TeliaSonera Acquisition of MCT Corp. Coscom in Uzbekistan Indigo and Somoncom in Tajikistan Roshan in Afghanistan Strategic Acquisition Rationale
• TeliaSonera will be the leading operator in Central Asian markets – Now: Uzbekistan, Tajikistan and Afghanistan – Existing via Fintur: Kazakhstan, Azerbaijan , Georgia and Moldova – Existing direct & unconsolidated: Turkey (incl. Ukraine indirectly) and Russia (incl. Tajikistan indirectly)
• Attractive Growth Opportunity in terms of Addressable TeliaSonera MCT Market (Scandinavia, Baltics) – 10%-20% mobile penetration Fintur Turkcell – Less than 10% Fixed Line Penetration à wireless is attractive Megafon Yoigo
• Natural Addition to TeliaSonera’s Eurasian Footprint – Uzbekistan, Tajikistan and Afghanistan complement current map in Central Asia – Significant economic/cultural ties between Kazakhstan, Azerbaijan, Tajikistan and Uzbekistan
• Company and Shareholders Honoring International Business Practices – Company’s operations developed by international practices: audited, subject to US rules
Acquisition Cost TeliaSonera
Acquisition of 100% of MCT Corp for a 100% enterprise value of approximately SEK 2.0 Sonera billion (USD 300 million) holding interest in Holding BV four Eurasian mobile operators: 100% • 99.97% interest in Uzbek-American Joint Venture “Coscom” LLC (Coscom) in MCT Corp. Uzbekistan Delaware Corporation • 60% interest in CJSC “Indigo- Tajikistan” (Indigo-Tajikistan) in Tajikistan and Venture Holdings Local Ventures • 59.4% in CJSC Joint Venture Management and MCT Dev. Corp. “Somoncom” (Somoncom) in Tajikistan Financing Companies Delaware Corp. 100% 100% Coscom • 12.25% interest in “Telecom Development Indigo-Tajikistan CATD B.V. 100% Company Afghanistan Limited” (Roshan) in Netherlands Afghanistan 60% Somoncom 99%
Telecom Dev. Co. Roshan Afghanistan B.V. 100% 12.25% MCT Telecom Corp. Coscom Delaware Corp. 99.97% 100%
Acquired Companies
2006 MCT Market Market Company Standard Subscribers Interest Revenues EBITDA EBITDA Share (E) Position (E) USD m USD m Margin
(as of May 31, 2007)
GSM 900/ Coscom/Uzbekistan 99.97% 392,929 11% #3 26.3 5.8 22% 1800 Mhz
Total Tajikistan 377,192 27% #2 27.3 13.7 50%
GSM 900 / 1800 Indigo 60.00% 171,943 12% - 14.0 6.9 49% 3G-UMTS
GSM 900 /1800 Somoncom 59.40% 205,249 15% - 13.3 6.8 51% 3G-UMTS
GSM 900 / Roshan/Afghanistan 12.25% 1,300,300 50% #1 191.3 66.5 35% 1800 Mhz New Mobile Markets Uzbekistan Tajikistan Afghanistan
Mobile market consists of four Mobile market consists of nine operators; Five GSM licenses, two of which were operators, including three GSM and 5 GSM/UMTS (2 belong to MCT) to commence operations in 2007. one CDMA operators. 4 CDMA
Market Share of Mobile Operators Market Share of Mobile Operators Market Share of Mobile Operators
As of May 2007E As of May 2007E As of May 2007E
Perfectum Other (CDMA), (CDMA), ~ 4% ~ 13% AWCC, ~ 38% Coscom, ~ 11% Uzdunrobita Takom (Beeline), Babilon (MTS), ~ 52% ~ 13% Mobile, ~ 35% Areeba, Unitel Roshan, ~ 12% (Beeline), MLT ~ 50% ~ 33% (MegaFon), ~12% Indigo*, ~27%
* Indigo and Somoncom combined Coscom, Uzbekistan
Subscribers (as of May 31, 2007) 392,929 Market Share 11% Position in the Market # 3 Prepaid / Total Subs (approx.) 63% • First GSM operator in Central Asia MCT Interest 99.97% • Leader in serving Uzbekistan Standard GSM 900/1800 Mhz corporate segment Network Launch 1997 • High quality customer service 20% territory base, Coverage 66% population base • Well established distribution 2006 ARPU (monthly) USD 7.4 network in main cities Coscom (Postpaid) Brand • ISO 2001 quality certification Real (Prepaid)
Revenues (2006YE) USD 26.3 million
EBITDA (2006YE) USD 5.8 million
EBITDA Margin (2006YE) 22% Somoncom,Tajikistan
Subscribers (as of May 31, 2007) 205,249 Market Share 15% Position in the Market # 2 (Combined with Indigo) • First GSM operator in Tajikistan Prepaid / Total Subs (approx.) 58% • Leader in the North Tajikistan MCT Interest 59.4% • Seamless network with Indigo GSM 900 / 1800 Mhz Standard • Strong Coverage Area 3G-UMTS GSM:1999 in Khujand, center • Strong Distribution Network of the noth regions. Network Launch UMTS: 2006 license received and trial launched
All cities in the North regions, Coverage (90% of population jointly with Indigo)
2006 ARPU (monthly) USD 9 Revenues (2006YE) USD 13.3 million Indigo (Postpaid) EBITDA (2006YE) USD 6.8 million Brand Salom & Real (Prepaid) EBITDA Margin (2006YE) 51% Indigo,Tajikistan
Subscribers (as of May 31, 2007) 171,943 Market Share 12% Position in the Market # 2 (Combined with Somoncom) Prepaid / Total Subs (approx.) 20% • Seamless network with Somoncom MCT Interest 60% • 40% corporate customer share GSM 900 / 1800 Mhz Standard • Strong Coverage Area 3G-UMTS GSM: 2001 in Dushanbe to cover South Network Launch regions of Tajikistan. UMTS: 2006
All cities in the South Coverage regions (90% of population jointly with Somoncom)
2006 ARPU (monthly) USD 12.2
Revenues (2006YE) USD 14.0 million Indigo (Postpaid) Brand EBITDA (2006YE) USD 6.9 million Salom & Real (Prepaid) EBITDA Margin (2006YE) 49% Roshan, Afghanistan
Subscribers (as of May 31, 2007) 1,300,300
Market Share 50%
Position in the Market # 1
Prepaid / Total Subs 100% • The leading mobile operator in Afghanistan MCT Interest 12.25% • Strong network coverage Standard GSM 900/1800 Mhz • Strong brand Network Launch 2003 • Strong management 2006 ARPU (monthly) USD 21.7
Brand Roshan (Prepaid)
Revenues (2006YE) USD 191.3 million
EBITDA (2006YE) USD 66.5 million
EBITDA Margin (2006YE) 35% Corporate Social Responsibility
• TeliaSonera has a transparent way of working in CIS countries – We are committed to our Code of Ethics & Conduct – We will ensure solid internal control environment • TeliaSonera recognizes its corporate social responsibilities and will keep acting as a good citizen in the new markets The MCT acquisition underlines TeliaSonera’s strategy in Eurasia
– To be the leading Eurasian mobile operator – Create shareholder value by considering all possible value enhancing alternatives – Combine Eastern positions to create stronger platform for growth – Evaluate new acquisition opportunities – Continue the profitable growth within the current footprint Appendix Country information Appendix 1. Overview of the New Countries
Country: Uzbekistan Tajikistan Afghanistan
Population: 27.8 million (July 2007) 7.1 million (July 2007) 31.9 million (July 2007)
Area: 450,000 sq km 143,100 sq km 647,500 sq km
GDP: USD 10.78 billion (2006 est.) USD 2.1 billion (2006 est.) USD 8.8 billion (2006 est.)
Mobile Service USD 460 million / 1.7% USD 170 million / 7% USD 450 million / 4.3% Revenues (07E) & ~ as % of GDP: Mobile 3.6 million / 13% 1.6 million / 20% 2.6 million / 8% Subscribers and Penetration Rates (May 07E) Fixed Line 1.98 million / 7.4% 250,000 / 3.8% 110,000 / 0.4% Subscribers and
Teledensity: Internet 425 providers / 1,080,000 12 providers / 6,000 internet 8 providers / 30,000 internet Development: internet users users users # of Operators 4 operators, including 3 GSM 9 operators; 5 GSM licenses, 2 of which were and 1 CDMA operators. 5 GSM/UMTS (2 belong to MCT) to commence operations in 4 CDMA 2007.
Source: CIA World Factbook Appendix 2. New Countries-Demographics
Country: Uzbekistan Tajikistan Afghanistan
Age 0-14 years: 32.9% 0-14 years: 37.9% 0-14 years: 44.6% Distribution: 15-64 years: 62.3% 15-64 years: 57.4% 15-64 years: 53% 65 years and over: 4.8% 65 years and over: 4.8% 65 years and over: 2.4% Median age: 22.7 Median age: 20 Median age: 17.6 Gender 50.4% female, 49.6% male 50% female, 50% male 51% male, 49% female Distribution: Ethnic Uzbek 80%, Russian 5.5%, Tajik Tajik 79.9%, Uzbek 15.3%, Pashtun 42%, Tajik 27%, Distribution: 5%, Kazakh 3%, Karakalpak Russian 1.1%, Kyrgyz 1.1%, Hazara 9%, Uzbek 9%, Aimak 4%, 2.5%, Tatar 1.5%, other 2.5% other 2.6% Turkmen 3%, Baloch 2%, other 4%
Religions: Muslim 88%, Eastern Orthodox Sunni Muslim 85%, Shi'a Sunni Muslim 80%, Shi'a Muslim 9%, other 3% Muslim 5%, other 10% 19%, other 1% Working 53% 51% 60% Population: Source: CIA World Factbook Appendix 3. New Countries-Economic Indicators
Country: Uzbekistan Tajikistan Afghanistan
USD 10.78 billion (2006 GDP: USD 2.1 billion (2006 est.) USD 8.8 billion (2006 est.) est.) GDP/capita USD 2,000 (PPP) USD 1,300 (PPP) USD 800 (PPP) (PPP):
Inflation: 7.6% 7.5% 16.3% GDP by sector: Services: 43.2% Services: 48.8% Services: 38% Agriculture: 31.1% Agriculture: 22.7% Agriculture: 38% Industry: 25.7% Industry: 28.5% Industry: 24% Mobile Service Revenues/GDP: 1.7% 7% 4.3% Major Potential investment by Continued privatization of medium and The many legislative changes Investors: Russia and China in large state-owned enterprises could proposed are anticipated to Uzbekistan's gas and oil increase productivity. In 2006, substantial greatly improve the investment industry may boost growth infrastructure development credits to climate in Afghanistan. prospects. improve its roads and electricity transmission network. To help increase north-south trade, the United States is constructing a USD 36 million bridge linking Tajikistan and Afghanistan.
Source: CIA World Factbook