interim REPORT JANUARY june 2019 MOVING IN THE RIGHT DIRECTION - PowerPoint PPT Presentation

JOHAN DENNELIND PRESIDENT & CEO CHRISTIAN LUIGA EXECUTIVE VICE PRESIDENT & CFO interim REPORT JANUARY – june 2019

MOVING IN THE RIGHT DIRECTION SERVICE REVENUES SEK 6.9 -2% -4% -1.4% -2.6% BILLION EBITDA EBITDA OPERATIONAL FREE CASH FLOW OPERATIONAL FREE CASH FLOW SERVICE REVENUES Q1 19 Q2 19 Q1 19 Q2 19 YoY growth* YoY growth* • Driven by mobile service • Sequential improvement • On track to reach full year revenues and B2B although H1 still weak outlook • Full year cash flow composition slightly different versus previously expected 2 * Like for like, excluding IFRS 16 impact

SERVICE REVENUE DEVELOPMENT -2% 0% -3% -1% SERVICE REVENUE DEVELOPMENT -1% -4% SERVICE REVENUE DEVELOPMENT* 0% -3% SERVICE REVENUE DEVELOPMENT* -3% -1% -0.8% -0.8% -1.4% -1.4% SERVICE REVENUES IMPROVED SEQUENTIALLY Organic & like for like growth, external service revenues Organic & like for like growth, external service revenues Like for like growth, external service revenues Like for like growth, external service revenues Service revenue growth Q1 19 Q2 19 Service revenue growth excl. Telia Carrier Sweden Finland Norway LED** Group Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 • Sequentially better due to less fixed erosion and • Better in B2B and less legacy pressure in Sweden mobile back to positive • Norway neutral Q2 from growth in wholesale and Get • Still loss of low-margin revenues in Telia Carrier development remained flat * 2018 based on the previous organic growth definition (stable FX and M&A excluded) 3 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period) ** LED=Lithuania, Estonia & Denmark

MOBILE IMPROVED - SUPPORT FOR BETTER H2 2019 B2B WINS AND PRICe OPTiMIZATION EFFECTS FROM NEW MOBILE PORTFOLIO IN SWEDEN EFFECTS FROM NEW MOBILE PORTFOLIO IN SWEDEN B2B WINS AND PRICe OPTiMIZATION IN FINLAND IN FINLAND SERVICE REVENUE SUPPORT FOR the REST OF 2019 B2B MOMENTUM AND PRICE OPTIMIZATION IN NORWAY B2B MOMENTUM AND PRICE OPTIMIZATION IN NORWAY 1 2 SERVICE REVENUE SUPPORT FOR the REST OF 2019 +0.1% 3 MOBILE service revenue GROWTH MOBILE service revenue GROWTH +0.1% Like for like, total mobile service revenues Like for like, total mobile service revenues Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 • Mobile recovery Q2 from growth in four markets • Sweden improvement related to B2B – no effects from new mobile portfolio yet • Finland driven by both B2C and B2B • Norway benefited from improved B2B and growth in wholesale 4

B2B IMPROVING SUPPORTED BY CONVERGENCE (Q1 –8.5%) (Q1 –2.2%) -0.2% (Q1 –2.2%) -0.2% IOT INSIGHTS CITY VITALITY 5G -1.9% (Q1 –8.5%) -1.9% B2B CONVERGENCE STARTING TO YIELD B2b service revenue growth in key markets - q2 B2b service revenue growth in key markets - q2 (Q1 –2.8%) Telia Global B2B CONVERGENCE STARTING TO YIELD +0.4% (Q1 –2.8%) +0.4% External service revenues, like for like growth External service revenues, like for like growth • Improvement in B2B mainly driven by Sweden and Norway • Convergence on the back of a strong ICT • ICT traction an important part of the explanation proposition is starting to yield 5

balanced approach to 5g APPROACH Upcoming auctions Upcoming auctions CUSTOMER CASES APPROACH CUSTOMER CASES Country Spectrum Likely timing Estonia 3.5 GHz Q1 2020 Estonia 700 MHz 2020 or > Lithuania 3.5 GHz Q4 2019 or > Sweden 2.3 & 3.5 GHz Q1 2020 • Early and curious • Several commercial contracts • Key spectrum secured in some markets - while some markets • B2B driving demand • Industry differentiation are still late • Mass market to come later – • Important tool to further we are ready digitalize businesses and drive efficiency • Partner network • 5G pilots in all markets • Aim to drive development of new services based on 5G technology 6

6,443 Adjusted EBITDA DEVELOPMENT* -4% -4% -6% -2% -8% Adjusted EBITDA DEVELOPMENT Adjusted EBITDA DEVELOPMENT 1% -4% 6,977 -2% 1% -2% -2% Adjusted EBITDA DEVELOPMENT* LESS PRESSURE ON GROUP EBITDA 6,735 7,468 7,520 -4% Like for like growth, excluding adjustment items and IFRS 16 Like for like growth, excluding adjustment items and IFRS 16 Reported in absolute, organic & like for like growth excl. IFRS 16 impact Reported in absolute, organic & like for like growth excl. IFRS 16 impact Q1 19 Q2 19 Reported EBITDA Organic/like for like EBITDA growth Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Sweden Finland Norway LED** Group • EBITDA down from continued pressure on legacy • Less revenue pressure in Sweden but elevated costs • ICT-related costs hampered Finland • Synergies in Norway on track, EBITDA burdened by weak mobile B2C * 2018 based on the previous organic growth definition (stable FX and M&A excluded) 7 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period) ** LED=Lithuania, Estonia & Denmark

OPEX DEVELOPMENT - 2019 estimated 3% OPEX development OPEX development OPEX DEVELOPMENT - 2019 estimated COSTS GREW H1 BUT FULL YEAR TARGET IS INTACT External expenses ex. properties (IFRS 16), organic & like for like growth External expenses ex. properties (IFRS 16), organic & like for like growth External expenses ex. properties (IFRS 16), like for like growth External expenses ex. properties (IFRS 16), like for like growth H1 18 H2 18 H1 19 H1 19 H2 19 • Underlying OPEX increase of less than 1 percent • Ongoing initiatives to be visible H2 in H1 2019 • Mainly resource cost related reduction • Pace to accelerate throughout H2 • Full year target of ~3 percent intact 8

FULL YEAR COST TARGET REITERATED FULL YEAR EASIER COMPARISONs (H2) G&A AND OTHER EFFICIENCIES G&A AND OTHER EFFICIENCIES ROBOTICS AND NEAR SHORING ROBOTICS AND NEAR SHORING NEW OPERATING MODEL NEW OPERATING MODEL GET SYNERGIES GET SYNERGIES OPEX DEVELOPMENT - 2019 estimated OPEX DEVELOPMENT - 2019 estimated FULL YEAR -2% -2% EASIER COMPARISONs (H2) 1% OPEX development OPEX development External expenses, like for like External expenses, like for like External expenses, like for like growth External expenses, like for like growth Q1 19 Q2 19 Q3 19 Q4 19 H1 18 H2 18 H1 19 • Increase Q2 driven by energy and resource costs • Sweden and Finland main drivers • Full year target of ~2 percent reduction is unchanged 9

B2B turned positive and new mobile portfolio -2.1% +0.4% +0.4% -2.9% -2.9% 0.0% 0.0% -2.1% SERVICE REVENUE DEVELOPMENT SERVICE REVENUE DEVELOPMENT B2C MOBILE SUBSCRIPTIONS AND ARPU B2B MOBILE SUBSCRIPTIONS AND ARPU Reported currency, external service revenues Reported currency, external service revenues Total subscription base in 000’, blended ARPU in local currency Total subscription base in 000’, blended ARPU in local currency B2C excl. fiber OTC B2B B2C 6,300 230 Subscriptions ARPU 6,100 220 5,900 210 5,700 5,500 200 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 • B2C supported by price adjustments • Subscription base growth driven by M2M and prepaid • B2B uptick from several levers • Churn down due to growth in prepaid (reactivations) • Growth in core revenues 10 = ARPU growth y-o-y

Good in mobile - ict behind cost increase SERVICE REVENUES* & EBITDA** MOBILE SUBSCRIPTIONS AND ARPU MOBILE SUBSCRIPTIONS AND ARPU +3.6% +3.6% -4% -4% -0.5% -0.5% SERVICE REVENUES* & EBITDA** SEK million, reported currency & like for like growth excl. IFRS 16 SEK million, reported currency & like for like growth excl. IFRS 16 Total subscription base in 000’, blended ARPU in local currency Total subscription base in 000’, blended ARPU in local currency 3,400 20 Subscriptions ARPU 3,359 3,248 19 3,300 18 3,200 17 1,226 1,124 3,100 16 3,000 15 Q2 18 Q2 19 Q2 18 Q2 19 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Service revenues EBITDA • Mobile subscription revenues up 3 percent • Subscription base development improved vs. Q1 • Fixed telephony affected by network dismantling • Strong ARPU uplift driven by both B2C and B2B • Cost base up from ICT push 11 = ARPU growth y-o-y = Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items

+0.4% -0.2% Broadband/TV service REVenue development Broadband/TV service REVenue development SERVICE REVENUES* & EBITDA** SERVICE REVENUES* & EBITDA** -0.2% SEQUENTIAL IMPROVEMENT +1% +1% SEK million, reported currency & like for like growth excl. IFRS 16 SEK million, reported currency & like for like growth excl. IFRS 16 SEK million, like for like, external service revenues SEK million, like for like, external service revenues TV revenues Broadband revenues 3,298 900 2,221 600 1,563 987 300 Q2 18 Q2 19 Q2 18 Q2 19 0 Service revenues EBITDA Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 • Sequential mobile improvement • Slight growth as broadband compensated for lower TV revenues • Synergies and less marketing supported EBITDA • Good fixed broadband intake from new partnership 12 = Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items