1

1

Q1JOHAN DENNELIND,

PRESIDENT & CEO

INTERIM REPORT

JANUARY – MARCH 2017

PHONERO TRANSACTION CLOSED PHONERO TRANSACTION CLOSED

TELIA BRAND IN ALL MARKETS TELIA BRAND IN ALL MARKETS

MOBILE REVENUES DRIVING GROWTH MOBILE REVENUES DRIVING GROWTH

EBITDA IN LINE WITH OUR EXPECTATIONSEBITDA IN LINE WITH OUR EXPECTATIONS

STRONG CASH FLOW GENERATION STRONG CASH FLOW GENERATION

BALANCE SHEET STRENGTHENED WITH BOND ISSUEBALANCE SHEET STRENGTHENED WITH BOND ISSUE

Q1 2017 HIGHLIGHTS- NORDICS & BALTICS

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“HAPPY WITH REVENUE GROWTH, BUT NOT

WITH COSTS”

2

REVENUE GROWTH IN MAJORITY OF MARKETSREVENUE GROWTH IN MAJORITY OF MARKETS

STRONG EBITDA DEVELOPMENT FOR THE REGIONSTRONG EBITDA DEVELOPMENT FOR THE REGION

EXIT FROM TAJIKISTAN COMPLETEDEXIT FROM TAJIKISTAN COMPLETED

UZBEK LEGAL SETTLEMENT PROVISION CHANGED TO

USD 1.0 BILLION (USD 1.45 BILLION)

UZBEK LEGAL SETTLEMENT PROVISION CHANGED TO

USD 1.0 BILLION (USD 1.45 BILLION)

Q1 2017 HIGHLIGHTS- EURASIA UPDATE

3

“PROGRESS MADE ON

EURASIA EXIT AND UZBEK LEGAL

SETTLEMENT”

SERVICE REVENUE DEVELOPMENTOrganic growth, external service revenues

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Continuing operations

+1.4%+1.4%

-0.9%

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

HEALTHY REVENUES BUT COSTS TEMPORARILY HIGHER

EBITDA DEVELOPMENTOrganic growth, excluding non-recurring items

• Service revenue growth in 6 of 7 markets

• Revenue growth still hampered by fixed telephony and B2B

• Strong EBITDA growth in Norway partly compensating for Sweden and Finland

4

Continuing operations

3

0%

1%

2%

3%

4%

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

STRONG MOBILE DEVELOPMENT ACROSS MARKETS

MOBILE BILLED SERVICE REVENUESContinuing operations, organic growth y-o-y

Sweden

+1.3%Sweden

+1.3%

MOBILE SERVICE REVENUES Organic growth, Q1 2017 y-o-y

Finland

+5.7%Finland

+5.7%

Norway

+5.3%Norway

+5.3%

Denmark

+4.3%Denmark

+4.3%

+2.6%+2.6%

• Growth in mobile billed service revenues was amplified by strong development in wholesale

• Mobile service revenues grew 2.1 percent in the Baltics

• Finland and Norway stand out but all markets contributed to the mobile billed revenue growth

5

STRATEGY REMAINS & PRIORITIES FOR 2017 ARE CLEAR

OPERATIONAL

FREE CASH FLOW

(>SEK 7 BILLION)

EBITDA

(IN LINE WITH

2016 LEVEL)

CAPITAL

ALLOCATION

6

STRATEGY PRIORITIES FOR 2017

Enhance

the core

Explore opportunities close

to the core

Value through superior

network connectivity

Customer loyalty

through convergence

Competitive

operations

4

MAKING PROGRESS TOWARDS CONVERGENCE VISION

Best digital customer

service

ON THE

CUSTOMER’S

TERMS

LIKE THE...

ON THE

CUSTOMER’S

TERMS

LIKE THE...

SEAMLESS

ACROSS ALL

TOUCH-POINTS

LIKE VIA THE...

SEAMLESS

ACROSS ALL

TOUCH-POINTS

LIKE VIA THE...

DEVICE AND

ACCESS

INDEPENDENT

SUPPORTED BY…

DEVICE AND

ACCESS

INDEPENDENT

SUPPORTED BY… Superior fixed

infrastructure

TELIA CONVERGENCE VISION -B2C

TELIA CONVERGENCE VISION -B2C

Adjacent services like

Telia Sense & Telia Zone

Best mobilenetworks

Value-loaded mobile

portfolio

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• Focus on customers with demand for

seamless, platform independent and

high quality offerings

• Active migration work and trickle down

effect over time

NOW TELIA ACROSS MARKETS

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AFTER REBRANDING IN

LITHUANIA & FINLAND...

...ALL SUBSIDIARIES ARE NOW TELIA

Q1

2016

Q1

2016

Q1

2017

Q1

2017

5

YOUNITE: OUR WAY OF MAKING MORE IMPACT

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UNITED NATIONS

SUSTAINABLE DEVELOPMENT

GOALS

OUR ACTIVE CONTRIBUTION

THE ”ALL IN” STRATEGY YOUNITE

• Connecting the unconnected

• Education for all

• A healthy and safe society

• Digital entrepreneurship and innovation

EMPLOYEE

ENGAGEMENT

STRONG NORWAY TO BECOME EVEN STRONGER

• Approved by the Norwegian authorities and closed

in April

• Purchase price of NOK 2.3 billion

• EV/EBITDA multiple of 3.7x

• Doubling Telia’s enterprise mobile market share

from 13 percent to 27 percent

• Brings a strong product portfolio

• Synergy target of NOK 400 million

• The nature of the synergies in line with previous

M&A made in Norway (NOK 1 billion)

+

10

6

Q1 SUMMARY

EXECUTING ON STRATEGY & PR IORIT IES CLEAR FOR 2017

MORE TO BE DONE ON COSTS

COMFORTABLE ON GUIDANCE

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12

Q1CHRISTIAN LUIGA,

EXECUTIVE VICE PRESIDENT & CFO

INTERIM REPORT

JANUARY – MARCH 2017

7

7,745 7,733

3,589 3,360

Q1 16 Q1 17 Q1 16 Q1 17

HIGHER COSTS IMPACTED SWEDEN EBITDA

• Pressure on legacy revenues and an increased cost level burdened EBITDA

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Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

+1.1%+1.1%

-2.9%-2.9%

+1.0%+1.0%

B2B

B2CB2C excl. fiber installation revenues

B2C incl. fiber installation revenues

SERVICE REVENUES BY SEGMENTOrganic growth, external service revenues

• Continued stable B2C segment

• Fiber installation revenues fairly flat y-o-y

• SME/SoHo still positive and B2B large is stabilizing

SERVICE REVENUES* & EBITDA**SEK million, reported currency & organic growth

* External service revenues **Excluding non-recurring items = Organic growth

-6.4%-6.4%

-0.3%-0.3%

ELEVATED COST LEVEL IN SWEDEN

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OPEX DEVELOPMENT SWEDEN Reported currency

+6.2%

Q1 17Other

costs

Customer

experience

Gross

savings*Q1 16 IT

• OPEX development not satisfactory

• Year on year OPEX impacted by:

• More transformation and compliance IT projects in pre-study phases (impacting OPEX and not CAPEX)

• Increased spend on customer experience

• OPEX comparables to come down in the coming quarters

* COGS savings not included in the above chart

8

249244

248

259256 257

Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

EXCEPTIONAL PERFORMANCE IN NORWAY

1,7241,964

665868

Q1 16 Q1 17 Q1 16 Q1 17

SERVICE REVENUES* & EBITDA**SEK million, reported currency & organic growth

+20.7%+20.7%

+5.4%+5.4%

Service revenues EBITDA

• Revenue growth mainly from rise in mobile ARPU and positive wholesale development

• Higher revenues coupled with good cost control resulted in significant leverage on EBITDA

15

MOBILE BLENDED ARPULocal currency

• ARPU growth y-o-y from subscription mix and upsell

• Somewhat positive ARPU development Q1 compared to the previous quarter

* External service revenues **Excluding non-recurring items = Organic growth

1,025 1,063

137 140

Q1 16 Q1 17 Q1 16 Q1 17

2,740 2,837

1,016 974

Q1 16 Q1 17 Q1 16 Q1 17

UNDERLYING FLAT EBITDA IN FINLAND & DENMARK

* External service revenues **Excluding non-recurring items

Service revenues EBITDA

= Organic growth

SERVICE REVENUES* & EBITDA**SEK million, reported currency & organic growth

SERVICE REVENUES* & EBITDA**SEK million, reported currency & organic growth

-5.9%-5.9%

+1.5%+1.5%

+0.4%+0.4%

+1.3%+1.3%

Service revenues EBITDA

• Strong mobile revenue growth trend intact

• Elevated cost level due to one-offs including rebranding impacting by ~6 percent

• Pressure on fixed telephony offset by mobile growth

• EBITDA supported by lower resource and marketing expenses

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9

181206

277 283

135 143

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Estonia Lithuania Latvia

Q1 16 Q1 17

LithuaniaQ1 16 Q1 17

Latvia

+0.3%+0.3%

Q1 16 Q1 17

Estonia

POSITIVE READ ACROSS THE BALTICS

+11.5%+11.5%

+3.6%+3.6%

+4.9%+4.9%

+0.7%+0.7%

+2.2%+2.2%

SERVICE REVENUESOrganic growth, external service revenues

EBITDA*SEK million, reported currency & organic growth

= Organic growth * Excluding non-recurring items

• Mobile and fixed revenues grew in all markets

• Growth in fixed broadband and TV mitigated pressure from fixed telephony

• Strong development in Estonia from revenue growth together with good cost control

• Lithuania somewhat held back by rebranding costs

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INCREASED TOTAL EPS

TOTAL EPS DEVELOPMENTSEK, continuing and discontinued operations

* Excluding income from associates and non-recurring items

1.61

0.87

Q1 16 Operatingincome*

-0.05

Discontinuedoperations

+0.74

Q1 17Other

+0.82

Non-recurringitems

Associates

-0.04-0.01

+0.02

CONTINUING OPERATIONS

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10

IMPROVED CASH FLOW & LOWER NET DEBT

47.950.8

Q1 17OtherCash

CAPEX

Opera-

tionsQ4 16

1.69x1.69x

1.58x1.58x

= Leverage ratio19

FREE CASH FLOW R12 Continuing and discontinued operations, SEK in billions

NET DEBT DEVELOPMENT*Continuing and discontinued operations, SEK in billions

0

4

8

12

16

20

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Discontinued operations

Dividends from associates net of taxes

Continuing operations excl. associates

Continuing operations incl. associates

* Not including hybrid bond issuance and 1st dividend payment (recorded in April)

8.9

BALANCE SHEET FLEXIBILITY FROM HYBRID BOND ISSUE

ATTRACTIVE

TIMING & PRICE

ADDING

INEXPENSIVE

EQUITY TO THE

BALANCE SHEET

ATTRACTIVE

TIMING & PRICE

ADDING

INEXPENSIVE

EQUITY TO THE

BALANCE SHEET

STRONG

COMMITMENT TO

CREDIT RATING &

OUR LEVERAGE

TARGET

STRONG

COMMITMENT TO

CREDIT RATING &

OUR LEVERAGE

TARGET

INCREASED

BALANCE SHEET

FLEXIBILITY TO

PURSUE THE

NORDIC/BALTIC

STRATEGY

INCREASED

BALANCE SHEET

FLEXIBILITY TO

PURSUE THE

NORDIC/BALTIC

STRATEGY

STRENGTHENS

THE AMBITION OF

PROVIDING HIGH

REMUNERATION

TO OUR

SHAREHOLDERS

STRENGTHENS

THE AMBITION OF

PROVIDING HIGH

REMUNERATION

TO OUR

SHAREHOLDERS

20

Rating A- confirmed and removed

from S&P’s CreditWatch negative

after issuing the hybrid bond but a

negative outlook was added

Rating A- confirmed and removed

from S&P’s CreditWatch negative

after issuing the hybrid bond but a

negative outlook was added

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0.0

0.5

1.0

1.5

2.0

2.5

Levera

ge r

atio

LEVERAGE HEADROOM DESPITE LEGAL SETTLEMENT

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CURRENT AND ILLUSTRATIVE PRO FORMA LEVERAGE*Leverage, illustrative purpose only

LEVERAGE

TARGET

2.0X

+/-

0.5X

* Actual leverage Q1, hybrid bond issuance of SEK 15 billion, SEK 4.3 billion dividend payment and the Uzbek legal settlement provision per March 2017

1.6x

Actual

Q1 2017

Actual

Q1 2017

Uzbek legal

settlement

provision

Uzbek legal

settlement

provision

1.3x

1.5x

1.8x

Hybrid

bond

Hybrid

bond

Dividend

(1st tranche)

Dividend

(1st tranche)

+ + +

OUTLOOK FOR 2017 UNCHANGED

* Free cash flow from continuing operations, excluding licenses and dividends from associated companies

** Excluding non-recurring items, in local currencies, excluding acquisitions and disposals

Above SEK 7 billion (SEK 5.5 billion in 2016)

Op. FCF & dividends from associates should cover a dividend around the 2016 levelOPERATIONAL FCF*

Around the 2016 levelEB ITDA* *

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12

Q&A

PROGRESS IN OUR DISCUSSIONS WITH AUTHORITIESPROGRESS IN OUR DISCUSSIONS WITH AUTHORITIES

RECENT DEVELOPMENTS HAVE LED TO REVISED

ESTIMATE OF MOST LIKELY OUTCOME

RECENT DEVELOPMENTS HAVE LED TO REVISED

ESTIMATE OF MOST LIKELY OUTCOME

CHANGING PROVISION TO USD 1.0 BILLION

(PREVIOUSLY USD 1.45 BILLION)

CHANGING PROVISION TO USD 1.0 BILLION

(PREVIOUSLY USD 1.45 BILLION)

NO FINAL RESOLUTION HAS BEEN REACHED AND NO

ASSURANCES THAT FINAL AMOUNT MAY NOT DIFFER

NO FINAL RESOLUTION HAS BEEN REACHED AND NO

ASSURANCES THAT FINAL AMOUNT MAY NOT DIFFER

UZBEK LEGAL SETTLEMENT UPDATE

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“PROVISION CHANGED FROM USD 1.45 BILLION TO USD 1.0 BILLION”

13

DEBT MATURITY SCHEDULEMMO

0

1

2

3

4

5

6

7

8

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

0

2

4

6

8

10

12

2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051 2054 2057 2060 2063

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DEBT MATURING NEXT 12 MONTHS

DEBT PORTFOLIO MATURITY SCHEDULE – 2018 AND ONWARDS

SEK billion

SEK billion

FINANCIAL SUMMARY Q1 2017

* External service revenues

** Excluding non-recurring items

Q1 2017 Q1 2016 CHANGE (%)

Net sales (SEK million) 19,252 20,394 -5.6

Change local organic (%) +3.0

Service revenues* (SEK million) 16,506 17,434 -5.3

Change local organic (%) +1.4

EBITDA** (SEK million) 6,149 6,217 -1.1

Change local organic (%) -0.9

EBITDA** Margin (%) 31.9 30.5

Total EPS (SEK) 1.61 0.87

Total free cash flow (SEK million) 4,087 2,293

of which continuing operations 3,861 2,071

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14

MAR 31, 2017 DEC 31, 2016

Return on equity*, % 8.0 4.5

Return on capital employed*, % 9.6 7.7

Equity/assets ratio, % 37.2 34.0

Net debt/equity ratio, % 53.8 58.9

Net debt/EBITDA** ratio, multiple 1.58 1.69

Net debt/assets ratio, % 20.0 20.0

* Rolling 12 months ** Rolling 12 months and excluding non-recurring items

FINANCIAL KEY RATIOS Q1 2017

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FORWARD-LOOKING STATEMENTS

Statements made in this document relating to future status or circumstances, including

future performance and other trend projections are forward-looking statements.

By their nature, forward-looking statements involve risk and uncertainty because they

relate to events and depend on circumstances that will occur in the future. There can

be no assurance that actual results will not differ materially from those expressed or

implied by these forward-looking statements due to many factors, many of which are

outside the control of Telia Company.

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