TeliaSonera January-December 2007

Full year



· Net sales increased 5.8 percent to SEK 96,344 million (91,060). In

local currencies net sales rose 6.3 percent.

· EBITDA, excluding non-recurring items, was SEK 31,021 million

(32,266) and the margin 32.2 percent (35.4).

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

27,478 million (26,751).

· Net income attributable to shareholders of the parent company

increased to SEK 17,674 million (16,987) and earnings per share to SEK

3.94 (3.78).

· Free cash flow was SEK 13,004 million (16,596).

· The number of subscriptions increased during the year to 114.9

million, with 5.8 million new subscriptions in the majority-owned

operations and 12.9 million new subscriptions in the associated

companies.

· Total proposed dividend of SEK 4.00 per share (6.30), including

ordinary and extraordinary dividend, equaling a total of SEK 17,962

million (28,290).





Fourth quarter



· Net sales increased 7.5 percent to SEK 24,921 million (23,187). In

local currencies net sales rose 6.8 percent.

· EBITDA, excluding non-recurring items, was SEK 7,208 million (7,766)

and the margin 28.9 percent (33.5).

· Operating income, excluding non-recurring items, was SEK 6,358

million (6,504).

· Net income attributable to shareholders of the parent company

increased to SEK 4,467 million (4,029) and earnings per share to SEK

0.99 (0.90).

· Free cash flow was SEK 1,839 million (2,865).







Comments from Lars Nyberg, President and CEO





“I am happy with the top-line growth and the bottom-line development in

the fourth quarter. During the year we continued investing in future

growth by expanding our presence in Eurasia to new growth markets,

building our Yoigo brand in Spain and offering IP-based services with

the ambition to migrate our fixed-voice customer base.



These investments, together with price erosion and regulatory

intervention, unfavorably impacted our EBITDA during every quarter of

2007.



For 2008, it is critical that we continue to execute our plan in Spain.

In addition, the planned efficiency measures are mandatory to allow us

to continue investing in future growth at the same time as we defend

leading positions in more mature markets and provide high-quality

networks and services.”









In this report, comparative figures are provided in parentheses

following the operational and financial results and refer to the same

item in the full year or in the fourth quarter of 2006, unless otherwise

stated.







Financial Highlights







SEK in

millions,

except per

share data Oct-Dec Oct-Dec Jan-Dec Jan-Dec

and return 2007 2006 2007 2006

Net sales 24,921 23,187 96,344 91,060

EBITDA1)

excl. non-

recurring

items2) 7,208 7,766 31,021 32,266

Operating

income 6,058 6,190 26,155 25,489

Operating

income excl.

non-recurring

items 6,358 6,504 27,478 26,751

Net income 5,209 4,538 20,298 19,283

of which

attributable

to

shareholders

of the parent

company 4,467 4,029 17,674 16,987

Earnings per

share (SEK) 0.99 0.90 3.94 3.78

Return on

equity (%,

rolling 12

months) 18.6 17.2 18.6 17.2

Free cash

flow 1,839 2,865 13,004 16,596



1) Please refer to page 18 for definitions.

2) Non-recurring items; see table on page 23.







Outlook







Group outlook for 2008



Net sales are expected to show stable growth in the financial year 2008

compared to the previous year.



Despite continued aggressive investments in future growth and in the

quality of our networks and services, TeliaSonera’s ambition for 2008 is

to maintain the EBITDA margin level of 2007, excluding non-recurring

items.



Net income for 2008 is estimated to be somewhat higher than in 2007,

excluding the positive one-off items of approximately SEK 2.0 billion in

2007 and potential positive one-off items in 2008.



Capital expenditure will be driven by continued investments in broadband

and mobile capacity and is expected to be around SEK 15 billion in 2008.





Efficiency measures



Intensified efficiency improvement is imperative for TeliaSonera to be

able to continue shifting the product mix by investing in mobility and

IP-based services.



Operating expenses for the Swedish and Finnish operations totaled about

SEK 36 billion in 2007, of which approximately SEK 22 billion is the

primary cost base to be addressed by the planned efficiency measures.

Efficiency measures to be implemented primarily in the Swedish and

Finnish operations during 2008 and 2009 are estimated to give an annual

gross savings effect of approximately SEK 5 billion compared to the cost

base of 2007.



TeliaSonera estimates that about two-thirds of these efficiency measures

comprising savings of addressable costs and sustainable savings in

volume-related costs will be implemented during 2008 and the remaining

one-third in 2009. The efficiency measures are expected to result in a

reduction of approximately 2,900 employees, of whom about two-thirds in

Sweden and one-third in Finland. The related restructuring costs, to be

reported as non-recurring items, are estimated to be around SEK 4

billion, of which approximately two-thirds in 2008.





Previous efficiency measures, implemented from April 1 to year-end 2007

in Sweden and Finland, are finalized and estimated to give an annual

gross savings effect of approximately SEK 1.5 billion as of 2008. The

savings effect for 2007 from these measures was approximately SEK 700

million and non-recurring expenses totaled SEK 790 million.







Review of the Group, Full Year 2007





Net sales increased 5.8 percent to SEK 96,344 million (91,060). The net

effect of acquisitions was positive 2.7 percent and the net effect from

exchange rate changes was negative 0.5 percent. Organic growth was 3.6

percent. All business areas showed higher sales.



In Mobility Services, net sales rose 6.1 percent to SEK 44,519 million

(41,949) with increased sales in all markets. In particular, the

acquisition of debitel in Denmark in April, good underlying development

in Sweden and Estonia and the Yoigo start-up in Spain drove sales

higher.



In Broadband Services, net sales increased 1.0 percent to SEK 41,273

million (40,880) due to higher sales in all markets except Sweden.

Particularly the good underlying development in Wholesale and in

Estonia, and the acquisition of NextGenTel in Norway in June 2006

contributed to higher sales.



Integrated Enterprise Services net sales increased 6.1 percent to SEK

13,729 million (12,940). The improvement was attributable to the

acquisitions of Cygate, Didata and Crescom in 2007.



In Eurasia, net sales rose 21.5 percent to SEK 10,338 million (8,508),

lifted by continued strong growth, especially in Kazakhstan and

Azerbaijan, and the acquisition of operations in Uzbekistan and

Tajikistan.



The number of subscriptions rose by 18.7 million to 114.9 million. The

number of subscriptions in the majority-owned operations rose to

approximately 36.1 million and in the associated companies to about 78.8

million.



EBITDA, excluding non-recurring items, decreased to SEK 31,021 million

(32,266) and the margin was 32.2 percent (35.4), despite higher net

sales in all business areas and higher EBITDA in Eurasia. The

profitability was impacted by the change in the product mix and related

investments in growth, especially in mobility and IP-based services. In

Spain, costs for building the Yoigo brand resulted in an EBITDA of SEK -

1,443 million

(-337). In addition, acquisitions during the year as well as price

erosion and regulatory intervention had a negative effect on

profitability.



Operating income, excluding non-recurring items, increased to SEK 27,478

million (26,751) due to higher income from associated companies in

Russia and Turkey.



Non-recurring items affecting operating income totaled SEK -1,323

million (-1,262), negatively impacted by charges of about SEK 900

million related to cost efficiency programs, and about SEK 600 million

related to a write-down of the access network in Finland and a provision

for dismantling the network. Non-recurring items were positively

impacted by the release of provisions of approximately SEK 200 million

in the third quarter. In 2006, non-recurring items were positively

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

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

London.



Financial items totaled SEK -904 million (-263), of which SEK -1,174

million (-472) related to net interest expenses. The comparable period

was positively impacted by a capital gain of SEK 183 million from a sale

of shares.



Income taxes amounted to SEK -4,953 million (-5,943). The effective tax

rate decreased to 19.6 percent (23.6). The decrease was mainly related

to recognition of deferred tax assets of approximately SEK 850 million

in the fourth quarter, mainly in Finland, after a positive ruling

concerning certain old tax losses, and to higher income from associated

companies in Russia and Turkey.



Minority interests in subsidiaries were SEK 2,624 million (2,296) of

which SEK 1,895 million (1,654) related to Fintur and SEK 702 million

(650) to Eesti Telekom, LMT and TEO.



Net income attributable to shareholders of the parent company increased

to SEK 17,674 million (16,987) and earnings per share to SEK 3.94

(3.78).



CAPEX increased to SEK 13,531 million (11,101) and the CAPEX-to-sales

ratio to 14.0 percent (12.2) driven mainly by increased investments in

network capacity and coverage in all business areas, and new services

especially within Mobility Services and Broad-band Services.



Free cash flow decreased to SEK 13,004 million (16,596), mainly due to

higher CAPEX, lower EBITDA and higher paid taxes. Free cash flow was

positively affected by a dividend of about SEK 900 million from the

associated company Telefos in the third quarter, mainly related to its

sale of Eltel. In the comparable period cash flow was positively

impacted by a tax refund of approximately SEK 1.5 billion.



Net debt increased to SEK 34,718 million from SEK 14,957 million mainly

due to dividend payments of SEK 28.3 billion to shareholders in May

2007, only partly offset by free cash flow.



The equity/assets ratio increased to 50.3 percent from 49.9 percent.





Acquisitions and divestitures



· In January 2007, TeliaSonera finalized the acquisition of Cygate and

consolidated the company as of February 2007. Cygate further acquired

Didata Dimension Data Sverige AB (now Didata Sverige AB), a Swedish

subsidiary of the global systems integrator Dimension Data Holdings plc,

on April 12, 2007. Didata has been consolidated as of June 1. The

Finnish managed-hosting specialist company Crescom Oy was consolidated

as of July 1, 2007. These acquisitions underline TeliaSonera’s strategy

to strengthen its position within managed services.



· On April 11, 2007, the acquisition of debitel Danmark A/S was closed.

The transaction also included debitel’s joint venture DLG-debitel I/

S operating under the brand DLG Tele. The acquisition strengthens

TeliaSonera’s position in the Danish mobile market. debitel has been

consolidated as of April 1 and, following a new shareholders’ agreement,

DLG Tele as of July 1.



· On May 7, 2007, TeliaSonera raised its shareholding in Eesti Telekom

to 58.3 percent through the acquisition of 4.61 percent of the

outstanding shares in the company for a cash consideration of

approximately SEK 485 million.





· On July 16, 2007, TeliaSonera closed the acquisition of MCT Corp. for

SEK 1.8 billion. To expand its presence in the growing markets in

Eurasia, TeliaSonera acquired 100 percent of the shares in MCT with

shareholdings in four Eurasian GSM opera-tors, Coscom in Uzbekistan,

Indigo Tadzhikistan and Somoncom in Tajikistan and Roshan in

Afghanistan. Coscom, Indigo Tadzhikistan and Somoncom are consolidated

as of July 1. TeliaSonera holds 12.25 percent in Roshan.



· On August 9, 2007, Telefos AB, 25.6 percent owned by TeliaSonera,

closed the sale of its entire shareholding in Eltel Networks. The

transaction had a positive effect of SEK 631 million on earnings in the

third quarter 2007.



· In December 2007, TeliaSonera finalized the negotiations to introduce

a local partner to its Uzbek mobile operator Coscom. In the transaction,

TeliaSonera received certain assets in exchange for 26 percent of

TeliaSonera’s 100 percent ownership in Coscom and a net cash

consideration of approximately SEK 200 million (USD 30 million). The

Uzbek partner was also granted a put option, giving the partner the

right to sell the 26 percent stake back to TeliaSonera after December

31, 2009, when certain pre-agreed criteria are fulfilled.





Significant events during 2007



· On May 11, 2007, TeliaSonera’s Norwegian operator NetCom signed a

MVNO agreement with Tele2 Norge AS. Under the agreement, Tele2 Norge

will transfer all traffic from Telenor’s network to NetCom’s network

before April 1, 2008. TeliaSonera estimates that after fulfillment of

the transfer, the agreement will have a positive annual impact of

approximately SEK 500 million on sales.



· In May 2007, the Government of Sweden sold 8 percent of TeliaSonera

and lowered its shareholding to 37.3 percent from 45.3 percent.



· On June 7, 2007, the European Union approved a price cap for pan-EU

mobile-phone calls and also set ceilings on the wholesale prices for

roaming calls. Total sales in the home markets related to roaming are

less than 5 percent of Group total net sales. TeliaSonera estimates that

the negative effect on EBITDA for 2008, excluding assumptions of

increasing traffic due to lower prices, will be less than SEK 500

million.



· On June 14, 2007, the Swedish telecommunications regulator (PTS)

submitted to the Government of Sweden a recommendation that TeliaSonera

be forced to place its fixed access network in Sweden in a separate unit

of the company. TeliaSonera believes legislation would hamper the

willingness to invest and consequently disadvantage consumers.



· On September 3, 2007, Lars Nyberg took over as President and Chief

Executive Officer of TeliaSonera, appointed by the Board of Directors on

July 27, as the successor to Anders Igel, who left the company on July

31, following a decision by the Board of Directors on June 11, 2007.





Significant events after year end 2007



· The Government of Sweden decided on January 17, 2008, on a proposal

for consideration by the Council on Legislation, “Functional separation

for better broadband competition.” More information is available at

www.sweden.gov.se/sb/d/586/a/96173.





· TeliaSonera launched a new, wholly owned telecom network

infrastructure subsidiary, TeliaSonera Skanova Access AB, in Sweden on

January 1, 2008. By establishing Skanova Access, TeliaSonera ensures

that the market’s requirements for transparency and control are met. The

company employs about 700 people and net sales for corresponding

operations in 2007 are estimated to approximately SEK 7 billion.



· Fintur Holdings B.V. (Fintur), of which TeliaSonera’s direct and

indirect ownership is close to 74 percent, finalized in January 2008 an

acquisition of an additional 14.3 percent interest in Geocell LLC

(Geocell) for a total consideration of approximately SEK 210 million

(USD 33 million), increasing Fintur’s ownership in Geocell to 97.5

percent from 83.2 percent.



· On February 7, 2008, TeliaSonera announced that it has indicated its

interest to acquire from the Republic of Latvia 51 percent of the shares

in Lattelecom for a sum of approximately SEK 3,700 million (LVL 273

million), including Lattelecom’s 23 percent shareholding in Latvijas

Mobilais Telefons (LMT), and the state-owned 28 percent of the shares in

LMT for a sum of approximately SEK 3,000 million (LVL 222 million).

TeliaSonera’s current direct shareholding in Lattelecom is 49 percent

and the direct and indirect shareholding in LMT is 60.3 percent. The

submitted non-binding indicative offer is subject to approval by the

Board of Directors of TeliaSonera AB and TeliaSonera has asked the

Government of Latvia to submit its reply no later than February 29,

2008.





Review of the fourth quarter



Net sales increased 7.5 percent to SEK 24,921 million (23,187). The

effect of acquisitions on sales was positive 3.3 percent and the net

effect from exchange rate changes was positive 0.6 percent. Organic

growth was 3.6 percent.



In Mobility Services, net sales increased 10.1 percent to SEK 11,456

million (10,407), driven by growth in all markets except Finland. The

acquisition of debitel in Denmark, strong volume growth in Sweden and

continued development in Spain contributed the most to the rise.



In Broadband Services, net sales decreased 1.2 percent to SEK 10,366

million (10,496). Sales decreased mainly in Sweden, where the decline in

net sales caused by lower fixed voice sales continued. However,

increased broadband sales in all markets nearly offset the decline in

traditional services.



Integrated Enterprise Services net sales increased 8.8 percent to SEK

3,589 million (3,298). The improvement was attributable to the

acquisitions of Cygate, Didata and Crescom in 2007.



In Eurasia, net sales rose 27.2 percent to SEK 2,911 million (2,289),

lifted by continued strong growth, especially in Kazakhstan and

Azerbaijan, and the acquisition of operations in Uzbekistan and

Tajikistan.



EBITDA, excluding non-recurring items, decreased to SEK 7,208 million

(7,766) and the margin was 28.9 percent (33.5) despite higher net sales.

In Spain, costs for building the Yoigo brand resulted in an EBITDA of

SEK -464 million (-247). In addition, price erosion, the change in

product mix from traditional fixed-voice to IP-based broadband services,

both in the retail and corporate segments, increased promotional

spending and regulatory intervention, especially in Norway, had a

negative effect on profitability. The operations acquired in 2007 all

had a dilutive impact on the margin.



Operating income, excluding non-recurring items, decreased to SEK 6,358

million (6,504), with lower EBITDA partly offset by higher income from

associated companies in Russia and Turkey.



Non-recurring items affecting operating income totaled SEK -300 million

(-314), negatively affected by charges of SEK 230 million related to

cost efficiency programs. Non-recurring items in the comparable quarter

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.



Financial items totaled SEK -289 million (-90), of which SEK -307

million (-91) related to net interest expenses.



Income taxes amounted to SEK -560 million (-1,562). The effective tax

rate was 9.7 percent (25.6). The decrease was mainly due to the

recognition of deferred tax assets of approximately SEK 850 million,

mainly in Finland, after a positive ruling concerning certain old tax

losses, and to higher income from associated companies in Russia and

Turkey.



Minority interests in subsidiaries were SEK 742 million (509), of which

SEK 557 million (335) related to Fintur and SEK 172 million (180) to

Eesti Telekom, LMT and TEO.



Net income attributable to shareholders of the parent company increased

to SEK 4,467 million (4,029) and earnings per share to SEK 0.99 (0.90).



CAPEX was SEK 4,537 million (3,688) and the CAPEX-to-sales ratio 18.2

percent (15.9), driven mainly by continued increased investments in

network capacity and coverage in all business areas, and new services

especially within Mobility Services and Broadband Services.



Free cash flow decreased to SEK 1,839 million (2,865) mainly due to

higher CAPEX, lower EBITDA, higher net financing costs and changes in

working capital.



Net debt decreased slightly during the quarter to SEK 34,718 million

from SEK 35,739 million on September 30, 2007, mainly as a result of

free cash flow.





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 8.0 percent in 2007, from SEK 56.25 to SEK

60.50. The highest share price was SEK 68.00 (58.25) and the lowest SEK

47.70 (37.90). The number of shareholders decreased from 691,106 to

655,247. Ownership by the Swedish state decreased to 37.3 percent from

45.3 percent and the Finnish state’s holding was 13.7 percent. Holdings

outside Sweden and Finland increased to 22.4 percent from 16.7 percent.

At year-end, Swedish institutional investors owned 18.2 percent (15.9)

of the share capital and Finnish institutional investors owned 3.0

percent (3.0). Swedish private investors owned 3.0 percent (3.2) and

Finnish private investors 2.4 percent (2.2).





Ordinary dividend and capital distribution to shareholders



For 2007, the Board of Directors proposes to the Annual General Meeting

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

8.1 billion, or 46 percent of net income attributable to shareholders of

the parent company. The proposal follows a review by the Board of

Directors of TeliaSonera in October 2007 of the company’s capital

structure and dividend policy.



The Board of Directors decided that the company shall target a solid

investment grade long-term credit rating (A- to BBB+) to secure the

company’s strategically important financial flexibility for investments

in future growth, both organically and by acquisitions. The ordinary

dividend shall be at least 40 percent of net income attributable to

shareholders of the parent company. In addition, excess capital shall be

returned to shareholders, after the Board of Directors has taken into

consideration the company’s cash at hand, cash flow projections and

investment plans in a medium term perspective, as well as capital market

conditions.



Accordingly, the Board of Directors proposes to the AGM an extraordinary

dividend for 2007 of SEK 2.20 (4.50) per share, totaling SEK 9.9

billion.



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

entitling share-holders to ordinary and extraordinary dividends be set

for March 31, 2008, and that the first day of trading in shares

excluding rights to ordinary and extraordinary dividends be set for

April 1, 2008. The recommended record date at VPC for the right to

receive ordinary and extraordinary dividends will be April 3, 2008. If

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

extraordinary dividend are expected to be distributed by VPC on April 8,

2008.







Annual General Meeting 2008





The Annual General Meeting (AGM) will be held on March 31, 2008, at 3

p.m. CET 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 February 2008. The record

date entitling shareholders to attend the meeting will be March 25,

2008. Shareholders may file notice of intent to attend the AGM from

February 26, 2008. TeliaSonera must receive notice of attendance no

later than 4 p.m. CET on March 25, 2008.



A Finnish shareholders’ information meeting will be arranged on April 1,

2008, at 3 p.m. Finnish time at Finlandia House, Helsinki. Finnish

shareholders will have the possibility to meet representatives from

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

attend the Finnish shareholders’ information meeting from February 26,

2008. TeliaSonera must receive notice of attendance no later than March

14, 2008. More information about how to file notice of intent to attend

the meeting will be given in connection with similar information about

the AGM.









Higher sales in all markets in Mobility Services







The business area Mobility Services is responsible for personal mobility

services for the consumer andenterprise mass markets. Products and

services in focus include mobile voice & data, mobile content, WLAN

Hotspots, mobile over broadband, mobile/PC convergence and Wireless

Office. The operations comprise the mobile operations in Sweden,

Finland, Norway, Denmark, Lithuania, Latvia, Estonia and Spain.





· Strong mobile volume growth continued throughout 2007, driven by

higher traffic volumes and an increased number of subscriptions. Growth

in mobile data traffic continued strengthening during the year,

especially in the fourth quarter. Price pressure persisted in all

markets due to intense competition and regulatory intervention, the

latter in the form of reduced interconnect fees.



· To meet a growing demand for higher network speeds and data services,

TeliaSonera launched turbo-3G in most Nordic and Baltic markets in 2007,

and in Sweden demand for mobile broadband was particularly strong. In

addition, a range of content services were launched in most of the

markets, including Mobil TV Client, Music Shop and Windows Live

Messenger.





SEK in

millions,

except margins

and

operational Oct-Dec Oct-Dec Jan-Dec Jan-Dec

data 2007 2006 2007 2006

Net sales 11,456 10,407 44,519 41,949

EBITDA excl.

non-recurring

items 2,932 3,297 13,332 13,845

Margin (%) 25.6 31.7 29.9 33.0

Operating

income 1,690 2,107 8,635 9,096

Operating

income excl.

non-recurring

items 1,847 2,302 8,998 9,610

CAPEX 1,476 1,330 4,168 3,252

MoU 194 186 190 182

ARPU, blended

(SEK) 225 227 230 233

Churn, blended

(%) 28 25 28 26

Subscriptions,

period-end

(thousands) 14,501 13,434 14,501 13,434





Additional segment information available at www.teliasonera.com/ir





Full year



· Net sales increased 6.1 percent to SEK 44,519 million, with

subscription growth and increased usage for both mobile data and voice,

offsetting the downward pressure on prices. Net sales rose in all

markets. The consolidation of debitel in Denmark, higher volumes in

Sweden and continued good customer intake in Spain, where sales totaled

SEK 589 million, contributed the most to the rise. Reduced interconnect

fees that TeliaSonera receives from other operators in the Nordic and

Baltic countries lowered sales by approximately SEK 725 million.



· The number of subscriptions increased by 1,067,000 to 14,501,000,

with 403,000 new subscriptions in Spain, the consolidation of debitel in

Denmark adding 268,000 and the purchase of ZetCOM in Latvia adding

137,000. In Sweden, the number of subscriptions increased by 310,000

excluding the deactivation of 106,000 old NMT subscriptions in the

fourth quarter. In Finland and Estonia, the number of subscriptions rose

slightly, while Norway and Lithuania showed a decrease of 64,000 and

62,000, respectively. During the fourth quarter, the number of

subscriptions in-creased by 221,000 for the business area as a whole.

Spain showed the largest increase with 187,000 new subscriptions,

followed by Sweden with 95,000, excluding the deactivation of NMT

subscriptions, and Finland with 57,000. Lithuania reported a decrease of

29,000.





· Blended churn was 28 percent (26).



· EBITDA, excluding non-recurring items, decreased to SEK 13,332

million, despite higher net sales in all markets and a positive net

increase of SEK 246 million from the reversal of provisions for

historical interconnect fees in Sweden. In Spain, costs for building the

Yoigo brand resulted in an EBITDA of SEK -1,443 million (-337). In

addition, price erosion, increased promotional spending and interconnect

price reductions, especially in Norway, affected EBITDA negatively.

Certain negative items in Denmark totaling approximately SEK 160

million, mainly related to balance sheet corrections, burdened EBITDA.

In Denmark, the consolidation of debitel in April also had a dilutive

impact on the margin, since the transfer of traffic to TeliaSonera’s

network was not yet completed.



· CAPEX rose 28.2 percent to SEK 4,168 million, driven by investments

to secure the network quality and increase coverage and capacity,

including the start-up investments in Spain, extended 3G/HSPA roll-out

and functionalities in all Nordic and Baltic markets.





SEK in

millions,

except Oct-Dec Oct-Dec Jan-Dec Jan-Dec

margins 2007 2006 2007 2006

Net sales 11,456 10,407 44,519 41,949

of which

Sweden 3,163 3,032 12,528 12,029

of which

Finland 2,407 2,413 9,602 9,517

of which

Norway 2,254 2,142 8,985 8,910

of which

Denmark 1,649 1,152 6,119 5,191

of which

Lithuania 656 604 2,484 2,412

of which

Latvia 669 660 2,654 2,495

of which

Estonia 588 550 2,305 2,071

of which

Spain 229 5 589 5

EBITDA excl.

non-recurring

items 2,932 3,297 13,332 13,844

Margin (%),

total 25.6 31.7 29.9 33.0

Margin (%),

Sweden 40.2 36.7 39.4 37.3

Margin (%),

Finland 24.8 25.8 31.6 25.9

Margin (%),

Norway 31.3 41.6 34.3 37.4

Margin (%),

Denmark 9.3 20.3 13.2 18.6

Margin (%),

Lithuania 33.5 38.9 36.8 40.2

Margin (%),

Latvia 41.1 38.9 45.2 47.5

Margin (%),

Estonia 29.3 35.1 34.9 37.7

Margin (%),

Spain neg neg neg neg







Fourth quarter



· Net sales rose 10.1 percent to SEK 11,456 million, driven by growth

in all markets except Finland. The acquisition of debitel in Denmark,

continued development of Yoigo in Spain and strong volume growth in

Sweden contributed the most to the increase. Strong mobile volume growth

both in terms of subscriptions and traffic offset price erosion. Reduced

interconnect fees that TeliaSonera receives from other operators in the

Nordic and Baltic countries lowered sales by about SEK 231 million.



· Blended churn was 28 percent (25).





· EBITDA, excluding non-recurring items, decreased to SEK 2,932 million

and the margin was 25.6 percent. Higher net sales, together with the net

increase of SEK 106 million from a reversal of provisions for historical

interconnect fees in Sweden, partly offset the decline. In Spain, costs

for building the Yoigo brand resulted in an EBITDA of SEK -464 million

(-247). In addition, price erosion and increased promotional spending

across all markets as well as interconnect price reductions, especially

in Norway, affected profitability. Certain negative items in Denmark

totaling approximately SEK 135 million related to balance sheet

corrections burdened EBITDA. A provision of SEK 37 million for a

retroactive charge for changed interconnect pricing in Estonia was made.

In Denmark, the consolidation of debitel also diluted the margin.



· CAPEX rose 11.0 percent to SEK 1,476 million, driven by investments

to secure the network quality and increase coverage and capacity.







Growth initiatives and migration in Broadband Services







The businessarea Broadband Servicesis responsible for mass-market

services for connecting homes and offices and for home communications.

Products and services in focus include broadband over copper, fiber and

cable, IPTV, voice over Internet, home communications services, IP-VPN/

Business Internet, leased lines and traditional telephony. The business

area operates the group common core network, including the data network

of the international carrier business. The business area comprises

operations in Sweden, Finland, Norway, Denmark, Lithuania, Latvia (49

percent), Estonia and international carrier operations.





· Growth in broadband and the migration from fixed voice persisted.

Bundling of services continued. By year-end TeliaSonera offered multi-

service packages in all Nordic and Baltic markets and kept its market

position in most of its markets. Investments were focused on bundled

solutions to cater to TV and other value-added services requiring higher

bandwidth. Price erosion continued in the form of increased bandwidth at

the same price.



· TeliaSonera sees television as an anchor for the new services we will

bring to the households in the future. Increased efforts to handle the

migration from traditional fixed-voice services were evidenced by the

move into the TV-market, mainly in Sweden. The year has been a success

for TeliaSonera ending with approximately 770,000 TV subscriptions, of

which 304,000 IPTV subscriptions in Sweden.





SEK in

millions,

except margins

and

operational Oct-Dec Oct-Dec Jan-Dec Jan-Dec

data 2007 2006 2007 2006

Net sales 10,366 10,496 41,273 40,880

EBITDA excl.

non-recurring

items 3,291 3,308 12,926 13,629

Margin (%) 31.7 31.5 31.3 33.3

Operating

income 2,002 1,532 6,939 7,435

Operating

income excl.

non-recurring

items 2,080 1,937 7,906 8,295

CAPEX 1,864 1,703 5,369 4,605

Broadband ARPU

(SEK) 265 286 270 289

Subscriptions,

period-end

(thousands)

Broadband 2,326 1,990 2,326 1,990

Fixed voice 6,218 6,497 6,218 6,497

Associated

company, total 757 720 757 720





Additional segment information available at www.teliasonera.com/ir







Full year



· Net sales increased 1.0 percent to SEK 41,273 million. Overall strong

growth in broadband sales and acquisitions more than compensated for the

decline in fixed voice. In absolute terms, sales were strongest in

Wholesale, even though certain negative items of approximately SEK 120

million mainly related to a provision for changed LLUB pricing in the

fourth quarter had an impact. Development was strong in the Baltic

countries. In Norway, net sales rose due to the consolidation of

NextGenTel in June 2006. In Sweden, increased broadband sales did not

compensate for the decrease in sales of fixed-voice services.



· The number of subscriptions for broadband access rose by 336,000 to

2,326,000, with an increase of over 40 percent in Lithuania. Meanwhile

broadband ARPU was affected by price erosion and fell 6.6 percent to SEK

270 as broadband access remained the key revenue source. The number of

fixed voice subscriptions declined by 279,000 to 6,218,000. During the

year, the total number of TV subscriptions rose by 330,000, or 74

percent, to 770,000 million, of which 379,000 IPTV subscriptions. In

Sweden only, the successful push for IPTV resulted in a total of 304,000

subscriptions at year-end and also helped attract new broadband

customers. During the fourth quarter, the total number of IPTV

subscriptions increased by 103,000, of which 88,000 in Sweden, while the

number of broadband subscriptions rose by 96,000. The decline in fixed

voice subscriptions was 93,000. In the fourth quarter, broadband ARPU

fell 7.3 percent to SEK 265.



· EBITDA, excluding non-recurring items, decreased to SEK 12,926

million with the largest drop, SEK 999 million, in Sweden, mainly due to

the continued decline in fixed voice, and investments in future growth,

such as IPTV. Certain negative items in Wholesale of approximately SEK

120 million, mainly related to a provision for changed LLUB pricing in

the fourth quarter, and higher costs for weather-related damages in

Sweden impacted profitability. In addition, price erosion in the form of

increased bandwidth at the same price had an effect. EBITDA rose about

SEK 490 million in Wholesale. A net increase of SEK 136 million from the

reversal of provisions in Sweden also impacted positively.



· CAPEX rose 16.6 percent to SEK 5,369 million mainly due to increased

investments in broadband platforms to cater to the improved bandwidth

and quality needed for IPTV and other services for the digital home.

Investments were also made in common infrastructure, including the core

network.





Fourth quarter



· Net sales decreased 1.2 percent to SEK 10,366 million due to lower

fixed voice sales in Sweden and Finland. All other markets showed

record-high sales driven by strong broadband growth and in Denmark the

consolidation of DLG Tele contributed to the rise. In absolute terms,

growth was strongest in Lithuania and in Wholesale, even though certain

negative items in Wholesale of approximately SEK 120 million mainly

related to a provision for changed LLUB pricing had an impact.



· EBITDA, excluding non-recurring items, was SEK 3,291 million due to

certain negative items in Wholesale of approximately SEK 120 million

mainly related to a provision for changed LLUB pricing. Price erosion,

the change in product mix from traditional fixed-voice to IP-based

services and costs for the successful push into the IPTV market,

especially in Sweden, also impacted EBITDA. A net increase of SEK 76

million from the reversal of provisions in Sweden impacted positively.



· CAPEX rose 9.5 percent to SEK 1,864 million.





SEK in

millions,

except Oct-Dec Oct-Dec Jan-Dec Jan-Dec

margins 2007 2006 2007 2006

Net sales 10,366 10,496 41,273 40,880

of which

Sweden 4,602 4,897 18,679 19,516

of which

Finland 1,586 1,603 6,215 6,207

of which

Norway 231 220 891 506

of which

Denmark 538 477 1,959 1,847

of which

Lithuania 561 495 2,104 1,960

of which

Estonia 458 415 1,780 1,576

of which

Wholesale 2,639 2,589 10,542 10,011

EBITDA excl.

non-recurring

items 3,291 3,308 12,926 13,629

Margin (%),

total 31.7 31.5 31.3 33.3

Margin (%),

Sweden 39.8 38.2 35.7 39.3

Margin (%),

Finland 22.4 25.6 23.6 26.5

Margin (%),

Norway 23.4 17.3 22.1 19.6

Margin (%),

Denmark 11.9 13.8 13.7 17.8

Margin (%),

Lithuania 39.0 41.0 43.6 47.2

Margin (%),

Estonia 26.4 28.4 26.8 32.8

Margin (%),

Wholesale 24.6 23.3 27.8 24.4









Integrated Enterprise Services growing through acquisitions







The business area Integrated Enterprise Services is responsible for the

Nordic and Baltic business where TeliaSonera is engaged in managing the

internal IT and telecom infrastructure of the enterprises. The business

area is responsible for the enterprises’ total telecommunications needs.

Customer offerings include networked IT services, voice & data

solutions, systems integration and converging services as well as highly

standardized solutions for the SME segment. Example of services are

management of LAN, servers, work stations, IP PABXs and call centers,

mobility and security solutions and horizontal standard applications,

e.g. e-mail services. The business area offers end-to-end management

solutions with service guarantees.





· On January 1, 2008, TeliaSonera combined all its business-to-business

sales re-sources into one sales organization in order to improve service

for customers and in-crease sales efficiency. The change means that

Integrated Enterprise Services was turned into a common sales division,

called Business Services, for basic telecom services and managed-

services solutions to business customers. The division will maintain

full responsibility for TeliaSonera’s managed services offering. It will

not have profit-and-loss responsibility but be measured by growth,

market share and sales efficiency. As of the Interim Report January-

March 2008, the activities of Business Services will be reported as a

part of the business areas Mobility Services, Broadband Services and of

Other operations.





SEK in

millions,

except Oct-Dec Oct-Dec Jan-Dec Jan-Dec

margins 2007 2006 2007 2006

Net sales 3,589 3,298 13,729 12,940

EBITDA excl.

non-recurring

items -226 55 -162 360

Margin (%) neg 1.7 neg 2.8

Operating

income -397 -163 -725 -234

Operating

income excl.

non-recurring

items -338 -27 -590 44

CAPEX 212 122 532 324





Additional segment information available at www.teliasonera.com/ir







Full year



· Net sales increased 6.1 percent to SEK 13,729 million, lifted by the

consolidation of Cygate, Didata and Crescom, which together had a

positive effect of 6.3 percent. Sales related to the distribution of

mass-market services produced by business areas Mobility and Broadband

Services decreased by SEK 367 million, mainly due to the migration from

fixed voice services as well as price erosion in mobile and broadband

services. Sales of integrated enterprise services and equipment sales

increased by SEK 888 million, mainly due to the consolidation of

acquired companies. The share of integrated enterprise services and

equipment sales was about 43 percent of net sales.



· EBITDA, excluding non-recurring items, declined to SEK -162 million

(360) mainly due to the migration from traditional services altering the

product mix and lowering the gross margin. These negative effects more

than offset efficiency measures.



· CAPEX was SEK 532 million (324), including investments in managed

services, such as server operations.





Fourth quarter



· Net sales increased by 8.8 percent to SEK 3,589 million (3,298) due

to the consolidation of acquired companies, which together had a

positive effect of 8.9 percent.



· EBITDA, excluding non-recurring items, deteriorated to SEK -226

million (55) mainly due to the migration from traditional services

altering the product mix and lowering the gross margin. These negative

effects, together with price erosion in mobile and data services, more

than offset efficiency measures.



· CAPEX increased to SEK 212 million (122) mainly due to increased

demand for financing solutions for business customers.







Expansion and continued strong development in Eurasia







The businessarea Eurasiacomprises mobile operations managed by Fintur in

Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia and Moldova and

a shareholding of 12 percent in Afghanistan’s largest operator Roshan.

The business area is also responsible for developing TeliaSonera’s

shareholding in Russian MegaFon (44 percent) and Turkish Turkcell (37

percent). The main responsibility is to create shareholder value and to

exploit penetration growth in the respective countries.





· TeliaSonera further strengthened its footprint in the fast growing

markets of Eurasia in 2007 by acquiring mobile operators in Uzbekistan

and Tajikistan and a minority shareholding in Afghanistan’s largest

mobile operator. With low mobile penetration rates and a combined

population of over 33 million, Uzbekistan and Tajikistan represent a

valuable opportunity for rapid growth.



· The competitive and regulatory environment is putting margins under

growing pres-sure in all markets. Price erosion, increased sales and

marketing efforts and overall cost inflation impacted margins

negatively, particularly in Kazakhstan, where competition for new

subscribers was intense. Market leadership was maintained in Azerbaijan

and Kazakhstan and the strong positions were kept in Uzbekistan,

Tajikistan, Georgia and Moldova.







SEK in

millions,

except margins

and

operational Oct-Dec Oct-Dec Jan-Dec Jan-Dec

data 2007 2006 2007 2006

Net sales 2,911 2,289 10,338 8,508

EBITDA excl.

non-recurring

items 1,327 1,207 5,255 4,757

Margin (%) 45.6 52.7 50.8 55.9

Income from

associated

companies

Russia 1,057 786 4,181 2,780

Turkey 891 692 2,725 2,020

Operating

income 2,926 2,409 10,883 8,527

Operating

income excl.

non-recurring

items 2,926 2,409 10,883 8,527

CAPEX 848 472 3,114 2,699

Subscriptions,

period-end

(thousands)

Subsidiaries 12,147 7,352 12,147 7,352

Associated

companies 78,083 65,169 78,083 65,169





Additional segment information available at www.teliasonera.com/ir





Full year



· Net sales rose 21.5 percent to SEK 10,338 million, fueled by strong

subscription growth and increased usage in all markets, particularly in

Kazakhstan and Azerba ijan. Consolidated since July 1, 2007, the

operations in Uzbekistan and Tajikistan affected net sales positively by

3.2 percent. Net sales rose 27.6 percent in local currencies.



· The number of subscriptions rose by 4.8 million to 12.2 million,

including 1.3 million subscriptions from the acquired operations in

Uzbekistan and Tajikistan. Subscription growth during the year excluding

acquisitions was 47.5 percent, or 3,494,000 subscriptions, and was

driven by 2,478,000 net additions in Kazakhstan mainly due to increased

subscriber acquisition campaigns. During the quarter, the total number

of subscriptions rose by 1.3 million, with the largest increases in

Kazakhstan and Azerbaijan and including 0.3 million subscriptions in the

consolidated operations in Uzbekistan and Tajikistan.



· EBITDA, excluding non-recurring items, increased to SEK 5,255 million

as a result of higher sales. The margin decreased to 50.8 percent due to

price erosion, higher promotional spending and the dilutive effect from

the acquired operations in Uzbekistan and Tajikistan. Overall inflation

also drove costs higher, particularly for salaries, rents and energy.



· CAPEX was SEK 3,114 million (2,699) and was kept relatively high in

order to build additional capacity, improve coverage and maintain a high

service quality in the net-works. Additional investment needs came from

acquired operations in Uzbekistan and Tajikistan.



· MegaFon (associated company, 43.8 percent holding) in Russia

continued to demonstrate strong performance and increased its

subscription base by 5.9 million to 35.7 million. MegaFon increased its

market share in terms of subscriptions from 19 to over 20 percent, and

also strengthened its position in terms of revenue. The Russian mobile

market continued showing strong volume and revenue growth. The total

market grew by 20 million subscriptions to 172 million. Mobile SIM-card

penetration rose from 105 to 119 percent.





· TeliaSonera’s income from Russia rose to SEK 4,181 million (2,780),

fueled by continued strong sales and earnings growth at MegaFon. The

result was also positively impacted by SEK 240 million in the form of a

gain from the sale of Petersburg Transit Telecom by Telecominvest and a

partial reversal of write-downs on old equipment in MegaFon. The Russian

ruble depreciated against the Swedish krona which had a negative impact

of SEK 110 million. The comparable period was positively affected by a

net of SEK 272 million from exchange rate fluctuations relating to

MegaFon’s borrowings and divestments.



· Turkcell (associated company, 37.3 percent holding, reported with a

one-quarter lag) in Turkey increased its subscription base by 4.0

million to 34.8 million, as a result of an expanded distribution channel

network and well-received offerings. In Ukraine, the number of

subscriptions rose by 3.0 million to 7.6 million.



· TeliaSonera’s income from Turkcell, which showed continued strong

sales and earnings growth, rose to SEK 2,725 million (2,020). The

Turkish lira depreciated against the Swedish krona, which had a negative

impact of SEK 165 million.



· In 2007, Turkcell distributed to its shareholders a total net cash

dividend of approximately SEK 2,800 million (USD 400 million),

corresponding to 65 percent of the distributable income for the fiscal

year 2006. TeliaSonera’s share was approximately SEK 1,000 million.





Fourth quarter



· Net sales rose 27.2 percent to SEK 2,911 million, driven by strong

subscription growth and increased usage in all markets, particularly in

Kazakhstan and Azerba ijan. Consolidated since July 1, 2007, the

operations in Uzbekistan and Tajikistan affected net sales positively by

7.9 percent.



· EBITDA, excluding non-recurring items, increased to SEK 1,327 million

as a result of higher sales. The margin dropped to 45.6 percent due to

price erosion, higher promotional spending and the dilutive effect from

the acquired operations in Uzbekistan and Tajikistan. Overall inflation

also drove costs higher, particularly for salaries, rents and energy.



· CAPEX was SEK 848 million (472) mainly driven by high investment

activity in Uzbekistan. In the comparable quarter CAPEX was low due to

the postponement of certain investments.



· MegaFon (associated company, 43.8 percent holding) in Russia

continued to demonstrate strong performance and increased its

subscription base by 1.6 million during the quarter. TeliaSonera’s

income from Russia rose to SEK 1,057 million (786). The Russian ruble

depreciated against the Swedish krona, which had a negative impact of

SEK 23 million. The comparable quarter included SEK 110 million in gains

from exchange rate fluctuations relating to MegaFon’s borrowings and the

divestment of PeterStar by Telecominvest.



· Turkcell (associated company, 37.3 percent holding, reported with a

one-quarter lag) in Turkey increased its subscription base by 1.0

million during the quarter. In Ukraine, the number of subscriptions rose

by 1.3 million during the quarter.



· TeliaSonera’s income from Turkcell, which showed continued strong

sales and earnings growth, rose to SEK 891 million (692). The Turkish

lira depreciated against the Swedish krona, which had a negative impact

of SEK 69 million.





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

millions 2007 2006 2007 2006

Net sales 2,911 2,289 10,338 8,508

of which

Kazakhstan 1,545 1,251 5,582 4,803

of which

Azerbaijan 804 688 2,958 2,453

of which

Uzbekistan 81 – 139 –

of which

Tajikistan 99 – 184 –

of which

Georgia 292 268 1,123 945

of which

Moldova 95 85 365 317







Stockholm, February 8, 2008





Lars Nyberg

President and CEO







This report has not been subject to review by TeliaSonera’s auditors.













TeliaSonera AB discloses the information provided herein pursuant to the

Swedish Securities Markets Act and/or the Swedish Financial Instruments

Trading Act. The information was submitted for publication at 07.30 CET

on February 8, 2008.

























Financial Information



As of the Interim Report January-March 2008, TeliaSonera will start

reporting the operations of former business area Integrated Enterprise

Services as a part of the business areas Mobility Services, Broadband

Services and of Other operations. More details on the new reporting

structure and restated comparable figures following the new organization

introduced on January 1, 2008, will be published well in advance of the

Interim Report January-March 2008.



Annual General Meeting 2008 in Stockholm March

31, 2008

Shareholders’ information meeting in Helsinki April

1, 2008

Interim Report January–March 2008

April 25, 2008

Interim Report January–June 2008

July 24, 2008

Interim Report January–September 2008

October 28, 2008

















Questions regarding the reports:



TeliaSonera AB

Investor Relations

SE–106 63 Stockholm, Sweden

Tel. +46 8 504 550 00

Fax +46 8 611 46 42

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, blended: Average monthly revenue per subscription.



Churn, blended: The number of lost subscriptions (postpaid and prepaid)

expressed as a percentage of the average number of subscriptions

(postpaid and prepaid).



MoU: Minutes of usage per subscription and month.



HSPA: High-Speed Packet Access.



LLUB: Local Loop Unbundling.













Condensed Consolidated Income Statements







SEK in

millions,

except per

share data

and number of Oct-Dec Oct-Dec Jan-Dec Jan-Dec

shares 2007 2006 2007 2006

Net sales 24,921 23,187 96,344 91,060

Cost of sales -14,608 -13,269 -54,196 -48,640

Gross profit 10,313 9,918 42,148 42,420

Selling,

admin., and

R&D expenses -6,790 -5,634 -24,311 -22,367

Other

operating

income and

expenses, net 571 351 621 -143

Income from

associated

companies and



joint

ventures 1,964 1,555 7,697 5,579

Operating

income 6,058 6,190 26,155 25,489

Finance costs

and other

financial

items, net -289 -90 -904 -263

Income after

financial

items 5,769 6,100 25,251 25,226

Income taxes -560 -1,562 -4,953 -5,943

Net income 5,209 4,538 20,298 19,283

Attributable

to:

Shareholders

of the parent

company 4,467 4,029 17,674 16,987

Minority

interests in

subsidiaries 742 509 2,624 2,296



Shareholders’

basic and

diluted

earnings

per share

(SEK) 0.99 0.90 3.94 3.78

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 4,490,457

Number of

treasury

shares

(thousands)

At period-end – – – –

Weighted

average – – – 125,546



EBITDA 6,932 7,455 30,333 31,113

EBITDA excl.

non-recurring

items 7,208 7,766 31,021 32,266

Depreciation,

amortization

and

impairment

losses -2,837 -2,820 -11,875 -11,203

Operating

income excl.

non-recurring

items 6,358 6,504 27,478 26,751











Condensed Consolidated Balance Sheets







Dec 31, Dec 31,

SEK in millions 2007 2006

Assets

Goodwill and other

intangible assets 83,909 74,172

Property, plant and

equipment 52,602 48,195

Investments in

associates and joint

ventures, deferred tax

assets

and other non-current

assets 48,633 41,826

Total non-current

assets 185,144 164,193

Inventories 1,168 997

Trade receivables,

current tax assets and

other receivables 20,881 20,631

Interest-bearing

receivables 1,701 1,958

Cash and cash

equivalents 7,802 11,603

Total current assets 31,552 35,189

Non-current assets

held-for-sale 6 10

Total assets 216,702 199,392



Equity and liabilities

Shareholders’ equity 117,274 119,217

Minority interests 9,783 8,500

Total equity 127,057 127,717

Long-term borrowings 41,030 24,311

Deferred tax

liabilities, other

long-term provisions 16,748 14,635

Other long-term

liabilities 2,366 2,382

Total non-current

liabilities 60,144 41,328

Short-term borrowings 2,549 3,418

Trade payables, current

tax liabilities, short-

term provisions

and other current

liabilities 26,952 26,929

Total current

liabilities 29,501 30,347

Total equity and

liabilities 216,702 199,392











Condensed Consolidated Cash Flow Statements







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

millions 2007 2006 2007 2006

Cash flow

before change

in working

capital 5,706 4,575 27,541 28,034

Change in

working

capital 626 1,881 -1,012 -533

Cash flow

from

operating

activities 6,332 6,456 26,529 27,501

Intangible

and tangible

fixed assets

acquired

(cash CAPEX) -4,493 -3,591 -13,525 -10,905

Free cash

flow 1,839 2,865 13,004 16,596

Cash flow

from other

investing

activities -242 599 -2,180 -2,179

Total cash

flow from

investing

activities -4,735 -2,992 -15,705 -13,084

Cash flow

before

financing

activities 1,597 3,464 10,824 14,417

Cash flow

from

financing

activities 491 524 -14,726 -19,382

Cash flow for

the period 2,088 3,988 -3,902 -4,965



Cash and cash

equivalents,

opening

balance 5,641 7,834 11,603 16,834

Cash flow for

the period 2,088 3,988 -3,902 -4,965

Exchange rate

differences 73 -219 101 -266

Cash and cash

equivalents,

closing

balance 7,802 11,603 7,802 11,603









Condensed Consolidated Statements of Changes in Equity







Jan-Dec 2007 Jan-Dec 2006

SEK in Shareholders’ Minority Total Shareholders’ Minority Total

millions equity interests equity equity interests equity

Opening

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

Business

combinations – – – 25 – 25

Reporting

financial

instruments

at fair value 39 – 39 -25 – -25

Hedging of

foreign

operations,

net of tax -114 – -114 – – –

Currency

translation

differences 8,748 160 8,908 -8,955 -608 -9,563

Inflation

adjustments – – – -147 – -147

Net income

recognized

directly in

equity 8,673 160 8,833 -9,102 -608 -9,710

Net income 17,674 2,624 20,298 16,987 2,296 19,283

Comprehensive

income 26,347 2,784 29,131 7,885 1,688 9,573

Transactions

with minority

shareholders

in

subsidiaries – -42 -42 – -215 -215

Dividends -28,290 -1,459 -29,749 -15,717 -1,618 -17,335

Closing

balance 117,274 9,783 127,057 119,217 8,500 127,717











Basis of Preparation





General. As in the annual accounts for 2006, TeliaSonera’s consolidated

financial statements as of and for the year ended December 31, 2007,

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 as well as standard RFR 2.1

“Accounting for Legal Entities” and other statements issued by the

Swedish Financial Reporting Board. This report has been prepared in

accordance with IAS 34 “Interim Financial Reporting.”



New accounting standards (not yet adopted by the EU). An amended IFRS 2

“Share-based Payment” (effective for annual periods beginning on or

after January 1, 2009; earlier application permitted) was published on

January 17, 2008. The amendment clarifies that vesting conditions are

service conditions and performance conditions only and further specifies

that all cancellations, whether by the entity or by other parties,

should receive the same accounting treatment. IFRS 2 is currently not

relevant to TeliaSonera.



A revised IFRS 3 “Business Combinations” and an amended IAS 27

“Consolidated and Separate Financial Statements” (effective for annual

periods beginning on or after July 1, 2009; early adoption permitted)

was published on January 10, 2008. Among other things, the changes to

the standards include: transaction costs expensed as incurred;

contingent consideration is always recognized at fair value and for non-

equity-consideration post-combination changes in fair value affects the

income statement; option added to on a transaction-by-transaction basis

permit recognition of 100 percent of the goodwill of the acquired entity

with the increased goodwill amount also increasing the non-controlling

interest; in a step acquisition, on the date that control is obtained,

the fair values of the acquired entity's assets and liabilities,

including goodwill, are measured and any resulting adjustments to

previously recognized assets and liabilities are recognized in profit or

loss; acquiring additional shares in a subsidiary after obtaining

control as well as a partial disposal of shares in a subsidiary while

retaining control is accounted for as an equity transaction with owners;

a partial disposal of shares in a subsidiary that results in loss of

control triggers remeasurement of the residual holding to fair value and

any difference between fair value and carrying amount is a gain or loss,

recognized in profit or loss. Telia­Sonera expects that applying the

revised IFRS 3 and the amended IAS 27 might lead to increased volatility

in the income statement.



For further information, see corresponding sections in the Q1, Q2 and Q3

2007 Interim Reports, and the 2006 Annual Report.









Non-recurring Items







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

millions 2007 2006 2007 2006

Within EBITDA -276 -311 -688 -1,153

Restructuring

charges,

synergy

implementation

costs, etc.:

Mobility

Services -157 -205 -363 -418

Broadband

Services -186 -392 -464 -847

Integrated

Enterprise

Services -59 -136 -135 -278

Other

operations -6 415 142 383

of which

TeliaSonera

Holding 3 478 161 478

Capital gains:

Broadband

Services 132 – 132 –

Telia Finans – 7 – 7

Within

Depreciation,

amortization

and impairment

losses -24 -13 -635 -13

Impairment

losses,

accelerated

depreciation:

Broadband

Services -24 -13 -635 -13

Within Income

from

associated

companies and

joint ventures – 10 – -96

Impairment

losses,

capital gains/

losses,

provisions and

other:

Mobility

Services – 10 – -96

Within

Financial net – – – 183

Capital gains:

Elisa – – – 183

Total -300 -314 -1,323 -1,079









Deferred Taxes







Dec 31, Dec 31,

SEK in millions 2007 2006

Deferred tax assets 12,017 12,054

Deferred tax

liabilities -9,577 -10,121

Net deferred tax assets 2,440 1,933









Segment and Group Operating Income







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

millions 2007 2006 2007 2006

Mobility

Services 1,690 2,107 8,635 9,096

Broadband

Services 2,002 1,532 6,939 7,435

Integrated

Enterprise

Services -397 -163 -725 -234

Eurasia 2,926 2,409 10,883 8,527

Other

operations -201 301 361 633

Total

segments 6,020 6,186 26,093 25,457

Elimination

of inter-

segment

profits 38 4 62 32

Group 6,058 6,190 26,155 25,489











Related Party Transactions





MegaFon. As of December 31, 2007, TeliaSonera had interest-bearing

claims of SEK 301 million on its associated company OAO MegaFon.



Telefos. From the beginning of the year up until August 9, 2007,

TeliaSonera purchased services and products from subsidiaries (companies

within the Eltel Group) to its associated company Telefos AB worth SEK

1,079 million, mostly referring to network construction.



Svenska UMTS-nät. In the three-month period and the year ended December

31, 2007, TeliaSonera purchased services from its 50 percent owned joint

venture Svenska UMTS-nät AB worth SEK 127 million and SEK 551 million,

respectively, and sold services worth SEK 49 million and SEK 212

million, respectively.







Investments







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

millions 2007 2006 2007 2006

CAPEX 4,537 3,688 13,531 11,101

Intangible

assets 444 357 1,308 1,152

Property,

plant and

equipment 4,093 3,331 12,223 9,949

Acquisitions

and other

investments 2,298 111 7,171 3,951

Asset

retirement

obligations 82 64 82 67

Goodwill and

fair value

adjustments 2,211 46 6,483 3,778

Equity

holdings 5 1 606 106

Total 6,835 3,799 20,702 15,052





In an agreement in late December 2007, TeliaSonera granted its Uzbek

partner a put option giving the partner the right to sell its 26 percent

interest in TeliaSonera’s Uzbek operations to TeliaSonera after December

31, 2009, when certain pre-agreed criteria are fulfilled. TeliaSonera

has accounted for the present value of the estimated redemption amount

of the option as a provision, which increased goodwill by SEK 1,701

million. Any future changes in the estimated redemption amount will be

recognized in the income statement, while no minority interest will be

recognized for the Uzbek operations.







Net Debt







Dec 31, Dec 31,

SEK in millions 2007 2006

Long-term and short-

term borrowings 43,579 27,729

Less short-term

investments, cash and

bank -8,861 -12,772

Net debt 34,718 14,957











Loan Financing and Credit Rating





The underlying cash-flow generation was positive also in the fourth

quarter of 2007. As a result of the problems in the “US Sub-prime

market,” funding conditions in general continued to deteriorate during

the quarter. The effects on the domestic Swedish debt capital markets

have been more limited although still negative. During the fourth

quarter, Telia­Sonera substituted most of its outstanding commercial

paper borrowings with longer-dated funding. Funding conditions in the

second half of 2007 were weaker than in the first half, and deteriorated

even further in the beginning of 2008.



Funding conditions in 2008 are uncertain, but they will most likely

remain less favorable than in the first half of 2007. Refinancing needs

in 2008 are expected to be limited but the extra dividend payout in

April will need new financing and thus TeliaSonera is exposed to the

near-term development of the funding conditions in the debt capital

markets.



On October 30, 2007, Moody’s Investors Service lowered its credit rating

of TeliaSonera AB to A3/P-2 after having had its A2/P-1 rating on

Outlook Negative since 2006. Outlook for the revised credit rating is

Stable. Standard & Poor’s credit rating of TeliaSonera AB remained at A-

/A-2 with Outlook Stable.







Financial Key Ratios







Dec 31, Dec 31,

2007 2006

Return on equity (%,

rolling 12 months) 18.6 17.2

Return on capital

employed (%, rolling 12

months) 19.4 19.5

Equity/assets ratio (%) 50.3 49.9

Net debt/equity ratio

(%) 31.8 15.0

Shareholders’ equity

per share (SEK) 26.12 26.55









Business Combinations in the Fourth Quarter





For minor business combinations in the fourth quarter, the combined cost

of acquisition was SEK 44 million and the net cash outflow SEK 27

million. Goodwill totaled SEK 36 million, of which SEK 24 million was

allocated to business area Mobility Services and SEK 12 million to

reportable segment Other operations. For further information on business

combinations during the year, see corresponding sections in the Q1, Q2

and Q3 2007 Interim Reports.







Collateral Pledged and Guarantees





Collateral pledged at December 31, 2007, totaled SEK 1,352 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 2,146 million, of which SEK 1,838 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, 2007, totaled SEK 2,299 million,

of which SEK 1,842 million referred to contracted build-out of

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

Lithuania.







Parent Company







Condensed

Income

Statements

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

millions) 2007 2006 2007 2006

Net sales 4,405 4,952 17,809 19,705

Gross profit 1,737 1,681 7,084 6,788

Operating

income 1,851 2,159 6,303 6,656

Income after

financial

items 2,777 2,028 23,845 7,631

Income before

taxes 1,668 1,372 21,259 4,127

Net income 1,172 1,048 20,001 3,228





Net sales primarily related to fixed network services in Sweden declined

due to migration to mobile services and lower priced IP-based services.

Out of the total net sales for the year, SEK 12,811 million (14,424) was

billed to subsidiaries. Income after financial items increased strongly

as a result of dividend payments from subsidiaries.





Condensed Balance

Sheets Dec 31, Dec 31,

(SEK in millions) 2007 2006

Non-current assets 142,469 131,332

Current assets 39,967 40,340

Total assets 182,436 171,672

Shareholders’ equity 63,013 71,262

Untaxed reserves 20,061 17,476

Provisions 944 2,046

Liabilities 98,418 80,888

Total equity and

liabilities 182,436 171,672





Following a review, management decided in December 2007 to report

certain items related to cash-pool balances gross instead of net. The

comparative year was recalculated accordingly, increasing the balance

sheet total by SEK 22,917 million.



Total investments for the year amounted to SEK 13,269 million (17,332),

including SEK 2,705 million (2,382) in property, plant and equipment,

primarily for the fixed network. Other investments totaled SEK 10,564

million (14,950), of which SEK 2,024 million attributable to the

acquisitions of Cygate and debitel Danmark, and SEK 8,015 million to

transfers of shareholdings within the Group.







Risks and uncertainties





TeliaSonera operates in a broad range of geographic product and service

markets in the highly competitive and regulated telecommunications

industry. As a result, TeliaSonera is subject to a variety of risks and

uncertainties. TeliaSonera has defined risk as anything that could have

a material adverse effect on the achievement of TeliaSonera’s goals.





Risks can be threats, uncertainties or lost opportunities relating to

TeliaSonera’s current or future operations or activities. Additionally,

these risks may affect TeliaSonera’s share price from time to time.



TeliaSonera has an established risk management process in place to

regularly identify, analyze and assess, and report business and

financial risks and uncertainties, and to mitigate such risks when

appropriate. Risk management is an integrated part of Telia­Sonera’s

business planning process.



See “Risk Factors” in TeliaSonera’s Annual Report 2006 (pages 46-48) for

a detailed description of some of the factors that may affect

TeliaSonera’s business, financial condition and results of operations.

TeliaSonera believes that the risk environment has not materially

changed from the one described in the Annual Report 2006.



Risks and uncertainties that could specifically impact the quarterly

results of operations during 2008 include, but may not be limited to:



· Investments in future growth. TeliaSonera is currently investing in

future growth through, for example, building a customer base in Spain

and increasing the expenditure on sales and marketing to retain and

acquire customers in most markets. While TeliaSonera believes these

investments will improve market position and financial results in the

long term, they may not have the targeted positive effects yet in the

short term and related expenditure may impact the results of operations

between the quarters.



· Efficiency programs. TeliaSonera is in the process of shifting its

cost base from traditional to new services. In the short term, depending

on when the related decisions are made and carried out, these efficiency

programs may not yet bring the cost savings that will be visible in the

long term. Additionally, related amounts of restructuring costs and

their timing may increase the volatility of quarterly results in the

short term.



· Non-recurring items. In accordance with their nature, non-recurring

items such as capital gains and losses, restructuring costs, write-

downs, etc. may impact the quarterly results in the short term with

amounts or timing that deviate from those currently expected. Depending

on external factors or internal developments, TeliaSonera might also

experience non-recurring items that are not currently anticipated.



· Associated companies. A significant part of TeliaSonera’s results

derives from MegaFon and Turkcell, which TeliaSonera does not control

and which operate in growth markets but also in more volatile political,

economic and legal environments. Variations in the financial performance

of these associated companies have an impact on TeliaSonera’s results of

operations also in the short term.



· Acquisitions. TeliaSonera has made a number of targeted acquisitions

in accordance with its strategy. The efficient integration of these

acquisitions and the realization of related cost and revenue synergies,

as well as positive development of the acquired operations, are

significant for the results of operations both in the long and short

term. Integration of acquired companies always includes certain risks,

and the integration process may increase the volatility of quarterly

earnings in the short term.









Forward-Looking Statements





This 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. Such

important factors include, but may not be limited to: TeliaSonera’s

market position; growth in the telecommunications industry; and the

effects of competition and other economic, business, competitive and/or

regulatory factors affecting the business of Telia­Sonera, its

associated companies and joint ventures, 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.