TeliaSonera January-December 2006









TeliaSonera reports record earnings in 2006







Full year



· Net sales increased 3.9 percent to SEK 91,060 million (87,661).

· EBITDA, excluding non-recurring items, reached SEK 32,266 million

(29,411) and the margin improved to 35.4 percent (33.6).

· Operating income, excluding non-recurring items, increased to SEK

26,751 million (20,107).

· Net income increased to SEK 19,283 million (13,694) and earnings per

share rose 48 percent to SEK 3.78 (2.56). Net income was impacted by

positive one-off items amounting to approximately SEK 1.7 billion. Net

income was record high, even excluding these one-off items.

· Free cash flow increased to SEK 16,596 million (15,594).

· Strong subscription growth with 1.5 million new subscriptions in the

majority-owned operations and 14.4 million new subscriptions in the

associated companies.

· Total proposed dividend of SEK 6.30 per share (3.50), including

ordinary and extraordinary dividends, equaling a total of SEK 28,290

million (15,717).





Fourth quarter



· Net sales increased 1.4 percent to SEK 23,187 million (22,876) driven

by strong revenue growth in International Mobile and acquisitions in the

home markets. In local currencies net sales increased 3.9 percent.

· EBITDA, excluding non-recurring items, increased to SEK 7,766 million

(7,098) and the margin improved to 33.5 percent (31.0).

· Operating income, excluding non-recurring items, increased to SEK

6,504 million (4,890).

· Net income totaled SEK 4,538 million (3,342) and earnings per share

rose 48 percent to SEK 0.90 (0.61).

· Free cash flow was SEK 2,865 million (3,191).





Financial Highlights







SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except per Oct-Dec Oct-Dec

share data 2006 2005

Net sales 23,187 22,876 91,060 87,661

EBITDA1)

excl. non-

recurring

items2) 7,766 7,098 32,266 29,411

Operating

income 6,190 4,022 25,489 17,549

Operating

income excl.

non-recurring

items 6,504 4,890 26,751 20,107

Net income 4,538 3,342 19,283 13,694

of which

attributable

to

shareholders

of the parent

company 4,029 2,734 16,987 11,697

Earnings per

share (SEK) 0.90 0.61 3.78 2.56



1) Please refer to page 25 for definitions.

2) Non-recurring items; see table on page 30.









Comments from Anders Igel, President and CEO





“This is our best ever year financially, clearly showing our ability to

perform in a demanding market. There is more potential in the group to

improve longer term.”







Business focus for profitable growth





TeliaSonera introduced as of January 1, 2007, a new organization

comprising of four business areas. The format will capture the strong

growth within mobility and broadband services as well as managed

services for enterprises and in addition the high growth in the eastern

markets. The new organization is aimed at improving business focus and

reducing complexity in order to boost profitable growth and increase

speed of implementation. Customers will still meet one company.

Converged and combined services, and content services will be offered.



The new focus is aimed at stimulating growth through clear

responsibilities. Services will be developed closer to customers,

competence across borders and units will be utilized more effectively

and migration to new services will be speeded-up. Efficiency is improved

by focusing on cross-border synergies in the international business

areas, through faster and easier decision making, the separation of

process and IT-support between mass market services and high value

enterprise services as well as clearer target setting and benchmarking.



TeliaSonera’s focus will be on developing the operations in the home

markets, developing the investment in Spain and creating value related

to the eastern positions.







Outlook 2007





Group net sales are expected to continue to grow, reaching the target of

approximately SEK 100 billion in two years with maintained good

profitability.



Net income for 2007 is estimated to be somewhat higher than in 2006,

excluding the positive one-off items of approximately SEK 1.7 billion in

2006.



CAPEX-to-sales ratio is expected to grow due to increased investments in

broadband and mobile capacity.







Review of the Group, Full Year 2006





Net sales increased 3.9 percent to a record high of SEK 91,060 million

(87,661). The net effect of acquisitions and divestitures affected sales

positively by 1.7 percent and there was no net effect from exchange rate

changes. Organic growth was 2.2 percent.



In mobile communications, net sales increased in Eurasia (34 percent),

Norway (19 percent), the Baltics (9 percent) and Denmark (5 percent).

Growth in Norway was positively affected by acquisitions. In Sweden,

volume growth was strong, but net sales decreased 1 percent due to lower

prices. In Finland, total net sales decreased 6 percent. After excluding

the effects from Saunalahti’s withdrawal from TeliaSonera’s network, net

sales in Finland decreased 1 percent.



In fixed communications, demand for broadband services remained strong

in all TeliaSonera’s markets. The acquisitions of NextGenTel in Norway

and MicroLink in Estonia affected sales positively. Still, net sales

decreased, mainly due to the migration to mobile and IP based services,

which particularly affected sales in Sweden.



The number of subscriptions increased almost 20 percent, bringing the

total number of subscriptions in TeliaSonera’s majority-owned operations

at the end of the year to 30.2 million and 65.9 million in the

associated companies.



EBITDA, excluding non-recurring items, increased to SEK 32,266 million

(29,411) as net sales rose and the margin improved to 35.4 percent

(33.6). The margin improvement was especially due to higher margins in

Sweden, Finland and Denmark.



Operating income, excluding non-recurring items, increased 33 percent to

SEK 26,751 million (20,107) due to improvements in all profit centers,

except in Spain, where TeliaSonera launched its commercial mobile

offerings in December 2006.



In the majority-owned operations, operating income increased 25 percent

to SEK 21,076 million (16,858), with the strongest improvement in

Finland, followed by Eurasia, Denmark and Norway. The increase includes

SEK 900 million from adjusted depreciation schedules, mainly in Sweden

and Finland.



A SEK 389 million release of a reserve related to historical

interconnect fees in Sweden affected operating income positively in the

fourth quarter of 2006. The release follows a ruling by the Swedish

Administrative Court of Appeal on February 8, 2007, in favor of a

reduction of the historical interconnect fees that Tele2 had demanded

from TeliaSonera.



Income from associated companies increased 73 percent to SEK 5,579

million (3,229). Income from MegaFon increased to SEK 2,780 million

(1,176). The improvement includes SEK 340 million in gains from exchange

rates and divestments, and revaluations of loans in 2005. Turkcell

continued its positive operational trend and, despite a depreciation of

the Turkish lira against the Swedish krona, TeliaSonera’s income from

Turkcell rose to SEK 2,020 million (1,761). Additionally, the divestment

of the mobile operator MTN Uganda had a positive effect of SEK 562

million.



Non-recurring items affecting operating income totaled SEK -1,262

million (-2,558), and were related mainly to restructuring in Sweden and

Finland. Non-recurring items in 2006 were positively impacted by a SEK

500 million reversal of a provision related to the settlement of a

dispute regarding a potential co-location site in London (West Ferry

Road).



Financial items totaled SEK -263 million (-530) and were positively

impacted by a non-recurring capital gain of SEK 183 million (nil) from

the sale of shares in Elisa Corporation.



Income taxes increased to SEK -5,943 million (-3,325). The effective tax

rate increased to 23.6 percent (19.5). The increase is mainly due to the

expiration of the tax holiday in Kazakhstan.



Net income attributable to shareholders of the parent company increased

45 percent, or SEK 5,290 million, to SEK 16,987 million and earnings per

share increased 48 percent to SEK 3.78 (2.56).



CAPEX decreased to SEK 11,101 million (11,583) and the CAPEX-to-sales

ratio decreased to 12.2 percent (13.2). CAPEX decreased in all the

Nordic markets, especially within fixed communications in Sweden and

mobile communications in Finland. In the Baltics and Eurasia CAPEX

increased and, due to the commercial launch of Yoigo in December,

investments were made for the build-out of a network in Spain.



Free cash flow increased to SEK 16,596 million (15,594) mainly due to

improved EBITDA and increased dividends from the associated companies.

The improvement was limited mainly by an increase in working capital,

higher cash payments out of restructuring provisions and higher cash

payments for pensions.



Net debt increased to SEK 14,957 million (8,373) primarily due to

acquisitions.



The equity/assets ratio decreased to 49.9 percent (58.9).





Acquisitions



TeliaSonera was active during the year and paid a total of SEK 3.3

billion net cash in acquisitions. The largest transactions were:



· Accessing the Spanish mobile market by acquiring the majority of

Xfera (consolidated as of June 14, 2006) for a net of SEK 617 million.

TeliaSonera increased its ownership to 76.6 from 16.6 percent.

Telia­Sonera also assumed additional debt of SEK 3.8 billion through the

consolidation of Xfera.



· Expanding into the Norwegian broadband market by acquiring NextGenTel

(consolidated as of June 1, 2006) for a purchase price of SEK 2,338

million. NextGenTel is a strategic acquisition, strengthening our

position in the home markets. Our intention is to exploit the competence

and operations of NextGenTel when driving growth in other countries.





Significant events after the period



· On January 31, 2007, TeliaSonera signed a share purchase agreement to

acquire 100 percent of debitel Danmark A/S in Denmark. The purchase

price, on a debt free basis, may at most reach approximately SEK 1,270

million, of which TeliaSonera will pay SEK 860 million in cash at

closing. The remaining purchase price is capped at SEK 410 million and

is dependent on the development during the next six months. In addition

to the stand alone valuation, the transaction is based on transferring

debitel's traffic from other mobile networks into Telia Denmark's mobile

network. Closing of the transaction is subject to approval from the

Danish Competition Authority.



· On January 26, 2007, TeliaSonera announced that an arbitration

tribunal of the International Chamber of Commerce had issued an award

finding that a binding share purchase agreement was concluded between

TeliaSonera and Cukurova in 2005, calling for Cukurova to sell all the

remaining shares in Turkcell Holding to TeliaSonera. The award results

from an arbitration proceeding in Geneva that TeliaSonera commenced in

May 2005 against Cukurova after Cukurova withdrew from the transaction.

TeliaSonera hopes to conclude the transaction with Cukurova but, even if

the share purchase agreement is binding, TeliaSonera does not yet know

if Cukurova is willing, or able, to proceed with a transfer of the

shares to TeliaSonera.



· On January 26, 2007, TeliaSonera closed the acquisition of 98.8

percent of Cygate for a cash consideration of SEK 639 million. The

acquisition strengthens TeliaSonera in the managed services market,

primarily in Sweden.





Review of the fourth quarter



Net sales increased 1.4 percent to SEK 23,187 million (22,876). The net

effect of acquisitions and divestitures affected sales positively by 1.7

percent, while changes in exchange rates had a negative impact of 2.5

percent. Organic growth was 2.2 percent.



In mobile communications, net sales increased in Eurasia (17 percent),

the Baltics (10 percent), Norway (2 percent), and Finland (1 percent).

In Sweden, volumes continued to grow strongly, but net sales decreased 1

percent due to lower prices. Sales in Denmark decreased 13 percent due

primarily to lower terminal sales and currency development.



In fixed communications, the demand for broadband services was strong

and sales of broadband increased in all markets. Net sales were

positively affected by the acquisitions of NextGenTel in Norway and

MicroLink in Estonia. Despite the acquisitions and positive development

within broadband, fixed communications net sales decreased, mainly due

to lower fixed voice sales in Sweden.



EBITDA, excluding non-recurring items, increased to SEK 7,766 million

(7,098) as a result of higher net sales and the margin improved to 33.5

percent (31.0).



Operating income, excluding non-recurring items, increased 33 percent to

SEK 6,504 million (4,890) due to improvements in most of the operations.



In the majority-owned businesses, operating income increased 27 percent

to SEK 4,959 million (3,897). The improvement includes SEK 220 million

from adjusted depreciation schedules, mainly in Sweden and Finland.

Additionally, a SEK 389 million release of a reserve related to

historical interconnect fees in Sweden affected operating income

positively.



Income from associated companies increased 57 percent to SEK 1,555

million (992). Income from MegaFon increased by SEK 503 million, of

which SEK 265 million is due to gains from exchange rates and

divestments, and a negative revaluation of loans in 2005.



Non-recurring items affecting operating income totaled SEK -314 million

(-868) and were related mainly to restructuring in Sweden, Finland and

Denmark. Non-recurring items in the fourth quarter of 2006 were

positively impacted by a SEK 500 million reversal of a provision related

to the settlement of a dispute regarding a potential co-location site in

London (West Ferry Road).



Financial items totaled SEK -90 million (-145).



Income taxes increased to SEK -1,562 million (-535) and the effective

tax rate increased to 25.6 percent (13.8). The increase in the tax rate

was mainly due to the expiration of the tax holiday in Kazakhstan and a

low tax rate in the comparative period due to the revaluation of certain

deferred tax assets at the end of 2005. The increase in the effective

tax rate was also due to a decrease of net deferred tax assets in Spain

following enacted income-tax rate cuts.



Net income attributable to shareholders of the parent company increased

47 percent to SEK 4,029 million (2,734) and earnings per share increased

to SEK 0.90 (0.61).



CAPEX increased to SEK 3,688 million (3,091) and the CAPEX-to-sales

ratio rose to 15.9 percent (13.5) primarily due to the timing of

investments between the quarters.



Free cash flow decreased slightly to SEK 2,865 million (3,191) mainly

due to higher CAPEX and higher cash tax payments, despite the higher

EBITDA and a larger decrease in working capital.



Net debt amounted to SEK 14,957 million, a decrease of SEK 3,759 million

during the quarter due to positive cash flow generation.





TeliaSonera Share



The TeliaSonera share is listed on the Stockholm Stock Exchange and the

Helsinki Stock Exchange. The share’s settlement price on the Stockholm

Stock Exchange increased more than 30 percent in 2006, from SEK 42.70 to

SEK 56.25. The highest share price was SEK 58.25 (43.40) and the lowest

was SEK 37.90 (35.50).



The number of shareholders decreased from 745,172 to 691,106. The

Swedish state’s holding is 45.3 percent of the capital and the Finnish

state’s is 13.7 percent. Holdings outside Sweden and Finland increased

from 12.8 percent to 16.7 percent. At year-end, Swedish private

investors owned 3.2 percent (3.2) and Finnish private investors 2.2

percent (2.2). Swedish institutional investors owned 15.9 percent (19.7)

of the share capital and Finnish institutional investors owned 3.0

percent (3.2).





Ordinary dividend and capital distribution to shareholders



For 2006, the Board of Directors proposes to the Annual General Meeting

(AGM) an ordinary dividend of SEK 1.80 (1.25) per share, totaling SEK

8.1 billion. In light of the strong results in 2006, the proposed

ordinary dividend is in the upper range of the dividend policy’s 30-50

percent interval of net income attributable to shareholders of the

parent company.



In addition to the ordinary annual dividend, the Board of Directors

proposes an annual additional distribution to shareholders. The

additional distribution will be reviewed annually taking into

consideration cash flow and its projections as well as investment plans.

Based on the current assessment, the additional distributions would be

on the same level as the current distribution of approximately SEK 10

billion. Accordingly, for 2006, the Board of Directors has decided to

propose to the AGM an extraordinary dividend of SEK 2.25 per share

(2.25), totaling SEK 10.1 billion.



On top of this, the Board of Directors, in view of the strong

development during the year 2006, proposes to the AGM an additional

extraordinary dividend for 2006 of SEK 2.25 per share, totaling SEK 10.1

billion.



The Board of Directors proposes that the final day for trading in shares

entitling shareholders to ordinary and extraordinary dividends be set

for April 24, 2007, and that the first day of trading in shares

excluding rights to ordinary and extraordinary dividends be set for

April 25, 2007. The recommended record date at VPC for the right to

receive ordinary and extraordinary dividends will be April 27, 2007. If

the AGM votes to approve the Board’s proposals, ordinary and

extraordinary dividends are expected to be distributed by VPC on May 3,

2007.





New board members elected in January 2007





TeliaSonera’s Nomination Committee informed TeliaSonera in December

2006, that it had finalized its work regarding nominations for the Board

of Directors. As the proposed changes in the composition of the Board of

Directors were substantial, the shareholders represented in the

Nomination Committee requested TeliaSonera’s Board of Directors to call

an extraordinary shareholders meeting to elect new board members.



The Extraordinary General Meeting (EGM) of TeliaSonera AB (publ) was

held on January 17, 2007, and the EGM decided to elect the following

persons as new members to the Board of Directors: Maija-Liisa Friman,

Conny Karlsson, Lars G Nordström and Jon Risfelt.



The General Meeting decided to relieve the following Board members of

their duties: Carl Bennet, Eva Liljeblom, Lennart Låftman, Lars-Erik

Nilsson and Sven-Christer Nilsson.



The General Meeting decided that the number of Board members elected by

the General Meeting be seven without deputy members.



Caroline Sundewall, Timo Peltola and Tom von Weymarn will continue as

Board members. Tom von Weymarn will continue as the Chairman of the

Board.





Annual General Meeting 2007





The Annual General Meeting (AGM) will be held on April 24, 2007, at 5

p.m. Swedish time at Stockholmsmässan in Älvsjö, Stockholm. Notice of

the meeting will be posted on TeliaSonera’s website,

www.teliasonera.com, and advertised in the newspapers at the end of

March 2007. The record date entitling shareholders to attend the meeting

will be April 18, 2007. Shareholders may file notice of intent to attend

the AGM from March 26, 2007. TeliaSonera must receive notice of

attendance no later than 4 p.m. Swedish time on April 18, 2007.



A Finnish shareholders’ information meeting will be arranged on April

25, 2007, at 4 p.m. Finnish time at Finlandia House, Helsinki. Finnish

shareholders will have the possibility to meet in person representatives

from management and the Board. Shareholders may file notice of intent to

attend the Finnish shareholders’ information meeting from March 26,

2007. TeliaSonera must receive notice of attendance no later than April

16, 2007. More information about how to file a notice of intent to

attend the meeting will be given in connection with similar information

about the AGM.







Full year profitability maintained in Sweden







Full year



· The migration to IP-based services accelerated and usage of mobile

services based on 3G and WLAN increased. By concentrating new offerings

to mobile and IP based services, TeliaSonera maintained its market

position despite increased competition and changing market conditions.

The mobile market was characterized by strong price pressure and a focus

on flat rate offerings. Broadband prices remained fairly stable as

competitors focused on offering more bandwidth at the same prices.





Mobile communications



· Strong volume growth – both in outgoing traffic, which rose 20

percent, and the use of mobile data services – nearly offset price

erosion of slightly more than 20 percent. Net sales decreased 1 percent.



· The number of mobile subscriptions rose by 216,000 to 4,603,000.



· Postpaid churn remained unchanged at 11 percent.



· Volume growth and positive restructuring effects had a positive

effect on EBITDA and almost compensated for lower price levels,

increased sales costs and increased costs for the purchase of capacity

from the associated company Svenska UMTS-nät AB. The release of a

reserve related to historical interconnect fees affected EBITDA

positively by SEK 79 million in the fourth quarter. The EBITDA margin

remained unchanged.



· CAPEX-to-sales ratio remained unchanged and during the year

Telia­Sonera continued investments in EDGE and the roll-out of the GSM

network, thereby extending its geographic reach to 90 percent. Svenska

UMTS-nät has invested SEK 4.1 billion in the 3G infrastructure in Sweden

so far and has fulfilled the license conditions set by the regulator

PTS.





Fixed communications



· Despite strong growth within broadband, net sales decreased 6

percent. The number of broadband subscriptions increased by 29 percent,

or 205,000, to 922,000, which compensated for the decline in all other

areas except fixed voice. Fixed voice sales decreased due to the decline

in fixed voice traffic, a lower number of subscriptions and price

pressure.



· Positive effects from the ongoing restructuring program and a SEK 310

million release of a reserve in the fourth quarter more than compensated

for the decrease in fixed voice sales and the EBITDA margin increased.



· Despite increased investments in broadband, CAPEX decreased year on

year mainly due to lower investments in the circuit-switched telephony

network and in the transport network.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except

margins, ARPU

and no. of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 9,359 9,739 37,003 38,710

EBITDA excl.

non-recurring

items 3,668 3,635 14,829 15,183

Margin (%) 39.2 37.3 40.1 39.2

Operating

income 2,188 1,575 9,987 8,302

Operating

income excl.

non-recurring

items 2,816 2,558 11,242 10,803

Mobile

communications

Net sales 3,010 3,027 11,974 12,104

EBITDA excl.

non-recurring

items 1,276 1,216 5,033 5,081

Margin (%) 42.4 40.2 42.0 42.0

CAPEX 316 137 800 787

ARPU (SEK) 203 210 204 213

Number of

subscriptions,

end of period

(thousands) 4,603 4,387 4,603 4,387

Fixed

communications

Net sales 6,349 6,712 25,029 26,606

EBITDA excl.

non-recurring

items 2,392 2,419 9,796 10,102

Margin (%) 37.7 36.0 39.1 38.0

CAPEX 1,001 900 2,765 3,260

Number of

subscriptions,

end of period

(thousands):

Retail excl.

broadband 5,211 5,758 5,211 5,758

Broadband 922 717 922 717

Wholesale PSTN

subscriptions 1,002 858 1,002 858

Wholesale

copper access,

LLUB 520 374 520 374







Effects from the ongoing restructuring program



· The restructuring program in Sweden is expected to reduce annual

gross costs by SEK 4-5 billion as of 2008 compared to the cost level of

2004. The changes are expected to result in a reduction of approximately

3,000 employees. The restructuring costs are estimated at around SEK 5

billion to be reported as non-recurring items.



· The effect of cost savings in 2006 is approximately SEK 2,280 million

(800), of which about SEK 630 million (400) in the fourth quarter. A

large portion was related to fixed communications. The restructuring

measures implemented to date are estimated to give an annual gross

savings effect of approximately SEK 2.8 billion as of 2007.



· Since the introduction of the program in the beginning of 2005, the

cumulative non-recurring expenses for the restructuring totaled SEK

3,765 million (2,509), of which redundancy provisions were SEK 2,895

million (1,837) and SEK 870 million (672) were impairment charges for

the network and costs for surplus office space. In the fourth quarter,

an additional early retirement offer was given to employees born in 1947

or earlier and non-recurring expenses totaled SEK 628 million (986).



· Since the introduction of the program in the beginning of 2005, 1,209

employees have accepted the offer for early retirement and 468 employees

have been transferred to the re-deployment unit. Of these, 1,516 have

left the company. In addition, hired personnel have decreased by

approximately 670.



· The responsibility for the ongoing restructuring program in Sweden is

divided between the respective new business areas launched on January 1,

2007.





Fourth quarter



· Packaged solutions dominated the market for offers, and business

customers became an increasingly important target group. Efforts were

stepped up to make 3G the dominant solution. Broadband competition

intensified locally. Consolidation in the market continued. Mobile and

broadband offerings dominated the Christmas campaigns. TeliaSonera’s

successful sales drives resulted in a strong finish for the year.

TeliaSonera maintained its market position.





Mobile communications



· Due to a higher number of subscriptions and increased usage, net

sales remained stable, despite price erosion of almost 25 percent year

on year. Price pressure remained particularly strong in the segment for

small and medium-sized businesses.



· Successful Christmas campaigns generated the highest quarterly

subscription intake in two years. The number of subscriptions rose by

99,000 to 4,603,000, escalating towards the end of the year.



· Postpaid churn decreased to 11 percent (12).



· The number of traffic minutes per subscription rose 14 percent to 167

minutes, but ARPU decreased 3 percent to SEK 203 due to lower prices.



· The EBITDA margin was under pressure from higher costs for customer

intake and costs for the purchase of capacity from Svenska UMTS-nät AB,

which totaled SEK 120 million (80). However, a release of a reserve

related to historical interconnect fees affected EBITDA positively and

the margin rose to 42.4 percent.





Fixed communications



· Net sales continued to decrease as migration accelerated and led to a

lower number of voice subscriptions, decreasing traffic volumes and

lower prices. A SEK 50 million provision related to historical

interconnect pricing also burdened sales.



· Broadband subscription net growth was 60,000 during the quarter, the

highest quarterly increase in the year.



· During the quarter, the number of fixed voice retail subscriptions

decreased by 108,000, of which the vast majority migrated to mobile

only, or VoIP, solutions, and only 12,000 transferred to wholesale.



· In addition to lower net sales, the EBITDA margin was negatively

impacted by a lower year-on-year net effect from restructuring compared

to the previous quarters. Increased customer acquisition costs and

higher maintenance costs caused by stormy weather also had a negative

impact on EBITDA. However, the EBITDA margin rose to 37.7 percent,

positively affected by a SEK 310 million release of a reserve related to

historical interconnect fees.







Turnaround measures strongly improved

profitability in Finland







Full year



· TeliaSonera’s shift in focus to customer loyalty, quality and

services led to a stabilization of the entire Finnish telecommunications

market. Improved profitability at all major operators was the clearest

evidence of an ongoing market recovery. Prices stabilized and in some

cases average prices and ARPUs started to rise. In the mobile market,

the amount of ported numbers fell more than 60 percent, improving churn

levels at all mobile operators. In April, sales of bundled 3G packages

started and significantly increased the demand for 3G mobile phones.

Within broadband, double-digit market growth continued, although at a

more moderate pace than in 2005. TeliaSonera’s turnaround strategy

resulted in rising net sales and strongly improved profitability in the

second half of the year. As anticipated, TeliaSonera’s mobile market

share in terms of subscriptions decreased slightly.





Mobile communications



· Total net sales decreased 6 percent. Excluding effects from

Saunalahti’s withdrawal from TeliaSonera’s network (SEK -470 million),

sales decreased 1 percent. Increased sales of new handsets and higher

average prices and ARPU over the year partly offset the effect of

inherited price erosion (SEK -200 million).



· The number of subscriptions decreased by 100,000 to 2,407,000, mainly

because of the cancellation of new sales of Tele Finland’s low price

subscriptions. Including subscriptions through service providers, the

total number of subscriptions was 2,420,000.



· Postpaid churn declined to 18 percent (26).



· EBITDA and EBITDA margin rose, as turnaround measures helped

compensate for Saunalahti’s withdrawal. In 2005, among other things, a

settlement on historical mobile interconnect fees, together with the

takeover of the service provider ACN’s customers, burdened earnings by

SEK 460 million.



· CAPEX was almost halved due to increased purchasing efficiency and a

lower need for additional network capacity following Saunalahti’s

withdrawal.





Fixed communications



· Net sales increased 4 percent due to strong growth in equipment

sales. Around half of the growth was due to the consolidation of Data-

Info, an ICT solutions provider for enterprises. Sales of broadband and

managed IT services also rose, while sales of traditional data services

and fixed voice decreased.



· The number of broadband subscriptions increased by nearly 20 percent,

or 62,000, to 412,000.



· EBITDA rose 23 percent and EBITDA margin improved strongly due to the

successful execution of profitability enhancing measures, which have in

particular reduced subcontracting and personnel expenses.



· CAPEX declined 12 percent as broadband growth continued at a high but

more moderate pace than in 2005. Investment focus was on building IP

networks and extending coverage of fiber access networks. TeliaSonera

has the most extensive fiber access network in Finland.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except

margins, ARPU

and no. of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 4,348 4,233 16,744 17,002

EBITDA excl.

non-recurring

items 1,089 775 4,326 3,641

Margin (%) 25.0 18.3 25.8 21.4

Operating

income 359 -8 1,397 337

Operating

income excl.

non-recurring

items 454 -6 1,781 448

Mobile

communications

Net sales 2,409 2,379 9,427 9,993

EBITDA excl.

non-recurring

items 577 343 2,286 1,985

Margin (%) 24.0 14.4 24.2 19.9

CAPEX 157 202 392 763

ARPU (EUR) 29.5 28.5 28.7 30.1

Number of

subscriptions,

end of period

(thousands) 2,407 2,507 2,407 2,507

Fixed

communications

Net sales 1,939 1,854 7,317 7,009

EBITDA excl.

non-recurring

items 512 432 2,040 1,656

Margin (%) 26.4 23.3 27.9 23.6

CAPEX 341 325 1,015 1,157

Number of

subscriptions,

end of period

(thousands) 1,033 1,073 1,033 1,073







Effects from the ongoing cost efficiency program



· In addition to the SEK 1 billion gross cost savings program completed

in 2005, a turnaround program was initiated at the end of 2005 to secure

future growth and restore profitability. The program included cost

savings measures targeted at lowering annual gross cost levels by SEK 2

billion as of 2008 compared to the cost levels in 2005.



· The turnaround measures implemented to date are expected to yield

annual cost savings of approximately SEK 1 billion (from the total SEK 2

billion) as of 2007. During 2006, the savings effect from the turnaround

program was approximately SEK 700 million (nil), of which about SEK 220

million in the fourth quarter. In addition, cost savings totaled SEK 1

billion (250 million) from the previous savings program, of which about

SEK 250 million (220) in the fourth quarter. More than half of the

savings affected mobile communications.



· Since the introduction of the turnaround program, SEK 384 million

(nil) has been reported as non-recurring items, of which SEK 96 million

as impairment charges and SEK 138 million as expenses for the competence

pool. Thus far, 414 employees have been transferred to the competence

pool, of which 73 remained at the end of the quarter. In the fourth

quarter, non-recurring expenses for the turnaround program totaled SEK

95 million.



· The responsibility for the ongoing turnaround program in Finland is

divided between the respective new business areas launched on January 1,

2007.





Fourth quarter



· Demand was strong for bundled PC and broadband offerings. In

con­trast to the competition, TeliaSonera, in line with its strategy to

turn around the mobile market, chose not to offer any free air-time.

Telia­Sonera improved its service levels significantly by adding more

than 100 people to its customer service.





Mobile communications



· Net sales increased 1 percent due to higher mobile handset sales and

new pricing models. In local currency, sales rose 5 percent.



· The number of subscriptions decreased by 29,000 from the previous

quarter.



· Postpaid churn improved slightly to 16 percent (17).



· The number of traffic minutes per subscription rose 1 percent to 285

minutes, despite higher average prices. ARPU increased 4 percent to EUR

29.5.



· EBITDA and EBITDA margin strongly improved due to turnaround

measures, including decreased customer acquisition costs and new

interconnect prices from July 1, 2006.





Fixed communications



· Net sales increased 5 percent. In local currency, sales increased 8

percent. Main growth areas were equipment sales, managed IT services and

broadband. Around half of the growth was due to the consolidation of

Data-Info. A higher number of subscriptions and slightly higher ARPU

contributed to the growth in broadband. Sales of fixed voice and data

services continued to decline.



· The number of broadband subscriptions increased by 17,000 from the

previous quarter.



· EBITDA rose mainly due to a SEK 68 million gain from sales of old

receivables.







Record year in Norway







Full year



· Competition in the Norwegian mobile and broadband market remained

intense. Mobile activities were focused on price segmentation and cost

reduction. Within mobile, TeliaSonera increased its market share in

terms of revenue. Broadband prices remained fairly stable as competitors

focused on offering more bandwidth at the same prices. NextGenTel

maintained its position as the second largest broadband provider in

Norway.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except

margins, ARPU

and no. of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 2,366 2,096 9,432 7,481

EBITDA excl.

non-recurring

items 928 704 3,427 2,614

Margin (%) 39.2 33.6 36.3 34.9

Operating

income 666 486 2,425 1,682

Operating

income excl.

non-recurring

items 666 485 2,425 1,803

Mobile

communications

Net sales 2,146 2,096 8,926 7,481

EBITDA excl.

non-recurring

items 890 704 3,328 2,614

Margin (%) 41.5 33.6 37.3 34.9

CAPEX 277 261 645 876

ARPU (NOK) * 368 353 368 338

Number of

subscriptions,

end of period

(thousands) 1,641 1,651 1,641 1,651

Fixed

communications

Net sales 220 – 506 –

EBITDA excl.

non-recurring

items 38 – 99 –

Margin (%) 17.3 – 19.6 –

CAPEX 37 – 84 –

Number of

subscriptions,

end of period

(thousands) 172 – 172 –



* Refers to NetCom





Mobile communications



· Net sales rose 19 percent to SEK 8,926 million (7,481) due to the

acquisition of Chess (consolidated as of November 7, 2005), and higher

sales at NetCom. A changed customer mix, with a higher proportion of

postpaid subscriptions, and increased traffic contributed to the

positive sales development at NetCom. Lower interconnect fees

implemented as of July 1, 2006, impacted sales negatively.



· NetCom’s customer mix improved and the total number of postpaid

subscriptions in Norway increased by 83,000, while the number of prepaid

subscriptions decreased by 93,000. As a result, ARPU increased

significantly. Chess’ main focus during the year was to move its

customers over to the NetCom network.





· Postpaid churn declined to 15 percent (18).



· EBITDA increased to SEK 3,328 million (2,614) due to higher sales and

synergy gains from the consolidation of Chess. Lower interconnect fees

impacted EBITDA negatively by approximately SEK 55 million.



· CAPEX decreased year on year mainly due to large investments in UMTS

and EDGE in 2005.





Fixed communications



· Net sales were SEK 506 million and the EBITDA margin was 20 percent

as a result of the acquisition of NextGenTel (consolidated as of June 1,

2006).



· At year-end, NextGenTel had 172,000 subscriptions, of which 29,000

were VoIP subscriptions.





Fourth quarter



· TeliaSonera was less active in the fourth quarter after its sales

campaigns had dominated the Norwegian market in the third quarter. At

the end of the quarter, the regulator NPT issued a draft decision on

mobile voice termination prices, suggesting symmetric prices between

Telenor and NetCom by July 1, 2008. NetCom questions the calculation

method and the rationale of the proposed change of the termination

prices. The auction of a fourth 3G license was cancelled due to lack of

willingness to pay for the license.





Mobile communications



· Net sales increased 2 percent to SEK 2,146 million (2,096), mainly

due to the consolidation of Chess, increased traffic volumes and

improved customer mix. In local currency, net sales increased 11

percent. Lower interconnect fees impacted net sales negatively.



· During the fourth quarter the number of subscriptions increased by

4,000. The number of postpaid subscriptions increased by 9,000 and the

number of prepaid subscriptions decreased by 5,000.



· Postpaid churn increased to 19 percent (16).



· EBITDA rose to SEK 890 million (704), and EBITDA margin improved to

42 percent (34), mainly due to higher sales, synergy gains from the

consolidation of Chess, and lower sales and marketing costs. Lower

interconnect fees impacted EBITDA negatively by approximately SEK 30

million.





Fixed communications



· Net sales were SEK 220 million and EBITDA margin was 17 percent as a

result of the acquisition of NextGenTel.



· During the quarter the number of broadband subscriptions increased by

4,000. The share of VoIP subscriptions increased 2 percentage points to

17 percent.









Strong earnings improvement in Denmark, driven by mobile communications







Full year



· Prices in the Danish mobile market were stable and focus remained on

customer retention and customer loyalty. Mobile marketing activities

were focused on data services and content offerings, such as mobile

music shops. On the broadband market, prices stabilized gradually over

the year and the focus was on delivering more bandwidth at the same

prices. TeliaSonera maintained its position in the market.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except

margins, ARPU

and no. of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 1,712 1,916 7,413 7,178

EBITDA excl.

non-recurring

items 331 182 1,422 817

Margin (%) 19.3 9.5 19.2 11.4

Operating

income 79 52 423 -174

Operating

income excl.

non-recurring

items 124 -81 500 -277

Mobile

communications

Net sales 1,154 1,332 5,199 4,965

EBITDA excl.

non-recurring

items 242 77 982 391

Margin (%) 21.0 5.8 18.9 7.9

CAPEX 185 141 353 682

ARPU (DKK) 255 244 252 247

Number of

subscriptions,

end of period

(thousands) 1,123 1,154 1,123 1,154

Fixed

communications

Net sales 558 584 2,214 2,213

EBITDA excl.

non-recurring

items 89 105 440 426

Margin (%) 15.9 18.0 19.9 19.2

CAPEX 52 45 177 151

Number of

subscriptions,

end of period

(thousands) 537 550 537 550







Mobile communications



· Net sales increased 5 percent to SEK 5,199 million (4,965) due to

higher ARPU and handset sales. Lower interconnect fees impacted net

sales negatively.



· The number of subscriptions decreased by 31,000 to 1,123,000, mostly

due to a decline in the number of prepaid subscriptions as Te­liaSonera

continued focusing on high-value customers.



· Postpaid churn remained unchanged at 33 percent.



· EBITDA improved significantly to SEK 982 million (391) due to

increased net sales, synergy gains from the consolidation of Orange and

other efficiency gains. Lower interconnect fees affected EBITDA

negatively by approximately SEK 40 million. In 2005, EBITDA was burdened

by costs for the re-branding of Orange.



· CAPEX declined. In 2005, CAPEX had been driven higher by investments

to increase network capacity.





Fixed communications



· Net sales remained unchanged. Increased sales within broadband and

cable TV offset a continued decline in sales of traditional fixed

telephony.



· EBITDA and EBITDA margin increased slightly due to efficiency gains,

mainly in the form of reduced administration costs.



· CAPEX increased mainly due to the upgrade of the cable-TV and

broadband networks.





Fourth quarter



· Prices remained stable and Christmas campaigns were focused on data

services and handset sales. TeliaSonera started its sales campaigns of

Telia HomeFree, a new service to support fixed to mobile migration. The

market position was maintained.





Mobile communications



· Net sales decreased 13 percent primarily due to lower terminal sales

and exchange rate effects. Lower interconnect fees further burdened

sales. In local currency, net sales decreased 10 percent.



· During the fourth quarter the total number of subscriptions increased

by 29,000. The number of postpaid subscriptions increased by 13,000 and

the number of prepaid subscriptions increased by 16,000.



· Postpaid churn increased to 34 percent (27).



· EBITDA improved substantially due to synergy gains from the

consolidation of Orange and other efficiency gains. Lower interconnect

fees affected EBITDA negatively by approximately SEK 10 million.





Fixed communications



· Net sales decreased to SEK 558 million (584), mainly due to lower

fixed voice sales, but remained stable in local currency. Sales of

broadband and cable TV services increased 12 percent, or in local

currency 16 percent.



· During the quarter the number of broadband subscriptions increased by

3,000 to a total of 162,000.



· EBITDA and the EBITDA margin decreased slightly due to lower fixed

voice sales and slightly reduced margins in Stofa’s cable TV business.





Further market adaptation and streamlining



· During the year the Danish operation initiated further efficiency

measures in order to adapt the organization to the market. 65 employees

were laid off and annual cost savings of SEK 80 million are estimated as

of 2007. Restructuring costs of SEK 45 million were booked as a non-

recurring item in the fourth quarter.









Good development in the Baltics







Full year



· Competition remained fierce in the mobile and broadband markets, with

new entrants increasing the pressure on prices. Mobile operators focused

on upgrading their 3G networks with HSDPA. Growth within broadband

continued, creating a growing demand for VoIP services, IP TV and triple

play services. TeliaSonera was very active within all growth areas and

maintained its market positions.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except margins

and no. of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 2,555 2,453 9,950 9,293

EBITDA excl.

non-recurring

items 1,018 971 4,403 4,255

Margin (%) 39.8 39.6 44.3 45.8

Income from

associated

companies 18 45 208 220

Operating

income 612 432 2,781 2,303

Operating

income excl.

non-recurring

items 612 432 2,781 2,303

Mobile

communications

Net sales 1,814 1,651 6,978 6,380

of which

Lithuania 604 605 2,412 2,302

of which

Latvia 660 560 2,495 2,252

of which

Estonia 550 486 2,071 1,826

EBITDA excl.

non-recurring

items 693 608 2,953 2,799

Margin (%),

Lithuania 39.2 31.2 40.3 40.1

Margin (%),

Latvia 38.9 43.2 47.5 49.4

Margin (%),

Estonia 36.2 36.4 38.4 41.8

CAPEX 279 214 753 667

Number of

subscriptions,

end of period

(thousands) 3,636 3,301 3,636 3,301

Fixed

communications

Net sales 928 959 3,661 3,500

of which

Lithuania 498 522 1,978 1,970

of which

Estonia 430 437 1,683 1,530

EBITDA excl.

non-recurring

items 331 367 1,468 1,473

Margin (%),

Lithuania 41.2 44.8 47.3 48.3

Margin (%),

Estonia 29.3 30.4 31.7 34.1

CAPEX 278 173 650 418

Number of

subscriptions,

end of period

(thousands)

in

subsidiaries 1,506 1,433 1,506 1,433

in associated

companies 720 692 720 692







Mobile communications



· Net sales increased 9 percent to SEK 6,978 million (6,380) due to a

higher number of subscriptions in all three markets and increased

traffic per user in Latvia and Estonia. In Lithuania traffic per user

decreased slightly due to the high intake of new prepaid subscriptions.



· The number of subscriptions rose in all markets by a total of 335,000

to 3,636,000.



· Average Baltic postpaid churn increased to 14 percent (13).



· EBITDA improved in all Baltic markets driven by higher net sales. The

EBITDA margin was maintained in Lithuania, but increased price pressure,

together with higher costs for sales and marketing, weakened the EBITDA

margin in Estonia and Latvia.



· CAPEX increased in Lithuania and Estonia, mainly due to investments

in EDGE and UMTS/HSDPA. In Latvia, CAPEX decreased, mainly due to

reduced investments in 2G capacity and IT.





Fixed communications



· Total net sales increased 5 percent to SEK 3,661 million (3,500),

partly due to the acquisition of MicroLink in Estonia. Higher broadband

net sales contributed to the rise and more than compensated for lower

fixed voice sales.



· In Estonia and Lithuania, the number of broadband subscriptions rose

more than 50 percent to 322,000. The number of fixed voice subscriptions

decreased 2 percent to 1,166,000.



· The weakened EBITDA margin in Estonia is mainly due to the expansion

into the managed services market. Increased sales of low margin

products, including computers, to support the underlying business also

weighed on the margin. In Lithuania, the slightly lower margin is

explained by increased costs for sales and marketing and costs related

to re-branding.



· TeliaSonera’s income from the associated company Lattelecom, in

Latvia, was SEK 208 million (220).



· CAPEX increased due to the expansion of broadband in all markets and

the build-out of digital terrestrial television in Lithuania.





Fourth quarter



· The market was characterized by high activity, including Christmas

campaigns. Competition and price pressure remained intense. Telia­Sonera

maintained its market positions.





Mobile communications



· Net sales increased 10 percent to SEK 1,814 million (1,651) due to a

higher number of subscriptions in all three markets and increased

traffic per user. In local currency, net sales as a weighted average of

the three markets rose 14 percent.



· During the quarter the number of subscriptions increased by 78,000 to

3,636,000.



· Average Baltic postpaid churn increased to 15 percent (14).



· EBITDA improved in all three markets due to higher net sales and

increased profitability in Lithuania. The changes in EBITDA margins were

mainly driven by the development of sales and marketing costs.







Fixed communications



· Net sales decreased 3 percent. In Estonia, net sales increased 2

percent in local currency, driven by strong demand in the business

segment. In Lithuania net sales decreased 1 percent in local currency

due to the sale of Comliet. Excluding the effect from divestments, sales

in Lithuania rose 5 percent in local currency.



· The number of broadband subscriptions continued to grow and during

the quarter increased by 39,000 to 322,000. The number of fixed voice

subscriptions increased by 6,000 to 1,166,000.



· The weakened EBITDA margin was mainly due to increased costs for

sales and marketing, and higher sales of low margin products.



· TeliaSonera’s income from associated company Lattelecom decreased to

SEK 18 million (45) due to a change in deferred tax items related to

fair value adjustments recorded in the TeliaSonera merger.



· CAPEX increased mainly due to the expansion of broadband and hotspots

in all Baltic markets and the introduction of digital terrestrial

television in Lithuania.







Successful launch in Spain – customer intake

exceeding expectations





· After a record short period of time following the closing of

TeliaSonera’s acquisition of Xfera in June 2006, Xfera launched its

Spanish operation under the brand Yoigo on December 1.





SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except number

of Oct-Dec Oct-Dec

subscriptions 2006 2005

Mobile

communications

Net sales 5 – 5 –

EBITDA excl.

non-recurring

items -247 – -337 –

CAPEX 43 – 181 –

Number of

subscriptions,

end of period

(thousands) 24 – 24 –





· The Yoigo offering, based on easy to use services with transparent

and attractive pricing, has been very well received in Spain. At the end

of the year, the number of subscriptions had reached 24,000, out of a

total of 34,000 orders received after only one month of operation.



· EBITDA was SEK -247 million. Costs were mainly for the market launch,

network and new customer intake. In December costs for brand awareness

campaigns in connection with the commercial launch totaled SEK 90

million.



· The Xfera operation is based on a flexible and cost efficient

organization. Major functions such as network roll-out and maintenance,

customer care, sales and logistics are outsourced.









Record year in International Mobile with continued strong growth and

profitability







SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except margins

and number of Oct-Dec Oct-Dec

subscriptions 2006 2005

Net sales 2,289 1,950 8,508 6,367

of which

Kazakhstan 1,251 1,101 4,803 3,509

of which

Azerbaijan 688 557 2,453 1,902

of which

Georgia 268 219 945 719

of which

Moldova 85 75 317 243

EBITDA excl.

non-recurring

items 1,212 1,072 4,787 3,519

Margin (%),

total 52.9 55.0 56.3 55.3

Margin (%),

Kazakhstan 55.6 60.4 57.8 55.8

Margin (%),

Azerbaijan 52.3 60.9 61.4 63.2

Margin (%),

Georgia 51.9 44.7 47.9 46.6

Margin (%),

Moldova 44.7 44.0 44.2 52.3

Income from

associated

companies 1,478 845 4,800 2,937

of which

Russia 786 283 2,780 1,176

of which

Turkey 692 562 2,020 1,761

Operating

income 2,416 1,698 8,557 5,692

Operating

income excl.

non-recurring

items 2,416 1,698 8,557 5,692

CAPEX 472 563 2,699 2,449

Number of

subscriptions,

end of period

(thousands)

Eurasia 7,352 6,146 7,352 6,146

Russia 29,749 22,836 29,749 22,836

Turkey 30,800 26,700 30,800 26,700

Ukraine 4,620 1,205 4,620 1,205







Full year







Eurasia



· Net sales increased 34 percent due to strong subscription growth and

higher ARPU.



· The number of subscriptions rose by 20 percent, or 1.2 million, to

7.4 million. In Kazakhstan, the subscription growth was slowed by the

requirement to register prepaid subscriptions. The registration by the

customers was completed at the end of the third quarter and a total of

725,000 prepaid subscriptions were deactivated.



· EBITDA rose 34 percent, mainly due to higher net sales and the

EBITDA margin increased.



· CAPEX remained high in order to maintain high network and service

quality as well as coverage leadership in the region. TeliaSonera’s

first 3G roll-out in the region is ongoing in Georgia. The commercial

launch took place in December.



· All four Fintur companies are dividend payers and during 2006 the

companies paid a total of approximately SEK 1,400 million in dividends,

of which approximately SEK 660 million to minority shareholders. In

addition, SEK 350 million in extraordinary dividends were declared in

December 2006 and paid in January 2007, of which approximately SEK 172

million to minority shareholders.





Russia



· The Russian mobile market continued to show strong volume and revenue

growth. The total market grew by 26 million to 152 million

subscriptions. Mobile SIM card penetration rose from 87 to 105 percent.

After several years of decline, prices leveled out during the year and

ARPU improved. MegaFon strengthened its market position in terms of

revenue among the three main operators, from 26 to 29 percent. In

Moscow, MegaFon improved its market share of subscriptions from 14 to 19

percent. The Calling Party Pays (CPP) regulatory regime was introduced

in July. The 3G license procedure was announced in December.



· MegaFon (associated company, 43.8 percent holding) reported strong

sales and earnings growth and TeliaSonera’s income from Russia rose 136

percent to SEK 2,780 million (1,176). SEK 340 million of the improvement

is due to gains from exchange rates and divestments, and a negative

revaluation of loans in 2005.



· The number of subscriptions increased by 6.9 million to 29.7 million

subscriptions. Growth was strongest in Moscow, where the number of

subscriptions increased by 56 percent, or 1.8 million, to 5.0 million.



· MegaFon paid no dividend to its shareholders (nil). The cash

generated from operations was invested to expand the business.





Turkey



· The Turkish mobile market continued to expand and the number of

subscriptions grew by 9 million to over 51 million. Mobile SIM card

penetration rose from 57 to 69 percent (reported with a one-quarter lag,

year on year).



· In Turkey, Turkcell’s (associated company, 37.3 percent holding,

reported with a one-quarter lag) subscriptions increased by 4.1 million

to 30.8 million. In Ukraine, the number of subscriptions increased by

3.4 million to 4.6 million.



· Despite a depreciation of the Turkish lira against the Swedish krona,

TeliaSonera’s income from Turkcell rose to SEK 2,020 million (1,761) due

to a higher number of subscriptions and increased usage.



· During 2006, TeliaSonera received SEK 1,501 million (175) in

dividends from Turkcell and Turkcell Holding (which owns 51 percent of

Turkcell and is jointly owned by TeliaSonera and Cukurova Holding).





Fourth quarter







Eurasia



· Net sales increased 17 percent. In local currency, net sales rose 25

percent. The number of subscriptions rose by nearly 0.5 million to 7.4

million. Subscription growth was particularly strong in Kazakhstan,

following the completion of the registration process of prepaid

subscriptions and successful sales and marketing activities.



· EBITDA increased 9 percent, driven by higher net sales. The EBITDA

margin decreased due to costs for increased sales and marketing

activities that had been postponed from previous quarters in Kazakhstan

and Azerbaijan.



· CAPEX decreased, partly due to the postponement of certain

investments.





Russia



· MegaFon succeeded well during the fourth quarter and took 30 percent

of the Russian subscription growth. In Moscow, MegaFon took 38 percent

of the growth.



· MegaFon showed continued strong sales and earnings growth.

Telia­Sonera’s fourth quarter income from Russia rose to SEK 786 million

(283). The increase includes SEK 92 million in gains from exchange rates

and the PeterStar divestment by Telecominvest. In 2005, income was

negatively affected by SEK 173 million from revaluations of loans.



· MegaFon’s subscriptions increased by 1.6 million in the fourth

quarter.





Turkey



· In Turkey, the number of subscriptions rose by 1.0 million during the

quarter (reported with a one-quarter lag). In Ukraine, the number of

subscriptions increased by 0.7 million.



· TeliaSonera’s income from Turkcell rose 23 percent to SEK 692 million

(562) due to continued strong growth in usage and the number of

subscriptions. A depreciation of 16 percent of the Turkish lira against

the Swedish krona affected TeliaSonera’s income from Turkcell

negatively.







Other operations *)







SEK in Oct-Dec Oct-Dec Jan-Dec Jan-Dec

millions 2006 2005 2006 2005

Net sales 1,278 1,216 4,826 4,575

EBITDA excl.

non-recurring

items -63 -48 7 151

Income from

associated

companies 17 84 694 84

Operating

income 401 -25 1,046 171

Operating

income excl.

non-recurring

items -114 -14 498 73

CAPEX 170 96 394 247



*) Include TeliaSonera Holding and TeliaSonera International Carrier



· Net sales increased mainly due to increased voice sales in the

carrier operations.



· Income from associated companies in 2006 was affected by a SEK 562

million gain from the sale of MTN Uganda that was booked in the third

quarter by TeliaSonera’s associated company Overseas Telecom.



· Operating income was positively affected by the reversal of

provisions related to integration and restructuring in the carrier

operations. For the full year the effect was SEK 101 million, of which

SEK 61 million in the fourth quarter.



· Non-recurring items in the fourth quarter of 2006 were positively

impacted by a SEK 500 million reversal of a provision related to the

settlement of a dispute regarding a potential co-location site in London

(West Ferry Road).



· CAPEX increased due to expansion of the carrier operations into new

regions and markets.





Stockholm, February 13, 2007





Anders Igel

President and CEO





Each year, TeliaSonera’s auditors review the interim reports for the

first three quarters. Accordingly, this report has not been subject to

review by the auditors.



















Financial Information



More details on the new reporting structure and restated comparable

figures, following the new organization introduced on January 1, 2007,

will be published well in advance of the Interim Report January-March

2007.



Interim Report January–March 2007 April 24,

2007

Annual General Meeting, Stockholm April 24,

2007

Shareholders’ information meeting, Helsinki April 25, 2007

Interim Report January–June 2007 July 27,

2007

Interim Report January–September 2007 October 26, 2007

Year-end Report January–December 2007 February 13, 2008

















Questions regarding content in the

reports:

Ordering of individual hard copies of

TeliaSonera AB the reports:

Investor Relations

SE–106 63 Stockholm, Sweden Tel. +46 372 851 42

Tel. +46 8 504 550 00 Fax +46 372 843 56

Fax +46 8 611 46 42 www.teliasonera.com/ir

www.teliasonera.com/ir





















Definitions



EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization.

Equals operating income before depreciation, amortization and impairment

losses and before income from associated companies.



ARPU: Average monthly revenue per user.



Churn: The number of postpaid subscribers that have left the company

expressed as a percentage of the average number of postpaid subscribers.



PSTN: Public Switched Telephone Network.



LLUB: Local Loop Unbundling.



HSDPA: High Speed Downlink Packet Access.













Condensed Consolidated Income Statements







SEK in Jan-Dec Jan-Dec

millions, 2006 2005

except per

share data

and number of Oct-Dec Oct-Dec

shares 2006 2005

Net sales 23,187 22,876 91,060 87,661

Costs of

production -13,269 -12,933 -48,640 -47,287

Gross income 9,918 9,943 42,420 40,374

Selling,

admin., and

R&D expenses -5,634 -6,277 -22,367 -23,706

Other

operating

revenues and

expenses, net 351 -636 -143 -2,348

Income from

associated

companies 1,555 992 5,579 3,229

Operating

income 6,190 4,022 25,489 17,549

Net financial

revenues and

expenses -90 -145 -263 -530

Income after

financial

items 6,100 3,877 25,226 17,019

Income taxes -1,562 -535 -5,943 -3,325

Net income 4,538 3,342 19,283 13,694

Attributable

to:

Shareholders

of the parent

co. 4,029 2,734 16,987 11,697

Minority

interests in

subsidiaries 509 608 2,296 1,997



Shareholders’

basic and

diluted

earnings per

share (SEK) 0.90 0.61 3.78 2.56

Number of

shares

(thousands)

Outstanding

at period-end 4,490,457 4,490,457 4,490,457 4,490,457

Weighted

average,

basic and

diluted 4,490,457 4,490,457 4,490,457 4,573,986

Number of

treasury

shares

(thousands)

At period-end – 184,775 – 184,775

Weighted

average – 184,775 125,546 101,246



EBITDA 7,455 6,744 31,113 27,508

EBITDA excl.

non-recurring

items 7,766 7,098 32,266 29,411

Depreciation,

amortization

and

impairment

losses -2,820 -3,714 -11,203 -13,188

Operating

income excl.

non-recurring

items 6,504 4,890 26,751 20,107











Condensed Consolidated Balance Sheets







Dec 31, Dec 31,

SEK in millions 2006 2005

Assets

Goodwill and other

intangible assets 74,172 74,367

Property, plant and

equipment 48,195 48,201

Investments in

associates, deferred

tax assets and

other financial assets 41,826 40,526

Total non-current

assets 164,193 163,094

Inventories 997 765

Trade receivables,

current tax receivables

and

other receivables 20,631 20,489

Interest-bearing

receivables 1,958 2,407

Cash and cash

equivalents 11,603 16,834

Total current assets 35,189 40,495

Non-current assets

held-for-sale 10 186

Total assets 199,392 203,775



Equity and liabilities

Shareholders’ equity 119,217 127,049

Minority interests 8,500 8,645

Total equity 127,717 135,694

Long-term borrowings 24,311 20,520

Deferred tax

liabilities, other

long-term provisions 14,635 14,948

Other long-term

liabilities 2,382 2,343

Total non-current

liabilities 41,328 37,811

Short-term borrowings 3,418 6,215

Trade payables, current

tax payables, short-

term

provisions and other

current liabilities 26,929 24,055

Total current

liabilities 30,347 30,270

Total equity and

liabilities 199,392 203,775











Condensed Consolidated Cash Flow Statements







SEK in Oct-Dec Oct-Dec Jan-Dec Jan-Dec

millions 2006 2005 2006 2005

Cash flow

before change

in working

capital 4,575 5,424 28,034 26,158

Change in

working

capital 1,881 795 -533 832

Cash flow

from

operating

activities 6,456 6,219 27,501 26,990

Intangible

and tangible

fixed assets

acquired

(cash CAPEX) -3,591 -3,028 -10,905 -11,396

Free cash

flow 2,865 3,191 16,596 15,594

Cash flow

from other

investing

activities 599 -3,068 -2,179 -840

Total cash

flow from

investing

activities -2,992 -6,096 -13,084 -12,236

Cash flow

before

financing

activities 3,464 123 14,417 14,754

Cash flow

from

financing

activities 524 -421 -19,382 -15,653

Cash flow for

the period 3,988 -298 -4,965 -899



Cash and cash

equivalents,

opening

balance 7,834 16,936 16,834 17,245

Cash flow for

the period 3,988 -298 -4,965 -899

Exchange rate

differences -219 196 -266 488

Cash and cash

equivalents,

closing

balance 11,603 16,834 11,603 16,834











Condensed Consolidated Statements of Changes in Equity







Jan-Dec 2006 Jan-Dec 2005

SEK in Shareholders’ Minority Total Shareholders’ Minority Total

millions equity interests equity equity interests equity

Opening

balance 127,049 8,645 135,694 121,133 6,934 128,067

Business

combinations 25 – 25 – – –

Reporting

financial

instruments

at fair

value -25 – -25 46 – 46

Currency

translation

differences -8,955 -608 -9,563 8,809 732 9,541

Inflation

adjustments -147 – -147 1,177 – 1,177

Transactions

with

minority

shareholders

in

subsidiaries – -215 -215 – -12 -12

Net income

recognized

directly in

equity -9,102 -823 -9,925 10,032 720 10,752

Net income 16,987 2,296 19,283 11,697 1,997 13,694

Total

recognized

net income 7,885 1,473 9,358 21,729 2,717 24,446

Dividend -15,717 -1,618 -17,335 -5,610 -1,006 -6,616

Treasury

shares – – – -10,203 – -10,203

Closing

balance 119,217 8,500 127,717 127,049 8,645 135,694









Basis for Preparation





General. As in the annual accounts for 2005, TeliaSonera’s consolidated

financial statements as of and for the year ended December 31, 2006,

have been prepared in accordance with International Financial Reporting

Standards (IFRS) and, given the nature of TeliaSonera’s transactions,

with IFRSs as adopted by the European Union. The parent company

TeliaSonera AB’s financial statements have been prepared in accordance

with the Swedish Annual Accounts Act and the Swedish Financial

Accounting Standards Council’s standard RR 32 “Accounting for Legal

Entities” and statements issued by its Emerging Issues Task Force. This

report has been prepared in accordance with IAS 34 “Interim Financial

Reporting.”



New accounting standards (not yet adopted by the EU). IFRS 8 “Operating

Segments” (applies to annual financial statements for periods beginning

on or after January 1, 2009, with earlier application permitted), was

issued on November 30, 2006, as part of the joint project with the US

FASB to reduce differences between IFRSs and US GAAP. IFRS 8 replaces

IAS 14 “Segment Reporting” and is aligned with the requirements of FAS

131. IFRS 8 requires an entity to report financial and descriptive

information about its reportable segments. Reportable segments are

operating segments or aggregations of operating segments that meet

specified criteria. Operating segments are components of an entity about

which separate financial information is available that is evaluated

regularly by the chief operating decision maker in deciding how to

allocate resources and in assessing performance. TeliaSonera has decided

to adopt IFRS 8 in 2007.



IFRIC 11 “IFRS 2 – Group and Treasury Share Transactions” (effective for

annual periods beginning on or after March 1, 2007, with earlier

application permitted) was issued on November 2, 2006. IFRIC 11

addresses how to apply IFRS 2 “Share-based Payment” to share-based

payment arrangements involving an entity’s own equity instruments or

equity instruments of another entity in the same group (e.g. equity

instruments of its parent). IFRIC 11 is currently not relevant to

TeliaSonera.



IFRIC 12 “Service Concession Arrangements” (effective for annual periods

beginning on or after January 1, 2008) was issued on November 30, 2006.

IFRIC 12 addresses how service concession operators should apply

existing IFRSs to account for the obligations they undertake and rights

they receive in service concession arrangements. IFRIC 12 is not

relevant to TeliaSonera.



For further information, see corresponding sections in the Q2 2006

Interim Report and in the 2005 Annual Report.







Non-Recurring Items







SEK in Oct-Dec Oct-Dec Jan-Dec Jan-Dec

millions 2006 2005 2006 2005

Within EBITDA -311 -354 -1,153 -1,903

Restructuring

charges,

synergy

implementation

costs, etc.:

Sweden -628 -577 -1,255 -2,095

Finland -105 -1 -288 -111

Denmark -45 92 -77 62

International

Carrier 44 134 77 216

Other 416 -9 383 -36

Capital gains:

Telia Finans 7 7 7 61

Within

Depreciation,

amortization

and impairment

losses -13 -514 -13 -636

Impairment

losses,

accelerated

depreciation:

Sweden – -405 – -405

Norway – 1 – -121

Denmark – 40 – 40

International

Carrier -13 -150 -13 -150

Within Income

from

associates 10 – -96 -19

Impairment

losses,

capital gains/

losses,

provisions and

other:

Finland 10 – -96 –

Infonet

Services – – – -19

Within

Financial net – – 183 –

Capital gains:

Elisa – – 183 –

Total -314 -868 -1,079 -2,558









Deferred Taxes







Dec 31, Dec 31,

SEK in millions 2006 2005

Deferred tax assets 12,054 12,305

Deferred tax

liabilities -10,121 -9,578

Net deferred tax assets

(+)/liabilities (-) 1,933 2,727









Related Party Transactions





MegaFon. As of December 31, 2006, TeliaSonera had interest-bearing

claims on its associated company OAO MegaFon of SEK 321 million.



Telefos. As of December 31, 2006, TeliaSonera had interest-bearing

claims of SEK 101 million on its associated company Telefos AB. In the

three-month period and the year ended December 31, 2006, TeliaSonera

purchased services and products from Telefos worth SEK 643 million and

SEK 1,812 million, respectively, mostly referring to network

construction.



Svenska UMTS-nät. In the year ended December 31, 2006, TeliaSonera

purchased services from its associated company Svenska UMTS-nät AB worth

SEK 505 million and sold services worth SEK 158 million.







Acquisition of Cygate





On November 16, 2006, TeliaSonera announced an agreement to acquire a

majority stake in Cygate Group AB. After obtaining relevant regulatory

approval closing took place on January 26, 2007. TeliaSonera acquired

98.76 percent of the shares for a cash consideration of SEK 639 million.



Cygate is a leading supplier of secure and managed IP network solutions

as well as system integration in the Nordic market. The acquisition

underlines TeliaSonera’s strategic direction to strengthen its position

within managed services.



The transaction is a strategic acquisition providing TeliaSonera with

broader competence within business solution sales, technology and

project management. Cygate provides solutions within networking,

security and IP telephony and services within support, maintenance and

IT management. Cygate, which has strong brand recognition in the market,

will operate as a separate business within TeliaSonera.



Cygate is expected to generate 2006 net sales of approximately SEK 805

million. Total assets as of September 30, 2006 were SEK 327 million.

Work on the purchase price allocation has started. To some extent the

cost of combination will be allocated to certain identifiable intangible

assets (e.g. trade names), but will mainly be recognized as goodwill.

The results of the Cygate operations are included in the consolidated

financial statements as of February 1, 2007.









Investments







SEK in Oct-Dec Oct-Dec Jan-Dec Jan-Dec

millions 2006 2005 2006 2005

CAPEX 3,688 3,091 11,101 11,583

Intangible

assets 357 488 1,152 1,233

Property,

plant and

equipment 3,331 2,603 9,949 10,350

Acquisitions

and other

investments 111 2,630 3,951 2,732

Asset

retirement

obligations 64 194 67 194

Goodwill and

fair value

adjustments 46 2,408 3,778 2,466

Shares and

participations 1 28 106 72

Total 3,799 5,721 15,052 14,315









Net Debt







Dec 31, Dec 31,

SEK in millions 2006 2005

Long-term and short-

term borrowings 27,729 26,735

Less short-term

investments, cash and

bank -12,772 -18,362

Net debt 14,957 8,373









Loan Financing and Credit Rating





Cash-flow generation was positive during 2006, but substantial dividend

pay-outs in May led to some refinancing need. During the year financing

activities have been focused on issuance in Swedish kronor and overall

the terms have been relatively attractive, even though public

discussions relating to the ownership structure in TeliaSonera AB led to

a deterioration of the funding conditions during the latter part of

2006.



In the fourth quarter Moody’s changed the Outlook on its TeliaSonera AB

A2/P-1 credit rating from Stable to Negative.



During the year, a bond originally issued by the acquired company

NextGenTel in Norway was prepaid in full. Furthermore, the remaining

Eurobond maturing in April 2009, originally issued by TeliaSonera

Finland Oyj (former Sonera Oyj), changed its listing from the London

Stock Exchange’s Gilt-Edged and Fixed Interest Market to the

Professional Securities Market.



Financing needs are expected to increase rather substantially in 2007,

primarily due to extraordinary dividends that are expected to be paid in

the spring.









Financial Key Ratios







Dec 31, Dec 31,

2006 2005

Return on equity (%,

rolling 12 months) 17.2 10.3

Return on capital

employed (%, rolling 12

months) 19.5 12.6

Equity/assets ratio (%) 49.9 58.9

Net debt/equity ratio

(%) 15.0 7.0

Shareholders’ equity

per share (SEK) 26.55 28.29









Collateral Pledged and Guarantees





Collateral pledged at December 31, 2006 totaled SEK 1,403 million,

mainly referring to blocked funds in bank accounts for Ipse 2000

S.p.A.’s future license payments and pledges of shares in Svenska UMTS-

nät AB. Guarantees totaled SEK 2,058 million, of which SEK 1,685 million

referred to credit guarantees on behalf of Svenska UMTS-nät. Under

certain third-party agreements, the credit guarantees on behalf of

Svenska UMTS-nät are capped at SEK 2,400 million.







Contractual Obligations





Contractual obligations at December 31, 2006 totaled SEK 1,869 million,

of which SEK 1,535 million referred to contracted build-out of

TeliaSonera’s mobile network in Spain and fixed networks in Sweden and

Lithuania.







Parent Company





Net sales for the year were SEK 19,705 million (21,363), of which SEK

14,424 million (16,046) was billed to subsidiaries. Earnings before

appropriations and taxes decreased to SEK 7,631 million (11,526), mainly

due to lower dividends from subsidiaries. Net income was SEK 3,228

million (1,853).



Total investments for the year amounted to SEK 17,332 million (7,009),

including SEK 2,382 million (2,754) in property, plant and equipment,

primarily for the fixed network. The acquisition price for NextGenTel

Holding was SEK 2,335 million. Other investments totaling SEK 12,615

million (4,255) were mainly attributable to capital infusions in

subsidiaries and other equity holdings. Of the capital infusions, SEK

12,113 million (921) was provided through debt conversion.







Financial Information/“Underlying” Measures of

Results of Operations





This year-end report includes information on “underlying” measures of

TeliaSonera’s results of operations, such as “EBITDA excluding non-

recurring items” and “Operating income excluding non-recurring items.”

EBITDA equals operating income before depreciation, amortization and

impairment losses, excluding income from associated companies. Non-

recurring items include impairment losses, capital gains/losses,

restructuring/phase-out of operations and personnel redundancy costs.

TeliaSonera’s management uses operating income excluding non-recurring

items as the principal measure for monitoring profitability in internal

reporting. Management believes that, besides operating income, EBITDA

excluding non-recurring items and operating income excluding non-

recurring items are also measures commonly reported and widely used by

analysts, investors and other interested parties in the

telecommunications industry. Accordingly, these “underlying” measures

are presented to enhance the understanding of TeliaSonera’s historical

operating performance.



These “underlying” measures, however, should not be considered as

alternatives to operating income as indicators of our operating

performance. Similarly, EBITDA excluding non-recurring items should not

be considered as an alternative to cash flows from operating activities

as a measure of liquidity. EBITDA excluding non-recurring items and

operating income excluding non-recurring items are not measures of

consolidated financial performance under IFRS or U.S. GAAP and may not

be comparable to other similarly titled measures for other companies.

These “underlying” measures are not meant to be predictive of potential

future results.







Forward-Looking Statements





This year-end report contains statements concerning, among other things,

TeliaSonera’s financial condition and results of operations that are

forward-looking in nature. Such statements are not historical facts but,

rather, represent TeliaSonera’s future expectations. TeliaSonera

believes that the expectations reflected in these forward-looking

statements are based on reasonable assumptions; however, forward-looking

statements involve inherent risks and uncertainties, and a number of

important factors could cause actual results or outcomes to differ

materially from those expressed in any forward-looking statement,

including TeliaSonera’s market position, growth in the

telecommunications industry in Europe, the effects of competition and

other economic, business, competitive and/or regulatory factors

affecting the business of TeliaSonera and the telecommunications

industry in general. Forward-looking statements speak only as of the

date they were made, and, other than as required by applicable law,

TeliaSonera undertakes no obligation to update any of them in light of

new information or future events.