internet and telephony Communication 738 Mobile services application Operationand Communications Satellite Mobile li fixed to addition in frequency MHz 1800 and 900 on communicationdataservices and voice GSM 474 quality high offers and Denmark 3,753 298 operato mobile leading the of one is A/S Holding Sonofon date. that fromstatements financial consolidated the in included been operatio of result the and 100.0 shares common outstanding 100.0 the of 100% 100.0 Telenor acquisition, owns the of After completion own. already n did we that A/S Holding Sonofon Sweden in shares common outstanding the of 46.5% TelenorFebruaryremaining Norway/Sweden 2004, 12 the acquired On 3,639 541 Communication Mobile Denmark Business 4) 11.0 Communication Mobile USA 3) Communication Mobile 2) % interest 1) 46.5 IT-operation Bangladesh 55.9 Country AB Utfors CommunicationInc Personal GMPCS Denmark Montenegro A/S CBB Ltd GrameenPhone (ProMonte) SA. Luxemburg TelecomEuropean A/S Holding Sonofon Company millions in NOK 2004 in acquisitions Significant Telenor.by financing of types other capitalor includeincreases not does summary The accounting. of method purchase u recorded is acquisition Each years. three past the over place taken have disposals and significantacquisitions following The GROUP TELENOR NOTES okvlea nascae opn ttedt fcnoiain3,972 2004. in Sonofon in goodwill of write-down regardingthe 1 note See plan. original to according amortized is acquisitions prior on Goodwill years. 20 of life useful a have to estimated Telenor’sto relates million acquisition 2,837 latest NOK this Of Sonofon. segment the to relates million 6,480 NOK of Goodwill life). usefulaverage years (5 systems administrative in million 359 NOK and life) usefulaverage years (8 licenses to million 22 NOK life), usefulaverage years (15 trademto million 373 NOK life), usefulaverage years (12 roaming-agreeements to million 248 NOK life), usefulaverage years (4 custome to assigned was million 539 NOK amount this Of Telenor's in acquisition. latest assets intangible identified to relates mi 1,541 NOK which of consolidation, of date the at million 2,558 NOK were A/S Holding Sonofon of Totalassets intangible other 1) acquisition last price Purchase consolidation dateof the at associatedcompany an as value Book consolidation of date the at assets Net interestMinority Totalliabilities liabilities Short-term liabilities Long-term taxes Deferred Totalassets assets Current assets fixed financial Tangibleand assets assets intangible Other Goodwill millions in NOK 01 the preliminary allocation. preliminary the fromdeviates somewhatthat values excess net of allocationassociated company.final an the as reflectaccountedThey for was company the when investment, prior the for value carrying the and acquisitions last the considerationfor include figures These 2004. December 31 of as company the in shares the Telenorof 100% owns allocations and evaluationsPreliminary ASA.PartnerBusiness EDB by purchases Asset equity.shareholders’ against recorded are and goodwill allocatedto not is values excess Net Acquisitions and disposals and Acquisitions Change in Purchase Net excess Amortization Amortization excess Net Purchase in Change Sonofon 12 February2004 Sonofon12 2) 3) 2) 4) 1) 4 for information for 4 software r relationship r and is and sing the sing a number a ation ation stimates llion llion arks rs in rs air value air ion was ion ns has ns

10 years 10 years 15 ne 1): ot 13,213 3,639 7,611 5,602 1,825 3,040 1,187 2,988 2,558 6,480 737 - -

Telenor ASA Annual Report 2004 PAGE 89 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 90 Notes Telenor Group Acquisition of Pannon GSM Rt, Canal Digital AS and Kyivstar GSM JSC in 2002 in JSC GSM Kyivstar and AS Canal Digital Rt, Pannon GSM of Acquisition 2003 disposals Significant opn onr neet%Bsns rc au period value 39 price 84 communication Mobile Business 4.6 % interest Country Bangladesh 6,732 1) Comincom/CombellgaOJSC Ltd. GrameenPhone AS Holding Media APR 8,609 TelecomGolden Inc. Company millions in NOK 2003 in Acquisitions Significant million. 295 NOK a recorded and million 400 NOK for 2004 during business telecom its of Telenor’spart sold ASA PartnerBusiness EDB subsidiary of taxes before gain a recorded and million 133 NOK of consideration a Transactyfor in j.s.c sharesSlovakia its of 100% sold recor was taxes before million 135 NOK of gain A Telenor in million. sharesVentureTotal 394 its AS. NOK III was consideration Telenor2004, sol of end the Telenorat by Ventureand owned AS, was III which AS, Securinet in shares its of Telenor100% sold 2004 disposals Significant fu of or periods respective the in effect in been acquisitions the had resulted have would actually which operations of results indicativ necessarily not are and only purposescomparative for prepared been have figures forma pro These acquisitions. the to per the in results the and values excess of amortization Telenor'sand for adjustedexpenses interestare results forma pro The NOK in share per income net forma Pro income net forma Pro interestsminority and taxes before profit forma Pro revenues forma Pro data share per except millions, NOK in periods: respective the of beginning the occurredat had operations IT Communicationand GMPCS Inc. A/S, CBB D.O.O.), (ProMonteGSM SA Luxemburg European A/S, Holding Sonofon of acquisition the if as results presents information financial forma unauditedpro following The (unaudited) information formaPro iplo-einRsi 75Mbl omncto 3 - 50 - period 102 value 432 years 5–20 aggregatepurchasThe markets. of number a in activities coordinatedfrom stemming synergies of advantagetake to operations of 7,741 Telecommunication price Communication Telenor's of Mobile gaistrategypart to frequency.was MHz acquisition 1800 This and 900 on communicationdataservices and voice GSM h offers and Hungary operatorsin mobile leading the of one is Rt. GSM Pannondate. that fromstatements financial consolidated included 37.2 been have operations Rt. GSM Pannon of result the and shares common outstanding the of 100% Telenor acquisition, owns 17.5 of After completion Rt. GSM Pannon in shares common outstanding the 74.2%of Telenoradditional February2002, an 4 acquired On 7,906 Sweden Communication 6) Mobile Russia Business 5) 4) 74.2 3) % interest 2) 1) Country VimpelCom-Region Norway AB Glocalnet Hungary AB Utfors ComunicationsInc. JSC GSM Kyivstar AS Digital Canal Rt. GSM Pannon Company millions in NOK 2002 in Acquisitions Significant billion. 2.1 NOK cashwas considerationThe million. 1,515 taxe before gain a recorded and CosmoteSA in shares its of Telenorrecorded.9% was sold taxes before million 26 NOK of loss A TeleoperatorGolden fixed-line Russian listed the in shares Comincom/Combellgafor OJSC exchange in in sharesTelenor the sold 4) 3) 2) COMSAT Mobile Includes minority share of NOK 533 million. 533 NOK of share minority Includes capital. share the of 2.3% further a acquire to Telenoroption an has subsidiaries. via region Nordic the in business conducts Group Digital Canal Norwegian. is company parent The ventures. joint and associatedcompanies of value book the in included is value excess Net agreement. purchase Asset goo negative as recorded is value excess Net 96%. to up share ownership the increase may which Telenorloans, convertible holds Telenor’sof exchange by acquiredASA.A-Pressen was in AS shareholding Holding Media APR interestin ownership The TelecomGolden in Inc. share for excha interestin Telenor ownership 2003 its laterin sold and subsidiary owned whollyComincom/Combellga a OJSC became 2003 In equity.to directlyPartially recorded ventures. joint and associatedcompanies of value book the in included is value excess Net 1) 5) 2) 3) 4) 3) Sweden 90.0 Telecommunication 153 (424) 18 years 18 (424) years 10 1,005 22 153 294 743 Telecommunication Communications Satellite Mobile Communication Mobile 90.0 100.0 8.8 Sweden USA Ukraine 30 74 850 217 402 1,378 Telecommunication TV-distribution 25.0 Telecommunication 44.8 20.4 Russia Norway Russia 4) Change in Purchase Net excess Amortization Amortization excess Net Purchase in Change Change in Purchase Net excess Amortization Amortization excess Net Purchase in Change 50.0 TV-distribution 2,166 2,244 5–15 years 5–15 2,244 2,166 TV-distribution 50.0 31959,233 63,119 ,6 4,057 5,163 042003 2004 .52.28 2.95 3) 6) 2) 1) 1) 2) ture results.ture NOK 71 million. 71 NOK ded. Telenorded. iod prior iod d 100% of 100% d Telecom s of NOK of s 5–20 years 5–20 years 5–15 years 5–20 e of the of e gain of gain igh quality igh com Inc. com e price was price e 10 years 10 years 18 years 10 n control n the in the in dwill. dwill. nge te nagbeast ,2 9 956 298 2,626 assets intangible Other Goodwill assets tax Deferred consoli of dates the at assumed liabilities and acquired assets the of valuesfair estimated the summarizes table following The acquired. liabilities and assets of valuesfair the of e experts’ financial independent on based been has price purchase the of allocation The parties. the between negotiations after fair a on based set was valuecash. The in paid was and billion 0.3 NOK approximately was aggregateprice purchaseThe markets. numbe a in activities coordinatedfrom stemming synergies of advantagetake to operationsTelenor's of control gainstrategy to pa frequency.is MHz acquisition 1800 This and 900 on communicationdataservices and voice GSM quality high offers Ukraineand operatori mobile leading a is JSC GSM Kyivstar 2004. December of Telenor’sas 2004. 56.6% in is exercisedshare was 1.6% owner capitalshareo the of 2.3% further a acquire to option Telenoran 2002. Septemberhad 1 fromstatements financial consolidated the in includedJSC’s been GSM Kyivstar of have operationsresult the and shares common outstanding the of 54.2% Telenor owned acqu the of After completion JSC. GSM Kyivstar in shares common outstanding the of 8.8% Telenoradditional 2002, an acquiredIn a liabilities and assets of valuesfair the of estimates experts’ financial independent on based been has price purchase the of parties. the between negotiations aftervalue fair a on based set was value The markets. of number a in activities coordinated stemm synergies of advantagetake to operationsTelenor's of controlof gainstrategy part to is acquisition cash.This in paid billion 2.2 NOK approximately was aggregateprice purchaseThe management. and distribution for solutions delivers company the operators.cable-TVFur to cards and smart on based households broadcastingto satellite based subscription distributesDigital 2002. in equity shareholders’ the against directlyrecorded been has consolidation and agreement between period the in expenses calculatedand valuesfin excess net Canalof Digital’sthe of amortization 50% loss, 2001, June in agreement the into entering company’sth the at for resultsoperating risk transferof the of result a Asdate. that fromstatements financial consolidated i included been have operationsCanalDigital of result the and shares common outstanding the of 100% Telenor acquisition, owns t of After completion AS. CanalDigital in shares common outstanding the of 50% Telenoradditional 2002, an Juneacquired 30 On ac liabilities and assets of valuesfair the of estimates experts financial independent on based been has price purchase the of partie the between negotiations aftervalue fair a on based set was valuecash. The in paid was and billion 8 NOK approximately ucaepiels custo ,0 ,6 294 840 740 plan. original to according 2,166 acquisiti prior on Goodwill years. 20 of life useful a with JSC GSM Kyivstar segment the to relates million 371 NOK of Goodwill 869 981 life). usefulaverage years (10 653 to assigned was million 65 NOK and life) usefulaverage years (9 licenses to assigned was million 48 NOK life), usefulaverage relations customer to assigned was million 522 NOK amount this Of Telenor's in acquisition. latestassets intangible identified 7,906 r million 635 NOK which of consolidation, of date the at million 956 NOK were JSC GSM Kyivstar of Totalassets intangible other 1,873 plan. original to according 1,121 i acquisitions prior on Goodwill years. 15 (575) of life useful a Broadcastwith segment the to relates million 1,988 NOK of Goodwill 1,644 1,793 life). usefulaverage years trademarks(15 to assigned was million 116 NOK and life) usefulaverage relations customer to assigned was million 111 NOK amount this Of Telenor's in acquisition. latestassets intangible identified 8,636 r million 227 NOK which of consolidation, of date the at million 298 NOK were AS CanalDigital of Totalassets intangible other (365) 636 plan. original to according amortized acquisiti prior on Goodwill years. 20 of life useful a with Rt. GSM Pannon segment the to relates million 5,613 NOK of Goodwill life). usefulaverage years licen to million 126 NOK and life) usefulaverage years trademarks(10 to assigned was million 275 NOK and life) usefulaverage (730) relatio customer to assigned was million 1,727 NOK amount this Of Telenor's in acquisition. latestassets intangible identified 2,517 million 2,128 NOK which of consolidation, of date the at million 2,626 NOK were Rt. GSM Pannon of Totalassets intangible other 1) acquisition last price Purchase equity against directly Recorded consolidation dateof the at associatedcompany an as value Book consolidation of date the at assets Net interestsMinority Totalliabilities liabilities Short-term liabilities Long-term taxes Deferred Totalassets assets Current assets fixed financial Tangibleand assets accounted for as associatedcompanies. as accountedfor compa the when investments, prior the for values carrying the and acquisitions last the considerationfor include figures These 4 February 2002 30 June 2002 1 September 2002 September 1 2002 June 30 February2002 4 Pannon GSM Rt Canal Digital AS Kyivstar GSM JSC GSM Kyivstar AS Canal Digital Rt PannonGSM 1883503,273 3,570 11,858 ,2 ,9 1,733 1,697 3,222 ,1 ,8 371 1,988 5,613 ,0 2 271 520 1,102 0 3153 63 308 2 31 128 - 671 - - 658 e time of time e s amortized s s. The allocation The s. ons is amortized is ons ing from ing nship (5 years (5 nship cquired. hip (5 years (5 hip years (5 hip ons is ons elates to elates quired. ancing trademarks The allocation The dation elates to elates thermore, ses (6–12 ses relates to relates stimates r of r f which f n the n value he n the n isition, nies were nies Canal and was and rt of rt 1) :

Telenor ASA Annual Report 2004 PAGE 91 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 92 Notes Telenor Group utmreupet1671161,528 4,626 2,493 5,903 1,146 4,254 2,164 6,758 1,607 14,480 3,994 2,271 7,585 15,464 communication.satellite maritime fromrevenues 14,263 Revenues Other software of sale operationsand IT equipment Customer activities based network Other TV-distribution Satelliteand lines Leased telephony Mobile ADSL) and (ISDN (PSTN)/digital Analog millions in NOK 2002. in significantdisposals no were There 2002 in Disposals Significant futureres of or periods respective the in effect in been acquisitions the had resulted have would actually which operations of o indicative necessarily not are and only purposescomparative for prepared been have figures forma pro These acquisitions. the per the in results the and values excess of amortization Telenor'sand for adjustedexpenses interestare results forma pro The NOK in share per income net forma Pro (loss) income net forma Pro interestsminority and taxes before profit forma Pro revenues forma Pro share per except millions, NOK in 2002: of beginning the occurredat had AB Utfors COMSATand AS, DigitalInc. GSM Kyivstar Rt., GSM Pannon of acquisition the if as results presents information financial forma unauditedpro following The (unaudited) information formaPro structure. new the reflect restatedto are years previous for figurescomparablestructure. The reporting the in changes Telenormade also In segment. one as presented be longer canno segment Telenorprevious the operationsMobile mobile individual in growth the of re a Asseparate segments. as operations mobile consolidated major the show to segments reportableTelenor its 2004, changed In 158 Other 232 software of sale and operations IT equipment Customer activities network-based Other 550 programcards.of TV-distribution Satellite lines Leased telephony Mobile ADSL) and (ISDN (PSTN)/digital Analog Totalrevenues operations and assets fixed of disposal on Gain mobile operators, text messages and content. and messages operators,text mobile sale of software. of sale and ADSL) and Internet subscriptions. Further, it includes revenues from incoming traffic from other telephone operators.telephone other trafficfrom incoming Further, fromrevenues includessubscriptions. Internetit and ADSL) and 02 03 includes revenues from contracting, rent etc. rentcontracting, fromrevenues includes includes revenues from satellite broadcasting, distribution of TV channels to the Nordic market, satellite-based network, and network, satellite-based market, Nordic the to channels TV of broadcasting,distribution satellite fromrevenues includes Key figures segments figuresKey Revenues include revenues from subscription and connection for digital and analog circuits.analog and digital for connection and subscription fromrevenues include includes revenues from subscription, connection and distribution of TV channels through cable and satellite, and sale sale and satellite, and cablethrough channels TV of distribution and connection subscription, fromrevenues includes includes revenues from traffic, subscription and connection for mobile telephones, paging, incoming traffic from other trafficfrom incoming paging, telephones, mobile for connection and traffic,subscription fromrevenues includes includes sale of customer equipment (telephone sets, mobile phones, computers, PABXs,computers, phones, etc.). mobile sets, (telephone equipment customer of sale includes include revenues from leased networks, data network services, etc. services, network data networks, leased fromrevenues include includes revenues from sales and operation of IT-systems, together with consultancy services and services consultancy with together IT-systems, of operation and sales fromrevenues includes includes revenues from traffic, subscription and connection for analog (PSTN), digital (ISDN digital (PSTN), analog for connection and traffic,subscription fromrevenues includes 07252,88948,668 60,752 1325,2 48,826 53,121 61,302 8612,2 17,199 20,823 28,691 ,5 ,8 1,431 1,286 1,350 0420 2002 2003 2004 9 9 1,008 994 991 ults. iod prior to prior iod JSC, CanalJSC, segment f the results the f 2003, sult 52,023 (4,854) (5,693) (2.74) 2002 Definition and reconciliation of EBITDAof reconciliation and Definition eeo oi owy1,3 0584231003231 93,292 69 10 3,213 1,070 4,283 10,508 11,734 Norway Telenor– Mobil millions in NOK 2004 loss and Profit businesses. in investments and expenditure inclu tables the in Investments payables. and receivables internalGroup primarily are eliminations sheet Balance payables. and internal to due were Corporateactivities Groupand and functions units/eliminations”, mobile “Other in liabilities and assets amoun large The segments. the between purchases and sales primarily are items loss and profit of Eliminations segments. the for loss and profit the in included not are dividends and contribution groupbusinesses, transferof Internal from losses and Gains prices. market on based be to are areas business the between deliveries prices. market on based parties the between negotiated are prices etc., development productFor contract-basedunits.services, between negotiations on based prices oriented cost on based areGroup the within services regulated network-based of Deliveries resources.allocating and performance assessing decision-ma operating chief the by used was and 2004, and 2003 structurein segment the in changes considered periods, these in decisio operating chief the to reporting the with consistent was 2002 and 2003 2004, for below reported information segment The functions. support and centralstaff and insurance internalcompany the services, international strategicGro projects,Groupdevelopment, and researchestate,real as such activities comprise activities Group and functions Corpor2004. and 2003 during out phased were activities whose Nextra International and Teleservice, includingservices Software Netwo Satellite including Services Satellite as units business comprises units Business Other services. operating and solutions wh group, IT listed Exchange Stock Oslo an is ASA PartnerBusiness EDB region Nordic the Group’swithin the activities TV-based Norway.of outside Broadccountries selected in activity has and communicationsolutions, as well as lines, leased and Internet I digital PSTN, analog including services delivers and Norway in network fixed Group's the comprises Fixed commerce. electronic services content Internet,data, voice, includingcommunication business, mobile Group's the Totalcomprises operations mobile prtn rft(os ,0 ,6 (320) 2,366 2,450 10,236 7,560 (1,231) 1,365 10,597 6,602 (718) (1,526) (5,136) 11,623 12 (13) 7,426 2 119 8,846 54 480 8,846 2,406 1,526 (471) 23 (27) (438) (44) 718 1 41 (32) 50 1,184 - 14,2196,602 1,831 589 676 1,646 EBITDA 113 20,821 64 1,097 4,594 2,794 Write-downs (158) 507 524 amortization and Depreciation 61,302 (109) 3 906 (loss) profit Operating 2 873 3,483 411 (3,407) 598 - Associatedcompanies - 61,302 54 400 items financial Net - (159) 1,495 6,277 interests minority and taxes (468) before (loss)Profit 694 524 1,174 - Taxes (6,581) 924 - 1,989 interestsMinority 5,212 - 17,440 387 (loss) income Net 785 684 3,027 3,114 millions in NOK 19,266 592 5,347 1,095 3,606 (81) 8,591 (3,248) 453 3,595 (1,260) 947 218 4,530 2,581 3,928 11,618 197 360 1,639 1,732 2) 4,344 31,570 1,313 1) 680 (1,063) Total 2,092 3,950 2,193 Eliminations 32,952 4,346 2,202 activities CorporateGroup and functions 357 4,346 5,863 units business 3,953 Other Partner Business EDB 2,202 4,393 Broadcast 455 5,869 Fixed Totaloperations mobile operations/eliminations mobile Other Bangladesh – GrameenPhone Ukraine – Kyivstar Malaysia DiGi.Com – Hungary – GSM Pannon Denmark – Sonofon See table below for definition and reconciliation of EBITDA. of reconciliation and definition for below table See operations.and assets fixed of disposal on gains include Revenues Revenues 1) revenues xenl n rt- rft n on iaca minority financial joint and profit write- and External 1) EBITDA 2) in mr soitdbefore Associated amor- tion, Deprecia- Profit (loss) Profit Deprecia- tization Operating companies Net taxes and taxes Net companies Operating tization on ls)vnue tm interests items ventures (loss) downs 0811,0 13,469 18,302 20,821 ,5 ,6 (4,298) 4,560 5,358 ,9 4 3,553 145 (480) (358) 2,596 2,376 490 2,244 1,244 0420 2002 2003 2004 receivables statements rks, Venturerks, ast comprises ast up treasury, up de capitalde SDN, ADSL, SDN, and ich delivers ich ate All other All ts for ts n-makers the kers for kers

Telenor ASA Annual Report 2004 PAGE 93 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 94 Notes Telenor Group Balance sheet items and investments at 31 December 2003 December 31 at investments and items sheet Balance iiCm–Mlyi ,7 ,7 ,9 2 7 14 250 302 (124) (77) 3,160 - 67 - 374 18,554 (22) 22,132 379 921 415 880 24,294 1,896 3,115 (372) 1,545 1,309 1,295 88,094 926 2,895 7,550 1,147 (37,657) 1,924 1,232 3,170 16,735 (59,787) 8,283 9,592 4,262 1,761 2,608 (97,620) 5,368 6,428 1,038 288 3,176 10,940 920 1,318 21,752 9,639 (24,692) 3,374 1,208 64,931 5,370 3,868 535 4,386 112 32,821 8,504 14,138 1,166 905 10,909 1,794 1,784 1,510 1,085 15,706 14,365 1,025 506 780 1,352 1,320 (73,040) 58 1,030 450 5,306 6,566 75,501 - 47,701 6,112 Malaysia 11,896 DiGi.Com – 154 6,048 3,869 Hungary – 5,640 GSM Pannon 852 7,364 70,279 2,256 2,679 1,580 Norway Telenor– Mobil 229 4,175 millions in NOK 2,783 5,675 18,294 1,311 40,459 606 - 7,632 4,400 1,097 1,997 - 39,172 1 3,944 47,585 1 68,079 8,487 2003 loss and - Profit 4,454 4,329 6 4,392 2,072 Total 3,077 3,678 Eliminations 26,293 activities GroupCorporate and functions 3,682 units business Other Partner Business EDB Broadcast Fixed Totaloperations mobile operations/eliminations mobile Other Bangladesh – GrameenPhone Ukraine – Kyivstar Malaysia DiGi.Com – Hungary – GSM Pannon Denmark – Sonofon Norway Telenor– Mobil millions in NOK 2004 December 31 at investments and items sheet Balance oa 8101,6 7748,1 5122,2 7,017 20,125 305 266 263 (86) 25,102 2,161 2,608 953 2,868 86,110 1,318 1,524 8,606 920 (36,811) 487 17,764 (53,304) 8,165 763 633 2,846 10,521 (90,617) 1,802 10,166 10,060 346 1,105 23,807 (21,953) 5,190 3,321 376 1,277 58,180 1,166 3,762 3,278 119 8,595 3,365 2,528 29,017 995 5,643 505 1,929 2,200 13,968 514 1,451 (68,783) 541 18,709 18 947 - 696 37,402 - (2,755) 6,218 76,251 13,761 6,268 - 58,098 2,628 2,644 12,170 114 - 203 1 2,326 5,322 12,151 34,441 - 2,824 1 7,594 8,064 1,975 4,696 34,245 1,232 7,426 2,377 37,883 64,081 5,615 - 1 (1,365) (10) (812) 1,803 (88) 8,073 (752) Total 1,231 3,347 Eliminations (736) 112 (909) 20,557 5,227 activities GroupCorporate and functions (71) (314) 7,560 units business Other (84) 8 Partner Business (101) EDB 2,480 944 (318) 10,742 (13) Broadcast Fixed 832 2,846 11 18,302 181 Totaloperations mobile (120) (149) 2,531 (4) operations/eliminations mobile Other 53,121 (2) GrameenPhone 4,681 (11) (807) 1,048 4,134 528 - Kyivstar - 53,121 Com DiGi (2,182) 403 Hungary – 1,229 GSM Pannon (1,888) 6,665 (364) - 408 Norway Telenor– Mobil 1,639 (6,829) 1,093 millions in NOK 399 1,661 4,661 18,796 387 5,224 3,590 843 20,509 480 (580) 4,820 3,229 23 4,343 4,205 92 158 4,289 1,573 9,567 362 2) 2,634 22,483 1,001 1) (488) Total 2,317 Eliminations 23,810 2,634 1,535 activities CorporateGroup and functions 137 units business Other Partner Business EDB 1,536 Broadcast 185 Fixed Totaloperations mobile operations/eliminations mobile Other Bangladesh – GrameenPhone Ukraine – Kyivstar See table above for definition and reconciliation of EBITDA. of reconciliation and definition for above table See operations.and assets fixed of disposal on gains include Revenues Revenues 1) ie sescmaisast sespoiin iblte ments liabilities provisions assets assets companies assets fixed ie sescmaisast sespoiin iblte ments liabilities provisions assets assets companies assets fixed revenues xenl n rt- rft n on iaca minority financial joint and profit write- and External te Ascae urn oa nl emInvest- term incl. Total Current Associated Other te Ascae urn oa nl emInvest- term incl. Total Current Associated Other 1) EBITDA 2) in mr soitdbefore Associated amor- tion, Deprecia- Profit (loss) Profit Deprecia- tization Operating companies Net taxes and taxes Net companies Operating tization on ls)vnue tm interests items ventures (loss) downs Long-term Long-term iblte Short- liabilities iblte Short- liabilities Assets by geographical location of the company the of location bygeographical Assets location customer on based revenues of distribution Geographic lmntos(,8)-(6 12 6(3 17 34 (107) (13) 429 (1,551) (500) (1,811) (5,136) (812) (297) 86 (943) 201 (86) (2,366) (264) (5) (2,450) 997 (132) (152) (50) (5) (320) 602 (475) 13,46913,789 (736) (66) 1,929 731 - 198 (409) (2,127) 48,826 974 (29) (2,666) (1) 914 4,866 - 3,072 (124) 48,826 (99) 757 (2,050) (4,612) 499 251 - CentralEurope 5,597 178 (931) 64 (2,030) - (1,812) WesternEurope (6,787) 348 - Nordic Other 3,364 18,352 152 1,414 (2,030) Norway 362 4,255 631 - millions in NOK 20,022 (2,003) 3,605 (770) 3,386 6,068 403 297 5,040 (569) 126 3,025 4,341 154 7,482 3,008 708 390 1,289 1,022 2) 757 19,079 1,322 1) (616) Total 1,586 2,702 708 2,259 Eliminations 20,346 4,330 1,589 activities CorporateGroup and functions 137 4,502 units business 2,715 Other Partner Business EDB 9,441 1,589 Broadcast 134 4,505 Fixed 10,695 Totaloperations mobile operations/eliminations mobile Other Bangladesh – GrameenPhone Ukraine – Kyivstar Malaysia DiGi.Com – Hungary – GSM Pannon Norway Telenor– Mobil millions in NOK 2002 loss and Profit te onre 7 4 6 902 11,342 86,110 7,668 15,619 13,190 860 12,635 8,524 88,094 31,849 9,983 5,828 13,934 13,326 345 35,722 13,346 21,026 2,137 67 6,232 2,817 37,676 1,361 23,167 271 3,597 2,891 45 21,132 3,508 Totalassets countries Other Asia Europe Eastern CentralEurope WesternEurope Nordic Other Norway millions in NOK 1) Totalrevenues countries Other Asia EuropeEastern CentralEurope WesternEurope Nordic Other Norway millions in NOK location company on based revenues of distribution Geographic Totalrevenues countries Other Asia EuropeEastern country in which the subsidiary is located.is subsidiary the which in country rela as recorded is subsidiaries foreign of disposal on operations.Gain and assets fixed of disposal on gains include Revenues EBITDA. of reconcilliatons and definitions for table See operations.and assets fixed of disposal on gains include Revenues Revenues 1) revenues xenl n rt- rft n on iaca minority financial joint and profit write- and External 1) EBITDA 1) 1) 0420 042003 2004 2003 2004 agbeast Totalassets Tangibleassets 2) in mr soitdbefore Associated amor- tion, Deprecia- Profit (loss) Profit Deprecia- tization Operating companies Net taxes and taxes Net companies Operating tization on ls)vnue tm interests items ventures (loss) downs 1325,2 48,826 53,121 61,302 1733,0 31,044 31,206 31,753 3933,8 33,224 33,589 48,826 33,993 53,121 61,302 ,9 ,4 1,588 1,343 1,194 ,5 ,0 4,295 1,427 4,966 2,492 4,706 3,378 5,720 4,032 6,153 4,344 1,520 6,359 4,409 1,619 8,959 1,418 4,906 3,551 1,289 6,365 4,551 ,7 ,9 5,348 5,998 6,676 ,7 ,9 3,298 4,699 9,474 0420 2002 2003 2004 0420 2002 2003 2004 5 7 842 1,580 773 923 856 638 ting to the to ting

Telenor ASA Annual Report 2004 PAGE 95 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 96 Notes Telenor Group te esne ot 1 0 488 7,659 402 10,104 789 7,248 9,561 417 235 567 29 760 303 7,530 10,021 245 571 25 932 301 4,495 85 557 161 311 1,527 4,568 6,463 12,485 2002. in 23,000 and 2003, in 21,750 2004, in 21,300 was employees of numberaverage The 1,343 5,878 7,183 costs Totalpersonnel and salaries costs personnel Other 13,094 tax security social including costs Pension tax security Social pay holiday and Salaries 1,191 millions in NOK 9,001 16,070 Totalcapitalized work own operatingexpenses Other costs personnel and Salaries materialsetc. Costsof millions in NOK charges Total traffic and materials of costs materialsetc. Costsof satellitecapacity Traffic– charges capacity network Traffic– charges millions in NOK and adjusted for the best estimate of the financial assumptions at 31 December 2003 and 2004, respectively.2004, and 2003 December 31 at assumptions financial the of estimate best the for adjusted and 2004 and 2003 September 30 at measured were obligations benefit The 2004. and 2003 December 31 at measured were assets plan The 2 December 31 of as 5.7% to compared 2004 December 31 of as 5.0% ratediscountto the in reduction a to led which reduced, were ratesinterestlong-termin the 2004, In above. discussed as AFP for accounting of change the by offset was 2004 in effect The disco the in reduction primarily 1999, in and 2003 2004, in assumptions in changes to due mainly are losses and gainsActuarial 2003. in income to taken FundPension PublicService Norwegian the from repayments and above cussed as AFP-plan the in premiums pension companies, new to due primarily 2003, to compared 2004 in increased costs Contributionplan i expensed also was AFP-plan the of introduction the to relating costs service prior unrecognizedpreviously of million 127 NOK r The losses. and gains actuarial of amortization of part a as income to taken were million 111 NOK of NHO in membership the by n futureretirements for obligations capitalizedpreviouslypension while expensed, were million 18 NOK of premiums pension the means This plan. contribution defined a as plan this for account Telenorto plan, have this in liabilities and assets of share calculateto Tel able is plan the administratorof the However,until plan. multi-employer benefit defined a is NHO through AFP unchanged. are rights NAVO.throughemployees’ scheme previousThe the line in is NHO through scheme pension The NHO. transferredto was (AFP) plan Consequently,retirement early agreement-based the NAVOfromNHO. membership to organization employers’ their changed subsidiaries Norwegian most Telenorand 2004, ASA In 1996. of end the until criteria established within employees the to offered th plan retirement early an Telenorhad years previouslater.also In or years 62 of age the reachingupon retire may employees sche this Under 1997. in established was that (AFP) plan retirement early agreement-basedTelenor an 2004 had December 31 of As dominant. are Norway,plans of contribution outside For employees plans. pension these fund shares and bonds primar consisting assets Plan employees. executive for plan separatepension a and insurancecompanies independent with schemes pen group few a has Group The 2004. December 31 of Telenorthroughcoveredas FundPension were employees Group's the of 12,149 benefits. receive to eligible becomes and services renders employee the which period the over expensed is plans benefit pe of cost The compensation. and service of length employee's the on based determined are Benefits parliament. Norwegian the by annually amount base a calculatedto referenceare by payments Such citizens. Norwegian retired all to payments security social government Norwegian the Norway. in addition, employees In all substantially for plans pension Telenorbenefit defined provides 05 04 07 06 Pension obligationsPension costs personnel and Salaries capitalized work Own charges traffic materialsand Costsof ,4 ,5 1,168 1,151 1,142 0420 2002 2003 2002 2004 2003 2002 2004 2003 2004 that in 2004, in that enor’s n 2004. n Norway Norway at was at unt rate.unt ow covered ow provides emaining approved nsion dis- 003. with me ily of ily sion oa rvso o esosa 11.(oe1)63338 (69) 603 (57) 3,288 3,811 4,735 2,759 5,333 3,288 3,929 19) (note Total31.12. at pensions for provision paid benefits and contribution pension on tax security Social paid Benefits contribution Pension costs benefit periodic Net 4,735 sale and Acquisitions Total01.01 at pensions for provision Totalpensions for provision tax security social Prepaid losses actuarial net Unrecognized costs service prior Unrecognized status Funded year the of end the at assets planFair of value paid Benefits contribution Pension sale and Acquisitions assets plan on returnActual year the of beginning the at assets plan of Fairvalue assets plan in Change year the of end the at obligations Benefit paid Benefits sale and Acquisitions losses and gains Actuarial Interestcost cost Service year the of beginning the at obligation Benefit obligation benefit in Change millions in NOK nulajsmnsi esosi . . 3.0 3.5 7.5 3.0 3.5 3.0 7.5 3.4 3.4 3.0 6.1 3.4 3.4 3.0 % in pensions in adjustments Annual % in amount base security social the in increaseExpected % in increase compensation Rateof % in assets plan on returnExpected % ratein Discount December 31 ended years for costs benefit periodic net determine to used Assumptions % in pensions to adjustments Annual % in amount base security social the in increaseExpected % in increase compensation Rateof % ratein Discount December 31 at obligations benefit determine to used Assumptions assets plan of Fairvalue obligationAccumulatedbenefit obligation Projectedbenefit millions in NOK assets plan of excess in obligation accumulatedbenefit an with plans pension for Information respectively.2003, and Dece 31 at million 3,731 NOK and million 4,250 NOK was plans pension benefit defined all for obligation accumulatedbenefit The 0420 2002 2003 2004 . . 6.5 6.5 5.7 ,2 1,447 1,522 ,1 2,872 3,367 4,281 3,714 4,187 5,224 042003 2004 042003 2004 042003 2004 46 (454) (426) (1,016) (317) (983) (162) (343) (166) 3 191 338 338 603 454 409 426 239 252 455 263 482 9 698 791 3)(2) (39) (137) (10) (21) (37) . 3.4 3.4 5.7 3.0 3.0 5.0 0(17) 20 463 56 444 74 4 (26) (4) mber 2004 mber

Telenor ASA Annual Report 2004 PAGE 97 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 98 Notes Telenor Group otiuinpa ot 4 252 737 62 14 698 57 (185) 789 2005. in funds pension the to million 415 NOK approximatelycontributeTelenor to expects 141 yield. historicallong-term on based are bonds government above sec equity on yield long–term expected the calculationsof The securities. equity and corporatebonds bonds, government between (3) allocatiolong-term expected the by weighted bonds, government above securities equity on yield long–term expected an 791 and bonds (204) corp quality high 114 to spread credit a for adjusted 2004, December 31 at yield bond government Norwegian 20-year estimated the on 760 calculatedare bas assets plan on returnExpected 5.4%. was 2004 December 31 of as assets plan on returnlong-term expected The investment. evaluatedper is securities fore for policy currencyhedging The securities. equity foreign and Norwegian in both invested are assets plan The assets. plan 127 (189) 35 of maximum a to restrictedare securities equity in Investments currencyhedged. mainly currencies areforeign in held Bonds 13 corp and institutions financial municipals, Norwegian government, Norwegian the by issued bonds in invested are assets plan The 932 Total Other securities Equity Bonds category Asset follows: as categorywere asset by 2003, and 2004 December 31 Telenor’sat allocations asset average weighted plan pension year the for (loss)profit to Total charged costs pension costs Contributionplan costs benefit periodic Net tax security Social losses and gains actuarial of Amortization costs service prior of Amortization assets plan on returnExpected Interestcost cost Service millions in NOK cost benefit periodic net Componentsof oa te prtn xess1,7 25613,188 2,069 560 12,506 3,418 14,873 2,583 474 327 3,448 2,196 3,838 482 281 3,632 1,876 1,026 296 3) 1,863 135 2) 1) Totalexpenses operating other Other contractsWorkforceloss and reductions 116 personnel external and Consultancyfees debt Bad Advertising commission sales and Marketing Concessionfees 116 telecommunication and distribution freight,Postage Traveltravelallowances and maintenance Operationand etc. equipment office vehicles, premises, Costof 135 millions in NOK 129 2004. in million 58 NOK was cost the and plan contribution defined a as currentlyfor accountedis plan The plan. mu a to plan pension their changed AB), Telenor’sTelenorUtfors of (including some AB primarily subsidiaries,2003, In Swedish payments benefit pension Expected millions in NOK 08 See note 11. note See assets. capitalized or customers external to sold are that services perform which personnel, external and consultants for fees Includes 9. note See 1) Other operatingexpenses Other 3) 2) 0520 0720 20092010–2014 2008 2007 2006 2005 ,5 ,2 1,394 1,327 1,350 ,1 ,8 916 1,187 1,416 0420 2002 2003 2004 0420 2002 2003 2004 6 5 218 543 252 455 263 482 6 2 564 329 425 268 505 582 9 8 982 337 287 209 898 248 58 90 84 95 0%100% 100% 042003 2004 6 25% 26% 0 72% 70% %3% 4% ign equity ign lti-employer % of the of % orations. on fixed on urities ed orate ns elzdlse o h er2739418 543 643 (62) 309 643 592 (85) 100 2001: December 31 from accruals the of forward roll displays tables following The 297 leases. property on loss contractsand delivery business ongoing the in use of longer no are that activities to relatedcontractual obligations to contracts mainly relateLoss 592 720 (67) 129(51) disputes. legal contractsand loss reduction, workforce for made were provisions 2002, and 2003 2004, In futurecreateprofitability. will costs development and research that expected net existing the of usages new and network the in securityproducts, new technologies, new to relate activities development and Resear 2002. in million 531 NOK and 2003 in million 461 NOK 2004, in million 423 NOK to amounted costs development and Research 1) Totaldebt bad off writtenpreviously amounts Recovered year the for losses Realized debt bad for provisions in changes Other debt bad for provisions in Change December 31 of as Provisions January 1 of as Provisions millions in NOK ie 23 9(6 62 34 53 37 - - - (39) 44 - 250 - 275 88 (36) (12) (39) 436 63 (40) - - 663 (94) (8) (1) 111 39 - - 39(247) - 1,099 - (1) (2) (57) - - (56) - 37 (27) (40) 19 306 (80) 7 (186) - - 22 6 (21) - (433) - 22 27 377 - 22 125 237 46 275 - 61 125 8 88 716 105 disputes Legal 70 35 - 4891,022 120 contracts loss and Total reductions workforce 27 8 Total contracts loss 112 38 activities Corporategroup and functions units business Other 12 PartnerBusiness EDB Broadcast - Fixed operations Mobile contracts Loss Totalreductions workforce activities Corporategroup and functions units business Other Partner Business EDB Broadcast Fixed operations Mobile millions in NOK Workforcereductions 10 09 11 Includes effects of disposal and acquisition of businesses and translationadjustments. and businesses of acquisition and disposal of effects Includes Workforce reductions, loss contracts and legal disputes legal Workforcecontractsand loss reductions, costs development and Research debt Bad 1) Provisions in additions 2002 Provisions in Provisions 2002 additions in Provisions 1) the balance 2002 recorded 2002 amounts the balance the amounts 2002 recorded 2002 balance the 11.01poi n osblneuiie noe31.12.2002 income utilized balance loss and profit 31.12.2001 he adtosi drcl n mut ae o sheet takento amounts in directly in additions sheet 1 1 1)(9 141 (59) (19) (1) 8 212 2---82 2002 0420 2002 2003 2004 11 6(119) 36 (111) 4 209337 248 , loss on loss , work. It is It work. ch

Telenor ASA Annual Report 2004 PAGE 99 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 100 Notes Telenor Group Provisions as of 31 December: 31 of as Provisions racs 4--(3 8 13 19 - 354 141 (8) (14) (33) (57) 19 181 (2) 110 (48) 46 (13) 62 (35) (243) 638 284 (3) 10 (52) - (32) 3 (2) - 37 (4) 16 6 (152) (95) (43) (175) (21) - (115) (105) 16 (13) - (92) (778) 202 (535) 9 6 (80) 3 7 1 138 Workforcereductions (40) 62 30 4 millions in NOK 34 436 14 53 - 56 18 39 37 64 - 439 91 237 275 - disputes Legal 44 250 88 1,099 8 contracts loss and Total reductions workforce 663 Total contracts 63 loss activities Corporategroup and functions units business Other 111 PartnerBusiness EDB Broadcast 82 Fixed contracts Loss Totalreductions workforce activities Corporategroup and functions units business Other PartnerBusiness EDB Broadcast Fixed operations Mobile Workforcereductions millions in NOK ie 6 3 25 291 13 9 544 104 - - 4 95 (15) - (5) 37 127 (275) (21) 844 (423) 100 2004. and 2003 December 31 of - as - (4) (119) 300 36 employees 800 than more and employees 1,600 approximatelyincluded 2002 December 31 of as reductions workforce for Provisions - (10) (3) 25. note See sheet. balance the in amounts prepaid the of reduction a as recorded was loss the of Parts (26) (10) cont the in costs unavoidable and benefits futureeconomic expected between difference the 12 as estimated was loss The potential. (5) 28 futureea the of 86 expectations reduced to due Sweden MVNO-contractin the (11) on million 562 NOK of loss Telenora 2004 estimated In (20) (76) (5) - (4) (37) services. 569 th of use actual the on based element variable a and prepaymentnonrefundable fixed a contains (716) agreement The Sweden. in network 25 (95) 616 UMT and TrafficGSM of purchassein the includes which agreement, Operator(MVNO) Network Virtual Mobile Telenora into entered (1) (293) - 1 - (35) - Total (61) - 19) (noteterm Long - 24 22) (noteterm Short 19 354 96 12 (30) millions in NOK - 141 5 61 21 13 28 924 (84) 42 308 1) 110 66 disputes Legal 19 181 638 46 contracts loss and Total reductions workforce 284 106 Total contracts 62 loss activities Corporategroup and functions 10 units business Other PartnerBusiness EDB Broadcast 37 Fixed contracts Loss Totalreductions workforce activities Corporategroup and functions units business Other PartnerBusiness EDB Broadcast Fixed operations Mobile Does not include legal disputes realting to tax issues, see note 13. note see issues, tax realtingto disputes legal include not Does 1) 1) Provisions in additions 2004 Provisions in Provisions 2004 additions in Provisions Provisions in additions 2003 Provisions in Provisions 2003 additions in Provisions the balance 2004 recorded 2004 amounts the balance the amounts 2004 recorded 2004 balance the the balance 2003 recorded 2003 amounts the balance the amounts 2003 recorded 2003 balance the 11.03poi n osblneuiie noe31.12.2004 income utilized balance loss and profit 31.12.2003 31.12.2003 income utilized balance loss and profit 31.12.2002 he adtosi drcl n mut ae o sheet takento amounts in directly in additions sheet he adtosi drcl n mut ae o sheet takento amounts in directly in additions sheet 4 5-(9 7)30 (77) (69) - 35 141 016-()()148 (2) (6) - 126 30 2004 2003 042003 2004 9 668 236 992 230 6 432 762 ract. rnings S e e iaca tm ,56(,6)(2,366) (1,365) (311) (31) 59 526 1, (96) (1,833) (789) 567 (1) 91 (91) (817) 95 (45) (2,023) 73 586 (87) (17) 69 102 2,630 (1,534) (66) 651 2, 496 102 2002. 38 December 31 of as FundPension the in equity the of value book the to down written was FundPension capitalcontributio the of value the 2002, In made. were valuesfair the of estimates individual shares, Fornon-listed prices. quoted the to down written were shares Listedvalues. market in fall a by triggeredtemporary. than were other write-downs The diminutio for assets, financial other and shares on made were write-downs 2002, Duringvalues. market increased to due reversed Telenorto capitalF PensionB.V.contribution the Satellites on Skies and New company listed the in shares the on 2002 in made write-downs Telenor’sthe of 2003, sale In Cosmoteon SA. in gainshareholding remainingthe primarily were 2004 in disposal on values. market increased to Venture,due reversedin companies were primarily years, previous in made write-downs some 2004, In items financial Net assets financial of write-downs) and (losses gains Net assets financial of write-downs Write-downsof reversal and assets financial of disposal on Losses assets financial of disposal on Gains (loss) currency foreign Net Totalexpenses financial interestCapitalized expenses financial Other Interestexpenses Totalincome financial income financial Other Interestincome millions in NOK oa eerdtxs112164(4,727) (480) 4,247 1,604 2,376 772 1,112 2,244 1,132 (5,136) 7,426 1) Total(income) expense tax income 8,846 Totaldeferredtaxes Norway Outside Norway Deferredtaxes Totaltaxes current Norway Outside Norway taxes Current interests minority Totaland taxes before (loss)profit Norway Outside Norway interests minority and taxes before (loss)Profit millions in NOK 12 13 In 2004 new tax regulations were introduced in Norway related to gains and losses on realization of shareholdings, as explained as shareholdings, of realization on losses and gains relatedto Norway in introduced wereregulations tax new 2004 In N in tax to liable extent large however,are,a losses to and gains located.The were companies disposed the which in countries the relatedareto companies of disposal from losses Norway.and outside Gains subsidiaries and associatedcompanies Includes Taxes expenses and income Financial 1) 155 203 (1,901) (2,033) (1,585) ,2 1 (4,005) 1,478 916 761 1,223 1,128 ,7 ,3 (1,150) 3,634 8,172 0420 2002 2003 2004 0420 2002 2003 2004 11 8 (722) 688 (111) 1 5 164 55 476 117 484 394 7 ,9 (3,986) 3,792 674 12,769 11 4 n to Telenorto n und, were und, market , which were which , orway. n in values in n Gains below.

Telenor ASA Annual Report 2004 PAGE 101 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 102 Notes Telenor Group fetv a aei 543. N/A 2,409 (480) 32.0 - 2,376 25.4 - 73 106 2,244 808 - 52 - 207 (3,952) 188 177 rules. transitional the - and rules new the (15) of interpretation the on disagreements be may thereintroduced are rules new when (797) 39 generallythe is However, 190 as 2004. March 26 and January 1 between period the in shares (152) of disposal on - recognised gains taxable 16 ot against offset be to 2004 December 31 and March 26 between period the in recognised shares, of disposal external from losses 145 a rules transitional these of One enacted. were Certainrules transitional2004. March 26 850 of as effect camecapitalinto losses deducib capitalrules/non gainsthe (192) while 2004, January 1 of as becameeffective received dividends of respect in rules new The ta be longer no will shares of disposal other or sale the from deriving loss However,any exempt. tax be will subsidiaries from 3 (874) dividends and shares of sale the from deriving losses capitaland gains legislation, new this to According Method”. “Exemption 50 the of introduction the was corporations for change major The rules. tax new enacted Parliament Norwegian the 2004, December In - 705 181 148 2) % Effectiveratein tax (34) (income) expense tax Income 27 Other (375) Greece in Courtcase 257 813 TaxSonofon relatedto claim year current allowance valuation or realized not – assets tax Previouslyrecognized year current recognized not assets tax Other associatedcompanies and subsidiaries in earnings retained on taxes Deferred realized not assets tax recognizedpreviously – Norway in rules tax in Changes shares of sale on gain Non-taxable assets tax deferred recognized Previouslynot deductible tax not are that goodwill of write-downs and Amortizations expenses Non-deductible income Non-taxable assets tax deferred recognized Previouslynot – Norway outside subsidiaries in income Net Norway outside subsidiaries in loss Net Associatedcompanies 28% fromTax different Norway ratesoutside rate(28%) tax corporate income to according taxes income Expected millions in NOK Effectiveratetax the appropriate corporate body prior to 26 March 2004. March 26 to prior corporateappropriatebody the de formally been not had which ASA, PartnerBusiness EDB of subsidiaries dormant of futureliquidation the to related primarily The 2004. in assets tax deferred recognizedTelenorpreviously Method”, some reversed “Exemption the of introduction the to Due liquidated.therefore was and company dormant becamea Holding Mobil Dansk Thus, AS. Holding Telenor to sharesMobile A/S’ Holding Sonofon its sold AS Holding Mobil Dansk AS, Holding Teleby February2004, in A/S Holding Sonofon in sharesoutstanding 46.5% remaining the of acquisition successful Followingthe A Holding Telenor’sSonofon of in owner previousownership the 53.5% was AS, Holding Mobil Dansk Group. the within companies of Telenor’sof part as carriedout was ong liquidation This AS. Holding Mobil Dansk of liquidation the to from following loss tax This 2004. March 26 to subsequent shares of liquidation or sale from deriving losses tax by offset been has gain this Method”, t rules transition the to AccordingCosmote SA. in shares of sale the capitalon gain taxable Telenor a 2004, realized In AS. I TelenorNye Commuand AS TelenorHolding of Digifone liquidation simultaneous the on losses taxTelenor realized when ASA 2002, particular was This recognition. in resulted have shares of basis taxable the to adjustments addition, In allowances. valuation a tax deferred as recorded been previously not have which of some shareholdings, the on losses tax of realization corresponding shar of liquidation or sale the to due primarily recongnized are assets tax deferred These recognized. been not have assets tax which on companies associated and subsidiaries on losses to related primarily are assets tax deferred recognized Previouslynot deductible. tax generallynot are companies of purchase on goodwill of write-downs and Amortizations assets. tax deferred the utilize will we that pr is cannotit demonstrate that we as allowances, valuation to casessubject most in are Norway outside subsidiaries in Losses Norway.in effect tax a have longer no will shares of liquidation or sale on losses or gains 2004, in Norway in rules t of consequence a As years. previous in taxable Telenor’sbeen of have liquidation shares or ownership sale on losses or Gains sep a in included is any Taxif undistributed earnings, deductible. on tax or taxable not are companies associated from Results rate.tax higher a had (Bangladesh)GrameenPhone Ltd. and 28% than ratestaxlower (Ukraine)had JSC GSM Kyivstar and (Hungary) Rt. GSM Pannon that were significanteffects most rate. taxThe 28% Norwegian the than lower and ratestaxtha by influenced is However,this small. is Norway outside subsidiaries for ratestaxin different of effect net The table preceding the in items selected line Commentsto 1) There was a loss before taxes and minority interests in 2002, and a tax income was recorded. was income tax a and 2002, interestsin minority and taxes before loss a was There 28%. rateis tax corporate income nominal Norwegian 1) ,7 ,7 (1,438) 2,079 2,477 0420 2002 2003 2004 9)(9 (21) - (99) (25) (94) (30) 1(9 82 (69) 11 20 414 (200) - t are both higher both are t oing reduction oing o the “Exemption the o x deductible. deductible. x ly the casein the ly llows net llows arate line item. arate line includes a includes received he new tax new he es and the and es cided by cided obable obable ility of ility deferred ssets with ssets nor Mobile nor case, se were se AS herwise /S. nications 2) 2) the final outcome will be. As of 31 December 2004, Telenor has not recorded the potential tax benefit related to this case.this to related benefit tax potential the recordedTelenor not 2004, has December 31 of As be. will outcome final the Telenor.including payers, taxis of It number a by challenged been has statement This ruling. the of time the from effect have s ruling EEA-court the that opinion the of are they that stated has Finance of Ministry Norwegian case.However,adjustmentthe simi Telenoris casethat believes a case”) in “Manninin (the payer tax Finnish a of favor in ruled EEA-court the 2004 November (Overligningsnemnda). board” tax “Superior the to decision the Telenor butappealed adjustment, has RISK such allowed not have authori tax Norwegian The Agreement. EEA the Telenoron by based claimed was million 184 NOK with shares the of values base tax adju RISK a 2003, in CosmoteSA in shares the of 9% of sale TelenorAS’son with gainB-Invest the connection calculationof In income. to taken was billion 0.2 NOK and proceeding, of Telenor. unfavorablesettlement outcometo Telenora final 2003 to a agreedHowever,casein of in pay to required be could amo the of estimate best the was this as Greece, in ruling court a with connection in billion 0.4 TelenorNOK 2002, expensed In completed. been returnstax 2003 AS’ TelenorHolding of Eiendom assessment the has “Sonofon-case”nor the in decision neith is there Telenor’s2005, Marchof 31 assessment of final Asreturns. taxthe 2003 in loss tax the for reduction the allow a tax Telenor, favorableto is Norwegian loss the tax or Sonofon regardingthe decision court final the either if recognized be t However,this 2003. for results financial the in TelenorAS in Solutions sharesBusiness of sale the from derived benefit tax th reflect Telenornot above, discusseddid as 2001, in Sonofon in shares of sale the with connection in loss tax regardingthe Telenor’sof challenge the to t Duereturns. tax 2003 the on loss Telenorthis and claimed loss tax fide bona a is this opinion Telenorthe overallGrourestructuringof the of part as carriedout was sale This AS. TelenorHolding to Solutions BusinessAS Telenorin sharesBus of sale the with connection in billion 2.8 NOK of loss tax a realized AS TelenorHolding 2003, Eiendom In system. RISK the of abolishment to due adjustment th decrease not Telenor of will favor in ruling court final a of result a as reassessment subsequent Any share. per 3.44 NOK by Jan 1 of Telenoras for ASA Norway) to liable tax investors affects only that basis, taxable the of (adjustment adjustment RISK Telenor’sof change The increa 24. Taxhas returnnotetax see Authorities, Norwegian the Telenoragainst proceedings initiated Janu In Group. the overallrestructuringof the of integralpart an as carriedout was disposal The AS. TelenorHolding Eiendom co sister a AS, Holding Mobil Dansk to A/S Holding Sonofon in shares of disposal the to due loss tax this recognized originally 2002. in recorded was which billion, 2.4 NOK by increased was 2001 for expence currenttax the change, this of result a As A/S. S in shares the of disposal the from loss tax the disallaving 2001by fiscalyear the for returntax AS) TelenorHolding Eiendom Telenorchanged Communication Norway in AS authorities assessment tax the 2001, for assessment tax ordinary the during 2002, In 2006. January 1 to subsequent area within resident companies to distributed be will that dividends for Hungary in taxes withholding of abolishment the and Method” “Exe the of introduction the to due GSM, Pannonfrom futuredistributions to related were changes major The Method”. “Exemption introdu the to due undistributedearnings, on taxes deferred the of million 639 TelenorNOK reversed2004, has In distribution. probabi the regardto without undistributed earnings on taxes deferredrecordedtherefore and dividends, of distribution the or temporaryof reversal the control to able Telenornot companies, Forsource.associatedis at taxes withholding as or Norway in tax to subject be will dividends extent calculatedthe is to taxes Deferred dividends. receive to expected it Norway,which for ou companies associated and subsidiaries certain in undistributedearnings Telenoron taxes2004, deferredrecorded and 2003 In 09--2 453 43 110 24 5,525 5,057 5,817 16 4,959 19 30 866 26 - 619 - - - - 360 360 29 27 91 197 266 322 106 - - - - 3,714 3,714 - 892 10,874 - - - - 155 360 5,234 519 5,389 temporarydifferences. taxable other has company relevant the where except allowances, reduc been primarily have losses tax remaining the on assets taxfuture. Deferred the in utilized be will losses tax these that pr is becauseit assets tax as 5,3893,714 recognized are (Sonofon) Denmark Norway,(DiGi.Com)and in Malaysia losses tax of effect tax The recognized been has asset Taxdeferredtax which on losses Valuationallowance Totalforward carried losses tax time-limited Not later and 2010 2009 2008 2007 2006 2005 millions in NOK follows: as expire countries selected Taxin carriedforward losses Taxforward carried losses owySee te odcMlyi te Total Other Malaysia Nordic Other Sweden Norway ----8383----101101 ax return ax ax effect will will effect ax er a final court final a er ed by valuation by ed ation, either ation, uthorities uthorities e currente p. In Telenor’sIn p. onofon Holding onofon mpany of mpany iness Solutions iness ary 2003, ary unclear what unclear e RISK e ction of the of ction uary 2002 uary lity of lity unt Telenorunt difference Telenor stment of the of stment lar to its RISK its to lar sed the sed this judicial this the EEA the obable obable hould only hould tside On 23 On mption ties (now

Telenor ASA Annual Report 2004 PAGE 103 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 104 Notes Telenor Group e eerdtxast 4 ,3 - - - - - (6,900) (1,278) - (2,926) (6) 3,034 - (43) (5,089) 3,850 - 12,860 (30) - (816) (542) - (156) 3,426 (1,653) (831) (5,579) - 5,122 1,237 417 - (1,408) (484) (3,754) - currencyeffects. primarily w rest The amounts. largest the constituted goodwill) (excludingvalues excess on taxes deferred which ProMonte,of and Sonofon (2,770) was This million. 792 NOK for accounted companies of sale and acquisition - million, 980 NOK of difference the Of statement. loss (16) - p the in million 1,112 NOK - to compared million 2,092 NOK was 2004 in sheet balance the in assets tax deferred net 6,348 in change The (12) (1,367) - 942 9,017 2004. including years, previous for accumulatedlosses to due remains, 2,999 compan these to related allowance valuation full However,a income. net showed companies these 2004, In 2004. December 31 of as (695) reco are 2,658 allowance valuation corresponding a and AS CanalDigital of subsidiaries foreign the on assets tax Deferred companies. - (55) - ass on allowance valuation and assets tax liabilities, tax deferred in reduction the explains This purposes. tax 3,047 for difference (232) (2,057) temp longer no is companies associated of valuetax and value book between Norway,difference in the regulations tax new to Due (216) 485 19) (note liabilities tax deferred which Of assets tax deferred which Of 330 (3,699) (373) - assets deferredtax Net Deferredtaxes (2,631) Taxforward carried losses 2,971 - Totalliabilities and assets current 2,486 Totalliabilities and long-termassets items long-term Other associatedcompanies and subsidiaries foreign in earnings Undistributed Associatedcompanies assets Tangibleintangible and millions in NOK December 31 of as Deferredtaxes rt-on 8 0 2 ,9 6262102 497 2,107 25 1,950 3,051 120 3,634 2,632 702 1,610 16 3,133 1,925 2,194 8,048 2,931 424 8,090 1,002 8,035 104 686 282 939 7,624 - 7,986 (554) 7,753 Total Write-downs depreciation and Amortization 347 millions in NOK (4,605) (752) write-downs: and depreciation amortization, of Specification 151 share. per b negative calculatedbe is to 2004 Telenorfor for shareASA per basis) taxable the of (regulation regulation RISK Preliminary above. explained Norway,in a regulations tax new to due companies associated to related was 2004 during allowances valuation in change main The year the of end the at Balance adjustments Currency divestitures and Acquisitions year this assets tax recognized not Other Norway in rules tax in changes – Associatedcompanies Norway outside subsidiaries and associatedcompanies from losses Net allowances valuation of balance opening in Changes year the of beginning the at Balance millions in NOK allowances valuation in Changes 14 Amortization, depreciation and write-downs and depreciationAmortization, 0420 0220 0320 0420 2002 2003 2004 2002 2003 2004 2002 2003 2004 Tangible assets Goodwill Other intangible assets intangible Other Goodwill Tangibleassets sesLaiiisalwneAst iblte allowance Liabilities Assets allowance Liabilities Assets 0420 0420 032003 2003 2003 2004 2004 2004 auto Valuation Valuation ,5 6,900 1,653 7,088 6,900 042003 2004 2)(36) 3 (25) (55) 952 39 ociated y NOK 1.39 NOK y primarily rded as rofit and rofit orary s ies tes523 5-1 4 2)296 83 - (22) 497 - - 160 (4) 2,632 356 424 340 potential. sales 47 the of review a on 15 CA-softw to related 2002 in Others in facility.write-downs payment The a as interactiveTV of use the for expectations reduced wel broadcastingstandards,as new of commercialization delayed to related primarily was 2002 Broadcastin in assets intangible 8 25 5 ot of write-downs The use. in longer no was that Norway Mobile in portfolio IT-systems the of parts Telenor 2002, down wroteIn 3 - 118 potential. futureearnings the of expectations 16 r the to due Sweden in business mobile the in million - 61 NOK was 2004 in assets intangible other of - write-downs the in Included 2,138 - 25 cashflows. expecteddiscounted on based 104 33 A PartnerBusiness EDB in write-downs The Slovakia. and Republic Czech the in operationsInternet the to related partially were 16 19 i write-downs The premium.control a reflect to adjusted 2002, December 31 at price share quoted publicly the on based was down 35 15 prices share quoted publicly low continued of result a as down written DiGi.Comoperationswas mobile the for goodwill 2002, In 120 2 12 - experts. valuations external of assistance with methods, valuationvarious on based was valuefair the of assessment 2 7 T 2004. year-end of company’sas the potential of growth expectations the of review a and growth expected Sonofon’sthan slower 2,194 du was Sonofon in goodwill Telenor’sof reductions. price write-down and the of competition assessment intensecharacterized by - was market Danish the - 2004 In million. 2,190 NOK by A/S Holding Sonofon in goodwill Telenor 2004 down wroteDecember 31 of As 2 282 5 - Sweden. and Denmark in market TV-networks antenna small the in l the to due TV-distribution for equipment on primarily made were write-downs 2002 Broadcast,in In contract period. the of end 33 - valu terminal including 13 cashflows expected on evaluatedbased contractsoperatingwas to related Equipment use. in were longer 13 that equipment and platforms operating down wrote and platforms operating of number the reduceTelenor environment,to decided internal its with Norway Telenor’sintegration– of the Fixed with in Norway.business – connection service operatingFixed In 78 mainly were 2002 in Fixed in assets tangible of write-downs insignificant.The - were 2003 in assets tangible of write-downs The cashflows. expected on based were and situation, market the 2,190 million 215 NOK by A/S Holding Sonofon in transmissionnetwork the on primarily were 2004 in assets tangible of write-downs The 251 Total Others Partner Business EDB Broadcast Fixed Totaloperations mobile millions in NOK write-downs of Specification ad726 1)()()72711 617 772 1,120 35,722 (7) 6,468 (1,300) 37,676 6,770 (127) 1,018 (60,686) (2) 791 1,719 (8,035) (4,407) 1,025 - 97 (8,735) 771 (10) 1,039 (402) (648) (2,356) (6,151) (219) (760) - 139 9 (11) 11,535 2,439 (1,267) (144) 38 (465) 97,919 (1,140) 1,761 - 630 68 (95) (874) (157) (11,602) 783 1,790 (1,033) 4 712 (47) (42) 1,147 10,168 10,575 (702) 8,057 9,885 50 194 9,108 13 (378) 2) 12,745 (24,718) 70 1,623 390 (10,628) (2,129) 1) 1,656 Total (2,762) Workprogress in (6,194) 382 14,053 total Sub (333) Satellites (152) systems Support Buildings (1,150) 1,183 Land equipment TV Cable 6,583 installations Radio 38,989 equipment & Switches 18,273 equipment Subscriber switches and network telephone Mobile networks trunk & regional Local, millions in NOK Tangibleassets 15 Net additions. Net satellites.and network fixed-line netwo telephone Mobile GSM switches, mainly 2004, December 31 of as leases capital for million 1,943 NOK of value book Includes 1) Tangible and intangible assets Tangibleintangible and 2) agbe nagbeTnil nagbeTnil intangible Tangible intangible Tangible intangible Tangible sesGowl sesast odilast sesGowl assets Goodwill assets assets Goodwill assets assets Goodwill assets 10.420 0420 043.20 11.431.12.03 31.12.04 31.12.04 2004 2004 2004 2004 01.01.04 6101,1 236 875 804 6,8)3,5 33,913 35,250 (60,686) (8,034) (8,735) (2,356) 10,917 96,110 ,0 1 1 ,2 1,809 2,426 - (1) - - 618 1,809 0420 2002 2003 2004 diin iiainDsoasdwsdwsvlevalue value downs downs Disposals sification Additions Accumulatedcost te te Other Other Other n els n rt-adwie okBook Book write- and write- and reclas- and Translation adjustm. Depreciation Acc. depr.Acc. IT operating IT related to related . The write- The . are based are her SA were SA educed ow demand ow l as l e to e e at the at e due to he n Fixed n no rk,

Telenor ASA Annual Report 2004 PAGE 105 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 106 Notes Telenor Group rdmrs5743(0 7)(7)83477 853 862 (177) 3,137 1,732 14,760 (79) (1,207) 5,536 224 9 22,964 2,244 (296) - 10,001 (17,681) 12,963 (1,993) 2,360 (6,184) (4) (8,444) (9,237) (1,027) 3,328 (240) (30) (3,051) (3,133) (3) (220) (5,067) (129) (111) (271) 483 2004. December 31 of as million 1,286 NOK Accumulatedwas capitalized(cost) interest (1,647) (78) 2,801 138 (409) 15,127 Fixed and Norway Mobile mainly affected Comparablechanges restated.2002. These arefigures for write-downs in million 101 NOK (122) 577 and amortization in million 648 NOK 2002, December 31 of as value book in million 1,737 NOK 1,767 reclassificationto amountedThe 26,031 1,603 made. was assets intangible to assets tangible from systems supportadministrative in software reclassification 7,205 of a 2003, In 7,922 466 Rt.). GSM (PannonHungary Pakistanand in licences mobile primarily were licenses of additions The 1). note (see A/S Holding 2,715 15,515 10,516 primar businesses, of acquisition to due was billion 10.9 NOK 2004, in assets intangible other and goodwill of additions the Of 2,699 1) Totalassets intangible 5,352 Totalassets intangible other Workprogress in assets intangible other and Software Trademarks Licenses base Customer assets intangible Other Goodwill millions in NOK assets Intangible information. further for 32 note See periods. lease expected the over deferred are Th purposes. tax for equipment canthe depreciate parties the since million 530 NOK of Telenorbenefits receivedequipment. has owner of benefits and Telenorrights the leases, maintains the of course the contractualDuring terms.their with accordance in life the over payments the release then institutions financial The securities.related Government US and institutions financial ratehighly with agreements these under us by due amounts all Telenordefeased has million. 1,107 NOK of 2004 December 31 of as boo a with network fixed-line and network Mobile GSM switches, telephony for Leases QTE BorderCross into entered has Group The book net on effects no had This periods. previous in retired were that equipment, and switches and networks trunk and regional primarily billion, 6.6 NOK approximately by reduced was write-downs and accumulated depreciation and accumulatedcost 2004, In mriain(7)15(9)(5)(6 (939) 7,205 (2,194) 12,963 (16) (105) (2) 48 (158) (318) 9,224 564 - 1,824 (192) 192 (6) (23) 1,849 105 - 1,422 (4) (204) 25 (678) 2,066 (2) (2) 9,446 6,744 (343) (2,190) 11 2004 December 31 of as Balance 5,887 units business of disposal relatedto off written Goodwill losses) Write-downs (impairment (317) Amortization reclassification Translationand adjustments acquired Goodwill 2004 January 1 of as Balance millions in NOK 2004: December 31 ended year the for goodwill of value carrying the in Changes Net additions Net 1) oa oie EDBBusiness Total mobile 10.420 0420 043.20 11.431.12.03 31.12.04 31.12.04 2004 2004 2004 2004 01.01.04 prtosFxdBodatPrnrOhr Total Others Partner Broadcast Fixed operations 0 3 2 3 105 439 - (2) - - 336 105 diin iiainDsoasdwsdwsvlevalue value downs downs Disposals sification Additions ---- Accumulatedcost n els n rt-adwie okBook Book write- and write- and reclas- and Translation adjustm. Depreciation Acc. depr.Acc. 1)(15) (15) of the leases leases the of ily Sonofon ily ship of the of ship values. e amounts e k value k . d local, ** aa iia ae VA 5 0yas2000 years 10 2002 2004 156 2004 years 10–15 * years 20 1,568 years 20 Totalassets financial ventures*** joint and Associatedcompanies Total 100 assets financial other investments** other and Shares 765 3,738 receivables* Long-term millions in NOK 2) 1) Total Others AS TV Kabel Digital Canal FellesdataAS S.A. Marlink AB Unigrid AB Sverige Digital Canal DiGi.Combhd AB Utfors JSC GSM Kyivstar Group Digital Canal Rt. GSM Pannon GroupPartner Business EDB D.O.O ProMonteGSM A/S Holding Sonofon millions in NOK operations and subsidiaries following the relatedto Goodwill omhligAbnaSA 8003023 298 16 314 3.0 - 14.9 14.9 48,000 4,036,143 - 79,539,869 1 1) investments Totalother and shares Other Telenorto Fund contribution PensionCapital AS Energivekst 5 Ltd. Holdings Group Inmarsat S.A. CosmoholdingAlbania EutelsatS.A. AS Tiscali Ltd. Holdings Inmarsat millions in NOK 2004: December 31 of as investments other and shares of Specification 1) Totallong-termreceivables debt bad for Provision receivableslong-term Other employees to Loans ventures joint and associatedcompanies from Receivables Non-interest-bearing debt bad for Provision receivableslong-term Other employees to Loans ventures joint and associatedcompanies from Receivables Interest-bearing millions in NOK 16 ) ) consequently Telenor did not consolidate Tiscali AS as of 31 December 2004. On 15 March 2005, the Norwegian CompetitionAuthori Norwegian the 2005, March 15 On 2004. December 31 of as AS TelenorconsolidateTiscali consequently not did and approval,governmental to subject was purchase The shares.long-term as classified is and 2004 in purchased was AS Tiscali respectively. million 823 NOK and million 551 NOK were A/S Holding Sonofon and ASABravida interest-bearingon receivables2003 December 31 of as and million, 272 NOK wereASA Brainterest-bearingfromreceivables 2004, December 31 of As A/S. Holding Sonofon and ASABravida to loans primarily werethey i while ASA,Bravida to loans primarily wereventures joint and associatedcompanies interest-bearingfromreceivables 2004, In receivablesLong-term AB. Holding Nät and AB Line On Sweden allocation. Preliminary Shares and other investments other and Shares 2) 1) Financial assets Financial ) 2) ) ) 1) we yTlnrondi value % in owned byTelenor owned o fsae hr Book Share shares of No. okvle mriainYearof Amortization value Book ,2,3 . 36 0.4 4,127,130 11.4pro acquisition period 31.12.04 12,963 9394411 4.4 79,349 ,8 0. 43 100.0 2,080 ,0 02 er 2002 years 10–20 4,900 27 8yas2002 years 18 (207) 0 0yas2000 2001 years 20 years 10 2002 809 121 years 12–20 230 2 0yas2001 years 10 124 7 52 er 2001 years 15–20 474 31 er 2001 years 3–20 years 10 92 93 --39 1) 7–10 years 2004 /2001 2004 years 7–10 ,9 3,848 1,292 ,2 14,014 7,720 ,2 10,166 6,428 042003 2004 042003 2004 2 1,456 326 1,629 512 1 1,629 126 512 150 8 2,219 780 827 24 18 10 3 (5) (3) 6- -- n 2003 n vida ty 780

Telenor ASA Annual Report 2004 PAGE 107 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 108 Notes Telenor Group NOK in millions in NOK *** rt-on fntecs aus-(6 (1,965) (1,760) (862) 9,489 10,0099,439 (26) 14,186 592 (579) 6,302 10,166 9,439 - (532) (226) (1,420) 6,428 50 company.the 10,009 in values the of evalu an on based zero to companies) associated from income net in (included million 316 NOK by OniWaydown written2002 was in Fu companies. similar to comparison and future cashflows of estimates on based was A/S Holding Sonofon of valuefair The 2002. (3,167) Decembe 31 of as price market quoted the to made were write-downs Forthe DTACtelecommunicationcompanies. UCOM for values and the in significantfall a by triggered were write-downs The million. 52 NOK of UCOM and million 829 DTACNOK of million, 1,000 of 157 A/S, Holding Sonofon of downs write to related mainly were companies associated on values excess net of write-downs 2002, In capitalinvested. (4,043) be and above liability correspondingTelenor wherea values has negative carried at areventures joint and companies Associated 126 1) ventures Totaljoint and companies associated 19) (noteprovisions) as (classified valuenegative a with carried investments which Of December 31 of as Balance translationsadjustments and Equity values excess Write-downsnet of values excess net of Amortization disposal on (losses) Gains income Net disposal and Transferredinvestments other to/from Investments January 1 of as Balance millions in NOK 2) tes-(8 34 2 1 2 4 1,292 (2) - 17 6,302 - (532) - 2 7 ------(226) 7 49 9 - 18 - 21 32 944 (111) 5 - 13 (3,893) - - - (22) - (6) - - 58 - (3) 10,009 - (58) 10 - (1) - - - 5 - - - 402 - 7 - 3 54 (34) 1 - - 8 8 (4) 18 (26) - 4 - (19) 27 - - (11) (2) 58 44.12 25 7 - - - - - (82) 4 14 - - 9 - 50.00 10 6 47.05 4 4 8 2) - 50.00 1) 1 44.95 49.00 23.09 23.85 Total (23) Others - 50.00 15 CommunicationsAS PartnerMaritime 399 PolarsatInc. 1 17 CompanyAS Media Mobile The 50 3 TeleVentureAS Management 44.80 AS TelenorKantine & Renhold - AS Doorstep 8 ASA Bravida 45.00 47.50 AS Norge HMS income 2004 CommunicationsAS World Mobile Wide 50.00 BitComAB ASAElectronics Otrum 31.12.03 AS Holding Media APR % in TelecomGolden Inc AB Glocalnet TeleAS Lufthavn Data Oslo & AS Oslo Nordialog CorporationMatrix Wireless TeleringenAS TelecomEuropean (ProMonteGSM) S.A GmbH ONE UCOM DTAC VimpelCom A/S Holding Sonofon Company ventures joint and companies associated in investments of Specifications Other includes shares in companies where Telenor owns more than 10%, which are not specified due to insignificant book values. book insignificant to due specified not are which 10%, Telenorthan where more companies owns in shares includes Other 2005. March 15 from effective subsidiary a consolidatedas wi AS Tiscali business. TelenorTiscali’srequired service sell Internetbut to dial-up AS, Tiscali of acquisitionaccepted the Share of net income after taxes are partially based on estimates and preliminary results for some of the companies. Actual figu Actual companies. the of some resultsfor preliminary estimatesand on based partially are taxes after income net of Share taxes. after income net companies' Telenor'sthe and of disposal share on losses and gains pretax Includes ASA.A-Pressen of sale the on loss the of partially StavTeleSotwas Cosmoteand which of JSC, sale the on gain the primarily were 2003 in disposal on losses and Gains ) Associated companies and joint ventures joint and companies Associated 5) 8) 5) 5) 8) 5) 6) 4) 8) 4) 8) 8) 3) 8) 1) 8) hr we au drn fnt e xesajs-vlevalues value adjust- excess net net of during value owned Share 7) 30 1- - 4- 94 35 - 640 - 96 1,242 24 - (1) - (168) 213 (1) (6) 211 3 (44) 606 222 - 118 573 98 1 (14) - (19) (49) 2,967 (7) 6 - - 91 (26) (232) (48) - (141) 1,350 (35) 28 102 33.00 84 20.32 - 32 854 37.00 - - - 761 23.30 239 586 17.45 2,380 24.85 40.29 29.90 ,7 377 2)(5 - - - 24 (233) (55) 209 (28) - (3,787) 3,870 - ok ipsl hr dwso lto Bo excess Book lation of downs Share disposals Book net ainEquity zation Invest- et/adwie adtas Net trans- and write- and ments/ 1) 2) 1) 0420 2002 2003 2004 Amorti- 1 2 341 883 329 1,914 912 150 ausmns3.20 31.12.04 31.12.04 ments values 215736 1,507 32 ---- ll be ll market yond the yond rthermore, NOK res may res fset by fset ation ation r 9) eevbe rmascae opne n on etrs22- 232 Non-interest-bearing receivables Other employees from Receivables ventures joint and associatedcompanies from Receivables Interest-bearing receivables current Other Totalreceivables accounts debt bad for Provision receivablesAccounts receivables Accounts millions in NOK 9) 8) 7) 6) 5) 4) 3) ita adnA ,0,0 8011 18.0 2,900,000 3) 2,780 2) 1) assets Totalcurrent as classified shares etc. shares Other sharesListed 2,801 AS Garden Virtual AB Metrima Q-FreeASA IntelsatLtd. millions in NOK 322 * Totalinvestments term short Shares* Bonds/Commercialpaper 132 millions in NOK limited. are tradeaccount to respect with risk credit of concentrations base, customerGroup's the of diversity and volume large the to Due Totalreceivables current revenues Totalaccrued and expenses prepaid revenuesAccrued expenses Prepaid revenuesaccrued and expenses Prepaid Totalreceivables current other debt bad for Provision receivablesshort-term Other employees from Receivables ventures joint and associatedcompanies from Receivables 17 18 ) ONE GmbH is accounted for as an associated company because of Telenor’sshareholder’sof a because to associatedagreement.company due an influence as accountedsignificant for is GmbH ONE 2004. DTACDecember in 31 41.7% per interestof ownership an had UCOM table. the VimpelComin for figures the in included is merger the VimpelCom-RegionVimpelCom-Region.beforeTelenor’s of (loss) income net of share interestin ownership Telenor direct merger a the had to VimpelCom.Prior in stock common total the of 29.9% and stock voting total the Telenorof Aftermerger 26.6% 2004. the had November 26 on placeVimpelCom-Region took VimpelComand of merger The February2004. 12 of as shares remaining the of acquisition the to subsequent subsidiary wholly-owned A figures. preliminary the deviatefrom Includes companies where Telenor owns more than 10%, which are not specified due to insignificant book values. book insignificant to due specified not are which 10%, Telenorthan where more companies owns Includes million. 73 NOK Q-Freefor ASAin Telenorshares 2005 the March sold 9 On million. 828 NOK for IntelsatLtd in Telenorshares 2005 the sold January 28 On 2004. December 31 of as assets current as classified shares of Specification companies. Telenor’sbetween difference the areTelenor’s values and associa excess cost acquisitionof acquisitionNet at equity of share million. 202 NOK ASA:Electronics Otrum m Telecom1,176 Golden NOK Inc.: million, 172 NOK AB: Glocalnet million, Corporation:49 Matrix NOK Wireless million, 1,165 NOK UC DTAC:million, 3,036 million, NOK 13,389 VimpelCom: NOK 2004: December 31 of as associatedcompanies listed of values Market D.O.O. ProMonteGSM in 100% interestof ownership Telecoman European has 2004. S.A. August 12 of as shares remaining the of purchase the to subsequent subsidiary wholly-owned A ) Current receivablesCurrent Short term investmentsterm Short 2) 1) 3) we yTlnrondi value % in owned byTelenor owned o fsae hr Book Share shares of No. ,0,2 . 47 442 7.6 4.1 3,809,826 6,855,530 ,9,7 5629 35.6 1,497,572 -11 - - --36 0159,232 10,165 ,0 5,677 6,104 ,6 775 1,260 ,1 6,241 6,819 ,5 1,520 2,056 042003 2004 042003 2004 75 (564) (715) 9 384 301 893 317 421 846 7 83 576 4 1,260 745 029 20 226 32 2 (23) (2) -- s receivables s ted illion, OM: 576

Telenor ASA Annual Report 2004 PAGE 109 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 110 Notes Telenor Group Long-term interest-bearing liabilities Telenor ASA liabilities interest-bearing Long-term eovn rdtfclt U U ,0 - 1,268 16,212 - 14,122 22,703 2,592 - - 18,481 20,602 6,000 USD 1,500 EUR 15,528 - - 1,000 USD 500 USD 236 230 Telenor interest-bearingliabilities Short-termASA TelenorTotal Group liabilities long-terminterest-bearing subsidiaries interest-bearingliabilities Long-term TelenorTotal ASA liabilities long-terminterest-bearing EUR facility creditRevolving interest-bearingliabilities term Derivativeslong relatedto bonds relatedto discount Capital Bonds Norwegian program EMTN program(USCP) Commercialpaper U.S. program(ECP) CommercialEuropaper millions in NOK Totalprovisions provisions Other associatedcompanies valuesNegative 11) (note loss and reduction workforce for Provisions 13) (note liabilities tax Deferred 7) (note pensions for Provisions millions in NOK million. 62 NOK to amountedQ-Free ASA which of 2004, December 31 million 97.5 NOK totaled investments short-term as classified Telenor’scompanies of valueslisted Market in interest ownership E 139 3,076 2,336 - 1,217 1,891 185 10,413 2,064 2,113 1,148 801 9,873 - 2,064 174 350 19,500 1,200 150 4.90% 37 - 5.50% 2.66% 5.71% 4.37% 4.38% TotalTelenor ASA NOK bonds Norwegian 25,762 USD SEK JPY EUR CHF 24,593 AUD EMTNprogram millions in NOK table. the in inclu not are borrowings these to relatedinstruments Telenor Hedging by issuedASA. instruments debt the shows below table The assets. and significantsubsidiaries of disposals limiting covenants a and pledge) (negative lenders existing the securedto status similar a grantingsecurewithoutfuture borrowingsto assets of th paper,restricting commercialprovisions containexcept agreement financing Telenorunsecured.areThe in borrowingsASA All paper.commercialoutstanding all for sourcerefinancing as serve time any at should USCP) and (ECP Telenor'sPolicy,to AccordingFinance committed 2008. this November in matures billion 1.5 facilitiy,EUR credit revolving The 3) 2) 1) TelenorTotal Group liabilities interest-bearing TotalTelenor interest-bearingliabilities short-termGroup subsidiaries interest-bearingliabilities Short-term Telenor interest-bearingliabilities termASA Derivativesshort relatedto 20 19 compared to previous years. previous to compared presentati in change a is This short-term. reportedas are months 12 next the within maturity with Interest-bearingliabilities below.Specified currency.another into instrument debt a of flows cash the convert to Foreignderivativesused currency Interest-bearingliabilities Provisions 2) 2) Average interest Amount in Amount in Amount in Amount in Amount in Amount Averageinterest 3) 1) rate 31.12.04 currency 31.12.04 NOK 31.12.04 NOK 31.12.03 NOK 31.12.04 NOK 31.12.04 currency rate31.12.04 1) ii 2004 Limit 61319,257 16,173 ,2 1,645 3,120 ,9 3,059 2,005 3,991 1,413 ,7 3,076 2,071 816 2,057 ,7 4,222 5,074 042003 2004 65 (776) (645) 0 98 157 338 104 126 603 1)(214) (14) 2)(31) (20) 3) credit facility credit lso contain lso as of as on e pledge pledge e ded 2003 3) yvtrBnsUD1.8 ,1 1,105 1,510 238 396 43 2,496 10.38% - 130 - 21 606 2,225 39 1,023 73 155 2,070 5,949 USD 119 6,297 - - - 2,013 460 18 - 711 31.12.03 NOK 3.40% 2,070 151 111 5,980 31.12.04 NOK 4,822 125 333 (93) - 503 rate31.12.04 - 6.41% 2.50% 4.98% - NOK 13 5.94% 5,980 Currency 585 461 Bonds 3.65% - 4.75% MYR NOK 4.87% NORAD from Borrowings USD USD 6.21% institutions financial from Borrowings institutions financial from Borrowings 3.75% institutions financial from Borrowings institutions financial from Borrowings Kyivstar 3.79% instrument Debt GrameenPhone GrameenPhone - GrameenPhone DiGi.Com DiGi.Com Company millions in NOK subsidiaries in liabilities interest-bearing Long-term TotalTelenor ASA NOK GBP EUR bonds Norwegian USD SEK NOK GBP EUR CZK EMTNprogram EUR/NOK swaps Basis millions in NOK table. the in figures the in reflected is this derivatives, of use the throughaltered been has borrowings underlying the of rateinterestcurrency-ex or the When rateinterest swaps. and currency swaps cross instruments, debt includes below table The iclaeu 9 132 191 14 - - 10 - 4,222 - - 154 55 5,074 196 - 622 56 7.00% 500 8.64% 5.18% 6,00% 4.70% 160 440 NOK HUF an 1999 1998, in network fixed-line and network Mobile GSM switches, telephony for Leases QTE BorderTelenorCross into entered NOK DKK standardfinanc to subject areguaranteedTelenor generallyand not areby subsidiariesASA in liabilities interest-bearing The USD 2.57% lease Finance 2.39% 2) 1) subsidiaries in Total liabilities long-terminterest-bearing Miscellaneous lease Finance lease Finance Digital Canal Licenses UMTS AS Satellite Services SEK lease Finance Solutions Business NOK lease Finance institutions financial from Borrowings Partner Business EDB institutions financial from Borrowings Partner Business EDB License GSM Partner Business EDB Pannon TelenorPakistan Sonofon reflected in the tables. See notes 15, 21, 23 and 32. and 23 21, 15, notes See tables. the in reflected are and sheet, balance the on net shown are amounts defeased the and obligations leasing The securities.related Government US 2003. Telenor has provided a defeasance of all amounts due by us under these agreements with highly rated financial institution ratedfinancial highly with agreements these under us by due amounts all of defeasance Telenora provided2003. has Telenor ASA guarantees this financing. Denominated in DKK, EUR, NOK and SEK. and NOK EUR, DKK, TelenorDenominatedin financing. guaranteesASAthis TelenorIII). financing. guaranteesand ASAthis II (Thor Satelliteleases 2) 1) Average nterest Amount in Amount in Amount in Amount in Amount in Amount Averagenterest rate 31.12.04 currency 31.12.04 NOK 31.12.04 NOK 31.12.03 NOK 31.12.04 NOK 31.12.04 currency rate31.12.04 0 227 888 104 763 - 1.50% - NOK Average interest Amount in Amount in Amount in Amount Averageinterest 55818,481 15,528 ial covenants. ial posure s and s d not

Telenor ASA Annual Report 2004 PAGE 111 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 112 Notes Telenor Group Maturity profile of interest-bearing liabilities as of 31 December,31 2004 of as liabilities interest-bearing of profile Maturity MNporm1,3 ,7 ,6 ,6 ,06230-31343- 3,433 341 3,059 54 - - 1,054 2,360 - 1,076 3,991 7 1,873 - - 14 096 1, - - 2,964 28 2,578 - 4 3,263 27 991 112 8 334 47 7.00% 88 1,475 251 3,062 - 112 14,932 4.70% 37 debt short-term Other - 13.78% 4 bonds Domestic 346 program EMTN 3.40% 37 8.64% 4.70% millions in NOK 271 8.03% 2.50% 6.25% 5.94% institutions financial from Borrowings 2) lease Finance 1) 12.09% Totalliabilities interest-bearing short-term Miscellaneous TelenorASA lease Finance lease Finance Digital Canal AS Satellite Services lease Finance NORAD from Borrowings Solution Business institutions financial from borrowing and Bonds institutions financial from Borrowings institutions financial from Borrowings Partner Business EDB institutions financial from Borrowings Partner Business EDB loans term Vendor and financing GrameenPhone Licenses UMTS GrameenPhone Bonds License GSM GrameenPhone Kyivstar TelenorPakistan DiGi.com Pannon Pannon Company millions in NOK Telenorin Group liabilities interest-bearing Short-term The table below includes interest-bearing liabilities, interest rate derivatives and currencyderivatives. and rateinterest derivatives liabilities, interest-bearingincludes below table The portfolio. the of distribution rateinterestraterisk the Consequently,instruments.fixed shows for datematrix the ratean instruments, floating for daterate fixing next the allocatedto is rateinterest risk The intervals. time into divided rates.interestT in increase point one-percentage a to duevalue fair in change the shows that analysis sensitivity a is Below 139 337 139 extent. lesser a to used are rateinterest rateoptions and forwardagreements whereas 77 inter typicallyinvolves This portfolio. debt the of rateinterestrisk the manage to Telenorrateinterest derivatives applies 3,510 77 years. 1.9 was 435 avera the 2004, December 31 at As years. 0.5–2.5 is portfolio liability the of durationaverageband The composition. 94 portfolio and variables market account into takes that model ToTelenorsimulation this, a limits. useachieve acceptable within payments 94 198 futureof volatility the hold time same the at and cost interest minimize to is management rateinterestrisk for objective The 220 220 3,433 rateinterestchanges. by influenced 220 pay interest as well as statement, loss and profit the in expense interest and 4,843 income Interest liabilities. and assets of value ratesinterestaffec market in Changes 2,483 activities. cash 341 management and fundingthroughrateinterest risk to Telenor exposed is 2,483 1,474 raterisk Interest 378 - tradingpositions. open 378 5,597 ou any have Telenornot 2004, did December 31 currencyrateinterestof trading.Asand to related activity Telenorlimited has 760 4,186 financing. standalone have normally 90% than less owned 760 Subsidiaries 90%. than more owned companies for and company parent 2,360 managemen risk credit and rateinterest - risk risk, exchange foreign funding, for responsible is Telenor function treasury ASA's 3,991 923 1,096 923 24,593 1,413 - 4,837 - 6,487 3,263 TelenorGroup 1,413 2,578 5,074 total Subsidiaries, long-term Subsidiaries, 1,413 18,106 short-term Subsidiaries, Telenortotal ASA, 21 Telenor ASA guarantees this financing. Denominated in DKK, EUR, NOK and SEK. and NOK EUR, DKK, TelenorDenominatedin financing. guaranteesASAthis TelenorIII). financing guaranteesand ASAthis II (Thor Satelliteleases Financial Instruments and Risk Management Risk and Instruments Financial Totalof as 11.420 0620 082021 0121 2012 2012 2011 20092010 2008 2007 2006 2005 31.12.04 2) 1) ------198 ------Average interest Amount in Amount in Amount in Amount Averageinterest rate 31.12.04 NOK 31.12.04 NOK 31.12.03 NOK 31.12.04 NOK rate31.12.04 .0 2 116 125 1.50% 6 228 164 - -7775 d to the maturity the to d est rateswaps, est ments, are ments, he matrix is matrix he interest t for the for t ge durationge tstanding t the fair the t the After Exchangeraterisk E ,3 .8-11 .8-- - - 37.30 ------2004: December 31 of - as Krone Norwegian - - 9.50 cu - other in derivatives and liabilities assets, interest-bearingGroup's the of currencydistribution the shows below table The - - capitalmarkets. well-functioning have currenciesthat in carried out only is above described as 101.71 Hedging - - - - - Telenorthe Group.of exposure - - p a also is entities foreign in instruments debt to relatedrate risk Exchange options. contractsor forward economically using 116.27 h are higher - or million 50 NOK Norway.outsideto investments equivalent Committedof cash flows dispose or acquire to made are 0.74 7.38 - currency,foreigna in when denominatedtransactions or other into enter entities Norwegian when arises also raterisk Exchange - 5.15 - - Telenor.by hedged not normally is raterisk exchange - This - - currencies.foreign in expenses operating or revenuesfrom - rising raterisk exchange to exposed be also will entities - Norwegian 5.12 20.54 - - purpose. this for typicallyusedare currency swaps) contractsand currency forward 10.78 4.40 - 1.17 ( derivatives and bonds) and paper (commercial instruments market money of Combinationscurrencies involved. the in instruments 6.94 - - issue to is investments localnet currency.ratetheir to relatedexposures exchange in handle done strategyto be Management's - it 0.91 dividends, pay companies - these If period. the ratefor exchange average the using Krone Norwegian translatedareto years entities 3.49 - 45.60 of contributions loss and profit the rates,as exchange in changes by affected also is Group the of income net currencies.The 4.85 to compared Krone Norwegian of value the in - changes with varies entities foreign in Telenor'sinvestments of value years 0.13 net book The 35.53 2.03 0.97 - - 0.25 - 2.08 Krone. Norwegian years than currenciesother in denominated 7,317 29 trans have will Krone Norwegian operatein mainly that companies addition, In Krone. Norwegian currenciesthan functional other 27.80 17.79 5.02 compani currencies.Telenorin investedother has to relative Krone Norwegian the of value the years in changes to Telenorexposed is - 1,736 0.57 - (0.15) 10.77 2,120 years 963 - (210) 1) 12.34 14.71 years liabilities 0.51 Interest-bearing 12,228 147 years USD 193 UAH years SEK NOK year MYR HUF GBP Facevalue EUR DKK CZK Currency 2004 December 31 of as equivalent millions in NOK ses--4 1 3 95 - (1,118) (26) 17 (411) - (2,215) - - 36 635 (927) - (503) - - - (819) 6,144 418 (26) - - 19,500 - (785) - (1,177) (599) 18,000 (109) 7 risk. credit a represent also agreements, Telenor, netting for value 13 replacementlegal account positive into taking (19,500) 63 Financial instruments. such in inherent is risk Credit assets. interest-bearing (12,274) short-term in Telenor liquidity surplus invests (669) (76) (384) - 2004. December 31 of as billion 441 6.0 NOK - wa obligation payment The (1,241) 32. and 23 20, 15, notes see sheet, balance the on net shown are amounts defeased the and obligations 70 (179) l The securities.related Government US and institutions ratedfinancial highly in agreements these under us by due amounts all - Telenornetwork. has fixed-line and network 44 Mobile GSM switches, telephony for Leases QTE BorderCross Telenorinto entered has - (252) - customers. of number high the to due receivables account (461) the to related risk credit limited is There - - (350) obligations. financial its perform to failed counterpart 350 a if suffer would Group the that loss the is risk Credit risk Credit (37) - - 37 Total Forwardcontracts swaps Currency liabilities Interest-bearing assets Interest-bearing currency local millions, Facein value The figure deviates from note 20, due to the inclusion of derivatives not related to interest-bearingliabilities. relatedto derivatives not of inclusion the to due 20, notedeviatesfrom figure The 1) U H Z K U B U P Y E A USD UAH SEK MYR JPY HUF GBP EUR DKK CZK CHF AUD 4538.31.59.589 21 .051 0.6163.07 106.86 5.12 4.40 32.15 8.97 90.45 12.65 88.53 24,523 – 12 – – 4556 – – After8 7–8 6–7 5–6 4–5 3–4 2–3 1–2 0–1 Decrease in fair value due to a 1%-point increase in interest ratesinterest in increase 1%-point a to due fairvalue in Decrease ------derivatives with derivatives rrencies than rrencies art of the risk the of art foreign

will typically will easing es that have that es greements other financial actions edged defeased foreign s

Telenor ASA Annual Report 2004 PAGE 113 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 114 Notes Telenor Group exchange rate risk management raterisk exchange rateinterestand for used Instruments The table below shows book value and fair value of some financial instruments as of 31 December 2004 and 2003: and 2004 December 31 of as instruments financial some of valuefair and value book shows below table The below.table the in included not are method, equity the using by for accounted or the in consolidated companies Listed years. relevant the of end the at prices quoted on based are shares listed Fairfor values models. pricing appropriaterevaluedusingare Options 2004. December 31 of ratesas exchange and curves swap quotedcalculated using by flows, of valuepresent the by estimated arerateinterest contracts swaps and currencyforwardforeign currency swaps, Fairof values above. described Telenorcurve creditthe usingASA estimated been have valuesfair liabilities interest-bearing other Forall value. book the to equal be to assumed is subsidiaries in instruments Fairvalue available. are such where quotes market by determined been has subsidiaries by issued instruments debt Fairof value maturities. different with Telenorinstruments debtof ASA market secon the in extrapolated tradesobserved frombeen has curve credit The 2004. December 31 of as Telenorspreads creditthe ASA incorporatesrateinterestest calculatedwhich curve, an been using Telenor have by issuedASA instruments debt Fairof values date. this at realize could company the amounts the of indicative be only may hereinpresented Accordingly,value.fair esti estimated the an at arrive to data market interpreting in below.recommended is However,prudence des methodologies valuation the and prices market on company’sbased arethe instruments of valuesfinancial fair estimated The instruments financial Fairof values instruments. equity in investments through risk market equity to Telenorexposed is marketrisksOther sources.funding of set to access ensuringthrough risk liquidity minimize to is this of part important flexibility.An financial emphasizes Management 20. noteGroup’s see the risk, minimize to liquidity facilities credit committed two established also Telenorhas risk. ASA and maturity to time short with instrumentsinterest-bearing in invested is systems accountGroup the within liquidity Surplus appropriate. when currencyswaps using involves also cashmanagement Efficient possible. as efficient as Group the in flows cashthe manage to Kingdom United the and Hungary Denmark, Norway, in Sweden, systems accountGroup established has Group The time. on obligations their pay to available liquidity have not do Group the in companies that risk the is risk Liquidity risk Liquidity basis. daily a on monitoredTelenor is for exposureASA Credit agreements. netting legal account into taking December 31 of as million 1,578 NOK to equivalent Telenorwas for valueASA replacement positive with derivatives Fairof value risk. overallreducecredit to means collateralare agreementsand agreements I Bothtransactions. derivative in banks three collateralwith Telenoragreementshas 2004, ASA December 31 of Astransactions. i counterpartsare that banks 16 the with situation bankruptcy a in losses against offset be to gains allows which agreements), agreeme netting legal Telenorcounterpart.has each ASA towardsexposureaggregated credit on limits strict setting through and cr high with counterparts accepting throughdiversification,throughreduced is transactions financial from arising risk Credit neetrt pin iblt 7 7 (24) 90 (377) 285 12 (62) - 49 - - (62) 12 2,955 (7) 28 (54) (432) 720 437 122 (7) - (54) 54 97 7 122 7,952 82 7,952 1) contracts forward currency foreign Loss contracts forward currency foreign Gain interestratecurrency swaps cross Loss 5,398 interestratecurrency swaps cross Gain Interestliability rateoptions asset Interestrateoptions interestrateLoss swaps interestrateGain swaps 5,398 interest-bearingliabilities Short-term interest-bearingliabilities Long-term liabilities Financial investments marketmoney short-term and Cash shares Listed assets Financial millions in NOK These items are included in interest-bearing liabilities in the balance sheet, see note 20. note see sheet, balance the in interest-bearingliabilities in included areitems These 1) 1) 1) 1) okvleFi au okvleFairvalue value Book Fairvalue value Book 2,4)(258 2,7)(24,743) (23,479) (22,528) (21,247) 405 400 323 (3,356) (3,273) (4,050) (4,005) 102 114 94 (670) (954) (1,124) (1,072) ,3 ,2 ,4 2,235 1,944 2,023 1,731 0420 032003 2003 2004 2004 edit ratings only ratings edit a diversified a low default low Telenor Group n derivative n future cash future mates imates of imates of other of SDA 2004, nts (ISDA nts cribed dary option neetbaiglaiiisscrdb sespegd ,8 2,692 754 2,184 17,066 572 18,141 Guarantees millions in NOK III). Thor and II (Thor leases satellite the DiGi.Com,GrameenPhoneto primarily related 2004 December 31 of as assets pledged securedby liabilities the and assets Pledged pledged assets of value Book pledged assets by secured Interest-bearingliabilities millions in NOK 1) Totalliabilities non-interest-bearing non-interest-bearingliabilities Long-term Totalliabilities non-interest-bearing current liabilities current Other contractsloss and reductions workforce for Provision revenuesPrepaid expenses Accrued taxes Current payable Dividends etc. deductions tax taxes, Government payable Accounts millions in NOK Sonofon Holding A/S from Telenor Eiendom Holding AS to Dansk Mobil Holding AS. The disputed amount is approximately NOK 8.6 bil 8.6 NOK approximately is amountdisputed The AS. Holding Mobil Dansk to AS TelenorfromHolding A/S Eiendom Holding Sonofon sal the from 2001 fiscalyear the for loss tax a of disallowance the to Court relating District Oslo the before authorities tax Norwegian Telenor(previouslythe against AS proceedingsTelenorCommunication Holding initiated 2003, Eiendom AS) January In Telenor’son effect negative materialposition. any financial without resolved be will matters these date, to available inf the on based Telenorthat, believes litigation of uncertainties the acknowledging While made. canbe estimates reliable and likel are outcomes negative that extent the to proceedings other the of outcome expected the cover to made been have provisions below.described Furthe as Telenordecisions, by these againstappeals of outcome the pending assessments, tax in deviations or unfavorablecover Telenor’sto of conductmade the been with have Provisions business.connection in arising matters concerning bel described and material being regardedas those others among including proceedings, legal of number a in Telenorinvolved is 2004. in terminated were GmbH ONE company associated financin interest-bearing of lenders the of favor in million 570 NOK approximately to guaranteeup the for and 2004 capacityin investment committed the of fulfillment the for million 781 NOK of Ltd. Telenor’sIntelsat to 2003 December 31 guaranteeof as 2003). December 31 of as million 81 (NOK 2004 December 31 of as 74million approximatel of aggregateamount an of parties guaranteesexternal payment to and Telenorperformance provided addition, has In respectively.2010, and 2009 in end periods leasing The 2003). December 31 of as million 271 (NOK 20 per million 151 NOK of III) Thor and II (Thor leases satellite the of fee termination guaranteea Telenora for provided has requ license the of fulfillment the for million 151 guaranteeNOK Telenorperformance of a addition, provided In 2004. December as million 876 NOK to Pakistan, amounting in equipment network mobile Telenorof purchase2004, guarantees the providedIn for 26. note see Sweden, in project Bravidaa ASA’swith to connection deliveries in primarily 2003), 3 of as million 854 (NOK BravidaASA to related million 917 NOK approximately of guaranteea liability includes above table The respectively. million), 1,073 (USD million 7,165 NOK and million) 1,070 (USD million 6,459 NOK to amounted gu these 2003 and 2004 December 31 of As obligations. lease all of payment the guaranteesfor providedThese are 32. and 21 20, n see table, preceding the in included not are Leases QTE BorderCross the into entering with connection Guaranteesin provided included.guarantees not are purchFurthermore, table. the in shown not are sheet balance the in included is liability relatedGuarantees the where provided 23 22 24 See note 11. note See Pledges and guaranteesand Pledges Non-interest-bearingliabilities Commitments and contingencies Commitmentsand 1) 87317,820 18,713 ,6 2,557 2,169 8,148 8,752 3,163 4,474 1,776 3,750 3,503 4,342 2,603 3,806 ,7 2,135 2,072 042003 2004 2003 2004 2003 2004 2 641 321 6 432 762 3 695 732 e of shares in shares of e 04 irements in 2008. in irements ased bank ased ormation g to the to g in satellite in 1 December 1 otes 15, otes rmore, ow, rulings rulings of 31 of arantees y, y, Ltd. and Ltd. y NOK y lion,

Telenor ASA Annual Report 2004 PAGE 115 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 116 Notes Telenor Group Teletopia filed an appeal with the Supreme Court but the case was not admitted. The judgment is therefore legally binding. legally therefore is judgment The admitted. not casewas CourtSupremethe but the with appeal an Teletopia filed favo in judgment a in resulted Appeal Courtof the beforeTeletopia AS by Telenoragainst initiated proceedingsMobil legal The reached. been has verdict a Telenor’swhich the for to 2003, 24 notefor statements in financial mentioned Disputes filed. been had claim no 2005, March 31 of As tha later no court ordinary before claim the Tele2consequence, file musta As court. District the caseto the refer to decided Conciliation the 2004 May 18 on request, parties’ the with accordance In pricing. cost-oriented for requirements the with dance been Tele2not with agreementhave provider service the under services telephone mobile of resale for Telenor by Mobil charged that allegation the on based costs legal and interestsplus million 113 NOK approximatelyTele2. of repaymentTele2 claiming is compl a with connection in parties, the between reached is settlement no if court competent the transferredcaseto is a before p court civil Norwegian in step first the Board, Conciliation the before appear to summoned was AS Telenor 2004, MarchMobil In 2005. April 14 before filed be must AS Enitel of liquidators the from appeal An acquitted. TelenorTelenorMarch,Court and Bærum14 TelecomdatedDistrict Mobil AS and AskerSolutions from judgment a In 2005. January commenc hearings court The 2001. to 1997 of period the for networks mobile and fixed our trafficin terminatedand lines leased overchar alleged on based is interestplus million 121 NOK of reimbursement and damages for claim Court.BærumThe District and before AS TelenorTelenoragainst proceedingsand TelecomMobil legal AS initiated Solutions have AS Enitel of liquidators The 2004. and 2003 years the covers also claim This costs. legal and interestsplus million 300 NOK to claim the increased has appeal its In February2006. 8 to scheduled are appeal Courtof the before proceedings main and Appeal Courtof the case to the app Sense Telenor of favourMobil. in judgement a CourtBærummade District and Asker the Telenor.2004, by November 2 On filed informat financial to according years relevant other and 2003 year the include recalculatedto orderbe in might claim the that the to notice gave Sense pricing. cost-oriented for requirements the with accordance in not and excessive been had 2003 to 2000 for agreement provision service a in forth set prices our that allegations on based interests,excluding million, 170 NOK to up Courtc District Oslo the before AS Telenoragainst proceedings Mobil legal Communication initiated Sense ASA 2003, November In 2005. November 18 to 14 on be to scheduled areLagmannsrett) (Borgarting Court appeal the of beforeproceedings main and judgment the appealed authorities The 2004. June 14 on issued was AS TelenorHolding favorableto Eiendom decision a and 2004 January Courtin District Oslo the wer case. Hearings tax the Telenorin should prevail billion, 2.4 NOK approximately of benefit tax potential a to corresponding rprisadeupet248127 03 30 84 2,601 37 1,718 30 - 941 294 31 453 732 Norway,radio,of coastal defense the – (SSO) Obligations Service Special to subject 2004 Telenorin addition, was In services. 30 eme disabled, the for services phones, pay public companies, and households all to telephony PSTN of provision the things other 1 843 amo entails Transport obligation Communications.of USO and Ministry The Norwegian Telenorthe and between agreement an through 145 was it Thereafter network. fixed on concession the to according 31 (USO) Obligations Service Universal maintain and provide to had 475 September 1 expired it Until 2004. in 132 activities certain for (licenses) concessions by as well as Act, this to pursuantissued regulations other and 2003 June Communications25 Electronic of Actthe by governed is telecommunicationsmarket Norwegian The 71 1,022 6 shares). treasury (includingstate Norwegian 163 the by owned 54.0% Telenorwas 2004 ASA December 31 of As 73 514 156 1,381 152 202 21 637 123 180 (GrameenPhone). 5,280 Bangladesh(DiGi.Com)Pakistan,and UkraineMalaysia (Kyivstar),in networks mobile primarily are 1 2005 in Committedinvestments 2,478 372 2005. in million 558 NOK Operator)of Network Virtual (Mobile MVNO-agreement a under 40 p capacityincludes 737 networks and satellite of Rent included. not are Hungary and Norway in licenses UMTS the to due investments 565 227 Futurenon-committed obligations. purchaseminimum committedTelenor no which underhas agreements include not does table The Totalobligation contractual contractualinvestments Other 63 1,052 equipment and Properties Committedinvestments contractualobligations Other IT-relatedagreements net-capacitysatellite- and of Rent etc. equipment, office cars, of Rent premises of Rent millions in NOK 2004: December 31 of as areas following the in payments fixed with agreements into entered has Group The 26 25 Contractualobligations Relatedparties 0520 0720 2009Etter2009 2008 2007 2006 2005 3----- 2004, Telenor2004, n May 2005. May n the period the e held before held e services ur of Telenor.of ur ion to be to ion the Asker the the prices the aint filed by filed aint Board roceedings ed on 17 on ed carriedon tax , Sense , rgency in accor- in ayments effect laiming ging for ging held ealed AS were AS ng total receivables of NOK 3 million from Telenor (NOK 3 million as of 31 December 2003). December 31 of as million Telenorfrom3 (NOK million 3 NOK of receivables total AS Norge HMS 2004 December 31 of As 2003. in million 4 NOK and 2004 in million 10 NOK Telenorfor services. services purchased secur and environment, health, Telenor.provided by AS Norge ownership HMS 50% with 2003 October 1 established was AS Norge HMS 2003. December 31 of as million 19 NOK and Decembe 31 of as million 13 TelenortowardsNOK of payable accounts respectively.had Limited2002, and Services NeraSatellite in million 104 NOK and million 131 NOK million, 84 NOK invoiced and Limited, Services NeraSatellitetraffic to Inmarsat sells Telenof company associated an is Communicationswhich AS, WorldMobile of Wide subsidiary a is Limited Services NeraSatellite 2003. December 31 of as million 124 NOK and 2004 December 31 of as million 120 NOK GlocalnetAB from receivableAccounts services. Internet dial-up and telephony for 2003 in million 361 NOK and 2004 in million NOK TelenorGlocalnetAB invoiced million). 80 (SEK million 70 NOK for GlocalnetAB to receivables associated and base customer residenti Telenorthe 2003 Towardssold of 2002. end December the 31 of as GlocalnetAB company Telenorassociated the acquired company.the over takes until AS Zebsign of operations the of guaranteesfinancing and the AS, Zebsign in shares its sell to agreement an into entered February2005, In 2005. capitalsharein to converted be will that 2004 December 31 of as million 15 TelenorfromNOK loan of a Zebsi 2002. in million 41 NOK and 2003 in million 1 NOK million, 1 NOK Telenorof to companies sale for revenues had AS Zebsign signa and identification electronic for Telenor, by services delivers ownership and 50% with 2001 in established was AS Zebsign sale. the from gain the in reduction TeleVentureto a as million AS 34 Management NOK of compensation TelenorTelenor additional 2004, as Venturerecordedis AS III s the with respectively. 2004, connection and In 2003 TelenorDecember 2002. in VentureTelenorsold and VentureAS were AS III millio 21 NOK and 2003 in million 18 NOK 2004, in Telenor and Venturemillion TeleVenture 14 AS. NOK III invoiced AS Management Telenorfor TeleVentureVenture company services associatedTelenor management The AS, performed Venture AS ASA Management II capishare ordinary over priority has and CompaniesAct, Norwegian the to pursuant 2005) in (13% 15% of dividend a to right the capipreferencecapital.preference The to converted were BravidaASA on loans shareholderoutstanding the of all 2004 December valueface at BravidaASA in shareholder another to loans outstanding the of Telenorparts 2004, Duringsold 2003). December 31 mill 86 (NOK 2004 December 31 of as million 7 NOK Bravidawere to liabilities Outstanding loans). long-term was million 551 NOK o 2003, December 31 of as million 553 NOK capitalpreferenceof (receivables of form the in loans long-term was million 272 NOK approximat which of 2004, December 31 of as BravidaASA on million 283 NOK approximately of Telenorreceivablesoutstanding had 20 of end the towards completed was project The completion. after years two subsidiary.guaranteeof a a wasperiod Bravidahas Brawhen Telenor2000 by guaranteeprovidedin The was Sweden. contract in engineering an is which SödraLänken, project the to guarantee regardingBravida’fulfillment a to related primarily is This 2003). December 31 of as million 854 NOK (approximately 2004 December 31 of as million 917 NOK approximatelyframe of a with of TelenorguaranteesBravidaprovidedASA to relatedhad prices. significantly.arm's-length reduced on be based aretransactionswill Bravida The ASA with relations TelenHence, 2004. of end the at parties external Bravida’sto sold services. administrative of were businessesTelecom IKT and Bravida,primaril to companies Groupfrom respectively,invoiced 2002, were and 2003 2004, in million 85 NOK and million 92 NOK NOK services. other and installation for mainly 2002, in million 1,868 NOK and 2003 in million 1,305 NOK 2004, in million 1,170 BravidaAS from services and goods purchased companies Group 2004, In BravidaASA. of listing a of event in share ownership its merger,the Telenorof shall time the at into enteredagreement shareholders a to According 2004. December 31 of as 47.05% was BPAwith Telenor’smerged AB. was Bravida AS sh when 2000, ownership November 1 from company associated an been has BravidaASA respectively.2002, and 2003 2004, in services these invo were million 21 NOK and million 24 NOK million, 12 Telenor.fromNOK personnel of totalhire abroadA companies Associated agreements. arm's-length based were transactions The year). (half 2002 in million 223 NOK was services and products these l 30 June 2004, June 30 l 2004, 2003 2004, IT operations/ IT enor receives enor the buyer the length prices. length or’sbusiness 67 million, 67 s deliveries s ture. In 2004, In ture. Telenor SSO. In SSO. 0 June 0 was tal. on ale of ale 04. gn AS had AS gn A for NOK for A ion as of as ion iced for iced or.Telenor f which f y for sale for y . At 30 At . 494 r 2004 r vida AS vida decrease rvices. n in n tal has tal ecoders. had al ely igital ity are

Telenor ASA Annual Report 2004 PAGE 117 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 118 Notes Telenor Group ahi usdaisprhsd10-319 (12,551) 658 (506) 2,416 - - 17,864 962 (6,421) - 140 - 1,552 - (1,670) 1,353 112 13,773 - (4,215) companies, associated and subsidiaries of purchase Cashon payment purchased subsidiaries in Cash paid cash which Of price Purchase equity to directly Recorded acquisition of time the at associatedcompanies of value Book interestsMinority Totalliabilities Totalassets current Totalassets fixed other Associatedcompanies companies associated and subsidiaries of Purchase millions in NOK sales. regardingsignificantand purchases information further for not transferred.See and cashreceived of net companies, associated and subsidiaries of sale fromcash receipts and purchase on cashpayment the show which statement cashflow consolidated the in items the against reconciliated is and companies associated an subsidiaries of sale and purchase by effected are sheet balance consolidated the in items main the how shows below table The companies associated and subsidiaries of sale and Purchase 2004. in services these for 366,987 NOK paid was company The TelenorAS. to Norge services consultancy delivered him, of related closely a by Partner,owned Info company a Olin Management. Group the of member a was Thygesen Edvard Jan 2004, During 2003. De 31 of as million 15 NOK and 2004 December 31 of as million 4 TelenorNOK from of receivables had AS Telenor Kantine & Renhold resp 2002, and 2003 2004, in million 111 NOK and million 113 NOK million, 106 NOK of Telenorcompanies to sale for revenues had Telenor.to canteen c services and The Telenorcleaning of delivers company associated an is which AS Kantine Telenor& Renhold o mlye'txddcin62 88 22 6 (1) 192 191 (113) 2,440 77 115 8492,327 - holder,accountGroup wher the Telenor agreements,is these ASA Under banks. two with accounts bank Group established has Group (104) 953 deductions. tax employees' the of guaranteespayment bank purchasedfor has Group the companies, certain of exception the With (12,232) 1,020 2,307 Total Other deduction tax Foremployees' 299 millions in NOK (506) 124 accounts bank Restricted 98 price. sales the to compared 502 cashreceip the reduced businesses in shares for exchange in shares of Sale futureperiods. in received (6,281) be will price sales the Telenorof Venturewhere sale AS the III to related primarily was 2004 in cashreceipts and price sales between difference The price. purchase the to compared 2003 in cashpayments the reduced bu in shares for exchange in Purchaseshares sheet. of balance consolidated the in values book in changes without cashpayments re which 2002, and 2003 2004, in subsidiaries some in interests Telenorownership price. its purchaseincreased the in included is loan The A/S. Holding Sonofon in shares remaining the of purchase of time the at Telenorover which took A/S Holding Sonofon shareholder’sthe of loan payment the to related primarily was 2004 in cashpayments and price purchase between difference The transferred cash of net companies, associated and subsidiaries of saleCash from receipts sold subsidiaries in Cash received cash which Of Salesprice sale of transltionadjustments and (loss) Gain interestsMinority Totalliabilities Totalassets current Totalassets fixed other Associatedcompanies companies associated and subsidiaries Saleof received cash of net 27 Additional information about cash flow cash about information Additional 583 (7,308) - (5,883) ,4 ,5 12,187 1,552 5,140 ,3 ,1 192 3,714 1,032 0420 2002 2003 2004 0420 2002 2003 2004 27 27 - (247) (217) 5 7 - 370 553 2)(5 - (35) (28) 35 133 45 54 32 23 17 (735) - - ts in 2003 in ts parts of parts sulted in sulted e 1 e not d ompany ectively. sinesses to s The cember eas party xctv ie otsN 6 fPninqaiyn noea h aeo -7,0 75,000 62. of age the at retire to right the with retirement 75,000 to equal be will income Pension-qualifying The - dateof the at income Pension-qualifying of 66% 100,000 60. of age the at retire to right the with retirement No months 6 100,000 Sivertsen Eide Stig President - Vice Executive dateof the at income Pension-qualifying of 66% months 6 TorsteinMoland months 6 CFO, and President Vice Executive Senior above. men is Fredrikwhich Baksaas,Jon for except currentManagement, Groupthe of member each for information shows below table The months. six is notice termination of period agreed The amount. thi on payment holiday no be will There employment. new the for salary the of 75% by reduced be would payment casethe which in such during employment other any undertake not does he that provided Telenoremployment, if the terminatesmonths 24 of period s receive to right the Mr.has Baksaas2003. January 1 occurredon adjustment first The ConsumerIndex. Pricethe with annually 3,000,00 NOK to restricted is income Pension-qualifying income. pension-qualifying of 66% to equal pension total a in resulting supplementar a with 60 of age the at retire Telenor’sto 2002. programright Mr.in the Baksaasoption gives share plan pension 105 100,00 another and options sharegranted 150,000 was he CEO and Presidentappointed was he when 2002, In years. 7 of maturity a option sharegranted 250,000 was he salary.2003, fixed In of months 6 of payment maximum a with 2004 for agreement bonus a has FredrikB Jon 2004. in 112,395 NOK were benefits other and 243,000, NOK taxsecurity social inclusive 1,968,000 NOK was CEO the c Pension 2004. for 3,500,000 FredrikNOK wasBaksaasJon (CEO) officer executive chief and president the for salary annual The similar. or options sharing, profit bonus, for agreement or office of change or termination of 2,403 event the in extraordinaryremunerto them entitles which agreements no have Directors of Board the of members The 157,000. NOK total in was commi nomination and audit the remunerationrespectively.for 401,000, addition, NOK In and 1,785,350 NOK was 2004 for Assembly Corthe Directors, of Boardaggregate the remunerationThe for 1,183,108. NOK of premiums pension Telenorpaid addition also In 24,034, NOK was 2004 for persons) (8 Management Group the for compensation) Aggregateother remunerationand (salary, etc bonus - 69 Management. Group the from down stepped Svendsen Berit and Løset Åsmund 2005 January Sørby.26 Karlsen Mortenof As Sivertsen Eide Stig TorsteinThygesen, EdvardJohansen, Jan Fredrik Arve Baksaas,Moland, Jon of consists Management Group The - companies). associated recorded billion 0.4 (NOK AS Holding Media APR in shares for exchange in ASA A-Pressen in shares of sale the and investments), shares as recorded billion 0.7 (NOK company holding new Inmarsat's in interest ownership an for exchange in Inmarsat in shares sal the companies), associated as recorded billion 1.3 Telecom(NOK Golden Inc. in shares Comincom/Combellgafor in exchange in interests: ownership in changes to relatedtransactions following the of primarily consisted 2003 in businesses in Investments 1,091 respectively. billion, 0.7 NOK and billion 0.4 NOK approximately was 2004 in pa Pakistan.The in license mobile and Hungary in UMTS-license a of purchase the to related were 2004 in licenses in Investment Company. Med Mobile The company associated the to businesses of sale the on shares of exchange the was 2004 in businesses in Investments Total leases Financial grant the of year the in paid not part – licenses in Investments businesses in Investments millions in NOK transactions non-monetary Material holder.accountGroup the and bank the between balance net the represents position net the that so against favor their in balances off canset banks The participants. or holders sub-accountareGroup the in companies other the aettentc a eso eeis2004 100,000 60. of age the at retire to right the with retirement 100,000 benefits Pension - pay dateof the at income Pension-qualifying of 66% notice months 6 months 6 Johansen Arve President Vice Executive Senior Name/title 28 Management compensation etc. compensation Management 2) 2) Agreed Share Share Share Share Share Options Share Options Options Severance of period Agreed regulation according to the consumer price index. price consumer the to accordingregulation annual an with 2004, December 31 of salary the index. price consumer the to accordingregulation annual an with 2004, December 31 of salary the to equal be will income Pension-qualifying The index. price consumer the to accordingregulation annual an with 2004, December 31 of salary the to equal be will income Pension-qualifying The ,6 ,3 451 2,430 1,160 0420 2002 2003 2004 7346 27 - 1) 2003 1) sales of shares of sales y pension, y alary for a for alary 0, adjusted 0, deposits, osts for osts and other and rt not paid not rt as porate aksaas and e of e s ation ation tioned period, 0 in the in 0 ia s with s ttees 2002 839. 1)

Telenor ASA Annual Report 2004 PAGE 119 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 120 Notes Telenor Group President retirement with the right to retire at the age of 62. of age 70,000the at retire to right the with retirement to equal be will income Pension-qualifying The 75,000 - dateof the at income Pension-qualifying of 66% months 6 months 6 Sørby Karlsen Morten President Vice Executive Management include closely related parties. related closely include Management Group the and Members BoardDeputy Directors, of Board the by below.owned Shares shown is 2004 December 31 of as Management GroupCorporatethe the and Members, BoardAssemblyDeputy Directors, of Board the of members the by owned shares of number The company.the in loans have directors the of None months. 12 of terms have non-interest-beaare shares of purchase for Loans discount. after employee per 5,992 NOK to limited were shares of purchase for lo The 2004). December 31 of as million 14 (NOK 2004 November programin ownership stock employee the in shares of purchase the conne in loans and subsidiaries foreign the of two in purchasehouse for cars,loans company to alternative an as employees the carsb purchasedfinance to provided mainly were loans The 2004. December 31 of as million 38 NOK were Total 2004 employees to loans 2) 62. of age the 75,000 at retire to right the with retirement 1) budget. exceeding performance financial exceptional of result a as paid be only may bonus the of 100% to equal be will income Pension-qualifying The bo the of 50% criterion), bonus given any (underreached is budget the If 2004. in salary fixed of months 6 framewas bonus The 75,000 benefits Pension - pay dateof the at income Pension-qualifying of 66% months 6 notice months 6 Thygesen Edvard Jan President Vice Executive Name/title Cont. Berit Svendsen Berit Løset Åsmund Sivertsen Eide Stig Thygesen Edvard Jan Sørby Karlsen Morten Johansen Arve TorsteinMoland FredrikBaksaas Jon Management Group The Jenssen Arne Olsen Erik Stein Kopren Berit Røkke Mona CorporateAssembly The Henriksen Hjørdis Hundere Ragnhild Rønning Roger Enger Helge Members Board Deputy Tystad Irma Salomonsen Gunnar Per Stavn Harald VenBjørg Enger Thorleif Directors of Board The of retirement. The future pension benefits are based on the salary at the time of transfer to other work. other to transfer of time the at salary the on based are benefits pension future The retirement. of the to up period time specified a salary.relateagreementsto their These half of compensation to right the with organization the within tasks other to transfer possible a to them entitle which Torsteinagreements haveand both Johansen Moland, Arve 29. note in described are 2004 and 2003 2002, programsfor option share The Agreed Share Share Share Share Share Options Share Options Options Severance of period Agreed regulation according to the consumer price index. price consumer the to accordingregulation index. price consumer the to accordingregulation the salary of 31 December 2002, with an annual an with 2002, December 31 of salary the the salary of 31 December 2003, with an annual an with 2003, December 31 of salary the Number of shares as of 31.12.2004 of as shares of Number 31.12.2004 of as shares of Number 31.12.2004 of as shares of Number 31.12.2004 of as shares of Number 1) 2003 1) nus is paid. is nus ction with ction age ring and ring y 28,610 56,123 44,977 20,199 29,697 10,000 2002 ans 7,939 3,304 7,639 1,382 1,582 1,857 3,689 2,000 1035 407 275 200 275 275 813 1) te uios0231-250113011.1 1.0 0.1 results. quarterly company's the of publication the after - ten-dayear,a a during times four exercised be only may options The 2004. grantedin options for 48.36 NOK and 2003 grantedin 0.7 26.44 NOK was grantwhich date,the to prior tradingdays five Exchange Stock Oslo at price closing average the to corresponds 1.3 exer grantThe date.the to subsequent years seven is dateexercise possible latest year.The per 5.38% grant,with adjustedof pr tradingdays five Exchange Stock Oslo at price closing average the than higher is exercise of time the at price stock the if - ar grantand datethe to subsequent years three the of each vest options the of third 5.2 One 2004: and 2003 grantedin For options 0.1 42.12. NOK is price exercise latest the 2002, JuneFredrik 21 BaksaasJon granted to For options Februarygranted21 options for 50.96 NOK is price 1.1 exercise possible latest The results. quarterly company's the of publication 4.0 t after period ten-dayyear, a 2.5 a during times four exercised be only may options rate).interestInterbankThe (Norwegian NIBOR 12 of 1/12 to corresponding month commenced per interest an with grantincreasingdate, the to prior tradingdays five Exchange Oslo at price closing average the to corresponds price exercise grantThe date.the to subsequent years seven is dateexercise 1.2 12.2 1. latest grant.The of date the to subsequent years three the of each vest options the of third One 2002: grantedin For options - 2004. in granted options were personnel key and managers new 12 7.1 4.9 2003. in granted options were personnel key and managers 110 and - 2002 in granted options were personnel key and managers 85 Telenor 3.1 in shares programASA for Option 21.9 2.9 disclosed. not therefore is and 2004, or 2003 in exercise any - wit February2004 in terminated was AB Utfors programfor option The AB. Utfors subsidiary the for one and ASA PartnerBusiness 0.2 compa subsidiary listed the for Telenorone in sharesASA, for programs:One options shareTelenor three arethe thereGroup In 26.4 2.6 - 2.6 Norway.outside mainly advice, tax and compliance tax of Taxreviewaudits. include reporting fees and audits system information dispositions, and acquisitions with connection in diligence due include principally fees related Company’sthe of reviews r the quarterly and audits statutoryrequired the with associated fees include services audit Feesfor Auditors Other Auditor Group companies Group Other Auditors Other Auditor Group TelenorASA millions in NOK subsidiaries. foreign and Norwegian both Feesinclude 2003. Telenorand to 2004 duringinvoiced s other and services tax services, relatedaudit for fees and 2003 and 2004 for fees auditsuggested summarizes below table The auditors the Feesto pin ofie n20 50026.98 36.28 48.36 50.96 32.36 38.06 26.44 50.96 50.45 42.12 45,000 1,027,994 4,410,33933.97 380,000 50.96 71,667 290,000 5,103,333 2,850,000 life option of end the 55,000 2,615,000 150,000 options share 2,520,000 plan. the of termination the to prior exercised be may options All dates.exercise t on based is and 2004 December 31 of as Telenor’sprice exercise details option relatedbelow by table outstanding The options 2004 December 31 at Balance 2004 in exercised Options 2004 in forfeited Options 2004 grantedin Options 2003 December 31 at Balance 2003 in exercised Options 2003 in forfeited Options 2003 grantedin Options 2002 December 31 at Balance 2002 in forfeited Options June) (21 2002 grantedin Options February) (21 2002 grantedin Options ASA Telenor Options Share 29 Share option plans option Share 0420 0420 0420 042003 2004 2003 2004 2003 2004 2003 2004 Audit fees Audit related fees Fees for tax services Other fees Other services tax Feesfor relatedfees Audit fees Audit 1---0.4 oo Averageat price exercise of No ior to the date the to ior regulatory possible eports. Audit- eports. cise price cise 2002. e exercisable e Stock ny EDB ny he he latest he for options for ervices hout y period y months

Telenor ASA Annual Report 2004 PAGE 121 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 122 Notes Telenor Group during a 3 to10 day period after the publication of the company’sthe results.of publicationquarterly the after period day to10 3 a during four exercised be canonly options year.The per 5.38% with adjusted price exercise the than higher is exercise of time the at if year following the exercisable are grantand datethe to subsequent years two the of each vest options the of granted.Half optio the before days five price stockaverage the to corresponding price exercise an grantedat be will options subsequent Any 44.83. NOK of price exercise an at 2004 November grantedin were options and 45.55, NOK of price exercise an at 2004 April grantedin were 989,994 options these Of employees. key and management the of grantedto was options, 1,300,000 of maximum a of consisting plan, option an GeneralMeeting Annual 2004 the with connection In after years seven is dateexercise possible company’slatest the The results.of publication quarterly the after period ten-day year a times four exercised be only may options year.The per 5.38% with adjusted price exercise the than higher is exercise of pr stock the if exercisable are grantand datethe to subsequent years three the of each vest options the of third One 2003. in appoi of time the at ASA PartnerBusiness EDB for CEO new the grantedto were 15.94 NOK of price exercise an at options 600,000 programexpired.the when 2004, May until forward be could Vested employees. options unexercisedbutits for plans compensation stock had ASA PartnerBusiness EDB subsidiary The PartnerASA EDBBusiness in shares programfor Option of Exercisableas Options exercisable. are they as long as term, options the of end the earl exercised be may company. the options reachednotification The the day the on price closing and price exercise the between the to cashcorresponding in amount an paying by options redeem to Telenorright the options, maintains the of exercise the At Weightedaverageremaining 5) 4) 3) Options 2) 1) 48.36 26.44 42.12 50.96 NOK) (in price exercise Weightedaverage pin xrie n20 - 118.7 34.5 - 45.5 137.9 15.9 - 117.7 of as exercisable Options 129.6 67.0 124.9 2004 December 31 - Weightedaverageremaining 9,284,997 126.7 1,614,994 1,014,994 - shares. treasury 14,571,700 411,678 compan the 2004, December 31 of As dividends. receive to right the and rights voting equal have shares All each. 6 NOK of value a with shares 1,749,697,047 ordinary into divided 10,498,182,282 NOK capitalshareof a Telenorhad 2004, ASA December 31 of As 9,884,997 600,000 2004 December of lifeas - 528,620 9,696,675 269,445 outstanding Options 9,955,850 life option of end the at NOK) (in price exercise Weightedaverage plan. the of termination the to prior exercised be may options Some dates.exercise latest the is and 2004 December at as price exercise option related by outstanding options Partner'sBusiness EDB details below table The options share 2004 December 31 at Balance 2004 in forfeited Options 2004 in exercised Options 2004 grantedin Options 2003 December 31 at Balance 2003 in forfeited Options 2003 in exercised Options 2003 grantedin Options 2002 December 31 at Balance 2002 in forfeited Options 2002 in exercised Options 2002 grantedin Options 2001 December 31 at Balance PartnerASA EDBBusiness options Share 30 right after the publication of Telenor’sof publication the after right results.quarterlyfinancial a in exercised be only may options The terms. options’ the throughout fixed are prices exercise the 2004, and 2003 programsof year,eachopti June, sharerespectively). For20 the Februaryand (20 curve spot ratesthe calculated forward of implied NIBOR mo 12 on based and exercise, dateof latestpossible calculatedthe areat 2002 programsof option share the for price Exercise First possible exercise was February 2005 for 1/3 of the options. the of 1/3 for February2005 was exercise possible First options. the of 1/3 for February2004 was exercise possible First options. the of 1/3 for 2003 July was exercise possible First options. the of 1/3 for February2003 was exercise possible First 48 50024- - 200,000 2.4 1.8 5.5 25,000 989,994 600,000 44.83 45.55 15.94 5) 4) 3) 2) Number of shares, ownership etc. ownership shares, of Number 1) outstanding life as of 31 December 2004 31 December 2004 December 31 2004 December 31 of lifeas outstanding ,5,0 er 583,328 913,667 years 5 years 4 2,250,004 1,630,335 8,0 er - 100,000 years 6 years 4 380,000 150,000 oo Averageprice exercise of No times a year,a times the grant.the the stock price stock the ice at time time at ice , during a during , ns are ns difference based on based y had y ier than ier on nth ntment period the rest the nominal carried 25,000 1) yvtrGMJCGM90GMGR 972012 1997 2012 GSM/GPRS 1997 900 GSM GSM/GPRS 900 GSM JSC GSM Kyivstar A/S Holding Sonofon rMneGMDOO S 0 S/PS20 2017 2022 2015 2002 2004 2000 2008 GSM/GPRS networks Fixed 900 GSM Wimax GSM/GPRS/EDGE 1993 1800 GSM GSM/GPRS/EDGE 900 GSM TelenorTelecom AS Solutions D.O.O. ProMonteGSM DiGi.Combhd Rt. GSM Pannon State Street Bank (nominee) Bank StateStreet TradeIndustry of and Ministry shareholders of Name 2004: December 31 of as shares) tre 14,571,700 (including1,749,697,047 sharesoutstanding the of number total the of more or 1% had shareholders following The generalmeet annual the capitalshareat the of reduction the for vote to itself obliged has Trade Industry of and Ministry The Telenorin unchpercentageremains ownership s Norway’ of Kingdom Tradethe Industry.of consequence and Ministry a Asthe from cancellation and redemption a propose also will Board The cancelled.are back bought were that shares the that GeneralMeeting propo will Directors of BoardTrade the Industry.agreementof and Norway,the Ministry of to Accordingrepresentedthe through shareholder largest its with agreement Telenoran 2004, into Marchentered In employees. programfor ownership stock a for used sh these of 368,200 2004 November In authorization. this with accordance in shares Telenortreasury 2004 14,939,900 acquiredIn 2005. July 1 until valid is authorization This 200. NOK of maximum a and 6 NOK of minimum a be shall share per paid amount The 1,049,520,588. NOK to up totaling value nominal shares174,920,098 treasuryacquire to Directors of Board the for given was approval 2004, May 6 generalmeeting annual the At TradeIndustry.of and Ministry the from shares 14,531 of redemption through and shares treasury 40,913,172 of cancellation the through done was This 2004. July in 332,669,784 NOK capitalTelenorsharewith 2004 its reduced May 6 on GeneralMeeting Annual the by given authority the with accordance In 28. note see 2004, and February2003 in and 2002, July Februaryand in employees key and managers to options share allotted Telenoremployees. programASA for ownership stock 2003 the to related 2004 December in for subscribed were each 6 NOK of value nom a at shares 92,736 which under 2004, and 2003 2002, in place programstook ownership share Employee employees. programsfor sha and personnel key for plans option share in used be also capitalsharemay in increase an Such growth. further for position company the place to is authority the of purposemerger. The a in shares of issuance the cashand than other consideration for of issuance the includes authority The shares. such to shareholders of rights pre-emptive the waive may Directors of Board The until lasts authority Such each. value nominal 6 NOK of shares ordinary 87,460,049 to up of issuancethrough 524,760,294 NOK to the increase to directors of board the to authority grantan to resolved was it 2004, May 6 held generalmeeting annual the At rmePoeLd S 0 S 962011 1996 2019 GSM 2004 expiration 900 GSM granted GSM/GPRS/EDGE 900 GSM 2005 type 1) 1992 Licenses Telenor(Private)PakistanLtd. GSM/GPRS/EDGE Ltd. GrameenPhone 900 GSM TelenorASA/Telenor AS Mobil Company subsidiaries:Telenor and by ASA held licenses operating main the summarizes below table The investors. other and institutional to sale a through Industry,ownership and its reduced of Ministry the throughState, Norwegian the 2004, March In State’s62.63%. was Norwegian ownership the 2003, December 31 of As (nominee) AS Bank Mellon (nominee) Bank Chase JPMorgan Bank Chase JPMorgan Fund Scheme InsuranceNational 31 licenses. The preceding table includes only the Norwegian fixed network business. network fixed Norwegian the only includes table preceding The licenses. exte large a Norway,to thatoutside and in both business, network fixed the in links radio of number a Telenoron dependent is Licenses Radio links Radio S 8020 2017 2019 2002 2016 2004 2014 2007 2001 1999 1997 1800 GSM 1800 GSM 1800 GSM 1800 GSM 1800 GSM S 8019 2010 1998 1800 GSM S 0 012013 2001 900 GSM EGSM MSWCM 042019 2012 2004 2000 W-CDMA UMTS W-CDMA UMTS 1) ewr ies License License Network ubro hrs% shares of Number 4,2,0 53.99 944,626,908 395091,37 2,21 3.61 23,935,009 38,659,400 63,193,800 486031,42 24,876,033 430285.39 94,390,278 1988 Not time limited time Not 1988 se to the Annual the to se ing in 2005. in ing share capitalshareup re ownership re , the Kingdom the , 1 July 2005. July 1 in a better a in shares nt require nt with a with asury of shares of ares were ares ,792 anged. Trade

inal

Telenor ASA Annual Report 2004 PAGE 123 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 124 Notes Telenor Group esos2(5 2)(24) - 1,631 47 49 12 1,038 (25) (42) (173) (3) 1,193 (25) (2) 67 (54) (58) 10 10 2 (3) 7 (8) (14) 9 8 (4,298) 4 (8) (7) 4,560 3 (8) 5,358 amortization 1 Goodwill instruments Derivativefinancial properties backof lease and Sale compensation Stock Temporaryentities in investments relatedgoodwill and costs license of Amortization Pensions interestassociatedcompanies capitalized of Depreciation GAAP US Adjustmentsfor GAAP Norwegian with accordance in (loss) income Net amounts share per except millions in NOK GAAP US to GAAP Norwegian from(loss) income net of Reconciliation below: out set are GAAP US and GAAP Norwegian under principles accounting Group's the between differences principal The U fromGAAP, respects certain in Norwegian differs underprepared which been have statements financial consolidatedGroup's The operations. their for important are which licenses, of number a hold companies associated addition In Norway.broadcastingterrestrialin for licenses Telenorholds also satellites. to stations earth from transmissionfor rights provide licenses Uplink (UK). Kingdom United and Bulgaria Finland, Denmark, Norway, in Sweden, licenses Telecommunication(International TelenorFurthermore,ITU Union). by administeredho are that frequencies and west, 1-degree at positions, orbit to rights are Norway.important outside most and The in both regulations, to subject is business satellite The ae nacrac ihU AP(,5)(,8)412 78 (279) 479 47,879 (4,148) (2.06) (2.06) (2,286) (609) (119) 52,826 7,930 8,297 (2,658) 2.84 (68) 2.84 (345) - (1,006) 12 - - - 67,801 30 9,303 6,422 (390) 3.22 3.22 90 - 78 - (38) 7 (3) (3,658) (160) - 12 (0.10) - (102) (258) 51 5,6395,036 (48) -> 58 (5) 578 16 - GAAP US with accordanceinterest in Minority (962) 12 GAAP US Taxeswith accordance in 14 - interests minority and taxes before (loss) Profit 13 11 19 (256) GAAP US with accordance in Operatingprofit GAAP US with accordance in 10 Revenue (29) (diluted) GAAP US with accordance In - 14 22 (basic) GAAP US with accordance In - principle accounting in change of years prior on Cumulativeeffect - share per (loss) income Net 15 GAAP US with accordance in (loss) income Net interests Minority adjustments GAAP US Taxof effect differences Other principle accounting in change of Cumulativeeffect contract service of extension with business of Sale acquisitions subsequent value excess net Amortization obligation retirement Asset terms equal on Prepayments write-downs of Reversal software of Sale date Measurement impairment Goodwill 32 United StatesGenerallyUnitedAcceptedPrinciplesAccounting oe20 032002 2003 2004 Note 7)2 - 28 (71) where Telenorwhere is of signals of lds uplink lds S GAAP.S usqetaqiiin1 0 74 83,729 12 (122) (113) (160) (296) 42,535 84,180 109 (317) 590 - - (102) (344) 42,430 (251) 16 15 (71) 19 (256) 13 14 2 (31) 1,676 (298) (61) 22 17 12 15 (45) 9 8 9 5 4 6 GAAP US with accordance in assets Fixed GAAP US with accordance in equity Shareholder's 700 interestsMinority adjustments GAAP US Taxof effect differences Other 37,237 contract service of extension with business of Sale 1 3 terms equal on Prepayments acquisition Subsequent 700 obligation retirement Asset write-downs of Reversal 37,594 liability pension Minimum software of Sale dateMeasurement impairment 5 Goodwill amortization Goodwill instruments Derivativefinancial properties backof lease and Sale compensation Stock tax of net – securities equity Marketable subsidiary in shares of disposal transactionsand equity subsidiaries' on Gains Temporaryentities in investments relatedgoodwill and costs license of Amortization Pensions interestassociatedcompanies Capitalized Dividends GAAP US Adjustmentsfor GAAP Norwegian with accordance in equity Shareholder's millions in NOK GAAP US to GAAP Norwegian from equity shareholder's of Reconciliation te opeesv noe(,8)243(2,884) 2,473 7,509(6,542) (3,658) (2,082) 5,036 3,557 (3,688) 34 870 (24) 5,639 (269) (3,722) 10 (2,884) 548 1,139 (209) (42) (34) (38) 295 (2,675) (57) 16 2,473 (150) 101,088 586 17,359 (822) 22 (58) 445 101 3,295 101,171 Total(loss) income comprehensive (600) (79) 15,473 1,687 income comprehensive Other 9 39,255 16,991 (2,082) GAAP US with accordance in (loss) income Net (656) 151 millions in NOK 775 81 92 2,343 Reconciliation (751) 19,438 (2,857) 34,882 (32) (1,664) income comprehensive Other 647 113 Foreigntranslation currency adjustment liability pension Minimum hedge investment Net (2,311) securities on (loss) gain Unrealized millions in NOK availa securities on losses and gainsunrealized and currencyitemsforeign as suchsources, non-owner from arise that period a d equity in changes all and income net includesComprehensive income components. its and (loss) income comprehensive of display reporting the standardsfor Standard(SFAS)Accountingestablished Comprehensive Financial Income" "Reporting of Statement130 GAAP U.S. under (loss) income comprehensive of components the reflectstable following The GAAP US with accordance in provision and liabilities Short-term GAAP US with accordance in provision and liabilities Long-term GAAP US Totalwith accordance in assets GAAP US with accordance in assets Current rtxTxNtPea a e rtxTxNet Tax Pretax Net Tax Pretax Net Tax Pretax 0420 2002 2003 2004 oe20 2003 2004 Note 0420 2002 2003 2004 2(1)(267) 680 (390) 2,708 (216) 675 (1,352) 3,901 12 11 10 1,776 10 2,603 17 55 (561) (535) 5 (214) (268) 7 26691 4)28 (43) ble for sale. sale. for ble uring and

Telenor ASA Annual Report 2004 PAGE 125 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 126 Notes Telenor Group e netethde1091811,432 (34) (4,029) 1,841 (24) (113) (3,445) of as GAAP US under sheet balance the in obligations pension net the of overview an is Below GAAP. Norwegian with accordance in not is This 1,079 eq shareholders to recorded is difference remaining Any losses. actuarial net unrecognized of extent the to difference, this by (3,353) 1,676 - ar assets intangible and obligations Pension obligations. pension net of value book the exceeds also difference this and assets pensi of valuefair the exceeds (ABO) obligation accumulatedbenefit the GAAP,when US made with accordanceis adjustment In an period. service averageremaining the over SFAS amortized GAAP, adopting is US of 87 Under effect the equity shareholder's 15 to directlyrecorded was principle accounting in change the GAAP.of US effect the adoption, However,upon wit consistent substantially is standardwhich accounting an to GAAP,according pensions for Norwegian accountsGroup Under the Pensions (2) capitalized.be shall operations, its for assets qualifying fun of use the include activities such and operations principal planned its start to necessary activities undergoing is company associat the which period a under companies, associated to advances GAAP,and US loans funds,Under equity incurredintereston companies. associated of financing the with connection GAAP,incurredinterestin expensed Norwegian has GroupUnder the Capitalizedinterest(1) Total taxes deferred – adjustments liability pension minimum – adjustments currency foreign – hedge investment net – tax after securities on (loss) gain unrealized – income comprehensiveAccumulated other Treasuryshares equity Other capital paid Other capital Share millions in NOK GAAP: U.S. with accordance in equity Componentsof for the year ended 31 December 2004. December 31 ended year the for mi 5 NOK and 2003 December 31 ended year the for million 3 NOK was GAAP US for method cost the Totalunder for accounted assets 2004. December 31 ended year the for million 7,176 NOK and 2003 December 31 ended year the for million 10,065 NOK was GAAP US for method equity the Totalunder for accounted assets GAAP,US under consolidated temporaryinvestments immaterial. areof statements financial the on effect The consolidated. or method equity the under for accountedare 20% to equal or greater GAAP,ownership US an Under with temporaryinvestments all profits. making of purpose the for companies periodicallyin invests Group The value.fair to down o cost at recordedarenature temporary in be to considered is that ownership an has Group the which in entities in Investments Temporaryentities (4) in investment retroactively.for accounted was period amortization the in revision this reconciliation, GAAP US the Under periods. prior restatementof retroactive no with estimate, of change a as for accounted been has this GAAP Norwegian with accordance In license. the of term the to changed been has period amortization the 1998 from Effective 1 exceeding not period a over licenses acquired to related goodwill and costs license amortized Group the 1997 of end the to Up relatedgoodwill and costs license of Amortization (3) obligations pension Net income comprehensiveAccumulated other assets Intangible assets Plan obligation Benefit 31 December 31 December 31 December 31 December 31 December 31 2404,3 35,799 42,535 42,430 7631,8 9,423 18,634 10,820 13,685 18,656 10,824 17,633 17,539 10,498 0420 2002 2003 2004 24 40 (254) (420) (169) (294) (169) (687) 31 December 31 December 31 December 31 042003 2004 0 338 603 7 911 672 4)(382) (78) (47) (22) (113) - uity. ds to acquire to ds e increased e r written r . 0 years. 0 ed change h on plan on llion Scholes option pricing model with the following weighted-average assumptions. The assumptions for 2004 are shown in the table b table the in shown are 2004 for assumptions The assumptions. weighted-average following the with model pricing option Scholes grantusin of date the at estimated was options these for valuefair The Statement. that of method valuefair the under options st employee its for accounted had ASA PartnerBusiness Telenor EDB if and as determined been has Stock-Basedand Compensation", SFASby required"Accountin is 148, GAAP US for share per earnings and income regardingnet information forma pro of Disclosure period. vesting the over expense compensation calculatedas recordedbe and would stocks, respective of price market quoted price exercisepresumed the on based period, reporting each of end the at options the of value intrinsic the and GAAP US under would options these for accounting plan variable ASA, PartnerBusiness EDB Telenorand for ASA plans the of features the to Due known. are options the of price th and receive to entitled is employee the shares of number the which at date first the is options stock for costs compensation deter for datemeasurement the 25, APB with accordance In options. stock employee its for accounting in interpretationsrelated a 25) (APB Employees" to Issued Stock for "Accounting 25, No. Opinion Board Principles Accounting follow to Telenor elected has grathe at value intrinsic any have not did that options stock GAAP,for recognized was Norwegian expense with accordanceno In 2004. in ASA’soptions PartnergrantedBusiness as EDB were sharesof 1,014,944 and 2003 in options grantedas were shares AS PartnerBusiness EDB of 600,000 2004. in personnel key and managers other for plan a and CEO, new the for 2003 in introduced separateplan A 2004. in terminatedTelenor’s of were employees ASA PartnerBusinessthe EDB for subsidiary plans option Share Telenorof ASA’s2004. granted380,000 subscribe in were to shares o Telenorand of ASA’s2003 granted2,850,000 subscribe in were to shares Telenor options of ASA’s2002, granted in were shares 2,670,0 subscribe to Options personnel. key and managers to program options granting option Telenor share 2002, a introducedIn compensation Share (7) earnings. into income sive co other of out reclassified was tax after million 1,668 NOK 2004, In 2004. December 31 ended year the for million 2,586 NOK of rea a and 2003 December 31 ended year the for million 53 NOK was sales such from loss respectively.realized gross The million, NOK and million 108 NOK was securities sale for available of sale the from proceeds 2004, and 2003 December 31 ended years the respectively 2004, December 31 for million 15 NOK and 2003 December 31 for million 2,328 NOK of tax before gainunrealized with respecti million, 82 NOK and million 626 NOK to amounted cost at securities sale for available 2004, and 2003 December 31 of As SFASwith accordance in 115. sale for available a equity.sharesshareholder's listed to directlyrecordedAll are tax after losses and gainsunrealized sale, for available as security.each securitiesfor valueequity fair For their marketable GAAP,at valuedUS are securitiesUnder equity marketable temporary.not is value in decline fai or cost original the at valuedare long-term as classified securities equity in Investment value.fair or cost of lower the a securities equity Other cost. original the than valuefair estimated lower a have aggregateholdings the if only adjustedare a as managed and currentassets as classified are that securities equity in GAAP,investments of valueNorwegian book Under the securities Marketableequity (6) income. throughinterest minority increases that subsidiary interes ownership of sales and transactions) 51 (SAB transactionsGAAP, equity US subsidiary fromUnder gainsrecordsGroup the minority.to resultsallocatingthrough down amortized be will minority the by paid consideration the of value and subsidiary the in equity recorded the between difference the from paid consideration the of valuefair at measured is interest minority resulting The recognized. areinterest minority inc that subsidiary a in interests ownership of sales and GAAP,transactions equity subsidiaries’ fromNorwegian gains Under no transactions equity Subsidiaries (5) Telenor ASA 2004 program 3.13% 2.0% 36.5% 4.5 years 4.5 years 4.5 years 4.5 years 1.5 years 4.5 36.5% 32.3% 31.3% 54.4% 66.9% 2.0% 2.0% 2.0% 0.0% 0.0% 3.13% 4.80% 6.40% 2.50% 5.05% f the been have would GAAP US to according (loss) income net Group's the value,fair upon based determined been plans these for compe Had options. stock employee its of valuefair the of measure single reliable a provide necessarily not do models existing opinion, management's in estimate, valuefair the affect canmaterially assumptions input subjective the in becausechanges and of those characteristicsfromsignificantly different have options stock volatility.employee Becauseprice the stock expected assumption subjective highly of input the require models valuation option transferable.addition, fully In are and restrictions vest no have that tradedoptions of value fair the estimating in use for developed was model valuation option Black-Scholes The programs 2004 ASAPartner Business EDB program 2003 ASAPartner Business EDB Telenorprogram 2004 ASA Telenorprogram 2003 ASA Telenorprogram 2002 ASA ikfe Dvdn oaiiyWeighted Volatility Dividend free Risk aeyl atraveragelife factor yeld rate r value if the if value r re classified as classified re s, including the including s, minority.The re valued at valuedre tradedoptions, classified or written or e exercise e g a Black- a g reases nsation cost nsation mprehen- and the and lized gain lized ing mining nd ptions ptions nt date. nt apply the portfolio was ts in a in ts vely, g for g 00 . For. elow. ollowing: A’s 3,304 ock

Telenor ASA Annual Report 2004 PAGE 127 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 128 Notes Telenor Group iue r om nacrac ihU AP32 .4(2.08) (2.08) (2.06) (2.06) below: specified are instruments financial derivative for GAAP US and GAAP Norwegian between 2004 for difference total The 2.84 (34) applied. is accounting hedge which for relationships 2.84 2.84 hedgin of effectiveness and designation for criteria establishes and valuefair at sheet balance the on recorded be instruments derivati all standardthat requiresaccounting SFAS This by 138. amended No. as 2.84 Activities," Hedging and Instruments Derivative Standards(SFAS)Accountingfor "Accounting Financial 133, of StatementintroducedNo. GAAP US 2001, January 1 of as Effective instruments financial Derivative (9) 3.26 (25) (3,692) periods. lease the over deferred be must gains remaining The gains. as recognized be 3.26 3.22 agreement back lease the of valuepresent net the exceed that properties of back lease GAAP,and US sale Under from gains only 3.22 lease. operating an as quali agreement back lease the when properties of back lease and sale GAAP,the from gainsNorwegian recognizedGroup Under the 5,050 (15) properties of back leaseSale and (8) options. share the of exercise the of date the at expensed is options share to relatedtaxsecurity social GAAP US Under - granted. options share for expensed is options shared the of exercise the to relatedtaxsecurity social GAAP Norwegian Under (3,658) 5,699 29. note in given is information relatedprograms and option Telenor stock of ASA's PartnerASA’sBusinesssummary EDB A and effect. dilutive a have may options stock The GAAP US with accordance in forma pro Diluted 5,6395,036 39 GAAP US with accordancereported in as Diluted GAAP US with accordance in forma pro Basic GAAP US with accordancereported in as Basic GAAP US with accordance in share per (loss) income Net GAAP US with accordance in (loss) income net formaPro 75 awards all for method based value fair under determined expense compensation employee based stock Add income reportednet in included expense compensation employee based stock Deduct GAAP US with accordance in reported as (loss) income Net amounts share per except millions in NOK cross currency interest rate swap. In these cases the hedged risks would be benchmark interest rates and exchange rates.exchange ratesinterest and benchmark be would risks hedged casesthe these currencyIn rateinterestcross swap. floa base/pay non "fixed receive a with Kroner Norwegian than currencyother in issuedrate bond fixed a hedge to is second The rateinterest swap. floating" fixed/pay "receive a into (47) enter consequently raisedand be to is funding which millions NOK in the in ratebond fixed a issue to is SFASunderfirst accounting The hedge 133. for qualify strategiesTelenorthat two employs hedges. fai as instrumentsrate.interest Telenorderivative these floating designates specified a by determined amount an pay rateand fi upon based amount Telenoran receiveallows to that instrument derivative a into entering by alteredoften is bonds these on ratinterest the Accordinglymaintain. to wishes management than rateinterestgreaterrisk a impose maturities long with bonds December,31 2004). of as bonds outstanding of (87% ratebonds fixed Telenor is by issuedASA debt the of significantportion A instruments hedging fairvalue as designated instruments nonderivative) (and Derivative SFASunder instruments financial 133: derivative to relates information following The effective. cost GAAP,is US it extentand the GAAP to Norwegian both under accounting hedge for cr GAAP.meet that instrumentsNorwegian use than to GAAP Telenor'sis US underpolicy earnings through reportedextentgreater t are losses or gains exchange foreign and instruments, hedging as designated canbe instruments what of requirements stringent more are there GAAP US Under investments. net of hedge to instrument one than moreTelenor combine GAAP may Norwegian Under (loss). income to recordedare derivatives such of valuefair in change the and basis, portfolio a on risk interest of hedging for applied cannotbe accounting hedge GAAP under cost carriedat are basis portfolio a on risk intereststrategy for hedging valuefair in usedrateInterest derivatives year-end previous from GAAP US for adjustments Totalequity in change accounting hedge value fair Interestratein derivatives used year-end previousfrom adjustment equity in Change GAAP US for (loss) income Totalnet to adjustments accounting hedge investment Net accounting hedge value fair Interestratefor derivatives used (loss) income net Adjustmentsto 0420 2002 2003 2004 N GAAP.N US Under in NOK millions NOK in currencyin interest rateinterest g xed interest xed r value r e exposure e Fixed rateFixed ve ting" base ting" o a o can iteria fy (47) (58) (11) (47) Amount of hedge ineffectiveness hedge of Amount instruments hedging earnings 2004 in recognized gain Net items: hedged earnings 2004 in recognized loss Net relationships Fairhedging value information Quantitative earnings. throughrecognized arevalue fair in changes any and derivatives, relati in designated are relationships hedging No purposes. management liquidity for used frequentlyForeign are currencyswaps earnings. in included and marked-to-market GAAP,US to according instruments hedging as qualify not do derivatives These durationtarget. the with line in be to order in periodicallyt rebalanceto used arerateInterest swaps management. rateinterest risk for duration-basedtargetTelenor a has instruments hedging as designated not Derivatives equ Translationof Cumulative Adjustmentsection the in reported been have instruments hedging these on adjustmentstranslation effecti be to proven have relationships hedging contracts.Toforwardthese extentand the bonds been have involved instruments In hedges. investment net as designated been have positions hedging Materialtransactions. derivative into enteringthrough or v the in debt issuing currencyby foreign in investments Telenorstatements,net financial hedge the to 21 note in described As operation foreign a in investment net a of instruments hedging as designated instruments nonderivative) (and Derivative hedged. been has shares of forecasted a sale to related currency risk foreign the contracts.Also, fo using currencyrisk foreign for hedged been currencyhave foreign forecasted in Two denominatedcapital outflows expenditure relations hedging cashflow three designated 2004 December 31 at incurred.Telenoras as had income to charged are hedge the of compo ineffective Any income. affects transaction hedged the as periods accounting same the during earnings in recorded is loss g realized The occurs.transaction hedged the until (OCI) income comprehensive other within recordedare instrument hedging the l or Gains instrument. derivative a into entering by item hedged the from cashflows currencyequivalent functional the fix and ratexchange Telenorforeign situations the canmitigatethese In eliminate. to wishes often management that raterisk exchange fore a currenciesimpose foreign in transactionsFutureexpected hedge. cashflow a is transactionfutureexpected a of hedge A instruments hedging flow cash as designated instruments Derivative the difference between book value and fair value.fair and value book between difference the bas GAAP. GAAP,down written Norwegian is with Norwegian consistent Under goodwill not is test impairment goodwill the of phase GAAP.US under is it se as However,the impairment for annuallytested is Goodwill GAAP, amortized. is Norwegian Under goodwill GAAP. Norwegian for million 2,190 NOK of loss impairment an to compared f million 3,152 NOK of goodwill of loss impairment an in resulted This experts. valuation same the of assistance with performed necessary was phase Accordingly, testing experts. second valuations externalthe of assistance with methods, valuationvarious val fair the of assessment an on based value,fair the of excess in valuecarrying a with unit reporting one found and 2004, of anal impairment phase first Telenorits completed goodwill. of valuefair implied the is liabilities and assets its to assigned ov unit reporting the of valuefair the of excess The unit. the of liability and unit’sassets the each assigning to valuefair valuefair the determining by measured is impairment the necessary) (if phase second the In value.fair respective the to unit e of assets net comparing by impairment for tested be must goodwill where units Telenorreporting phase identifies first the In of testing impairment for process two-phase SFASa prescribesarise. 142 impairment indicatorsNo. of whenever and basis annual for tested is but life, useful estimated its over basis straight-line a on amortized longer no is SFASgoodwill Under 142, No. 2001. June 30 afterconsummated combinations business concerning disclosures expa and combination, business a in acquired goodwill including assets, intangible of determination the in accounting of method th applying for guidelines forth SFASsets method, purchasealso the under141 for accounted be to 2001 June 30 after initiated SFAScombi Assets”.business Intangible all requiresOther 141 and (SFAS 142 “Goodwill No. Statement142), and 141 statement of Telenorful 2002, the adoptedJanuary 1 Telenor 2001, SFASeffective adoptedJuly and Combinations”, “Business1 141, Effective goodwill of impairment and Amortization (10) million. 38 NOK of gain a was amount corresponding the 2003 December 31 At million. 14 NOK was 2004 December 31 at income comprehensive other in included instrument hedging on gain of amount Net relationships Cashhedging flow immaterial. is context this in loss and profit charg ineffectiveness hedge The effectiveness. hedge determining in excluded been have points forward contractsForthe forward GAAP.US to according taxes bef million 751 NOK was 2004 during adjustmenttranslation cumulative the in included instruments hedging on gain of amount Net operation foreign a in investment net a of exposure currency foreign of Hedges effectiveness. hedge of assessment the from excluded been have loss or gain instruments' derivative the of components No er the amounts the er ysis at the end the at ysis impairment on an on impairment arious currenciesarious NOK in millions in NOK ue based on based ue and are and of goodwill by goodwill of osses from osses ach reporting ach or US GAAP US or he portfolio portfolio he nds financial nds ign e purchase e 2004, the 2004, and was and e risk e cond on to these to on l provision l rward ve, nents goodwill. ain or ain ed on ed ed to ed nations ity. hips. ore (463) 472 9

Telenor ASA Annual Report 2004 PAGE 129 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 130 Notes Telenor Group original condition at the end of the lease term. The following table describes all changes in Telenor’sin changes all oblig retirementdescribes assets table following The term. lease the of end the at condition original Telenorrequireth restore that to provisionsgenerally contain leases Those buildings. network and administrative in and sites leased on installed improvements leasehold other and equipment to primarily relating obligations retirement Telenorasset have timeframe. reas a within removals planned and known material to expenses to GAAP,limited are obligations Norwegian retirement Under asset paid. be will actually obligation the whether significantunce in result futureand the into time long a be will removals assets the of timing the situations, most In asset. t with accordance in depreciation ordinary as expensed is capitalizedcost the and obligation, retirement asset the to relating expense accretion an recognition, initial the to Subsequent obligation. retirement asset the of valuedepreciated the to equal with asset, long-lived related the of valuecarrying the increased and obligations the of valuepresent net capitalizedthe and Telenor obligation, retirement asset an settle Telenorto Whererequired is obligation. retirement asset an settle to estoppel, by law,contractual,or by whether obligation, legal Telenorwherea exists has obligation retirementSFAS asset Under an 143, asset. long-lived the of amountcarrying the of part capitalizedas are costs retirement asset associated i are they which in period the in obligations Telenorretirement method, asset recognizesaccounting new the Under obligations. (SFAS Obligations Previously,asset Retirement 143). Assetto related amounts for recognizeAccountingTelenor not 143, did No. FASBwith accordance in Sta obligations retirement asset for accounting of method Telenorits 2003, changed January 1 Effective obligations retirement Asset (14) permitted. not GAAP,is US Under write-downs previous of reversal value. its recovered has asset underlying the if and valid longer no are impairment the triggered fact the if reversed be must goodwill) (excluding assets intangible and tangible GAAP,of down Norwegian writeprevious Under a write-downs of Reversal (13) period. maintenance software remaining the over revenue as recognized and deferred also GAAP,US fee Under development accounting. these of method completion of percentage the on based recognized are software tional o development GAAP,the for Norwegian fees Under the software. the of use the to essential not are that applications additional de Companymay contracts,the these with conjunction in addition, In Telenormaintenance. unless software softwareprovides the acc have not does customer the as period maintenance software remaining the over revenue as recognized and deferredupgrades is sof and GAAP,licenses softwaredelivery.US of their Under upon recognizedupgrades sale softwarefromrevenueis and licenses GAAP, of Norwegian sale Under fromrevenue services. systemsoperating IT and application service full of providerTelenor a is software Saleof (12) amortization. and depreciation subsequent the in differences consequently and GAAP US to compared GAAP under assets intangible and tangible of valuation differentGAAP. a shareholder’sis Norwegian thereunder result, equity a As d recordedare consolidation of datetransfer and risk GAAP.of dateUS the with consistent is between Results consolidation of consolida of date the and risk transferof for date the between period Group’sthe the againstin directly equity shareholders’ reco been have calculatedexpenses and valuesfinancing excess net of company’sacquiredtransferred. The amortization results, company’soperatiothe of for result risk the date the is combination GAAP,business a Norwegian for datemeasurementUnder the consolidation of date the with consistent is which issued, areinterests equity incurred,or or assumed liabi given, are assets other and received are assets date the is combination business a for datemeasurement the GAAP US Under date Measurement (11) se eieetolgto tbgnigo er36316 366 below: presentedare Januar 1 (ratherthan 2002 January 1 on adopted been had Statement the if as 143, Statement of application the of effects forma share). per (0.02 million 27 NOK by change accounting the of effect cumulative the before income decrease to was 2003 December 3 ended year the on change the of effect The 2003. December 31 ended year the for income in included was which share), per 0.10 NO of taxes income of (net million 258 NOK of income in charge a in resulted years prior on change the of effect cumulative The 2004. for million 1 NOK and principle, accounting of change cu the was million 17 NOK which of 2003 in million 29 NOK was companies associated in obligations retirement asset for costs of Tele reconciliation. GAAP US the in differences” “Other under included are companies associated in obligations retirement Asset year of end at obligation retirement Asset subsidiaries New Accretionexpense settled Liabilities incurred Liabilities year of beginning at obligation retirement Asset millions in NOK 042003 2004 5 366 454 3- 22 38 33 27 28 (10) - rtainty as to as rtainty ation liability: ation has estimated has tion. The date The tion. e sites to their to sites e an amount an he related he Norwegian a promissory a is recorded is irectly to irectly software K 187 million, 187 K ncurred.The f the addi- the f ors that ors nor’sshare mulative tware retirement network tement velop rded y 2003), y ns is ns lities are lities onable 1 The pro The ess to ess s are s At 31 December 2004, future minimum annual rental commitments under finance lease liabilities were as follows under US GAAP: US under follows as were liabilities lease finance under commitments rentalannualfuture minimum 2004, December 31 At equity.shareholder's or statement loss and affect not did This 2003. December 31 ended year the for million 6,203 NOK of liabilities interest-bearinglong-term and assets and 2004 December 31 ended year the for million 5,469 NOK approximately of amount the in liabilities interest-bearinglong-term asset financial as sheet balance consolidated the on grossrecorded are Leases QTE the under futureGroup'sobligations the and GAAP,US underTherefore, defeased exist. the legally not does obligations futurelease the against amounts defeased the offset liabil and asset the offset to right legal the exists there when except offset be not may GAAP,US liabilities Under and assets contingencies. other or indemnification to due gain the of loss of possibility remo a than more is there since transactions the from gain Telenorthe deferredGAAP has US under and GAAP Norwegian under Both sheet. ba the on net shown are amounts defeased the and obligations leasing The agreements. these under us by due amounts all defeased Telenornetwork. h fixed-line and network Mobile GSM switches, telephony for Leases QTE BorderCross into entered has Group The leases QTE border Cross (18) approved. when equity shareholder's of reduction a GAAP,as recordedUS are Under payable dividends relate. they which in year the for GAAP,equity shareholder'sreduce Norwegian payable Under dividends Dividends (17) taxes. deferred as rec are adjustments GAAP US the of effects tax income becausetaxesthe GAAP Norwegian (28) the from differ GAAP US for taxes Income Taxes(16) acquisition. each in for accounted and identified equity. is against Goodwill recorde is subsidiary a in acquisition subsequent a for liabilities and GAAP,assets for valuesfair Norwegian in Under changes subsidiaries. in interest of acquisition subsequent each in recorded 187 and identified are GAAP,US liabilities Under and assets subsidiaries in interest ownership of acquisitions Subsequent (15) share per (loss) Adjustedearnings share per (loss) earnings Reported share per Earnings (loss) income Adjustednet effect) implemention interests(2003 minority and tax of net obligations retirement Assets (loss) income net Reported amounts share per except millions in NOK Total Other Buildings boxes top Set Satellites network Fixed-line network mobile GSM Telephonyswitches millions in NOK assets: fixed tangible in included lease finance of valueBook GAAP) US and Norwegian (both gain Deferred GAAP Norwegian under obligation lease Finance GAAP US under obligation lease Finance interestrepresenting amount Less Totalpayments lease minimum 2016 through Lateryears 2008 2007 2006 2005 millions in NOK ,4 2,533 1,943 ,2 (3,686) (3,658) 5,223 5,036 032002 2003 042003 2004 .4(2.08) (2.06) 2.94 2.84 As of 31 December 2004 December 31 of As 8 - 304 617 1,133 276 189 110 501 920 135 682 36 121 52 ity.to right The d directly d the profit the amounts s and s financial as lance 8,767 orded te 7,291 1,828 5,434 1,470 352 867 823 907 736

Telenor ASA Annual Report 2004 PAGE 131 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 132 Notes Telenor Group the same time the equipment is recognized as revenue. as recognized is equipment the time same the as recognizedtherefore and equipment of sale allocatedto been has companies, mobile foreign our in primarily fee, connection Telenor’son significanteffect 2004 no Duringstandard had profit.operating accounting or revenuesthe of adoption The 2004. afte into enteredagreements for 00-21 EITF Telenorimplemented sale. has of time the cashat in received amount the to limited ForTelenor,elem conditions. delivered performance the allocatedamountsspecified to the other meeting or items additional of the on contingent not is that amount the to limited being item delivered the allocatedamountto the with values,fair relative on based accounting separateof unitsthe allocated among be Arrangement should considerationprobable. is item undelivered any (3 and items; undelivered of valuefair the of evidence reliable and objective is there (2) basis; standalone a on customer the ha item delivered the (1) criteria: following the arrangementmeet the in deliverables the if accounting separateof unitsinto di are deliverables multiple arrangementswith Revenue assets. use to rights and/or services, products, multiple of performance delivery the involve arrangementsthat for account to how addressing 00-21, Issue on consensus a reached EITF the 2003, May In material. not is difference this of income net on effect The recognized. is revenue per same the over deferred be also should revenuedeferred the of extent the to costs direct Initial relationship. customer the p expected the is which earned are fees the that periods the over recognized and deferred be should processseparate earnings a no do that fees GAAP,installation US incurred.and Under as connection expensed such are costs direct initial all and sale the ti the at revenue in recognized are fees GAAP,connection and Norwegian fees telecommunicationsUnder installation fromrevenue income. operating other below included be GAAP,US Under revenues.total gain in such included areoperations and assets fixed of GAAP, sale the Norwegian on Under gains recognition Revenue (20) elimina been has 2004 end year at down write the and trafficcosts and revenue the and prepayments Consequentlyrefundable.the a and terms equal on are payments fixed these since nullified been have parties the between prepayments fixed the GAAP US Under agreemen MVNO the capacityof of usage the of expectations revised to contractdue this on loss a as million 562 NOK down wrote Te2004 end year At sheet. balance the in recognized are parties the between prepayments The usage. actual the on trafficbased c and revenues as recognized is element variable the and fixed the principles accounting Norwegian with accordance In services. of use actual the on based element variable a and prepaymentnonrefundable fixed a contain agreements The counterpart. same the made was Sweden Telenor’strafficin in of network of purchaseUMTS for and agreements GSM similar time Norway.same in the At telenor’sUMT trafficin and of GSM sale includes which agreements, Operator(MVNO) Network Virtual TelenorMobile into entered terms equal on Prepayment (19) • UCOM is also a publicly traded company which holds a 41.7% interest in DTAC. UCOM had total assets and net income of NOK 3.4 b 3.4 NOK of income net and assets totalDTAC. had in interestUCOM 41.7% a holds which tradedcompany publicly a also is UCOM • of income operator.net phone and DTAC assets total mobile had Thailand’slargest and second tradedcompany publicly DTAC a is • VIEs. the consolidate not did beneficiary,consequently and pr the considered be Telenornot which would determinedin but VIE, a deemed being of risk high at were concluded qualitatively whi DTACUCOM and entities, two in holds it interests variable Telenor identified analysis, also 46R FIN its with connection In stat financial consolidated the to 26 note Bravida,see guaranteesto and given business of course normal the in receivables to million 172 NOK total of loans shareholders and investments equity the to occur,limited Bravidathey is with should associated Telenor’spotentia consolidated. any Bravidawas to period losses the to in exposuremaximum million 95 NOK of profitoperating mil 7,129 NOK Telenorof 2004. revenuesincluded end year at billion 4.9 of assets net Bravidahad 2004. December 30 Bravidaon Bravida’sof majority Bravida’sTelenora returns.residualof receiveexpected majority stopped or a losses, expectedabsorbs TelenortransactionsBravida.Following that these in concluded loan shareholders its of significantpart a of sale its through hold Telenorits 2004 reducedfurther December 30 on addition, In loans. shareholders’ its of sale through sold Bravidawere in of certain entity’s2004 beneficiary.the October primary to In change a in result could which entity’sor statusan alter VIE t occur events certainre-evaluated when be to entities unconsolidated or consolidatedrequire that provisions contains 46R FIN principle. accounting in change our of effect cumulative the reflect to adjustment an require Bravidaof Telecom,Technology,consolidation of The Information primarily Geomatics. and VentilationElectricity, and Plumbing c operations its and accounting of method equity the company.using the for accountedconsolidatepreviously Bravida to was had beneficiary. primary He the was it that and VIE a was TelenorBravidaASA 46R that concludedFIN of adoption its of result a As consolidate. must and beneficiary primary the as to referred is interests), of combination (a interest variable single a residua the of majority a to entitled or futurelosses, of majority the to exposed is which party The control. service even and guaranteea issuesecurities, debt or equity in holdings are which of common more The forms. of variety a cantake and returns, entity' the of portion a receive and/or futurelosses entity's the of portion a absorb to holder the entitles arrangementwhich intere variable A interest. variable a holds it which in and VIE) (a 46R FIN in guidance the to subject is which entity an date Telenorrequires which interpretationt an 46R, TelenorNo. FASB2004, (FIN) March implemented 8 Interpretation31 Financial On entities interest variable of Consolidation (21) and NOK 270 million, respectively. The risks and rewards associated with our interests in the entity arise as a result of our d our of result a as arise entity the in interestsour with associatedrewards respectively. and risks The million, 270 NOK and investments. equity the occur,to DTACthey limited with should associatedis losses, potential Telenor’s2000. DTAC.May DTACin interest15 in Telenorinterest equity on indirect exposu its maximumacquired and direct our aris entity the in interestsour with associatedrewards respectively. and 2004, risks for The million 752 NOK and billion 13.2 st is a contractuala is st Telenor’sholdings l returns throughreturns l it no longer no it ch Telenorch s value to value s s residual s ) delivery of delivery ) consolidating delivery delivery irect equity irect e as a result of result a as e iod that the that iod t represent t ings in Bravidain ings nce, Telenornce, in addition addition in ements. d by Telenorby d part of the of part did not did vided ents are ents l losses, l imary hat could hat revenue at revenue r 1 January 1 r o consoli- o ost of ost eriod of eriod lion and lion re to any to re s would s S network S lenor or onsist with t. me of me their ted. re non re NOK the illion consolidated based on variable interest under FIN 46R will not be consolidated under N GAAP.N under consolidated be not will 46R FIN underinterest variable on based consolidated apply.not do entiti Therefore46R FIN of concept the and model interest voting the on only based is consolidation GAAP N Under noebfr ae n ioiyitrs ,9 1,751 5,094 interestsMinority equity Shareholders' Totalassets Totalassets current Totalassets fixed Data Sheet Balance income Net interest minority and taxes before Income Operatingprofit Revenues Data Statement Income millions in NOK method. equity the using for accounted is investments Telenor'sthese basis. of sharecombined perc 100 a Telenor'son of investees non-consolidated information unauditedfinancial summarized forth sets table following The basis percent 100 – investees Non-consolidated (23) agreement.purchase the of term the over recognized and deferred GAAP,is transactionUS the with accordanceon gain In the Telecomthe area.of parts the of sale the on recorded was million 283 NOK of gain a GAAP N under and terms, marketable on is agreement The maintenance. and management application of purchaseminimum a Telenorto agreement,committed is the Under ASA. PartnerBusinessTelenor EDB fromservices purchasedpreviously same the for buyer the with agreement service a Telenor time, entered same Telecomthe the At area. of parts sell to agreement an into entered ASA PartnerBusiness EDB 2004 In contract service of extension with business Saleof (22) required under SEC Rules. SEC underrequired s financial 2004 to respect with reconciliations equity shareholders’ and income net tabular and narrativeinclude will GAAP US betwe disclosure reconciliation additional The principles. accounting under described is IFRS to GAAP TransitionNorwegian from 2004. for figurescomparable with IFRS to accordingstatements financial 2005 its IFR to datetransition its as 2004 January 1 Telenorselected 2004. has January 1 is IFRS to datetransition the provided IFRS, of year first their for statements financial audited of years two only include to allowed be will issuersprivate foreign 2003, Marc in proposed as amended is GAAP of set comprehensive a underpresented be to periods regardingthe regulations SEC Provided known. yet not is IFRS of implementation the of effect full The companies. public European to cable Regulati Europeanunderrequired as 2005 by (GAAP) principles accounting generallyaccepted primary as IFRS adopt Telenorto is (IFRS) Standards Reporting Financial International results.operating or assets totalrevenues, on effect material a SFAS of will Implementation 123(R) 2005. June 15 after beginning period annual for effective is 123(R) Statement recognition). fi to alternative an longer no is disclosure forma pro (i.e., valuesfair their on based statements financial the in recognized b to options, stock employee grantsof including employees, to payments share-based all requiresHowever, 123(R) Statement123. Stat in described approach the to similar is 123(R) Statement in payments share-based for Generally,accounting to approach the CashFASBFlows. of Statementamends 95, and No. StatementEmployees, to Issued Stock for Accounting 25, No. Opinion AP supersedes Stock-Based123(R) StatementCompensation.FASBfor Accountingof revision123, a No. Statementis which Payment, Standards(FASB)BoardAccounting Financial Share-Basedthe FASB2004), issued(revised2004, 123 December No. Statement16 On SFAS2004) (Revised 123 Standards Accounting US New Totalliabilities and equity Totalliabilities short-term Totalliabilities long-term occur, associated with UCOM is limited to the equity investments. equity the to limited is occur,UCOM with associated Telenor’ssho 2000. losses, May potential 15 any on to exposuremaximumUCOM in Telenorinterest UCOM. its acquiredin interest 25149,739 62,501 25149,739 62,501 4566,446 12,813 36,926 24,516 13,494 49,007 42,498 41,643 64214,004 29,255 16,462 21,095 ,4 924 3,574 6,341 6,800 042003 2004 2 34 428 nancial statement nancial reporting under reporting S and will report will and S tatements not have have not en IFRS and IFRS en ent es into ement on appli- on e uld they uld h B

Telenor ASA Annual Report 2004 PAGE 133 Notes Telenor Group Telenor ASA Annual Report 2004 PAGE 134 Statement of profit and loss Telenor ASA e iaca tm 6 dividends Proposed 4 5 (loss) income Net Taxes 3 2, 9 8, taxes before (loss) Profit items financial Net assets financial of Note write-downs) and (losses gains Net (loss) currencygain Net expenses Financial income Financial expenses and income Financial (loss) Operatingprofit Totaloperatingexpenses write-downs and amortization Depreciation, operations of disposal on Losses expenses operating Other costs personnel and Salaries trafficcharges and materials Costof Totalrevenues operations of disposal on Gains Revenues millions in NOK December Telenor January–31 1 ASA STATEMENTLOSS AND PROFIT OF Group contribution distributed, net after taxes after net distributed, contribution Group Operatingexpenses 7 (1,520) 4,656 5,571 1,436 2.603 6,324 2,207 5,707 2004 (753) (915) 638 683 683 721 (70) 63 14 - - - 221 (1,592) (2,221) ,1 (2,626) (5,276) 5,115 5,885 2,450 1,205 ,0 (3,494) 6,508 ,3 3,548 6,537 ,7 799 1,776 (5,907) 3,126 032002 2003 63 (1,782) (623) 70 2,650 (770) 457 (934) 9 671 792 5 350 668 358 605 582 582 539 55 -- 1,390 - -63 137 - hr-emitrs-ern iblte 11 12 11 Totalliabilities short-term liabilities non-interest-bearingShort-term liabilities interest-bearingShort-term Totalliabilities long-term liabilities non-interest-bearingLong-term liabilities interest-bearingLong-term Equity Liabilities and Equity Totalassets Totalassets current cashequivalents Cashand external receivablesNon-interest-bearing ContributionGroup Receivable companies Group on receivablesNon-interest-bearing Totalassets fixed assets Financial Tangibleassets assets intangible Other Goodwill assets tax Deferred Assets millions in NOK TelenorDecember 31 atASA SHEET BALANCE Guaranteeliabilities pledged Assets Totalliabilities and equity Note 10 13 9 8 8 7 32,510 15,699 90,881 88,391 90,881 42,672 87,541 29,166 15,528 2,490 3,344 2,000 3,766 2004 171 320 254 568 170 12 16 - - 23,818 18,699 85,084 82,306 42,567 85,084 80,562 21,122 18,481 2,778 2,696 2,000 4,155 1,476 2003 124 218 121 533 244 24 - -

Telenor ASA Annual Report 2004 PAGE 135 Balance sheet Telenor ASA Telenor ASA Annual Report 2004 PAGE 136 Cash flow statement Telenor ASA Net cash flow from financing activities financing from flow cash Net contribution Group of Payments dividends of Payment back buy Share shares of issuance fromProceeds rights drawinginternalGroup in change Net liabilities short-term of Payments liabilities long-term of Payments liabilities short-term fromProceeds liabilities long-term fromProceeds activitiesinvestment from flow cash Net investments other for Payments investments other of sale fromProceeds companies new establishing on Cashpayments subsidiaries of sale fromCash receipts assets intangible and Purchase tangible of operatingactivitiesfrom flow cash Net etc. accruals in Change companies Groupfrom/tointerests paid not Accrued, activities operating to relating not losses (gains)Currency write-downs previous of reversal and shares Write-downof contribution Group write-downs and amortization Depreciation, loss (gain) Net Taxespaid taxes beforeProfit millions in NOK December Telenor January–31 1 ASA STATEMENTFLOW CASH 1) December 31 at equivalents cash and Cash January 1 at cashequivalents Cashand equivalents cash and cash in change Net ratesexchange foreign in changes of cashequivalents cashand on Effect Net change in Group internal drawing rights are loans to and placements from Group companies. These loans and placements have h have placements and loans These companies. Groupfrom placements and to loans are rights drawinginternalGroup in change Net 1) (2,020) (1,084) (2,593) (2,207) (1,764) 5,571 1,971 2,135 2004 (659) (533) (791) (882) 303 992 533 (80) (75) (72) 43 88 63 70 ------127 5,856 (1,217) 101 (300) (1,081) 200 5,682 (2,000) 352 (6,935) (3,592) 638 5,893 (3,492) (3,127) ,1 (3,200) 2,716 ,8 (5,276) 5,885 ,8 (3,804) 8,188 ,7 (457) 1,171 032002 2003 90 (2,949) (920) 79 (621) (799) 84 (2,250) (874) 2 (701) 220 3 - 533 3 (396) 533 8)(12) (82) 4)(53) (46) 539 55 1(1,303) 71 250 42 6 (753) (6) -19 (3,702) - -- 11,012 - -16 1,341 - 1,081 - 396 - igh turnover.igh Equity available for distribution as dividends form Telenor ASA was NOK 14,038 million as of 31 December 2004. December 31 of as million 14,038 NOK Telenorwas form ASA dividends as distribution for available Equity ou hrs 2766-5--5 - 20 34 - 18 - - - 5 - 26 1,484 - 2 28 42,672 - - 19 (687) - 6 6 - 15,322 (1,152) - 17,539 92,736 - (332) 6 22 10,498 - 6 42,567 - 6 1,027,994 4 (169) 15 (55,444,964) 39,202 13,256 1,749,697,047 6 (169) 4 18,656 1) 9,917 10,824 42,608 595,109 6 2004 December 31 of as Balance (169) 6 18,634 sharesBonus granted option Share 10,820 13,342 program share Employee 695,520 cancellation Share 1,804,021,281 6 18,619 back buy Share 2003 year the for dividens 10,816 2004 year the for income Net 1,803,426,172 6 2003 December 31 of as Balance issue share Employee Dividends 2003 year the for income Net 1,802,730,652 2002 December 31 of as Balance issue share Employee Dividends 2002 year the for income Net 2001 December 31 of as Balance TelenorASA STATEMENTEQUITY SHAREHOLDERS’ OF Dividends for the year 2004 and adjusted and 2004 year the for Dividends Adjusted dividends for the year 2003 related to purchase of shares in the market prior to the Annual General Meeting in 2004. in GeneralMeeting Annual the to prior market the in shares of purchase to related 2003 year the for Adjusteddividends 1) of shares (NOK) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK mill.) (NOK (NOK) shares of ubraon aia aia qiysae Total shares equity capital capital amount Number ------o hr te adOhr Treasury Other paid Other Share Nom 176 (1,776) - (2,626) (1,776) - (2,626) 250 (2,590) - (2,590) ,5 4,656 - 5,115 4,656 - 5,115 79 (799) - (799) 200 (2,020) (2,020)

Telenor ASA Annual Report 2004 PAGE 137 Egenkapital Telenor ASA Telenor ASA Annual Report 2004 PAGE 138 Notes Telenor ASA year 2004. year e auditor management, Directors, of Board the to compensation the on information further for Group the for statements financial c the to 28 note to TelenorRefer in ASA. position same the have Directors of Board the Group’sand The Officer Executive Chief Group. the for statements financial consolidated t notes the to referbelow. Otherwise, shown are these Group, the for notes the from different substantially are company parent not the Where Telenordescribed. the as Group,for principles accounting the to Telenor similar areASA’s principles accounting s loss and profit the in items financial as classified are adjustmentsvalue The values.increased of consequence a as reversed write-downs these of parts main the 2004 and 2003 In statement. financial consolidated the in values the reflect better to 2002 perfor were subsidiaries Telenorin of investments valuesASAs the Write-downsof accounts. consolidated the in values the with viewed be must subsidiaries in investments the of value The temporarydecline. a than other is separateinvestment a for value a if made areseparate investments the Write-downs of cost. evaluatedat are these to provided loans and subsidiaries in Shares statements. financial consolidated the to 20 note See companies. Groupfrom of placements receives Telenor,and in to, financing loan debtprovides external and the of part main Telenorthe conducts ASA maintenance. and IT-operations strategicpr projects,Groupin fees consultancy of primarily consist Group the within companies Purchasesother fromservices. cons other of sale and services, development and research of Telenorthe sale fromGroup, fee management primarily are Revenues Telenortransferredduringto was ASA AS holding Telenor in Mobile employees the of part main the addition, TelenorIn to ASA. transferredTelenorfromwas Communicationdepartment development and research the 2004, January 1 Telenorof Asin ASA. placed Telenor’sstrategicincluding projects,Groupsome are Deltaoperations, there of addition efficiency improvingIn program for Telenor’sand corporatefunctions Management, Group the (Telenorcontains bank and internalFi company holding a Telenoris ASA TelenorASA STATEMENTSFINANCIAL THE TO NOTES arvleo lnast tteedo h er 9 409 595 479 294 797 409 366 479 350 213 cost benefit (prepaid) accrued Net 58 tax security social Accrued losses actuarial net Unrecognized costs service prior Unrecognized 358 187 status Funded year the of end the at assets planFair of value 87 paid Benefits contribution Pension Transferbusinesses of 638 319 assets plan on returnActual year the of beginning the at assets plan of Fairvalue assets plan in Change 205 year the of end the at obligations Benefit paid Benefits Transferbusinesses of losses and gains Actuarial Interestcost cost Service year the of beginning the at obligation Benefit obligation benefit in Change millions in NOK costs Totalpersonnel and salaries costs personnel Other tax security social including cost Pension tax security Social pay holiday and Salaries millions in NOK 01 03 02 Salaries and personnel costs personnel and Salaries general and principles accounting significant of Summary Pension obligationsPension 3) 3) 1) 1) 2) 1) 0420 2002 2003 2004 15 43 51 41 33 36 33 73 042003 2004 25 (155) (225) 4 61 141 55 237 0 70 202 2)(216) (26) 2)(21) (24) (47) (26) 348 27 53 16 34 24 47 14 38 55 3 (26) (3) (105) - 4, that are that 4, tatement. es for the for es operty lease, operty o the o onsolidated 2004. together liquid assets liquid med in med were loss in loss tc. for the for tc. nans). ultancy II AS II otiuinpa ot 1-2 56 - (20) 87 1 (21) 220 (33) 116 (216) (7) (26) - (170) 1) result year's the to Total charged costs pension costs Contributionplan (8) (216) income to recorded AFP relatedto liabilities Internal costs benefit periodic Net tax security Social losses and gains actuarial of Amortization costs service prior of Amortization assets plan on returnExpected Interestcost cost Service costs benefits periodic net Componentsof millions in NOK Group the for statements financial consolidated the in December,7 note31 see of as Assumptions 10) (note assets plan pension net which Of 10) (note scheme plan pension in changes which Of 31.12 at cost benefit (prepaid) accrued Net paid benefits and contribution pension at tax security Social paid Benefits contribution Pension costs benefit periodic Net Transferbusinesses of 01.01 at cost benefit (prepaid)accrued Net Cont. oa te prtn xess7172671 195 38 47 792 326 418 33 14 87 721 56 524 246 25 24 81 322 44 40 66 operations. international our of serving and development and research as companies, Groupfrom services of purchase to related 2002 to compared 2003 in fees consultancy in increase The Telenorwithin fallASA. now 2003 Telenorin ASA development and research to given were that subsidies the that fact the to due primarily 2004 in reduced were Consultancyfees companies Group within internal which Of Totalexpenses operating other Other debt Bad Workforcereductions personnel of rent and Consultancyfees commission sales representationand Marketing, Traveltravelallowances and maintenance Operationand etc. equipment office vehicles, premises, Costof millions in NOK 3) 2) 04 assets, unrecognized actuarial gains and losses and amortization, unrecognized actuarial gains and losses. and gains actuarialunrecognized amortization, and losses and gains actuarialunrecognized assets, plan obligations, benefit in increase an to TelenorTelenorfromlead to department This AS ASA.Communicationdevelopment II and research the of transfer the and AS TelenorHolding fromtransfers related to Mobile primarily was Transferbusinesses of 2004. for assumptions in changes and businesses of transfer the to due primarily was 2004 in losses and gains actuarialunrecognized in increase The tax). security social excluding figures (all million 1 NOK of NHO to pensio of expensing and income to recorded AFP relatedto million 16 NOK of liabilities internal losses, and gains actuarial of amorti as income to recorded AFP-obligations reduced in million 4 NOK million, 105 NOK of costs service prior of expensing were N in AFP-scheme the to change Telenorthe for of 2004 ASA in effects The 2004. in expensed was costs service prior unrecognized remaining the AFP-scheme the in change the to Due periods. service estimatedremainingover expensed 2003 including and to up effect implementation The subsidiaries. owned wholly for 1997 January 1 of as AFP-plan the of introduction the to due was 2003 Decembe 31 of as costs service prior Unrecognized 2004. in income into taken were NHO in membership the by coveredare now that future for obligations pension Previouslycapitalized plan. contribution a as plan this Telenorfor accountplan, to this have calculateTelenor’sto able lia is and plan assets the of administratorshareof the However, plan. multiemployeruntil benefit def a is NHO through AFP AFP-scheme. the under retirement for payments the of 100% coverTelenor to 2006, has ASAApril 1 Until agreement existing the to according 2006, April 1 after NHO in AFP-scheme the under retirement for payments the of 25% finances and NHO to premiumTelenor pension unchanged. arepays ASArights NAVO.employees’ through The – scheme previous the with line in is NHO through scheme pension The NHO. transferredto was (AFP) Consequently,plan retirement early agreement-based the employer’sNAVONHO. from their to membership organizationchanged subsidiaries Norwegian the of Telenormost 2004, and In ASA Other operatingexpenses Other 2) 1) 1) 3) 1) 0420 2002 2003 2004 0420 2002 2003 2004 3 6126 86 132 1 313 13 110 0 758 87 205 1)-- - (16) 61 6 24 29 11 24 47 26 38 55 71 18 27 12 - 37 19 41 4 13 24 042003 2004 2 87 220 5)(48) (53) 6100 26 3(52) 33 2 (26) (2) retirements bilities in bilities n premium n from was zation HO ined . r

Telenor ASA Annual Report 2004 PAGE 139 Notes Telenor ASA Telenor ASA Annual Report 2004 PAGE 140 Notes Telenor ASA e iaca tm ,2 ,0 (3,494) 3 6,508 (16) (8) 457 (1,592) 6,324 - 3,548 (923) (1) - (3) (661) (934) (5,907) (2,221) (5,894) 6,537 (1,179) 3 - 3,614 - (1,039) 3,126 (1,520) (70) (1) 3,127 (902) 5,707 (617) 4,534 2,207 79 2,207 3,628 2) 1) items Financial Net assets financial of write-downs) and (losses gains Net assets financial of write-downs Write-downsof reversal and assets financial of disposal on Losses assets financial of disposal on Gains (gain) loss currency foreign Net Totalexpenses financial companies Group to Interestexpenses expenses financial Other external Interestexpenses Totalincome financial companies Group from contribution Group companies Group from Interestincome external Interestincome millions in NOK loss. liquidation the for compensated than more i income tax as recordedarose, asset tax deferred a liquidations the with below.connection 7 In note see AS, Holding Digifone TelenorNye Communicationsof AS I liquidation simultaneous the to related mainly were 2002 in operations of disposal on Losses e eerdtxast 6 ,7 - - - - (46) (218) (264) 1,476 4 4 - 8 1,724 1,740 - - N/A - (2,650) - (187) (190) (3) 1,667 - 568 770 13.1% - 4 1 9 758 747 6 (2,843) (869) 3 3 16.4% 915 (2,653) - 7 (653) (2,650) statements. financial the in asset tax deferred a as reportedtherefore is and carriedforwar losses tax of utilization entail will future years in contributions Group that expected is It years. 8 in expire (18) (18) 788 (5,276) billi 2.7 NOK were 2004, December 31 of Taxas carried2004. forward losses in businesses transferof to due was statement loss pro the in million 915 NOK and million 908 NOK of sheet balance the in assets tax deferred in change the between difference The (1,477) 770 assets deferredtax Net - Valuationallowances 5,885 assets Deferredtaxes/tax - 1 915 forward Taxcarried losses 1,648 liabilities Short-term liabilities Long-term 915 assets Current 5,571 assets Long-term millions in NOK 1,560 December 31 of as Deferredtaxes % Effectiveratein tax Tax(income) expense calculatedyears previoustaxes of estimation Over/under TelenorNye AS of CommunicationsLiquidationI expenses Non-deductible income Non-taxable rate(28%) tax statutory to according taxes income Expected Effectiveratetax millions in NOK Total(income) expense tax income Norway in taxes Deferred Norway in taxes Current Norway in taxes before Profit millions in NOK 06 05 07 accounts. consolidat the in values the reflectbetter to 2002 in performed were Telenorsubsidiaries of in valuesinvestments ASAs the of Write-values. in increase of consequence a as 2002, in made write-downs the of part Telenorlarge 2003, a and reversed 2004 In 2001. for received contribution Group of adjustment an was 2002 contribution GroupNegative Taxes expenses and income Financial operationsof disposal on Losses 1) sesLaiiisAst Liabilities Assets Liabilities Assets 0420 032003 2003 2004 2004 ---- ,0 ,0 (66) 2,000 2,000 0420 2002 2003 2004 0420 2002 2003 2002 2004 2003 2004 d in Telenorin ASA, d n 2002, which 2002, n on, and on, ed , and , fit and fit downs te 53 6(2 6)8 58 244 - 186 87 270 16 167 (131) (69) (4) (58) (55) (32) (19) (4) 66 46 - 20 35 35 - - 300 75 225 - respectively.years, 3–5 and period) licence (the years 12 are assets intangible licen of life useful Estimated years. 5 is department development and research the to related goodwill of life useful Estimated Total Other Licenses Goodwill millions in NOK Telenorthe Group. to systemsadministrative in investments and licenses GSM and UMTS businesses, of acquisition the in goodwill assets Intangible Group.tax the in subsidiaries other in losses tax cover been have Norway in Grouptax the in subsidiaries in income taxable as loss, tax the cover Telenorto to providedASA been have Group no 2002, In realized. was also billion 1.3 NOK of shares same the on taxes before loss accounting an 2002 In statements. f consolidated the to 13 note see AS, Holding TelenorDigifone Nye and Communicationof AS I liquidation the with connection in wa billion, 3.2 NOK approximately of asset tax deferred a to corresponding billion 11.5 NOK approximately of loss tax a 2002 In diffe the in subsidiaries in investments of write-downs of reversal and write-downs calculatedthe was on asset tax deferred No hne npninpa cee(e oe3 116 125 24 - 149 12 12 12 2 10 (36) (9) (8) (27) 3) (4) (4) 13 2) 1) Totalassets financial receivables Other 6 7 (35) 3) note (See assets plan Net 3) note (See scheme plan pension in Changes investments other and shareslong-term Other companies Group Interest-bearingon receivables associatedcompanies on Receivables 70 (19) (16) subsidiaries in Shares millions in NOK 42 28 depreci not are that art, comprise also equipment Other years. 3–5 is equipment other and IT-equipment of life useful Estimated Total equipment Other IT-equipment millions in NOK 08 10 09 Interest-bearing receivables on Group companies are loans from Telenorfrom loans ASA’sare companies Group department. Interest-bearingon receivablesfinance million). 823 (NOK A/S Holding Sonofon and million) 477 (NOK ASABravida to interest-bearingloans primarily comprised it 2003 December 31 of As capital. preference of form the in milli 272 NOK of ASABravida to loans primarily were 2004 December 31 atventures joint and associatedcompanies on Receivables 15. note See Tangibleassets assets Intangible Financial assets Financial 1) 10.420 20 on 043.20 11.431.12.03 31.12.04 31.12.04 2004 downs 2004 2004 31.12.03 01.01.04 31.12.04 31.12.04 2004 downs 2004 2004 01.01.04 2) Accumulated cost amortizations amortizations Accumulatedcost amortizations Accumulatedcost Reclassi- Net additions/ Amortizations and write- and Amortizations additions/ Net Reclassi- write- and Amortizations additions/ Net Reclassi- fication disposals and write- downs as of Book value Book value Book value Book of as downs write- and disposals fication value Book value Book of as downs write- and disposals fication 3) Acc. Acc. 75180,562 87,541 24422,397 22,404 46256,482 64,672 042003 2004 7 1,342 278 6100 26 2- ses and other and ses contributions s realized s rent years. rent utilized to utilized inancial be used in used be ated on. ated on

Telenor ASA Annual Report 2004 PAGE 141 Notes Telenor ASA Telenor ASA Annual Report 2004 PAGE 142 Notes Telenor ASA oa hr-emnnitrs-ern iblte ,4 2,696 3,344 1,055 21,122 2,578 29,166 20,067 Totalliabilities non-interest-bearing short-term liabilities Other companies Group to Liabilities taxes Current expenses Accrued 24,453 payable Dividends etc. deductions tax taxes, Government payable Accounts millions in NOK interest-bearinexternal about information more for statements financial consolidated the to 21 and 20 note See years. previous presentati in change a is This short-term. as reportedare months 12 next the within maturity with liabilities Interest-bearing Totalliabilities interest-bearing interest-bearingliabilities Long-term Totalliabilities interest-bearing short-term interest-bearingliabilities short-term Other account bank Group Drawingon companies Group to interest-bearingliabilities Short-term millions in NOK capacity in 2004 was terminated in 2004. in terminated was 2004 capacityin sa in investment committed the of fulfillment the for million 781 NOK of Telenor’sIntelsat to 2003 December 31 guaranteeof as 2003). December 31 of as million 142 (NOK 2004 December 31 of as part external to subsidiaries by payments and deliveries for million 44 guaranteesNOK approximatelypayment of and performance providedTelenorFurthermore,had 2007. ASA guaranteein The ends 2003). December 31 of as million 162 (NOK million 116 NOK was Decembe 31 guaranteeof the as of amount The provided. was subsidiaries between guaranteedeliveries for fulfillment a 2000, In 200–2007. of period the in end agreements leasing These 2003). December 31 of as million 455 (NOK Digital liabilities leasing financial for 20004, December 31 of as million 268 NOK to guarantees,submittedupTelenor has limited ASA 2003). December 31 of as million 1,004 (NOK million 888 NOK was subsidiaries i recorded 2004 December 31 of as respectively.liability 2010, leasing and The 2009 in end periods leasing The 2003). December as million 271 (NOK 2004 December 31 of as million 151 NOK of fees termination including 2003), December 31 of as million 1,508 2004 December 31 of as III Thor and II Thor satellite-leases the for million 1,141 guaranteessubmittedNOK Telenor has of ASA Group. the of statement the to 24 note see claim, tax Sonofon the on interestaccrued for million 253 guaranteeNOK Telenora of provided2002, ASA In 2008. in requirements lic the of fulfillment the for million 151 guaranteeNOK performance of Telenora provided addition ASA In 2004. December 31 of million 876 NOK to Pakistan, amounting in equipment network mobile of purchaseTelenorguarantees the provided2004 for ASA In Group. the of statement t to 26 note see Sweden, in project Bravidaa ASA’swith to connection deliveries in primarily 2003), December 31 of as million ( 2004 December 31 of as BravidaASA to related million 917 NOK approximately of guaranteea liability includes above table The Group. the of statements financial the to 23 note see above, table the in included not were agreements Lease” QTE Boarder“Cross to related million 7,165 NOK and million 6,459 guaranteesNOK 2003 of and 2004 December 31 At sheet. balance comp the in recordedare liabilities guaranteescorrespondingguarantees bank purchasedthe or includewhere not does table The Guaranteeliabilities millions in NOK 12 11 13 Guaranteeliabilities non-interest-bearingliabilities Short-term Interest-bearingliabilities 46439,603 44,694 55818,481 15,528 ,0 1,776 2,603 - 2,135 ,6 4,155 3,766 042003 2004 2003 2004 042003 2004 5 462 33 450 104 2202 182 41 92 50 45 -- on compared to compared on he financial he in Canalin (NOK tellite financial ense g liabilities. liabilities. g n r 2004 r NOK 854 NOK any’s of 31 of ies as tok odn SNra 0. - 308,767 100.0 7,352,200 1,502,853 - 19,000 199.265 100.0 100.0 100.0 508,665 Norway 1,278,992 100 100.0 20,000 100.0 100.0 Norway 1,268,207 100.0 100.0 Norway Norway 100.0 Norway 100.0 100.0 Norway Norway Norway Norway Norway Norway Norway 84 82 AS TelenorHolding Solutions Business TelenorAS Holding Installasjon AS Holding Itworks AS TelenorII Holding SatelliteNetworks AS TelenorHolding Mobile 66 TelenorAS Holding Satellite Services TelenorAS CommunicationII TelenorAS PartnerKey TelenorAS IntercomHolding TelenorAS Partner Management 112 TelenorInternationalCentreAS TelenorAS Holding Networks thousands NOK in 861 respective their in described as subsidiaries other in shares own level second the in subsidiaries the Severalof subsidiaries. thei and companies, holding primarily are that subsidiaries,Telenor its forth ASA’sin interestsets below ownership table The 952 obligation. purchaseminimum committed no Telenorhas which underASA agreements include not does table This Committedobligations purchase millions in NOK Telenor the Group.of behalf on into entered had Telenorthat agreements primarily were obligations These obligations. purchasecommitted Telenor had 2004 ASA December 31 of As eeo og S owy1001,020 100,0 159,354 4, 110 - 4,607,362 27,452 Norway 100.0 1,150,376 100.0 100.0 100.0 100.0 100.0 Norway Norway Norway Norway Norway Norway Total TelenorAS Norge TelenorAS KB TelenorAS Holding Eiendom TelenorAS Holding Broadcast TelenorTeleserviceAS Holding TelenorAS InvestPartner Business TelenorAS Holding Inma AS II Holding Mobil Dansk 15 14 Shares in subsidiaries at 31 December 2004 December 31 at subsidiaries in Shares Contractualobligations 0520 0720 2009After2009 2008 2007 2006 2005 owy100100 100.0 Norway fiei value % in Office hr we Book owned Share annual reports. annual r directly owned directly r 22.403.823 ASA

Telenor ASA Annual Report 2004 PAGE 143 Notes Telenor ASA Telenor ASA Annual Report 2004 PAGE 144 Notes Telenor ASA Telenor Networks Holding AS Telenor Holding Networks y eeo oieCmuiain SNra 100.0 Norway TelenorAS Satellite Services TelenorAS SatelliteHolding Service AS Smartcash TelenorAS Cinclus TelenorAviation AS Mobile TelenorKapitalforvaltningASA TelenorVentureASA II TelenorForsikringAS TelenorVentureAS IV AS TTYL TakeS.A. Argos It of Care TelenorAS II Communication AS TelenorCommunicationsI Nye Mobile TelenorAS Holding Intercom TelenorAS Russia TelenorKFT Magyarorszag TelenorAS Centre International TelenorTelecom AS Solutions TelenorPrivatAS TelenorAS Svalbard TelenorAS 2 Satellite Services AS Telenor Services Global TelefonselskapetAS subsidiaries through owned subsidiaries in Shares y eeo oieCmuiain IA owy100.0 100.0 Norway 100.0 TelenorAS Solutions Business TelenorTeleserviceAS Holding ASAPartnerBusiness EDB Norway Luxembourg TelenorAS PartnerInvest Business TelenorAS Nye Invest East InfrastructureAB TBS AS Invest Russia Nextra TelenorAS Bedrift TelenorAS Solutions Business AS TelenorHolding Solutions Business OYOAS AS Nordialog A/S Holding Sonofon TelenorTelehuset AS AS Kjeden MobilData CommitAS InternationalAS Mobile Wireless TelenorAS Mobil AS TelenorCommunicationsII Nye Mobile TelenorAS Greece AS TelenorSweden Mobile TelenorAS Invest East TelenorCommunicationsAS Mobile AS TelenorCommunicationsIII Nye Mobile TelecomEuropean S.A. Luxembourg AS TelenorHolding Mobil TelenorAS SatelliteNetworks emr 100.0 Denmark ooc 99.9 Morocco ugr 99.3 Hungary wdn100.0 Sweden owy62.6 100.0 100.0 100.0 Norway 100.0 50.1 100.0 Norway 80.0 Norway 100.0 Norway Norway Norway Norway Norway Norway 100.0 100.0 100.0 Norway 100.0 100.0 100.0 100.0 Norway Norway Norway Norway Norway Norway owy4.0 51.8 Norway 100.0 100.0 Norway 100.0 96.0 Norway 100,0 Norway 48.0 Norway Norway 100,0 100,0 100,0 Norway 100.0 Norway 100.0 Norway 100.0 Norway 100.0 Norway 100.0 Norway 100.0 Norway Norway Norway Norway 100.0 Norway Norway Office in % in Office Share owned Share eeo ino onb jrpr odA owy100.0 100.0 100.0 100.0 100.0 100.0 Norway Norway Norway 100.0 Norway Norway Norway Luxembourg TelenorAS Midt-Norge Eiendom AS TelenorNord FornebuFjordpark Eiendom AS TelenorSyd FornebuFjordpark Eiendom TelenorAS Drift Eiendom AS Telenor4 FornebuKvartal Eiendom AS Telenor3 FornebuKvartal Eiendom AS Telenor2 FornebuKvartal Eiendom AS Telenor1 FornebuKvartal Eiendom TelenorAS EiendomHolding SatelliteS.A. BroadcastingNordic TelenorAS Direkte FrisurfAS TelenorAS Online TelenorAS Internett AS Salsamedia ConaxAS AS ICanal AS Pecheur TelenorInternationalAB Vision AS Norkring AS TV Kabel Digital Canal AS Digital Canal TelenorAB Plus Telenoro.o.d. Bulgaria TelenorLtd. UK TelenorAS Inma TelenorAS Satellite Service TelenorAS Holding Broadcast Cont. Nordialog AS Nordialog TelenorAS Norge TelenorSA Hellas TelenorVestEiendom AS TelenorAS Sør Eiendom TelenorAS Hareløkken Eiendom ra rti 100.0 Britain Great ugra100.0 Bulgaria wdn100.0 100.0 Sweden Sweden owy100.0 100.0 Norway Norway 100.0 100.0 100.0 100.0 85.0 90.0 Norway 100.0 Norway 100.0 Norway Norway 100.0 Norway 100.0 Norway 100.0 Norway Norway Norway 100,0 Norway 37,4 Norway Norway Norway owy52.0 100.0 100.0 Norway 100.0 Norway Norway Norway ree99.0 Greece Office in % in Office Share owned Share

Telenor ASA Annual Report 2004 PAGE 145 Notes Telenor ASA Telenor ASA Annual Report 2004 PAGE 146 Auditor’s Report tion of the net income for the year 2004. year the for income net the of tion approsuggested the approves GeneralMeeting the that recommended and 2004, for Group the for Telenorand for ASA sheet balance a statement loss and profit proposed Directors of Board the approves GeneralMeeting Corporatethe The that recommends Assembly following: the 2005 April Corporate7 TelenorThe decided of AssemblyASA STATEMENTCORPORATETHE FROM ASSEMBLY TELENOROF only.purposes information for prepared been has English to translation The Note: PublicAuthorisedStateAccountant(Norway) (sign) Mamelund Erik AS YOUNG & ERNST 2005 31 March Oslo, assu concern going the statements, financial the concerning 46–52, pages on included report, Directors' the in information the • la by required as information accounting the document and registerproperly to duty its fulfilled has Company'smanagement the • the present and regulations and law with accordance in prepared been have 82–145, pages on includedstatements, financial the • opinion, our In opinion. our for basis reasonable a provides audit our Wethat systems. believe interna and accounting its and affairs Company'sfinancial the of management the of review a comprises also audit standards,an and law Toby presentation.requiredstatement extentoverall financial the the evaluating as well as management, by made mates signif and used principles accounting the assessing includes also audit An statements. financial the in disclosures and amounts supp evidence basis, test a on examining, includes audit An misstatement.material of free arestatements financial the whether assurancereasonableabo obtain to audit the perform and plan we Norway.that requirepracticesin standards and accepted Those gener practicesstandards and auditing and Auditors and Auditing on Act Norwegian the with accordanceWe in audit ourconducted Auditors. and Auditing Norwegian the of requirements the to according information other on and statements financial these on opinion an express to is Officer.Company’sExecutiveOu the Chief of and Directors of Boardresponsibility the are report Directors’ the and statements financi These accounts. consolidated the and notes accompanying the cashflows, and income of statements the sheet, balance the statem financial The profit. the of allocation the for proposal the and assumption, concern going the statements, financial the c report Directors' the in information the auditedWeGroup. also the have for million 6,602 NOK of profit a and company parent fo million 4,656 NOK of profit a showing 2004, December 31 of Telenoras of statementsASA financial annual Wethe audited have 2004 FOR REPORT AUDITOR'S TelenorASA of Meeting To Shareholders' Annual the 2004 FOR REPORT AUDITOR'S and the proposal for the allocation of the profit is consistent with the financial statements and complies with law and regulat and law with complies and statements financial the with consistent is profit the of allocation the for proposal the and Norway in generallypracticesaccepted and standards,principles accounting Norway in generallypracticesaccepted and standards,principles accounting with accordance in ended, then the for cashflows and operations the of results the and 2004, December 31 of as Group the of Companyand the of position cial r responsibility r ents comprise ents icantesti- oncerning orting the orting ions. Act on Act l control l r the r auditing mption, ut year ally al w and w finan- nd pria- the most important to Telenorto importantare: most the which of 1 IFRS in exemptions mandatory and voluntary certain are Telenor.for 2005 December However,there 31 is which statements, financial IFRS first its for date reporting the at standardseffective IFRS with consistent be must 2004 of period comparative the in applied policies accounting that Standards”provides Reporting Financial International of Adoption “First-Time 1 general,IFRS In TELENOR FOR EFFECTS TRANSITIONAL 2005. December 31 ended year the for statements financial the in reported be Auditedaudited.will figures not below.arefigures The identified those than differences other or revisions in result may company’sConsequently,the IFRS in of understandingchanges 2005. for figuresinterim the and 2004 for figures IFRS final the affect could which 2005 during issued be may interpretations and Accordingly,IFRS. pronouncementsof new implementation and interpretation the arounduncertaintyinherent is standards.There management’son these based currentof understanding principles IFRS and GAAP) (N Principles GenerallyAccountingAccepted Telenor’sNorwegian to according principles current accounting between differences the of evaluation an Telenormade has 2004. for figurescomparableincluding IFRS with accordance in information unauditedfinancial provide Telenor2005, will of quarter first the in Starting 2004. for figures comparable the include will and 2005 December 31 ending year the for be Telenor’s IFRS. will statementsfollow financial to IFRS first required be also will companies listed Norwegian agreement, (EEA) Area Economic European the to Due 2005. by Standards”(IFRS) Reporting Financial “International with accordance in statements financial consolidated their prepare EU the within companies listed publicly that require (EU) Union European the of Regulations STANDARDSREPORTING FINANCIAL (IFRS) IMPLEMENTATIONINTERNATIONALOF b Employeebenefits: (b) combinations: Business (a) calculation of social security tax according to IFRS. to according taxsecurity social calculationof the ratediscountand lower a of use the to due primarily GAAP.N to according those is than This higher be will IFRS for 2004 January 1 of as losses actuarial cumulative The 2004. January 1 to subsequent losses and gains actuarial for approach GAAP.N to comparedcorridor 2004 the usefor Telenor to plans expenses pensions decrease and 2004, January 1 of as equity Telenor’sdecrease will This IFRS. to transition of date the at obligations pension on losses and gains actuarial cumulative to IFRS will be higher than that according to N GAAP.N to according that than higher be will IFRS to according goodwill of write-down resulting the and Sonofon for necessary was impairment GAAP.an N 2004, to end year At compared IFRS under reduced be will 2004 for expense zation amorti- and depreciation the IFRS, under assets identified the of profile amortization NGAAP.and depreciation different a to Due with compared consolidation of group’stime the the at equity increasetherefore and values excess net increase will IFRS to accordingallocation price purchase The forward. ried car- were Sonofon in investment original the for valuescarrying the and consolidation of date the at recognized were valuesfair GAAP,Forthe N IFRS. of to 46.5% according only consolidation) of date (the February2004 12 of as valuefair at recognized be will assumed liabilities and assets the restatedand be will purchaseTelenor’sincreasingThe 100%. to interest ownership acquired were Sonofon company associated the of shares 46.5% remaining the February2004, 12 On 2004. January 1 to subsequent combinations business for IFRS follow Telenor will carriedforward. be will GAAP N for determined as basis the and IFRS with accordancerestated in be not will 2004 January 1 Telenor has elected to recognize all recognize to Telenorelected has Business combinations prior to prior combinations Business (e) (d) Cumulative translation differences translation Cumulative (d) payments: Share-based (c) the tables. tables. the below provided are equity and income net on effects various the to Comments2004. January 1 from as IFRS implementing of equity and income net on effects estimated the show below tables The NOK 2 billion in accordance with N GAAP.N with accordance in billion 2 NOK were 2004 January 1 of as differencestranslation cumulative GAAP.N to compared IFRS to Telenor’saccording 2004 in sale on gains the on effect positive a has but 2004, January 1 of as equity total the on effect no have will This IFRS. to transition of date the before arose that differencestranslation exclude shall Krone Norwegian than currencyother in reported entity an of disposal subsequent a on loss or gain the consequence, equity.in a permanently As kept are and IFRS, to transition of date the at zero be to deemed are investments such hedge to used instruments financial on differencestranslation sponding corre- the and operationsforeign all for IFRS to transition of options that did not have any intrinsic value at the grantdate.the at value intrinsic any have not did that options stock GAAP,for recognizedN was with accordanceexpense no In included. be will 2005 January 1 of as vested not had that 2002 November 7 grantedto subsequent options only rules transitional the to Accordingvalue.calculatefair to the model valuation Scholes & TelenorBlack IFRS. a usesto according period vesting the over expensed grantis datethe at pensation Measurement” and Recognition Instruments: “Financial 39 IAS RECONCILIATION OF NET INCOME AND EQUITY FOR THE FOR EQUITY AND RECONCILIATIONINCOME NET OF fair estimated at held-for-sale sharesrecord Telenor will • and objects hedge as designated derivatives and Bonds • of overallrisk the manage to usedrate Interest derivatives • instru- derivative all recordTelenor 2005, will January 1 of As • under hedges as qualifying derivatives for Accounting • be: Telenorto for expected areeffects main The TELENOR GROUP FROM N GAAP TO IFRS TO GAAP N FROM GROUP TELENOR million. 460 NOK approximately by 2005 January 1 of as equity increase will This sold. or impaired until equity of separatecomponent a in recorded be will shares in investments of valuesfair the in Changes value. net. presented were relationships hedge GAAP,ForN sheet. balance the these in grosspresented be will hedges valuerespectively,fairinstruments, for hedge 2005. January 1 to subsequent loss and profit of statement the to recorded be will adjustmentsvalue fair from losses or gains and instruments financial alone stand as treatedGAAP.be N to comparedwill change derivatives These a is This 2005. January 1 of as effective IFRS, to according accounting hedge for Telenor’squalify not will portfolio debt million. 270 NOK approximately by 2005 January 1 of as equity decrease will This value.fair at accounting hedge for qualify that liabilities interest-bearing and ments 2004. December 31 including and to up continue will GAAP N is not implemented until 1 January 2005. January 1 until implemented not is The fair value of share-based com- share-based of valuefair The that existed at the date the at existed that

Telenor ASA Annual Report 2004 PAGE 147 IFRS Telenor ASA Annual Report 2004 PAGE 148 IFRS development of the additional software are recognized based on the on based recognized are software additional the of development GAAP,the N for Under software.fees the the of use the to essential not are that applications additional contracts,Telenordevelop may these with conjunction in addition, In maintenance. software provides Telenorunless software the use to right the have not does customer the as period maintenance software remaining the over revenue as recognized and deferredupgrades softwareis and licenses software of sale from Revenue IFRS. for 97-2)) (SOP Position of (Statement principles GAAP TelenorUS software to applies related recognition delivery.their Foruponrevenue recognizedupgrades software is and GAAP,licenses softwareN of Under sale services. fromrevenuesystems 1a) NOTES e noe538-395,677 (2,299) 319 (1,320) (55) (87) (76) 1,521 - 496 - (5) 6,997 - - (1,561) - 5,358 395 (27) (2,244) - 3,531 9,296 - (1,244) 3.25 6,789 - 2,673 - - 935 - 450 187 0.18 11) 1,526 (87) 53,912 22 496 (557) 410 - 6,602 (1,534) (238) - - - (939) 10,637 - - (12) 60,701 (550) - 2,596 - 8,846 3,07 9,970 5) 6,602 13,871 (47) (51) 54,700 422 (diluted), NOK in share per (loss) income Net 2,651 - 16,050 (104) (51) 939 shares treasury - excluding (basic), NOK in share per - (loss) income Net 8) (550) (20) income Net - - (898) interests Minority (557) - 10) interests minority before (loss)Profit (74) Taxes 61,302 10,684 interests minority and taxes 7) before (loss)Profit - 14,873 items financial Net - items financial of write-downs and (loss) gain Net 10) 2), 10,021 loss currency Net 5) 2), 1b), 74 6) 5), expenses Financial income Financial 4) 3), 1b), 16,070 (550) companies Associated (loss) profit Operating Totalexpenses operating 2) 1b) 550 Write-downs other - amortization and Depreciation goodwill of Amortization expenses and income Other operations and assets fixed of disposal on Losses operatingexpenses Other 2) costs personnel and Salaries capitalized work Own charges traffic materialsand Costsof expenses Operating Totalrevenues operations and assets fixed of disposal on Gains Revenues amounts share per except millions NOK In Loss and Profit Consolidatedof Statement Dividends 12) - 1 776 2 602 2 150 6 776 1 226 540 (216) - 129 (1,730) - - (76) 595 (267) 39,693 (1,825) (139) 34 (342) (935) - 37,650 51 (55) 95 268 (296) - 5,677 63 (19) 550 12) (46) 13) (935) 3.24 - 1,282 - 10) 11) 343 0.18 1a) 37,594 3) 63 9) - 37,237 - 939 4) 5) 5,358 8) IFRS – equity shareholders’ and income Net 3,06 Totaladjustments interests Minority Dividends adjustments TaxIFRS on 6) Adjustedgains Associatedcompanies 8) software of Sale 7) compensation Sharebased obligations retirement Asset Pensions translationdifferences and combinations Business Write-downgoodwill of other – amortization and Depreciation goodwill negative goodwill, of Amortization GAAP N – equity shareholders’ and income Net millions NOK In shares treasury excluding Financial income and expenses and income Financial Telenor is provider of full service application and IT operating IT and application service full Telenorof provider is 9) 2004 adjustments sification 2004 1b) 1a), Note oe20 10.431.12.04 01.01.04 2004 Note earned which is the expected period of the customer relationship. Initial relationship. customer the of period expected the is which earned are fees the that periods the over recognized and deferred are process separateearnings a represent not do that fees installation and connection such IFRS, incurred.Under as expensed are costs related initial all and sale the of time the at revenue in recognized are fees connection and 1b) million. 51 NOK by increases 2004 for interest minority and taxes before profit and Revenues 2004. January 1 of as equity reduces This period. maintenance software remaining the over revenue as recognized and deferred also are fees development these IFRS, Under accounting. of method completion of percentage Under N GAAP,N Under fees telecommunicationsinstallation fromrevenue APreclas- GAAP N 072-(1 60,701 (51) - 60,752 1 6 986 268 - 718 e noeEut Equity Equity income Net 1 432,099 413 319 IFRS due to a larger write-down of goodwill for Sonofon. The book value of value book The Sonofon. for goodwill of write-down larger a to due 8) 2004. January 1 of as equity to recorded was AB Utfors on million 343 NOK of goodwill negative 1, IFRS in rules transitional the with accordance In arise. impairment indicatorsof whenever and basis annual an on impairment for tested is but 2004 January 1 7) above. GAAP, N combinations” businesswith “(a) see compared IFRS to according 2004 in assets fixed tangible and assets intangible other to related expense depreciation and amortization lower 6) million. 27 NOK is expense interest and million 17 NOK is assets fixed of depreciation which of million, 46 NOK of expense subsequent the by affected is 2004 for income Net 2004. January 1 of as equity to recordedare obligations retirement asset of million 296 NOK of accumulatedeffects The timeframe.reasonable a within removals planned and known material to expenses to GAAP,limited areN Under obligations retirement asset asset. related the with accordance in depreciation ordinary as expensed is capitalizedcost the and obligation, retirement asset the to relating recorded is expense accretion an recognition, initial the to Subsequent obligation. retirement asset the of valuedepreciated the to equal amount an with asset, long-lived related the of valuecarrying the increased and obligations the of valuepresent net capitalizedthe and estimated Telenor obligation, has retirement asset an settle Telenorto required is Where obligation. retirement asset an settle to estoppel, promissory a by law,contractual,or by whether obligation, constructive or legal a has 5) equity. on effect no has This IFRS. to according 2004 for million 19 NOK by 4) GAAP.N the to compared IFRS for reversed is expenses personnel and salaries to recorded 2004 for million 95 NOK of losses actuarial of amortization result, a As 2004. January 1 of as equity to recordedare million 1,825 NOK of obligations 3) IFRS. to according expenses operating in included item line separatea to reclassifiedcontracts are loss and reductions workforce for 2) million. 106 NOK of expenses operating other of reduction a and million; 24 NOK of expenses personnel and salaries in increase an million; 20 NOK of trafficcosts and materials of reduction a include 2004 in Costsrevenues.deferreddeferred of amount the to limited deferred, also are costs relatedbecause the income net or equity on effect no has considerablyhigher.areThis sheet balance the in recorded costs related and fees connection Deferred million. 102 NOK by fees connection deferred for 2004 Telenorin revenuesreduced has revenue. as recognized is equipment the time same the at revenue as recognizedtherefore and equipment of sale allocatedto been has fee connection the of Part 2004. January 1 after into entered ments agree- for 00-21 EITF in principles Telenorthe used sale. has of time the cashat in received amount the to limited are elements delivered the to ForTelenor,criteria. performance specified other allocatedamountsor items additional of delivery the on contingent not is that amount the to limited being item delivered the allocatedamountto the with values, fair relative their on based accounting separateof unitsthe among allocatedArrangementis considerationprobable. is item undelivered any of delivery (3) and items; undelivered of valuefair the of evidence reliable and objective is there (2) basis; standalone a on customer the to value has item delivered the (1) criteria: following the arrangementmeet the in deliverables the if accounting separateof unitsinto divided are deliverables multiple arrangementswith Revenue services. or products multiple of performance or delivery the involve arrangementsthat for recognition revenue for consideration the of allocation for 00-21) (EITF) TaskIssue (Emerging Force principles GAAP TelenorUS ForIFRS, applies period. same the over deferred also arerevenue deferred the of extent the to costs related Gains and losses on disposals of fixed assets and operations, expenses operations, and assets fixed of disposals on losses and Gains Compared with N GAAP,primarily N IFRS Comparedunderwith increase write-downs from beginning IFRS, under amortized be longer no will Goodwill in results Sonofon of acquisition the for valuefair the Adjustmentof Telenorwhere exists obligation retirement asset an IFRS, to According expenses personnel and salary increases compensation Share-based pension on losses actuarialunrecognized cumulative IFRS, Under cation and total assets and liabilities increase in accordance with IFRS. with accordance in increase liabilities and assets total and cation classifi- its and sheet balance the impact above described changes The SHEET BALANCE principles. accounting of sets both to according same the is activities operatingfrom cashflow Net change. activities operatingfrom cashflow net and income net between reconciling items and point starting the GAAP,N to compared IFRS for different is 2004 for income net the since However,IFRS. and GAAP N to accordingstatement cashflow the for principles the between differences identified Telenornot method. has indirect and direct the both with statement Telenorcashflow the presents STATEMENTFLOW CASH ASA. PartnerBusiness 13) approved. is it year the in equity shareholders’ of reduction a as recorded is payable dividends IFRS, Under relates. it which in year the 12) GAAP,N above. to compared8) IFRS see for recorded is million 25 NOK of income tax a 2004 in addition, In software. of sale the and obligations 11) differences.translation and obligations pension in changes of effects the to due 2004, for GAAP N to compared increase assets 10) million. 254 NOK of goodwill of amortization GAAP N of reversal the to due mainly GAAP N to compared IFRS to according million 268 NOK by increase companies associated from results the For2004, 2004. January 1 of as IFRS to according equity to recorded was companies associated in tions obliga- retirement asset for million 8 NOK of accumulatedeffect The million. 27 NOK by equity decreases this 2004, January 1 of As method. equity the under for accountedare 50% to 20% of ownership an normally Telenorsignificantinfluence, which have in temporaryinvestments IFRS, Under value.fair to down written or cost at recordedarenature temporary in be to considered is that ownership Telenoran which has in GAAP, N entities to Accordingin investments million. 104 NOK for account obligations pension on losses actuarialunrecognized lative cumu- the for adjustment the which of 2004, January 1 of as million 139 9) 2004. in million 25 NOK only of income tax a and million 50 NOK of goodwill of write-down a in resulted adjustment IFRS the IFRS, to compared GAAP N to according goodwill of amountcarryingdifferent to However,due expense. tax and goodwill of write-down reclassificationbetween a be should statement loss and profit the in GAAP N to compared IFRS for adjustment the principle, In excess. such any for recognizedpreviously amount the increase it shall nor tion, combina- the of cost the over liabilities contingent and liabilities assets, acquiree’sthe of valuefairidentifiable acquirer’s net the the in interest of excess an of creation the in result not procedureshall this principles accounting of sets both to However,according expense. tax a as recorded is asset tax deferred of amountcarrying the in reduction subsequent the and increased, is asset tax deferred of amountcarrying the and reduced is GAAP, N goodwill to of Accordingamountcarrying expense. the an as reduction the recognize and goodwill of amountcarrying the reduce shall acquirer the addition, in IFRS, to Accordingstatement. loss or profit the in recognized was income tax realized the IFRS and GAAP N in Both 2004. in realized were for,accountedparts butinitially were tions combina- business the when separaterecognition for criteria the satisfy not did assets tax The companies. these of acquisition at assets tax deferred recognized not previously to dueGroupCanal Digital and AB Utfors on goodwill of write-downs to related million 50 NOK addition, In above. nations” combi- business “(a) in discussed as acquisition the restatementof the to due and 2004 in IFRS for amortized not is because goodwill 2004, year-end at write-down the before GAAP N than higher is Sonofon Telenor’s share of equity of associated companies decreases by NOK by decreasesTelenor’s companies associated of equity of share Tax on IFRS adjustments relate primarily to pensions, asset retirement asset pensions, to primarily relateadjustmentsTax IFRS on Minority interests for IFRS adjustments relate primarily to EDB to primarily relateadjustments IFRS for interests Minority for GAAP,equity N shareholders’reduces Under payable dividends financial and operations of disposals on gains IFRS, to According

Telenor ASA Annual Report 2004 PAGE 149 IFRS Telenor ASA Annual Report 2004 PAGE 150 Mobile markets mature quickly. Telenor will meet the competition by pursuing synergies and developing new services. AGE 151 P enor ASA Annual Report 2004 enor ASA Annual l Te Telenor ASA Annual Report 2004 PAGE 152 Telenor – 150 years mobile phones were inuse. phoneswere mobile PhoneOlympics"–25,000 as "theMobile describe theWinter GamesatLillehammer public corporation. Internationalmedia TelecommunicationsNorwegian becomesa 1994 ly opensinSt.Petersburg, Russia. Te name toTelenor. GSM,where Northwest TelecommunicationsNorwegian changesits 1995 networks inMontenegro andinBangladesh. Te 1996 l B Germany, networks in andopensmobile networksinUkraine mobile and to build digitalised. Telenor enters intoa consortium The telecommunications networkisfully 1997 munications isbrought toanend. The lastpartofthemonopolyontelecom- 1998 operatormobile DiGiinMalaysia. Te to interveneinthemergerofTelenor and states decide andSwedish The Norwegian 1999 25% intheparent companyUCOM). into TAC/UCOM (30%inTAC inThailand and Te 2000 The headquarters inOsloisinaugurated. 2002 t agreement communica- toroll out mobile w Te 2004 are afewkeymomentsinTelenor’s history: and todayasaninnovativeinternationalplayer. thecompanyispositioned Here F Te icences inGreece andAustria. ions infrastructure inPakistan. angladesh andIreland andisalsoawarded ork inNorway. Telenor enters intoan or 150years,Telenor hasbeenNorway’s telecommunications leading provider, l l l l l enor has a 13% ownership share, official- enor hasa13%ownership GSM tobuild enor isawarded alicence ia. Telenor acquires a33%share ofthe enor ASispartlyprivatised.Telenor buys net- enor opensthefirstUMTSmobile l enor –150years introduced. transmission ofdata overthenetworkis Te changes itsnametoNorwegian TelegraphThe Norwegian Administration 1969 Telecommunications.over byNorwegian Andebu Telephone Association,istaken The lastprivate telephone company, 1974 ti installa- fromnection themainlandtooil TelecomNorwegian openssatellite con- 1976 NMT islaunched. telephone isautomated, and The mobile 1981 munications networkiscompleted. Au 1985 oftelephone setsends. on thesale Telecommunications'Norwegian monopoly 1988 Te 100%byNorwegian owned issued inNorway. OnegoestoTele-mobil, telephony forGSMmobile Two licenses 1991 launched. gramme forthedistribution ofTVsignals is andacomprehensive pro-degree west, itatone- the satellite "Thor",positions TelecommunicationsNorwegian purchases 1992 14% share. TelecommunicationsNorwegian holdsa inHungary, telephony mobile to deliver network.Pannon GSMisestablished own system isofficiallyopened,inTele-mobil's Telecommunications'Norwegian GSM- 1993 ons intheNorthSea. l l tomatisation of the Norwegian telecom- ofthe Norwegian tomatisation ecommunications (Televerket), and ecommunications. Christiania, isofficiallyopenedon 1 January.Christiania, first telegraph Drammen between line, and TelegraphThe Norwegian Administration's 1855 C 1867 C 1869 erage. Norway, thereby securing cov- nationwide Te 1870 in Oslo. BellCompanyInternational opensfortraffic 1880 andStockholm. Christiania between setup,The firstinternationaltelephone line 1893 This isoneofthefirstitskindinEurope. RøstandSørvågen. cially openedbetween Te 1906 exchangeappears. The firstautomatic 1918 in1985). (completed in Norway The firstautomaticexchangesare installed 1920 Te 1946 telephone isintroduced.The manual mobile 1966 A Telegraphover byTheNorwegian Last private cityexchange,Mandal, taken 1967 able connection toDenmarkopened. connection able toGreat Britain connection opened. able dministration. l l l egraphy reaches Vardø inthefar northof ecommunications using radio offi- waves appearinNorway.ex services the rules in the Regulations totheAct intheRegulations the rules from amongtheemployeesaccording to deputy membersshallbeelected byand with Five membersandtwoobservers shall beelectedbytheGeneral Meeting. three deputy membersforthose for aterm of 2years.10membersand and thedeputy membersshallbeelected A The Company aCorporate shallhave § 7 for theCompany. of theBoard are authorised jointlytosign the Vice-Chairmanandoneothermember The ChairmanoftheBoard ofDirectors or § 6 five but maynotexceedeleven. The number ofDirectors shallbeatleast § 5 of NOK6each. 1,750,348,384 shares ofanominalvalue 10,502,090,304.00 dividedinto The Company’s share capital isNOK § 4 or inco-operation withothercompanies. a jointventure partnerinothercompanies its subsidiaries, as orthrough participation be carried onbytheCompany itself, orby business related thereto. Thebusiness may te The Company’s objectsare tocarry ona § 3 ofBærum,municipality Norway. The Company’s registered officeisinthe § 2 C The Company’s nameisTelenor ASA.The § 1 (Last amended15February 2005)–Translation from Norwegian MEMORANDUM ANDARTICLES OFASSOCIATION OFTELENORASA ompany isapubliclimitedcompany. ssembly of15members.Themembers l ecommunications business andanyother .Otherbusiness whichunder Norwegian 2. Approval ofthefinancialstatements 1. the followingbusiness: The Annual General shalltransact Meeting Meeting. than three days priortotheAnnual General theCompanynotify tothateffectnolater subject tofurther decisionoftheBoard, to attend theAnnual General must, Meeting nied bytheagenda. Shareholders wishing shallbeaccompa- ofthemeeting notice The priorwritten notice. twoweeks’ at least Annual General shallbecalled Meeting with before theendofJune eachyear. The The Annual General shallbeheld Meeting A chaired bytheChairmanofCorporate The Company’s General shallbe Meeting § 8 companies, etc. and corporate ofpubliclimited assemblies of representation ontheboard ofdirectors governingtheemployees’right (Norway) r submit nominations totheCorporatesubmit nominations bers totheCorporate Assembly, andto holder-elected membersanddeputy mem- General ofshare- fortheelection Meeting C C The Company anElection shallhave § 9 ofOslo,Norway.held inthemunicipality The Company’s General maybe Meetings elating toPublicelating Limited Companies ommittee tothe is tosubmit nominations ommittee. Thetask oftheElection ssembly. u ofAssociationfalls ortheArticles law of dividend. and annual report, including distribution nder theAnnual General Meeting. for the Election Committee.for theElection C the shareholder-elected membersofthe elected membersoftheBoard ofDirectors, fromSubject shareholder- tomotion foratermbe elected oftwoyears. Committeemembers oftheElection shall members oftheCorporate Assembly. The shareholder-elected membersanddeputy shall beelectedbyandfrom amongthe by theGeneral andonemember Meeting, C member andChairmanoftheElection of theCorporate Assembly isapermanent r members whomust beshareholders orrep- CommitteeThe Election shallconsistoffour to theBoard ofDirectors. elected membersanddeputy members A esentatives ofshareholders. TheChairman orporate Assembly mayadoptinstructions ommittee. Twomembersshallbeelected ssembly for the election ofshareholder- ssembly fortheelection

Telenor ASA Annual Report 2004 PAGE 153 Memorandum and articles of association of telenor asa Telenor ASA Annual Report 2004 PAGE 154 Elected offficers and management Brit ØstbyFredriksen, Drøbak Grethe Henriksen-Alves,Oslo Elin Observers fortheemployees Holm,BarduRagnhild Fr Esther M.Strømme, Oslo Alternates elected bytheemployees Arne Jenssen,Trondheim Stein ErikOlsen,Flaktveit Lillehammer Jan Riddervold, A Berit Kopren, Stavanger Members elected bytheemployees Siri Pettersen Strandenæs (3.alternate) Stener Lium, Ranheim(2.alternate) Inger-Grethe Solstad, Stavanger (1.alternate) Alternates elected bytheshareholders Haslestad,Germany Jørgen Ole Signe MarieJore Ritterberg, Oslo Nils-Edvard Olsen, Kirkenes Karde,Hans Olav Tromsø Rune Selmar, Oppegård Jostein Devold,Kristiansand Randi Braathe, Rygge Jan ErikKorssjøen,Kongsberg Bjørg Simonsen,Andfiskå Chairman: MonaRøkke,Tønsberg Members elected bytheshareholders Co ELECTED OFFICERSANDMANAGEMENT The riskfactors associated withTelenor’s are businessalsodescribedin form20-F, activities whichhasbeen submitted tothe t This report contains statements regarding thefuture prospects ofTelenor, profit figures, involvinggrowth initiatives, strate (Available on:www.telenor.com/ir/annual_reports) we described inaseparate onTelenor's section andresults,including is goals,initiatives Te S www 1994 are onTelenor’s published website: Te ontheweb reports Annual ainties inherent inallstatementsainties regarding thefuture can toactual lead substantially profits fro anddevelopment deviating stri Skare, Bergen ocial report ocial ancisco M.Rasmijn,Nesoddtangen l l bsite: enor’s corporate socialresponsibility, enor’s annual reports since rporate Assembly .telenor.com/ir/annual reports www .telenor.com/csr Hjørdis Henriksen,Sortland Helge Enger, Brandval Roger Rønning,Skotterud Marianne Losnegaard Jensen,Oslo Hundere,Ragnhild Otta Alternates elected by theemployees Harald Stavn, Kongsberg Irma Tystad, Trysil Pe Members elected by theemployees P Oslo Liselott Kilaas, John Giverholt,Asker Jørgen Lindegaard, Sweden Hanne deMora, Switzerland Vice-chairman: BjørgVen, Oslo Enger,Chairman: Thorleif Oslo Members elected bytheshareholders The Board ofDirectors Results forthe3rd quarter 2005 Thursday 27October Results forthe2ndquarter 2005 F Annual General Meeting F Results forthe1stquarter 2005.Capital MarketsDay W 2005 calendar Financial riday 22July riday 20May aul Bergqvist (from 7 April 2005) aul Bergqvist(from 7April ednesday 27 April r Gunnar Salomonsen,Skien gies and objectives. Therisksanduncer-gies andobjectives. m whathasbeenexpressed orimplied.

Securities andExchangeCommission: Stig EideSivertsen Stig Te Executive VicePresident andheadof Jan Edvard Thygesen Executive VicePresident Morten KarlsenSørby network operations of Telenor’s andfixed Nordic mobile Executive VicePresident andhead Johansen Arve of Telenor’s operations mobile international Senior Executive VicePresident andhead T and ChiefFinancialOfficer Senior Executive VicePresident Jon Fredrik Baksaas Chief Executive Officer Group Management orstein Moland l enor’s Broadcast operations 241 450

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Telenor ASA N-1331 Fornebu, Norway Telephone: +47 67 89 00 00

Investor Relations: Tel: +47 67 89 24 70 e-mail: [email protected]