1

JOHAN DENNELIND PRESIDENT & CEO

INTERIM REPORT JANUARY – MARCH 2018

Q1

GOOD START OF 2018

2

MOBILE GROWTH ACROSS FOOTPRINT

MOBILE GROWTH ACROSS FOOTPRINT

TURKCELL DIVIDEND & DIVESTMENTS

TURKCELL DIVIDEND & DIVESTMENTS

THREE YEAR BUY BACK PROGRAM

THREE YEAR BUY BACK PROGRAM

STRONG OPERATIONAL FREE CASH FLOW

STRONG OPERATIONAL FREE CASH FLOW

6 OF 7MARKETS6 OF 7

MARKETS

5BN/YEAR5BN/YEAR0.9BN0.9BN

4.3BN4.3BN

REPORTED EBITDA GROWTHREPORTED EBITDA GROWTH

+7.4%+7.4%

2

LAUNCH OF A THREE YEAR BUYBACK PROGRAM

3

SEK 15BN 9% 0.5xSEK 3.45

AMBITION OF OUTSTANDINGSHARES

PER SHARE IMPACT ON LEVERAGE

IMPROVED SERVICE REVENUE TRENDOrganic growth, external service revenues

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Service revenues

Service revenues excl. fiber installation revenues

-0.9%-0.9%

-0.5%-0.5%

4.2%

7.4%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 18reported

STABLE REVENUES WITH GROWING EBITDA

STRONG EBITDA DEVELOPMENTOrganic growth, reported Q1’18, excluding adjustment items

• Mobile revenue growth in 6 of 7 markets

• Legacy and fiber headwind in Sweden

• EBITDA growth in 6 of 7 markets

• Support from lower costs

4

3

0%

1%

2%

3%

4%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

MOBILE REVENUES CONTINUED TO GROW

MOBILE SERVICE REVENUE GROWTHOrganic growth

SWEDEN

+4%SWEDEN

+4%

MOBILE ARPU GROWTH Q1In local currency, y-o-y

FINLAND

+5%FINLAND

+5%

NORWAY

FLATNORWAY

FLAT

5

THE BALTICS

+4%THE BALTICS

+4%+1.5%+1.5%

• Mobile revenue growth in 6 of 7 markets • Growth in ARPU key part of strategy - not SIM cards

• Norway impacted by lower special number revenues

ARPU GROWTH IN FOCUS ON SWEDISH MOBILE

MOBILE SUBSCRIPTION GROWTH – B2CPostpaid mobile base, excl. mobile broadband, in 000’

POST-PAID ARPU GROWTH – B2C In local currency

6

• Stable growth of postpaid subscriptions

• Focus on value and revenue market share

1,500

1,750

2,000

2,250

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Mobile B2C postpaid ARPU Mobile B2C revenue growth

• ARPU increasingly driven by subscription and usage

• VAS more “normal” growth vs. Q3/Q4 2017

+5%+5%

4

CONVERGENCE IN OUR VALUE PROPOSITIONS

LIIGA PACKAGING TAKING SHAPE STRONG B2B PIPELINE AHEAD

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• B2B convergence via a broader portfolio

• Increased B2B interest from stronger proposition

• Data center to open in June

TEAM PASS LIIGA PASS GAME PASS

EUR 24.90/MONTHEUR 19.90/MONTH TO BE LAUNCHED

• Pre-sales exceeds expectations

• Both existing and new customers

• Much more to come

LEVERAGING ON STRONG B2B POSITION IN NORWAY

MOBILE B2C – CORE ARPU GROWTHIn local currency, B2C

PHONERO READY FOR NEXT PHASE

8

• Focus on value to drive ARPU

• Improved product mix - focus on segment Young

• Monthly fees mitigated for special numbers

• Churn in line with expectations

Q22017

Q22017

Consolidatedfrom

Customer migrationstarted

Customers migrated

Q32017

Q32017

Q12018

Q12018

NOK 400mSYNERGY RUN RATE

NOK 400mSYNERGY RUN RATE0

100

200

300

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Monthly fee Special numbers Other Roaming

+6%

5

OUR SEK 1.1 BILLION COST PROGRAM 2018 ON TRACK

9

COST SAVINGS REALIZATION – Q1SEK in billions, cost base* in scope

+0.2

DisposalsQ1 17

-0.3

Savingsexcl.FX

-0.1

Acquisitions Q1 18

-0.2

SEK1.1BN

SEK1.1BN

* Equipment related costs are not included in the SEK 1.1 billion cost savings target for 2018

COST REDUCTION AMBITION 2018

INTEGRATED APPROACH TO SUSTAINABILITY

10

CLEAR FRAMEWORK & TARGETS EXAMPLES OF RESPONSIBLE BUSINESS

ETHICS AND COMPLIANCEETHICS AND COMPLIANCE

TELIA - STATEMENT OF MATERIALITYTELIA - STATEMENT OF MATERIALITY

EMPLOYEE ENGAGEMENT & YOUNITEEMPLOYEE ENGAGEMENT & YOUNITE

RESPONSIBLE BUSINESS

RESPONSIBLE BUSINESS

SHARED VALUE CREATION

SHARED VALUE CREATION

CHILDRENS RIGHTS• Facilitate cooperation with others to spread learnings

• Sharing experience how to protect children from abuse

SHARED VALUE CREATION• Smart transportation

• Connected water taps

ENVIRONMENTAL RESPONSIBILITY• 148,000 tons CO2e abated, equivalent of 30,000 cars

• 87 percent of electricity from renewable sources 2017

STRONG ESG PERFORMANCE• MSCI ESG “AAA”

• EcoVadis “Gold Supplier”

6

OUTLOOK FOR 2018 (REVISED UP)

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

** Based on current structure, i.e. including M&A made so far, excluding adjustment items, in local currencies

Above SEK 9.7 billion (previously: Around SEK 9.7 billion)Operational FCF together with dividends from associated companies should cover a dividend around the 2017 level

O P E R A T I O N A L F C F *

In line or slightly above the 2017 level of SEK 25.2 billion (unchanged)E B I T D A * *

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CHRISTIAN LUIGA EXECUTIVE VICE PRESIDENT & CFO

INTERIM REPORT JANUARY – MARCH 2018

Q1

7

EBITDA GROWTH BOTH FROM ORGANIC AND M&A

EBITDA DEVELOPMENT – ORGANIC Organic growth, y-o-y, excluding adjustment items

• Revenue growth coupled with EBITDA leverage in majority of markets

13

DENQ1 17

SWE FIN NOR LIT EST LAT Other Q1 18

+4.2%

• EBITDA growth of 7.4 percent driven by

• Solid organic growth

• M&A in Finland and Norway

• FX tailwind from stronger EUR

EBITDA DEVELOPMENT – REPORTEDReported growth, excluding adjustment items

Q1 17 Organic M&A FX Q1 18

+7.4%

LOWER COGS & RESOURCE COST KEY FOR COST SAVINGS

14

COST 2018 SAVINGS BY TYPECost savings components as % of total savings

5% Resources

COGS

Marketing

IT

Other

• Improved sourcing and efficiency measures to drive down COGS

• Process improvements to drive down resource costs

COST 2018 SAVINGS OVERVIEWIllustrative only

Acqui-sitions

Savingsexcl. FX

Dispo-sals

2017 EquipmentCOGS

Cost base in scope

Target cost

base**

* 2017 M&A refers to the disposal of Sergel and acquisitions of Phonero and Nebula

• Equipment COGS and FX excluded

• All other costs incl. salary and other inflation included

** Adjusted for changes in FX

SEK 1.1 BILLION

8

EBITDA GROWTH IN SWEDEN DRIVEN BY LOWER COSTS

• Continued growth in SME/SoHo

• Recovery in Large enterprises

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

B2B

B2C

B2C excl. fiber installation revenuesB2C incl. fiber installation revenues

EBITDA* Organic growth

• Cost savings more than mitigate the lower revenues

SERVICE REVENUESOrganic growth, external revenues

15

3.0%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

FIBER REVENUES SEK million, reported currency

* Excluding adjustment items

-0.1%-0.1%

+1.4%+1.4%

-2.4%-2.4%

-42%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 180

100

200

300

Fiber installation revenues

Fiber installation revenue growth

• Permit issues remains

• We remain committed despite uncertainty

CONTINUED STRONG EBITDA GROWTH IN FINLAND

MOBILE DEVELOPMENTOrganic growth, ARPU growth in local currency

• Mobile ARPU still growing by around 5 percent

• Mobile growth impacted by loss of subscriptions

2,8373,084

964 1,151

Q1 17 Q1 18 Q1 17 Q1 18Service revenues EBITDA

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

+8.7%+8.7%

-0.7%-0.7%

• Reported numbers boosted by M&A and FX

• EBITDA uplift from less resource costs and marketing

= Organic growth * External service revenues ** Excluding adjustment items 16

2.4%

4.8%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Total mobile service revenues Mobile ARPU

9

REVENUE AND EBITDA GROWTH IN NORWAY

1,9432,129

862 1,008

Q1 17 Q1 18 Q1 17 Q1 18

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

+5.0%+5.0%

+1.1%+1.1%

Service revenues EBITDA

• Wholesale continued to be the main revenue driver

• Special number revenues down by SEK ~30 millions

EBITDA** DEVELOPMENTSEK million, reported EBITDA growth

* External service revenues ** Excluding adjustment items = Organic growth

• Revenues and cost control behind organic growth

• Phonero synergies drove double digit reported growth

• Slight y-o-y headwind from FX

17

Q1 17 Organic M&A FX Q1 18

+16.8%

206234

277318

145 141

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Estonia Lithuania Denmark

Q1 17 Q1 18Lithuania

Q1 17 Q1 18Denmark

+9.5%+9.5%

Q1 17 Q1 18Estonia

SOLID BALTICS – CHALLENGING MARKET IN DENMARK

+8.8%+8.8%

-6.9%-6.9%

-4.2%-4.2%

+4.7%+4.7%

+2.5%+2.5%

SERVICE REVENUE DEVELOPMENTOrganic growth, external service revenues

EBITDA* DEVELOPMENTSEK million, reported currency & organic growth

= Organic growth * Excluding adjustment items

• Mobile growth of 12 percent in Lithuania

• Solid fixed development in Estonia

• Denmark still challenging- unlimited offering launched

• EBITDA leverage in the Baltics from revenue growth and lower costs

• Good efforts on cost in Denmark left absolute EBITDA more or less flat

18

10

CASH CAPEX CONTINUES TO TREND DOWN

19

• Cash CAPEX continues to trend down

• Both lower fiber and non-fiber related CAPEX

• Difference booked vs. cash CAPEX due to ice hockey rights

• In line with our expectations 2018 will show lower cash CAPEX

CAPEX EXCLUDING LICENSESReported currency, SEK million, R12

12,000

13,000

14,000

15,000

16,000

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

SE

K m

illio

n

Booked CAPEX excl. licenses (R12) Cash CAPEX excl. licenses (R12)

LOWER NET DEBT AND LEVERAGE

1.15x1.15x

= Leverage ratio

NET DEBT DEVELOPMENT - Q1Continuing and discontinued operations, SEK billion

+3.2+1.2

Cash CAPEX

M&AQ4 17

-7.5

Operations

-2.2

FX & Other Q1 18

33.8

28.5

1.01x1.01x

20

1.27x1.27x

* Not including 2nd dividend tranche of SEK 5 billion

+5.0+1.6 +1.4

M&A proceeds

to be distributed

Turkcelldividend

-0.9

Q1 18 1stdividendtranche

Remaining part of global

settlement

Q1 18 pro

forma*

28.5

35.6

NET DEBT DEVELOPMENT – PRO FORMA*Continuing and discontinued operations, SEK billion

1.01x1.01x

11

NWC AN IMPORTANT PART OF THE CASH FLOW AGENDA

21

• NWC important part of cash flow agenda in coming years

• Additional potential from i) vendor financing ii) credit account iii) part payment for resellers

NET WORKING CAPITAL TRENDSNWC in relation to R12 sales*

DPO DEVELOPMENTAverage DPO** for Sweden, Finland & Norway

• Improved payment terms and vendor financing

• Several key suppliers and resellers in Sweden, Finland and Norway already on-board

-15%

-10%

-5%

0%

5%

10%

Q1 16 Q3 16 Q1 17 Q3 17

Telia Company Peer group average

* Peer group consists of Telenor, Tele2, TDC, KPN, Deutsche Telekom, Proximus** DPO=Days payable outstanding

2015 2016 2017

+6+6

0

2

4

6

8

10

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Operational free cash flow (R12)

STRONG CASH FLOW TREND CONTINUES

OPERATIONAL FREE CASH FLOW TREND Continuing operations, SEK billion

OPERATIONAL FREE CASH FLOWContinuing operations, SEK billion

10.03.9

4.3-0.4

Q1 18Q1 17 OtherEBITDANWC

CAPEX

InterestTax

Pensions

+0.7 +0.0

22

• Driven by operational performance

• Fairly neutral on tax but negative on interests as Q1 2017 was impacted by the settlement of interest rate swaps

12

>9.7 9.7

>1.0

Cash flow SEK 2.3 dividend*

Dividend from associated companiesOp. Free CF guidance

CASH FLOW AND LEVERAGE SUPPORTS BUYBACKS

23

1.3x1.3x

CASH FLOW GUIDANCEIn SEK billions

PRO FORMA LEVERAGE Q1 SHARE BUYBACKSIn SEK billions, % of outstanding shares

5

10

15

0%

2%

4%

6%

8%

10%

0

4

8

12

16

2018 2019 2020

* Dividend amount in SEK billion from a SEK 2.3 per share dividend including impact from 2018 buybacks

Q&A

13

EXITED THE SPOTIFY INVESTMENT

EXIT FROM EURASIA CONTINUES AND SPOTIFY DIVESTED

25

CONTINUING TO DIVEST IN EURASIA

• Azercell divested

• Leverage increase* of 0.1x

• Geocell divested

• Neutral on leverage*

• Investment made June 2015

• Proceeds of SEK 2.3 billion

• Return on investment of 2.4x (excl. FX)

• Successful collaboration ended

* After proceeds from the disposals have been distributed from Fintur to Turkcell

NEGATIVE EURASIA EBITDA DUE TO UZBEKISTAN

• Revenue growth Q1 due to Uzbekistan

• Positive EBITDA development in all countries except for Uzbekistan that was impacted by new subscriber taxes

* External service revenues **Excluding adjustment items

FINANCIAL TRENDS IN EURASIAOrganic growth

2%

-6%

Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Service revenues*

EBITDA**

26

FINANCIAL TRENDS IN KAZAKHSTANOrganic growth

-2%1%

Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Service revenues* EBITDA**

• Flat EBITDA development as decreased costs compensated for somewhat lower revenues

14

EPS DOWN DUE TO EURASIA

TOTAL EPS DEVELOPMENTSEK, continuing and discontinued operations

* Excluding income from associates and adjustment items

1.59

-0.16

0.08

M&A Q1 18

-0.09

Operatingincome*

Associatedcompanies

Provision reversal

0.00

Other Operations OtherQ1 17

-0.12

-0.95

0.09

-0.76

-1.75

CONTINUING OPERATIONS

DISCONTINUED OPERATIONS

27

Q1 2017 positively impacted by a reversal of provision for the Uzbek legal investigation

Q1 2017 positively impacted by a reversal of provision for the Uzbek legal investigation

Mainly due to the Azercell disposalMainly due to the Azercell disposal

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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