TeliaSonera January-December 2008

Record high fourth-quarter and full-year earnings







Fourth quarter



· Net sales rose 12.7 percent to SEK 28,096 million (24,921). Organic

growth in local currencies was 4.5 percent.

· EBITDA, excluding non-recurring items, increased 14.8 percent to SEK

8,272 million (7,208) and the margin to 29.4 percent (28.9).

· Operating income, excluding non-recurring items, increased 20.8

percent to SEK 7,678 million (6,358).

· Net income attributable to shareholders of the parent company

increased to SEK 5,644 million (4,467) and earnings per share to SEK

1.26 (0.99).

· Free cash flow increased to SEK 4,918 million (1,839), mainly due to

higher EBITDA, the timing of Turkcell Holding’s dividend payment and

lower income taxes.

· During the quarter the number of subscriptions grew by more than 6.8

million to 134.8 million, with 3.4 million new subscriptions in the

majority-owned operations and over 3.4 million in the associated

companies.





Full year



· Net sales rose 7.5 percent to SEK 103,585 million (96,344). Organic

growth in local currencies was 3.9 percent.

· EBITDA, excluding non-recurring items, increased 6.2 percent to SEK

32,954 million (31,021) and the margin was 31.8 percent (32.2).

· Operating income, excluding non-recurring items, increased 9.3

percent to SEK 30,041 million (27,478).

· Net income attributable to shareholders of the parent company

increased to SEK 19,011 million (17,674) and earnings per share to SEK

4.23 (3.94).

· Free cash flow was SEK 11,328 million (13,004).

· The number of subscriptions was 134.8 million at year-end with 7.5

million new subscriptions in the majority-owned operations and 12.5

million in the associated companies, compared to year-end 2007.

· The Board of Directors proposes an ordinary dividend of SEK 1.80 per

share (1.80), equaling a total of SEK 8,083 million (8,083).







Comments by Lars Nyberg, President and CEO





“We reported record high earnings for the fourth quarter and the full

year. Reported growth as well as organic growth in local currencies was

higher in 2008 than the year before, but we did not fully reach our

ambition of maintaining the EBITDA-margin level.



When I joined TeliaSonera in 2007, I said we need to change our behavior

in order to succeed in one of the world’s most rapidly changing and

demanding industries. In 2008, we strengthened the Leadership Team and

introduced a more stringent performance and consequence management. As a

result, I am starting to see a change in how we respond to external

trends and strive to achieve operational excellence.





We are pleased that customer satisfaction, according to the European

Performance Satisfaction Index (EPSI), improved in most of our Nordic

and Baltic businesses in 2008. In addition, we further strengthened our

market positions in Eurasia and became market leader also in Tajikistan

and Georgia.



During the year, we invested in future growth by expanding our presence

to Nepal and Cambodia. Mobility Services delivered continued growth with

improving margins, despite regulatory intervention and intense

competition. The reduced profitability in Broadband Services shows,

however, that the efficiency measures we are taking are necessary as we

cannot have structurally higher costs than our competitors.



We need to be prepared for a potentially drawn-out economic downturn

that may affect consumer and corporate behavior. The worsening economic

trends, particularly in the Baltic countries, had no material effect on

usage in our markets in 2008. However, we experienced somewhat slower

growth than expected in some Eurasian markets in January 2009, although

it is too early to draw any conclusion based on one month.”







Financial highlights







SEK in Chg Chg

millions, (%) (%)

except key

ratios, per

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

and changes 2008 2007 2008 2007

Net sales 28,096 24,921 13 103,585 96,344 8

EBITDA1)

excl. non-

recurring

items2) 8,272 7,208 15 32,954 31,021 6

Margin (%) 29.4 28.9 31.8 32.2

Operating

income 7,356 6,058 21 28,648 26,155 10

Operating

income excl.

non-

recurring

items 7,678 6,358 21 30,041 27,478 9

Net income3) 6,399 5,209 23 21,442 20,298 6

of which

attributable

to

shareholders

of the

parent

company3) 5,644 4,467 26 19,011 17,674 8

Earnings per

share (SEK) 1.26 0.99 27 4.23 3.94 7

Return on

equity (%,

rolling 12

months) 17.2 18.6 17.2 18.6

CAPEX-to-

sales (%) 16.1 18.2 15.2 14.0

Free cash

flow 4,918 1,839 167 11,328 13,004 -13



1) Please refer to page 17 for definitions.

2) Non-recurring items; see table on page 21.

3) January-December 2008 includes approximately SEK 1,520 million

(2,036) positive one-off items.



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 2007, unless otherwise

stated.







Group outlook for 2009





Net sales in local currencies and excluding acquisitions are expected to

increase in 2009 compared to 2008. Currency fluctuations may to an

increasing extent influence the reported figures in Swedish krona.



TeliaSonera will continue to invest in future growth and in the quality

of networks and services, although the intention is to keep the

addressable cost base for 2009 unchanged compared to SEK 33.8 billion in

2008. The ambition for 2009 is to maintain the EBITDA margin level of

2008, excluding non-recurring items.





Capital expenditures will be driven by continued investments in

broadband and mobile capacity as well as in network expansion in our

acquired operations. The CAPEX-to-sales ratio is expected to be somewhat

lower in 2009 than 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. Efficiency measures to be implemented primarily in

the Swedish and Finnish operations during 2008 and 2009 are in total

estimated to give annual gross savings effects of approximately SEK 5

billion compared to the cost base of 2007.



Just above half of these efficiency measures were implemented during

2008 and the remainder will be implemented 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, reported as non-recurring items, are

estimated to be lower than SEK 3 billion, of which about SEK 1.6 billion

were recognized in 2008.



The gross savings effect for 2008 from the ongoing efficiency measures

was approximately SEK 2 billion compared to the cost base of 2007.



Thus far, 270 employees have accepted the offer for early retirement and

1,064 employees have agreed to be transferred to the redeployment unit

in Sweden or the competence pool in Finland. Under the same efficiency

program, TeliaSonera in January 2009, gave notice to 1,200 employees in

Sweden and announced a streamlining of 390 jobs in Broadband Services in

Finland.







Review of the Group, fourth quarter 2008





Net sales increased 12.7 percent to SEK 28,096 million (24,921). Organic

growth in local currencies was 4.5 percent. All business areas showed

higher sales. The positive net effect of acquisitions was 1.5 percent

and of exchange rate changes 6.7 percent.



In Mobility Services, net sales rose 10.4 percent to SEK 12,796 million

(11,588) with increased sales in all markets except Latvia. Net sales

growth was driven by a doubling of the customer base in Spain, higher

usage and a growing number of mobile broadband customers in Sweden.



In Broadband Services, net sales increased 5.0 percent to SEK 11,768

million (11,209) due to higher sales in all markets except Sweden and

Norway. Growing voice and IP traffic in the international carrier

operations in Wholesale and higher sales of IP-based services in the

Baltic countries and Denmark contributed to the increase.



In Eurasia, net sales rose 44.9 percent to SEK 4,219 million (2,911),

lifted by continued growth, especially in Kazakhstan and Azerbaijan, and

the acquisition of operations in Nepal and Cambodia. In Uzbekistan, net

sales more than doubled and Tajikistan reported growth of more than 80

percent.





The number of subscriptions rose by 20.0 million from year-end 2007 to

134.8 million at year-end 2008. The number of subscriptions in the

majority-owned operations rose by 7.5 million to 43.4 million and in the

associated companies by 12.5 million to 91.4 million. During the fourth

quarter, the total number of subscriptions increased by more than 6.8

million, with 3.4 million new subscriptions in the majority-owned

operations and over 3.4 million in the associated companies.



EBITDA, excluding non-recurring items, increased to SEK 8,272 million

(7,208) and the margin to 29.4 percent (28.9). Eurasia showed strong

performance with a rise in EBITDA of more than 50 percent from the

fourth quarter of 2007. The EBITDA increase in Mobility Services came

from higher sales and cost efficiency. In Broadband Services, EBITDA

decreased as a result of a continued decline in fixed voice sales in

Sweden and Finland and a changed revenue mix that was not offset by

savings effects from efficiency measures.



The fourth quarter of 2007 included a positive net effect of

approximately SEK 280 million from one-off items distributed between

business area Mobility Services (see page 9) and business area Broadband

Services (see page 12).



Operating income, excluding non-recurring items, rose to SEK 7,678

million (6,358). Operating income was driven by higher EBITDA and income

from associated companies in Russia and Turkey.



Non-recurring items affecting operating income totaled SEK -322 million

(-300). Non-recurring items included charges of approximately SEK -200

million (-230) related to efficiency measures.



Financial items decreased to SEK -775 million (-289), of which SEK -674

million (-307) related to net interest expenses. Financial items were

negatively affected by higher net debt.



Income taxes amounted to SEK -182 million (-560) and the effective tax

rate was very low at 2.8 percent (9.7). The tax rate was decreased by

positive one-off items both in 2008 and 2007. A lowering of the Swedish

corporate income tax rate from 28.0 percent to 26.3 percent as of

January 1, 2009, resulted in a revaluation of deferred tax assets and

liabilities related to the Swedish operations and in a positive one-off

item of approximately SEK 400 million in the fourth quarter of 2008. New

deferred tax assets amounting to approximately SEK 650 million were

recorded in the fourth quarter of 2008, relating to Finland, the

Netherlands and International Carrier (SEK 850 million of new deferred

tax assets in the fourth quarter of 2007, mainly in Finland). The effect

on earnings per share from the positive one-off items in income taxes

was SEK 0.23 (0.19).



Minority interests in subsidiaries were SEK 755 million (742), of which

SEK 572 million (557) related to operations in Eurasia and SEK 175

million (172) to Eesti Telekom, LMT and TEO.



Net income attributable to shareholders of the parent company increased

to SEK 5,644 million (4,467) and earnings per share to SEK 1.26 (0.99).



CAPEX was SEK 4,523 million (4,537) and the CAPEX-to-sales ratio 16.1

percent (18.2).



Free cash flow increased to SEK 4,918 million (1,839). Higher EBITDA,

lower income taxes, about SEK 700 million in dividend from the

associated company Turkcell Holding and lower working capital all had a

positive effect.



Net debt at the end of the fourth quarter amounted to SEK 48,614 million

(47,674 at the end of the third quarter 2008).



The equity/assets ratio increased slightly during the fourth quarter to

50.5 percent (50.1 percent at the end of the third quarter 2008).







Review of the Group, full year 2008





Net sales increased 7.5 percent to SEK 103,585 million (96,344). Organic

growth in local currencies was 3.9 percent. In Mobility Services, net

sales rose 7.9 percent to SEK 48,673 million (45,115) with increased

sales in most markets. In Broadband Services, net sales increased 1.0

percent to SEK 44,943 million (44,478) with higher sales in all markets

except Sweden. In Eurasia, net sales rose 27.7 percent to SEK 13,204

million (10,338). The positive net effect of acquisitions was 1.5

percent and of exchange rate changes 2.1 percent.



EBITDA, excluding non-recurring items, increased to SEK 32,954 million

(31,021) and the margin was 31.8 percent (32.2). The EBITDA increase

came from higher sales and cost efficiency in Mobility Services and a

continued positive performance in Eurasia.



In addition to the one-off items in the fourth quarter of 2007 (reported

under the review of the fourth quarter on page 4), EBITDA in 2007 also

included a positive net effect of SEK 175 million, mainly related to

reversals of provisions in Mobility Services and Broadband Services, and

SEK 130 million in storm-related costs in Broadband Services in Sweden.



Operating income, excluding non-recurring items, increased to SEK 30,041

million (27,478) due to higher EBITDA and income from associated

companies in Russia and Turkey. In 2007, income from associated

companies included a capital gain of SEK 631 million from the sale of

Eltel and was 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.



Non-recurring items affecting operating income were SEK -1,393 million

(-1,323), including charges of about SEK -1,630 million (-900) related

to cost efficiency programs. Non-recurring items were positively

impacted by the release of a provision of SEK 360 million in TeliaSonera

Holding related to a fiber network in France.



In 2007, non-recurring items were positively impacted by the release of

provisions of approximately SEK 200 million in TeliaSonera Holding.

Meanwhile, a write-down of the access network in Finland and a provision

for dismantling the network had a negative impact of approximately SEK

600 million.



Financial items totaled SEK -2,237 million (-904), of which SEK -2,110

million (-1,174) related to net interest expenses. Financial items were

negatively affected by higher net debt. Meanwhile, received penalty

interest of approximately SEK 290 million related to a court decision on

historical interconnect fees in Sweden had a positive effect.



Income taxes amounted to SEK -4,969 million (-4,953). The effective tax

rate was low at 18.8 percent (19.6), mainly due to positive one-off

items in the fourth quarter (as described on page 4). The effect on

earnings per share from positive one-off income tax items was SEK 0.23

(0.19).



Minority interests in subsidiaries were SEK 2,431 million (2,624), of

which SEK 1,705 million (1,895) related to operations in Eurasia and SEK

692 million (702) to Eesti Telekom, LMT and TEO.



Net income attributable to shareholders of the parent company increased

to SEK 19,011 million (17,674) and earnings per share to SEK 4.23

(3.94).



CAPEX increased to SEK 15,795 million (13,531) and the CAPEX-to-sales

ratio to 15.2 percent (14.0) mainly due to the acquisition of a 2.6-GHz

license in Sweden and continued investments in network capacity and

coverage within Mobility Services and Broadband Services. In Eurasia,

CAPEX increased mainly due to investments in Uzbekistan and Tajikistan

to improve coverage and maintain high service quality.



Free cash flow decreased to SEK 11,328 million (13,004), mainly due to

higher CAPEX and higher financial expenses. Free cash flow was

positively impacted by higher EBITDA and approximately SEK 500 million

received in the form of a one-off payment related to historical

interconnect disputes in Sweden. In 2007, cash flow was positively

impacted by one-off dividends from associated companies; about SEK 900

million from Telefos, mainly related to its sale of Eltel, and about SEK

530 million from Overseas Telecom, mainly related to its sale of MTN

Uganda.



Net debt at year-end 2008 was SEK 48,614 million (34,155 at year-end

2007).



The equity/assets ratio increased slightly to 50.5 percent from 50.3

percent at year-end 2007.





Acquisitions and divestitures



TeliaSonera on September 26, 2008, announced the acquisition of

controlling interests in two mobile operators, Spice Nepal Pvt. Ltd. in

Nepal and Applifone Co. Ltd. in Cambodia. TeliaSonera acquired 51

percent of the shares and votes in TeliaSonera Asia Holding B.V. from

Visor Group that remains owner of the other 49 percent. TeliaSonera Asia

Holding B.V. owns 80 percent of the shares and votes in Spice Nepal and

100 percent of the shares and votes in Applifone. The total cash

consideration paid by TeliaSonera was approximately SEK 3.3 billion (USD

484 million), corresponding to 51 percent of the total equity value of

TeliaSonera Asia Holding B.V. The transaction was completed on October

1, 2008, and the operations have been consolidated as of the same date.

(For more information, see page 23 and www.teliasonera.com/ir.)





Significant events after year-end 2008



· TeliaSonera on January 15, 2009, said it had chosen Ericsson to

deliver the initial 4G city network in Stockholm, Sweden, and Huawei to

deliver the network in Oslo, Norway. The evaluation of suppliers for 4G

networks in other Nordic and Baltic countries are in progress.



· TeliaSonera, through its subsidiary Fintur Holdings B.V., on January

30, 2009, increased its holding in Geocell to 100 percent from 97.5

percent by acquiring 2.5 percent of the shares in the Georgian mobile

operator from the Government of Georgia.





TeliaSonera share



The TeliaSonera share is listed on NASDAQ OMX Stockholm and NASDAQ OMX

Helsinki. The share’s settlement price in Stockholm decreased 35.7

percent in 2008, from SEK 60.50 to SEK 38.90. The highest share price

was SEK 62.00 (68.00) and the lowest SEK 30.80 (47.70).



The number of shareholders decreased from 655,247 to 651,816. Ownership

by the Swedish state was 37.3 percent and the Finnish state’s holding

was 13.7 percent. Holdings outside Sweden and Finland decreased to 15.6

percent from 22.4 percent. At year-end, Swedish institutional investors

owned 24.2 percent (18.2) of the share capital and Finnish institutional

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

percent (3.0) and Finnish private investors 2.8 percent (2.4).





Ordinary dividend to shareholders



For 2008, 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 42.5 percent of net income attributable to shareholders

of the parent company. For 2007, in addition to the ordinary dividend,

excess capital was returned to shareholders in the form of an

extraordinary dividend of SEK 2.20 per share, totaling SEK 9.9 billion.



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

entitling shareholders to dividend be set for April 1, 2009, and that

the first day of trading in shares excluding rights to dividend be set

for April 2, 2009. The recommended record date at VPC for the right to

receive dividend will be April 6, 2009. If the AGM votes to approve the

Board’s proposals, the dividend is expected to be distributed by VPC on

April 9, 2009.





Dividend policy reiterated



TeliaSonera 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.





Proposal for authorization



In order to provide TeliaSonera with an additional instrument to adjust

the company’s capital structure, the Board of Directors proposes that

the Annual General Meeting resolve to authorize the Board of Directors

to repurchase a maximum of 10 percent of the company’s total number of

outstanding shares. To date, no plans are made to exercise the proposed

authorization. (For information on TeliaSonera’s dividend policy and

capital structure, see above.)







Annual General Meeting 2009





The Annual General Meeting (AGM) will be held on April 1, 2009, at 3

p.m. CET at Cirkus, Stockholm. Notice of the meeting will be posted on

TeliaSonera’s website, www.teliasonera.com, and advertised in the

newspapers in mid-February 2009. The record date entitling shareholders

to attend the meeting will be March 26, 2009. Shareholders may file

notice of intent to attend the AGM from February 19, 2009. TeliaSonera

must receive notice of attendance no later than 4 p.m. CET on March 26,

2009.



A Finnish shareholders’ information meeting will be arranged on March

30, 2009, at 3 p.m. Finnish time at Marina Congress center, 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 March 2, 2009.

TeliaSonera must receive notice of attendance no later than March 16,

2009. More information about how to file notice of intent to attend the

meeting will be given in connection with similar information about the

AGM.







Growth and improving margins in Mobility Services







Business area Mobility Services provides personal mobility services to

the consumer andenterprise mass markets. Products and services include

mobile voice and data, mobile content, WLAN Hotspots, mobile over

broadband, mobile/PC convergence and Wireless Office. The business area

comprises mobile operations in Sweden, Finland, Norway, Denmark,

Lithuania, Latvia, Estonia and Spain.





· Volume growth in the mobile markets continued with strong demand for

mobile devices, including mobile broadband and the Apple iPhone 3G.

Intense competition together with regulatory intervention continued to

put downward pressure on prices in all markets. The growing need for

higher network speeds required by mobile data services continued driving

investments in the industry.





SEK in

millions,

except

margins,

operational

data and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 12,796 11,588 10 48,673 45,115 8

EBITDA excl.

non-recurring

items 3,507 2,824 24 14,399 13,084 10

Margin (%) 27.4 24.4 29.6 29.0

Operating

income 2,283 1,580 44 9,526 8,386 14

Operating

income excl.

non-recurring

items 2,366 1,740 36 9,926 8,751 13

CAPEX 1,145 1,476 -22 4,467 4,168 7

MoU 196 194 1 195 190 3

ARPU, blended

(SEK) 224 225 0 223 230 -3

Churn, blended

(%) 27 28 27 28

Subscriptions,

period-end

(thousands) 15,900 14,501 10 15,900 14,501 10

Employees,

period-end 8,339 8,052 4 8,339 8,052 4





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





Fourth quarter



· Net sales rose 10.4 percent to SEK 12,796 million (11,588). Organic

growth in local currencies was 4.6 percent. The positive effect from

exchange rate fluctuations was 4.7 percent.



In reported currency, Spain, Finland, Sweden and Denmark made the

largest contributions to net sales in absolute terms. In general,

subscription growth and higher usage of mobile broadband, data and voice

drove volumes higher in our markets, while regulatory interventions,

including interconnect and roaming, put downward pressure on revenue.



In local currencies, sales growth came mainly from a doubling of the

customer base in Spain, higher usage and a growing number of mobile

broadband customers in Sweden, and the consolidation of ComHouse in

Norway. Revenue in Spain was also positively affected by the decision to

buy terminals directly from vendors and sell them to distribution

channels. Lower terminal sales and intensifying price pressure affected

sales in Latvia and Estonia. Usage growth in the Baltic countries

however remained largely unaffected by the weaker economic development.



· The number of subscriptionsrose by 1.4 million from year-end 2007 to

15.9 million. Growth was strongest in Spain with an increase of 543,000

to 970,000, in line with the target for 2008. Sweden followed with

527,000 new subscriptions and Finland with 227,000. In Lithuania, the

number of subscriptions was unchanged. During the quarter the number of

subscriptions rose by 450,000, with Spain and Sweden showing the largest

increases.



· EBITDA, excluding non-recurring items, rose 24.2 percent to SEK 3,507

million (2,824) and the margin to 27.4 percent (24.4). EBITDA rose as a

result of higher sales and improved cost efficiency, including lower

sales and marketing costs mainly in Sweden, Finland and Denmark. Changed

interconnect fees in the Nordic and Baltic markets had a negative net

effect of approximately SEK 155 million on EBITDA. In Finland, however,

the effect was positive as costs decreased more than revenues.



In Sweden, EBITDA decreased to SEK 1,191 million (1,216). However, the

fourth quarter 2007 was positively impacted by reversals of provisions

of SEK 185 million related to historical interconnect prices.



In Denmark, EBITDA increased to SEK 382 million (170), corresponding to

a margin of 21.3 percent (10.3). The fourth quarter of 2007 included

negative one-off items of SEK 135 million related to balance sheet

corrections.



In Spain, the EBITDA loss narrowed to SEK -273 million (-463).



· CAPEX decreased to SEK 1,145 million (1,476), mainly as a result of

reduced investments in Finland and Denmark due to the timing of

investments between the quarters. The CAPEX-to-sales ratio was 8.9

percent (12.7).





Full year



· Net sales rose 7.9 percent to SEK 48,673 million (45,115). Organic

growth in local currencies was 4.4 percent. The positive effect from

exchange rate fluctuations was 2.4 percent.



In reported currency, Spain, Denmark, Sweden and Norway made the largest

contributions to net sales in absolute terms. Overall subscription

growth and higher usage of mobile broadband, data and voice drove sales

higher. Regulatory interventions, including interconnect and roaming,

were offset by higher sales in most markets.



In local currencies, sales growth came mainly from strong subscription

growth in Spain and continued usage and subscription growth in Sweden.

The successful migration of Call me (formerly named debitel) customers

and an improved product mix in Denmark, and the consolidation of

ComHouse in Norway also lifted sales. A weaker economic development

affected equipment sales in Latvia and Estonia. However, the revenue

decline in these countries is mainly a result of lower prices and, in

Estonia, a reduction in interconnect fees.



· Interconnect fees that TeliaSonera receives from other mobile

operators were lowered in Denmark from DKK 0.72 to DKK 0.62 on May 1,

2008, in Sweden from SEK 0.55 to SEK 0.43 on July 1, 2008, and on the

same date in Norway from NOK 0.70 to NOK 0.60. In Finland, fees were

lowered from EUR 0.066 to EUR 0.051 on January 1, 2008, and further to

EUR 0.049 on January 1, 2009.



In Norway, the reduction of the interconnect fees and symmetric prices

with Telenor as of July 1, 2008, and the effect of losing the national

roaming agreement with Network Norway have, as previously estimated, a

total annualized negative effect of approximately SEK 600 million on

sales as of the fourth quarter 2008.



· EBITDA, excluding non-recurring items, rose to SEK 14,399 million

(13,084) and the margin to 29.6 percent (29.0). The EBITDA increase came

mainly from higher sales and improved cost efficiency. Changed

interconnect fees in the Nordic and Baltic markets had a negative net

effect of approximately SEK 630 million on EBITDA.



In Sweden, EBITDA increased to SEK 4,949 million (4,823). In 2007,

EBITDA was positively impacted by reversals of provisions of SEK 325

million related to historical interconnect prices.



In Denmark, EBITDA increased to SEK 1,374 million (841). The margin in

Denmark increased mainly as a result of an improved product mix and the

successful migration of Call me customers. In 2007, EBITDA included

negative one-off items of SEK 160 million related to balance sheet

corrections.



In Lithuania and Latvia, downward price pressure was not offset by lower

costs. Meanwhile in Estonia, lower costs for interconnect and roaming

combined with a decline in sales of low-margin equipment lifted the

margin to 38.1 percent (34.9).



The EBITDA loss in Spain narrowed to SEK -1,269 million (-1,443) despite

a SEK 100 million one-off expense in the third quarter of 2008 related

to the termination of the old national roaming agreement. The Spanish

operation is under review for different options going forward, as

previously communicated.



· CAPEX increased to SEK 4,467 million (4,168) mainly due to a one-off

payment of SEK 563 million for the acquisition of a 2.6 GHz license in

Sweden in the second quarter. Other CAPEX included continued investments

in network coverage and capacity, including upgrading and building

capacity for mobile broadband. The CAPEX-to-sales ratio was 9.2 percent

(9.2).





SEK in

millions,

except

margins

and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 12,796 11,588 10 48,673 45,115 8

of which

Sweden 3,407 3,257 5 13,334 12,905 3

of which

Finland 2,678 2,439 10 9,917 9,786 1

of which

Norway 2,289 2,258 1 9,433 9,001 5

of which

Denmark 1,793 1,652 9 6,845 6,138 12

of which

Lithuania 698 656 6 2,722 2,484 10

of which

Latvia 663 669 -1 2,635 2,654 -1

of which

Estonia 592 588 1 2,262 2,305 -2

of which

Spain 792 229 246 2,050 589 248

EBITDA

excl.

non-

recurring

items 3,507 2,824 24 14,399 13,084 10

Margin

(%),

total 27.4 24.4 29.6 29.0

Margin

(%),

Sweden 35.0 37.3 37.1 37.4

Margin

(%),

Finland 26.8 21.9 31.0 29.4

Margin

(%),

Norway 33.6 31.0 35.3 34.1

Margin

(%),

Denmark 21.3 10.3 20.1 13.7

Margin

(%),

Lithuania 32.8 33.5 34.6 36.8

Margin

(%),

Latvia 40.9 41.1 43.0 45.2

Margin

(%),

Estonia 37.0 29.3 38.1 34.9

Margin

(%),

Spain neg neg neg neg











Challenging transition continues in Broadband Services







Businessarea Broadband Servicesprovides mass-market services for

connecting homes and offices. Products and services 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.





· Overall price erosion was evident in all markets and the migration

from traditional fixed voice services persisted. Penetration growth of

DSL was affected by market saturation, competition and the promotion of

mobile broadband. Investments were directed to the backbone and

transmission networks to support services that require higher bandwidth,

such as IPTV and broadband.





SEK in

millions,

except

margins,

operational

data and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 11,768 11,209 5 44,943 44,478 1

EBITDA excl.

non-recurring

items 2,627 3,107 -15 11,922 12,821 -7

Margin (%) 22.3 27.7 26.5 28.8

Operating

income 1,009 1,688 -40 5,396 6,413 -16

Operating

income excl.

non-recurring

items 1,243 1,824 -32 6,684 7,515 -11

CAPEX 2,026 1,977 2 5,934 5,722 4

Broadband ARPU

(SEK) 285 265 8 274 270 1

Subscriptions,

period-end

(thousands)

Broadband 2,434 2,326 5 2,434 2,326 5

Fixed voice 5,806 6,218 -7 5,806 6,218 -7

Associated

company, total 777 757 3 777 757 3

Employees,

period-end 16,171 17,294 -6 16,171 17,294 -6





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





Fourth quarter



· Net sales increased 5.0 percent to SEK 11,768 million (11,209) with

growth in all markets except Sweden and Norway. Organic growth in local

currencies was 0.5 percent. The positive effect from exchange rate

fluctuations was 4.5 percent. The good development of the international

carrier operations continued, driven by growth of more than 40 percent

in low-margin voice traffic revenue, in reported currency. In Sweden,

sales decreased only 1.2 percent, a smaller decline than in the previous

quarters of 2008. Higher equipment sales, a higher share of paying IPTV

customers, and less declining fixed voice sales supported the improved

development.



· The number of subscriptions for broadband access rose to 2,434,000,

an increase of 108,000 from year-end 2007 and 29,000 from the end of the

third quarter 2008.



The total number of TV subscriptions rose by 98,000 from year-end 2007

to 867,000, of which 477,000 were IPTV subscriptions, up 99,000. In

Sweden, the push for IPTV resulted in a rise of 20,000 from year-end

2007 to 324,000. Thus far, around 70 percent of TeliaSonera’s IPTV

customer base in Sweden is paying customers. The total number of IPTV

subscriptions increased by 27,000 during the fourth quarter, of which

4,000 in Sweden.



The number of fixed voice subscriptions decreased by 412,000 from year-

end 2007 to 5,806,000, and was down by 115,000 from the end of the third

quarter 2008.





· EBITDA, excluding non-recurring items, decreased to SEK 2,627 million

(3,107) and the margin was 22.3 percent (27.7). In Sweden, the lower

margin reflected a changed revenue mix with a continued fall in sales of

traditional services that was not fully offset by efficiency measures,

and growth in IP-based services, including TV. Compared to traditional

fixed voice, these services have lower margins and ARPU. In Wholesale,

higher sales of low-margin international voice traffic affected

profitability. In Denmark, the margin decreased to 1.1 percent (9.4) as

a result of the continued promotion of IPTV and broadband services.



The fourth quarter of 2007 included a SEK 386 million reversal of a

provision related to historical interconnect fees in Sweden. In

Wholesale, a provision for changed LLUB pricing had a negative effect of

some SEK 120 million.



· CAPEX was SEK 2,026 million (1,977) with continued investments in

broadband platforms and common infrastructure, including core and

transmission networks. The CAPEX-to-sales ratio was 17.2 percent (17.6).





SEK in

millions,

except

margins

and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 11,768 11,209 5 44,943 44,478 1

of which

Sweden 4,983 5,041 -1 19,536 20,343 -4

of which

Finland 2,114 1,947 9 7,736 7,598 2

of which

Norway 224 231 -3 913 891

of which

Denmark 649 551 18 2,352 1,998 18

of which

Lithuania 631 567 11 2,302 2,124 8

of which

Estonia 606 492 23 2,163 1,926 12

of which

Wholesale 2,990 2,629 14 11,302 10,495 8

EBITDA

excl.

non-

recurring

items 2,627 3,107 -15 11,922 12,821 -7

Margin

(%),

total 22.3 27.7 26.5 28.8

Margin

(%),

Sweden 23.9 33.4 27.6 31.1

Margin

(%),

Finland 16.8 17.0 21.7 23.4

Margin

(%),

Norway 18.3 22.9 20.0 22.1

Margin

(%),

Denmark 1.1 9.4 4.4 12.1

Margin

(%),

Lithuania 38.8 39.5 42.7 43.9

Margin

(%),

Estonia 23.6 25.2 26.7 24.4

Margin

(%),

Wholesale 21.5 24.3 26.7 27.5







Full year



· Net sales increased 1.0 percent to SEK 44,943 million (44,478). The

decline in organic sales was 0.8 percent in local currencies. The

positive effect from exchange rate fluctuations was 1.5 percent. In

reported currency, sales grew in all markets except Sweden. The positive

development of international carrier operations in Wholesale and the

acquisition of DLG-Tele in Denmark contributed to the higher sales.



· EBITDA, excluding non-recurring items, decreased to SEK 11,922

million (12,821) and the margin to 26.5 percent (28.8). Cost efficiency

measures did not offset the effects of the changed revenue mix. In 2007,

EBITDA was positively impacted by one-off items of approximately SEK 200

million net.



In addition to the one-off items in the fourth quarter of 2007 (see

above), EBITDA in 2007 included a positive effect of SEK 60 million from

the reversal of a provision, and SEK 130 million in storm related costs

in Sweden, both in the first quarter.



· CAPEX was SEK 5,934 million (5,722) with continued investments in

broadband platforms and common infrastructure, including core and

transmission networks. The CAPEX-to-sales ratio was 13.2 percent (12.9).







Strengthening market positions in Eurasia







Businessarea Eurasiacomprises mobile operations managed by Fintur in

Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova, Nepal

and Cambodia 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.





· The business area continued to show good volume growth. Regulatory

intervention, higher penetration and increasing competition put pressure

on prices and margins in the region. In addition, the current economic

uncertainty reduces visibility ahead. Fluctuations in exchange rates may

also have an adverse effect on revenue and margins.



· TeliaSonera maintained market leadership in Kazakhstan and

Azerbaijan, strengthened its position and became market leader in

Tajikistan and Georgia, and maintained its positions in all other

markets.





SEK in

millions,

except

margins,

operational

data and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 4,219 2,911 45 13,204 10,338 28

EBITDA excl.

non-recurring

items 2,089 1,327 57 6,553 5,255 25

Margin (%) 49.5 45.6 49.6 50.8

Income from

associated

companies

Russia 1,350 1,057 28 5,070 4,181 21

Turkey 1,291 891 45 3,991 2,725 46

Operating

income 4,111 2,926 40 13,731 10,883 26

Operating

income excl.

non-recurring

items 4,111 2,926 40 13,731 10,883 26

CAPEX 1,040 848 23 4,595 3,114 48

Subscriptions,

period-end

(thousands)

Subsidiaries 18,416 12,147 52 18,416 12,147 52

Associated

companies 90,558 78,056 16 90,558 78,056 16

Employees,

period-end 4,780 3,862 24 4,780 3,862 24





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





Consolidated operations



Fourth quarter

· Net sales rose 44.9 percent to SEK 4,219 million (2,911) with revenue

growth in all markets. Organic growth in local currencies was 18.1

percent. In reported currency, the largest contributions in absolute

terms came from Kazakhstan and Azerbaijan. In Uzbekistan net sales more

than doubled and Tajikistan reported growth of more than 80 percent.

Consolidated since October 1, 2008, the operations in Nepal and Cambodia

affected net sales positively by 5.8 percent. The positive effect from

exchange rate fluctuations was 21.0 percent.





· The number of subscriptionsrose by 6.3 million, or 51.6 percent, from

year-end 2007 to 18.4 million, including 1.9 million subscriptions from

the acquired operators in Nepal and Cambodia. Subscription growth

excluding acquisitions was 36.0 percent, with the largest increase in

Uzbekistan, mainly driven by a successful re-branding that helped grow

the subscription base by nearly 2.0 million.



· EBITDA, excluding non-recurring items, increased 57.4 percent to SEK

2,089 million (1,327) as a result of higher sales. The margin rose to

49.5 percent (45.6), driven by a balanced-growth approach and efficient

cost control. Profitability improved despite price erosion caused by

growing competition and higher promotional spending. The margin in Nepal

was in line with the business area as a whole and the dilutive effect

from the consolidation in Cambodia was not material.



· CAPEX was SEK 1,040 million (848) and included continued investments

in capacity, coverage and higher service quality in the networks,

particularly in Uzbekistan, Nepal and Tajikistan. The CAPEX-to-sales

ratio was 24.7 percent (29.1).



Full year

· Net sales rose 27.7 percent to SEK 13,204 million (10,338) with

revenue growth in all markets. Organic growth in local currencies was

20.3 percent. In reported currency, the largest contributions in

absolute terms came from Kazakhstan, Azerbaijan, Uzbekistan and

Tajikistan. The acquisitions in Uzbekistan and Tajikistan, consolidated

since July 1, 2007, and in Nepal and Cambodia, consolidated since

October 1, 2008, affected net sales positively by 5.1 percent. The

positive effect from exchange rate fluctuations was 2.4 percent.



· EBITDA, excluding non-recurring items, increased 24.7 percent to SEK

6,553 million (5,255) as a result of higher sales. The margin decreased

to 49.6 percent (50.8) due to a decrease in average revenue per minute

as well as higher network, sales and marketing expenses. In addition,

inflation drove costs higher, particularly for salaries, rents and

energy.



· CAPEX increased to SEK 4,595 million (3,114) driven by investments in

additional capacity, and to improve coverage and maintain a high service

quality in the network particularly in Uzbekistan and Tajikistan. The

CAPEX-to-sales ratio was 34.8 percent (30.1).





SEK in

millions,

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

changes 2008 2007 (%) 2008 2007 (%)

Net sales 4,219 2,911 45 13,204 10,338 28

of which

Kazakhstan 2,074 1,545 34 6,673 5,582 20

of which

Azerbaijan 1,086 804 35 3,563 2,958 20

of which

Uzbekistan 206 81 154 496 139 257

of which

Tajikistan 179 99 81 516 184 180

of which

Georgia 388 292 33 1,393 1,123 24

of which

Moldova 127 95 34 420 365 15

of which

Nepal 158 – 158 –

of which

Cambodia 10 – 10 –









Associated companies – Russia



Fourth quarter

· MegaFon (associated company, in which TeliaSonera holds 43.8 percent)

in Russia continued its strong performance, increasing its subscription

base by 1.8 million to 43.6 million during the quarter.



· TeliaSonera’s income from Russia rose to SEK 1,350 million (1,057).

The ruble appreciated against the Swedish krona during the quarter,

which had a positive impact of SEK 116 million.



Full year

· MegaFon continued to demonstrate strong performance and increased its

subscription base by 7.9 million to 43.6 million. MegaFon increased its

market share in terms of subscriptions from 20 to 23 percent. The

Russian mobile market continued to show strong volume and revenue

growth.



· TeliaSonera’s income from Russia rose to SEK 5,070 million (4,181),

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

comparable period was 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 was, on average, stable against the Swedish krona.





Associated companies – Turkey



Fourth quarter

· Turkcell (associated company, in which TeliaSonera holds 37.3

percent, reported with a one-quarter lag) in Turkey grew its

subscription base by 0.9 million during the quarter. In Ukraine, where

Turkcell has a majority-owned operation, the number of subscriptions

rose by 0.7 million during the quarter.



· TeliaSonera’s income from Turkey rose to SEK 1,291 million (891). The

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

impact of SEK 45 million.



Full year

· Turkcell grew its subscription base by 1.5 million to 36.3 million,

as a result of attractive pricing, improved sales channel efficiency,

dealer incentives and the continuous positive effect of ongoing

campaigns. In Ukraine, the number of subscriptions rose by 3.1 million

to 10.7 million.



· TeliaSonera’s income from Turkey rose to SEK 3,991 million (2,725).

The Turkish lira appreciated against the Swedish krona, which had a

positive impact of SEK 9 million.



· In 2008, Turkcell distributed to its shareholders a total cash

dividend of approximately TRY 649 million (SEK 2.9 billion),

corresponding to 50 percent of the distributable income for the fiscal

year 2007. TeliaSonera’s share was approximately SEK 1,100 million

(983), of which about SEK 700 million (0) was paid in the fourth

quarter.



· Turkcell on August 27, 2008, announced the acquisition of 80 percent

of the shares in BeST (rebranded to Life), the third largest mobile

operator in Belarus.









Other operations







Other operationscomprise Other Business Services, TeliaSonera Holding

and Corporate functions. Other Business Services is responsible for

sales and production of managed-services solutions to business

customers.







SEK in

millions,

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

changes 2008 2007 (%) 2008 2007 (%)

Net sales 770 671 15 2,538 2,049 24

EBITDA

excl. non-

recurring

items 60 -78 116 -161

Income

from

associated

companies 13 -1 6 740

Operating

income -47 -180 -5 406

Operating

income

excl. non-

recurring

items -42 -174 -300 264

CAPEX 308 236 31 795 527 51





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



· Net sales for Other operations increased mainly due to the

consolidation of Avansys to Other Business Services and the good

development of TeliaSonera Holding.







Stockholm, February 11, 2009







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 11, 2009.

























Financial Information



Annual General Meeting 2009 in Stockholm April

1, 2009

Interim Report January–March 2009

April 24, 2009

Interim Report January–June 2009

July 24, 2009

Interim Report January–September 2009

October 28, 2009

















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.



DSL: Digital Subscriber Line is a family of technologies that provide

digital data transmission over the wires of a local telephone network.



LLUB: Local Loop Unbundling.













Condensed Consolidated Income Statements







SEK in

millions,

except per

share data,

number of

shares and Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg

changes 2008 2007 (%) 2008 2007 (%)

Net sales 28,096 24,921 13 103,585 96,344 8

Cost of sales -15,747 -14,608 8 -56,962 -54,196 5

Gross profit 12,349 10,313 20 46,623 42,148 11

Selling,

admin. and

R&D expenses -7,517 -6,790 11 -26,291 -24,311 8

Other

operating

income and

expenses, net -182 571 -780 621

Income from

associated

companies and



joint

ventures 2,706 1,964 38 9,096 7,697 18

Operating

income 7,356 6,058 21 28,648 26,155 10

Finance costs

and other

financial

items, net -775 -289 168 -2,237 -904 147

Income after

financial

items 6,581 5,769 14 26,411 25,251 5

Income taxes -182 -560 -68 -4,969 -4,953 0

Net income 6,399 5,209 23 21,442 20,298 6

Attributable

to:

Shareholders

of the parent

company 5,644 4,467 26 19,011 17,674 8

Minority

interests in

subsidiaries 755 742 2 2,431 2,624 -7



Shareholders’

basic and

diluted

earnings

per share

(SEK) 1.26 0.99 27 4.23 3.94 7

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



EBITDA 7,965 6,932 15 31,658 30,333 4

EBITDA excl.

non-recurring

items 8,272 7,208 15 32,954 31,021 6

Depreciation,

amortization

and

impairment

losses -3,315 -2,837 17 -12,106 -11,875 2

Operating

income excl.

non-recurring

items 7,678 6,358 21 30,041 27,478 9











Condensed Consolidated Balance Sheets







Dec 31, Dec 31,

SEK in millions 2008 2007

Assets

Goodwill and other

intangible assets 100,968 83,909

Property, plant and

equipment 61,946 52,602

Investments in

associates and joint

ventures, deferred tax

assets

and other non-current

assets 62,265 48,633

Total non-current

assets 225,179 185,144

Inventories 1,673 1,168

Trade receivables,

current tax assets and

other receivables 23,434 20,881

Interest-bearing

receivables 2,147 1,701

Cash and cash

equivalents 11,826 7,802

Total current assets 39,080 31,552

Non-current assets

held-for-sale 27 6

Total assets 264,286 216,702



Equity and liabilities

Shareholders’ equity 130,387 117,274

Minority interests 11,061 9,783

Total equity 141,448 127,057

Long-term borrowings 54,178 41,030

Deferred tax

liabilities, other

long-term provisions 24,594 16,748

Other long-term

liabilities 2,565 2,366

Total non-current

liabilities 81,337 60,144

Short-term borrowings 11,621 2,549

Trade payables, current

tax liabilities, short-

term provisions

and other current

liabilities 29,880 26,952

Total current

liabilities 41,501 29,501

Total equity and

liabilities 264,286 216,702









Condensed Consolidated Cash Flow Statements







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

millions 2008 2007 2008 2007

Cash flow

before change

in working

capital 9,300 5,706 28,480 27,541

Change in

working

capital 93 626 -1,394 -1,012

Cash flow

from

operating

activities 9,393 6,332 27,086 26,529

Intangible

and tangible

fixed assets

acquired

(cash CAPEX) -4,475 -4,493 -15,758 -13,525

Free cash

flow 4,918 1,839 11,328 13,004

Cash flow

from other

investing

activities -3,926 -242 -3,876 -2,180

Total cash

flow from

investing

activities -8,401 -4,735 -19,634 -15,705

Cash flow

before

financing

activities 992 1,597 7,452 10,824

Cash flow

from

financing

activities 1,336 491 -4,359 -14,726

Cash flow for

the period 2,328 2,088 3,093 -3,902



Cash and cash

equivalents,

opening

balance 8,799 5,641 7,802 11,603

Cash flow for

the period 2,328 2,088 3,093 -3,902

Exchange rate

differences 699 73 931 101

Cash and cash

equivalents,

closing

balance 11,826 7,802 11,826 7,802









Condensed Consolidated Statements of Changes in Equity







Jan-Dec 2008 Jan-Dec 2007

SEK in Shareholders’ Minority Total Shareholders’ Minority Total

millions equity interests equity equity interests equity

Opening

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

Reporting

financial

instruments

at fair value -341 – -341 39 – 39

Hedging of

foreign

operations,

net of tax -780 – -780 -114 – -114

Currency

translation

differences 13,185 1,675 14,860 8,748 160 8,908

Net income

recognized

directly in

equity 12,064 1,675 13,739 8,673 160 8,833

Net income 19,011 2,431 21,442 17,674 2,624 20,298

Comprehensive

income 31,075 4,106 35,181 26,347 2,784 29,131

Transactions

with minority

shareholders

in

subsidiaries – -842 -842 – -42 -42

Dividends -17,962 -1,986 -19,948 -28,290 -1,459 -29,749

Closing

balance 130,387 11,061 141,448 117,274 9,783 127,057









Basis of Preparation





General. As in the annual accounts for 2007, TeliaSonera’s consolidated

financial statements as of and for the year ended December 31, 2008,

have been prepared in accordance with International Financial Reporting

Standards (IFRSs) 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 2.2

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). A revised IFRS 1

First-time Adoption of International Financial Reporting Standards

(effective for annual periods beginning on or after January 1, 2009;

earlier application permitted) was issued on November 27, 2008. The

revised version has an improved structure but does not contain any

technical changes. IFRS 1 is not applicable to TeliaSonera.



An updated version of the recent reclassification amendments to IAS 39

Financial Instruments: Recognition and Measurement and IFRS 7 Financial

Instruments: Disclosures (issued on October 13, 2008) was issued on

November 27, 2008, clarifying the effective date requirements as

follows: “Any reclassification made on or after 1 November 2008 takes

effect from the date of reclassification. However, any reclassification

before 1 November 2008 can take effect from 1 July 2008 or a subsequent

date. A reclassification cannot be applied retrospectively before 1 July

2008.” Currently, TeliaSonera is not considering the reclassification of

any financial assets.





IFRIC 17 Distributions of Non-cash Assets to Owners (effective for

annual periods beginning on or after July 1, 2009; earlier application

permitted; prospective application required) was issued on November 27,

2008. IFRIC 17 applies to pro rata distributions of non-cash assets

except for common control transactions and clarifies that: (a) a

dividend payable should be recognized when the dividend is appropriately

authorized and is no longer at the discretion of the entity; (b) the

dividend payable should be measured at the fair value of the net assets

to be distributed; and that (c) the difference between the dividend paid

and the carrying amount of the net assets distributed should be

recognized in profit or loss. IFRIC 17 also requires an entity to

provide additional disclosures if the net assets being held for

distribution to owners meet the definition of a discontinued operation.

Currently, IFRIC 17 is not relevant to TeliaSonera.



IFRIC 18 Transfers of Assets from Customers (effective for transfers

received on or after July 1, 2009; earlier application permitted within

limits; to be applied prospectively) was issued on January 29, 2009.

IFRIC 18 clarifies (a) the circumstances in which the definition of an

asset is met; (b) the recognition of the asset and the measurement of

its cost on initial recognition; (c) the identification of the

separately identifiable services (one or more services in exchange for

the transferred asset); (d) the recognition of revenue; and (e) the

accounting for transfers of cash from customers. Currently, IFRIC 18 is

not expected to have any significant impact on TeliaSonera’s results or

financial position.



For additional information, see corresponding sections in TeliaSonera’s

Interim Report January-September 2008, Interim Report January-June 2008

and Annual Report 2007.







Non-recurring Items







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

millions 2008 2007 2008 2007

Within EBITDA -307 -276 -1,296 -688

Restructuring

charges,

synergy

implementation

costs, etc.:

Mobility

Services -83 -157 -397 -363

Broadband

Services -219 -246 -1,194 -599

Other

operations -5 -5 295 142

of which

TeliaSonera

Holding -3 2 383 161

Capital gains:

Broadband

Services – 132 – 132

Within

Depreciation,

amortization

and impairment

losses -15 -24 -97 -635

Impairment

losses,

accelerated

depreciation:

Mobility

Services – – -3 –

Broadband

Services -15 -24 -94 -635

Within Income

from

associated

companies and

joint ventures – – – –

Within Finance

costs and

other

financial

items, net – – 290 –

Penalty

interest:

Tele2 – – 290 –

Total -322 -300 -1,103 -1,323









Deferred Taxes







Dec 31, Dec 31,

SEK in millions 2008 2007

Deferred tax assets 13,206 12,017

Deferred tax

liabilities -11,260 -9,577

Net deferred tax assets 1,946 2,440









Segment and Group Operating Income







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

millions 2008 2007 2008 2007

Mobility

Services 2,283 1,580 9,526 8,386

Broadband

Services 1,009 1,688 5,396 6,413

Eurasia 4,111 2,926 13,731 10,883

Other

operations -47 -180 -5 406

Total

segments 7,356 6,014 28,648 26,088

Elimination

of inter-

segment

profits 0 44 0 67

Group 7,356 6,058 28,648 26,155









Related Party Transactions





MegaFon. As of December 31, 2008, TeliaSonera had interest-bearing

claims of SEK 362 million on its associated company OAO MegaFon. OAO

Telecominvest (TCI), 26.1 percent owned by TeliaSonera, owns 31.3

percent of the shares in MegaFon. TeliaSonera has signed agreements with

TCI and a TCI shareholder in order to secure TeliaSonera’s ownership in

MegaFon, including an agreement under which TCI has pledged 8.2 percent

of the shares in MegaFon to TeliaSonera.



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

31, 2008, TeliaSonera purchased services from its 50 percent-owned joint

venture Svenska UMTS-nät AB worth SEK 165 million and SEK 550 million,

respectively, and sold services worth SEK 84 million and SEK 357

million, respectively.







Investments







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

millions 2008 2007 2008 2007

CAPEX 4,523 4,537 15,795 13,531

Intangible

assets 792 444 2,528 1,308

Property,

plant and

equipment 3,731 4,093 13,267 12,223

Acquisitions

and other

investments 4,841 2,298 9,060 7,171

Asset

retirement

obligations 443 82 443 82

Goodwill and

fair value

adjustments 4,386 2,211 8,578 6,483

Equity

holdings 12 5 39 606

Total 9,364 6,835 24,855 20,702











Net Debt







Dec 31, Dec 31,

SEK in millions 2008 2007

Long-term and short-

term borrowings, net of

derivatives1) 61,472 43,016

Less short-term

investments, cash and

bank -12,858 -8,861

Net debt 48,614 34,155



1) As of the fourth quarter 2008, the net debt calculation includes

derivatives recognized as financial assets and designated to hedge long-

term and short-term borrowings. Comparative figures have been restated.







Loan Financing





The underlying cash flow generation was positive also in the fourth

quarter 2008.



Conditions for funding activities in the fourth quarter improved

somewhat compared to the very strained situation during early autumn. In

the quarter, TeliaSonera issued both short-term debt in the form of

commercial papers, focusing on maturities over 3 months, and long-term

debt in EUR as well as in SEK with maturities around 5 years. Credit

spreads rose but due to successively lower underlying interest rates the

total borrowing cost remained fairly reasonable.







Financial Key Ratios







Dec 31, Dec 31,

2008 2007

Return on equity (%,

rolling 12 months) 17.2 18.6

Return on capital

employed (%, rolling 12

months) 17.3 19.4

Equity/assets ratio (%) 50.5 50.3

Net debt/equity ratio

(%) 36.5 31.3

Shareholders’ equity

per share (SEK) 29.04 26.12









Business Combinations in the Fourth Quarter





For additional information on business combinations during the year, see

corresponding sections in TeliaSonera’s interim reports for the first,

second and third quarter of 2008.





Asia Holding



On October 1, 2008, TeliaSonera took a further step in executing its

strategy to expand into new high-growth emerging markets by acquiring 51

percent of the shares and votes in TeliaSonera Asia Holding B.V. (Asia

Holding), which owns controlling interests in:

· Spice Nepal Pvt. Ltd. (80 percent of the shares and votes), the

second largest mobile operator in Nepal with around 1.6 million

subscriptions and an estimated market share of approximately 41 percent

as of August 2008. Mobile penetration in Nepal, with a population of

28.4 million, is approximately 13 percent.

· Applifone Co. Ltd. (100 percent of the shares and votes), the fourth

largest mobile operator in Cambodia, with some 97,500 subscriptions and

an estimated market share of approximately 3 percent as of August 2008.

Mobile penetration in Cambodia, with a population of 14.6 million, is

approximately 21 percent.



Goodwill is explained by potential increases in subscription numbers, a

strong market position in Nepal and synergies from subsequent

restructuring of the operations.





The results of the Asia Holding operations have been included in the

consolidated financial statements as of October 1, 2008.





Preliminary purchase price

allocation SEK in millions

Purchase consideration 3,328

Transaction related direct expenses 54

Total cost of the combination 3,382

Licenses 664

Interconnect agreements 881

Customer relationships 158

Mobile networks 427

Financial non-current assets 9

Inventories, receivables and other

current assets 108

Cash and cash equivalents 56

Minority interests -655

Deferred income tax liabilities -398

Other long-term liabilities -189

Short-term liabilities -398

Total fair value of net assets

acquired 663

Goodwill (allocated to business

area Eurasia) 2,719







Cash flow effects SEK in millions

Total cost of the combination paid

in cash 3,382

Less acquired cash and cash

equivalents -56

Net cash outflow from the

combination 3,326







Impact on consolidated financials, SEK in millions

October 1 – December 31, 2008

Net sales 168

Net income 16







Pro forma

effects, as if

the combination

had taken place

at January 1,

2008

(SEK in millions,

except per share Asia TeliaSonera Group

data) TeliaSonera Group Holding pro forma

Net sales 103,585 398 103,983

Net income 21,442 -14 21,428

Earnings per 4.23 4.23

share (SEK)





The total cost of combination and fair values have been determined

provisionally, as they are based on preliminary appraisals and subject

to confirmation of certain facts. Thus, the purchase price accounting is

subject to refinement.





Other business combinations



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

combination totaled SEK 15 million and the net cash outflow SEK 15

million. Goodwill was SEK 11 million, allocated to business area

Broadband Services. Goodwill is explained by strengthened market

positions. The total cost of combination and fair values have been

determined provisionally, as they are based on preliminary appraisals

and subject to confirmation of certain facts. Thus, the purchase price

accounting is subject to refinement.









Guarantees and Collateral Pledged





Guarantees at December 31, 2008, totaled SEK 2,303 million, of which SEK

2,021 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. Collateral

pledged totaled SEK 1,854 million, mainly referring to blocked funds in

bank accounts for Ipse 2000 S.p.A.’s future license payments and for

certain court proceedings.







Contractual Obligations





Contractual obligations at December 31, 2008, totaled SEK 1,843 million,

of which SEK 1,512 million referred to contracted build-out of

TeliaSonera’s mobile networks in Sweden, Finland and Spain as well as

fixed network in Sweden.







Parent Company







Condensed

Income

Statements

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

millions) 2008 2007 2008 2007

Net sales 3,888 4,405 16,132 17,809

Gross profit 557 1,737 2,778 7,084

Operating

income 4 1,851 21,697 6,303

Income after

financial

items -2,159 2,777 18,280 23,845

Income before

taxes -49 1,668 30,317 21,259

Net income -69 1,172 30,306 20,001





Net sales, primarily related to fixed network services in Sweden,

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

services, and to operations being transferred to the subsidiary

TeliaSonera Skanova Access AB (Skanova Access). Out of the total net

sales in the year, SEK 12,644 million (12,811) was billed to

subsidiaries. Operating income increased strongly due to capital gains

on assets transferred to Skanova Access at the beginning of the year. In

2007, income after financial items was positively impacted by dividend

payments from subsidiaries.





Condensed Balance

Sheets Dec 31, Dec 31,

(SEK in millions) 2008 2007

Non-current assets 170,852 142,469

Current assets 40,246 39,967

Total assets 211,098 182,436

Shareholders’ equity 75,017 63,013

Untaxed reserves 8,024 20,061

Provisions 708 944

Liabilities 127,349 98,418

Total equity and

liabilities 211,098 182,436





Total investments in the year were SEK 40,280 million (13,269), of which

SEK 1,276 million (2,705) in property, plant and equipment primarily for

the fixed network. Other investments totaled SEK 39,004 million

(10,564), of which SEK 34,000 million related to a capital contribution

provided in kind in exchange for new shares issued by Skanova Access. In

2007, other investments included the acquisitions of Cygate and debitel

Danmark (SEK 2,024 million) and intra-group transfers of shareholdings

(SEK 8,015 million).







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 “Report of the Directors – Risks and Risk Management” in

TeliaSonera’s Annual Report 2007 for a detailed description of some of

the factors that may affect TeliaSonera’s business, financial condition

and results of operations.



Risks and uncertainties that could specifically impact the quarterly

results of operations during 2009 include, but may not be limited to:



· Current downturn in the world economy. The length of the current

turmoil in the global financial markets and the downturn in the world

economy are difficult to predict. TeliaSonera has a strong balance sheet

and operates in a relatively non-cyclical or late-cyclical industry.

However, a severe and long-term downturn in the economy would have an

impact on its customers and may have a negative impact on its growth and

results of operations through reduced telecom spending. The maturity

schedule of TeliaSonera’s loan portfolio is evenly distributed over

several years, and the refinancing is expected to be made using

uncommitted open-market debt financing programs and bank loans,

alongside the company’s free cash flow. In addition, TeliaSonera has

committed lines of credit with banks that are deemed to be sufficient

and may be utilized if the open-market refinancing conditions are poor.

However, the cost of funding might be higher, should the financial

turmoil and the downturn in the economy continue for a long time or

become even more severe.



· Investments in future growth. TeliaSonera is currently investing in

future growth through, for example, sales and marketing expenditures to

retain and acquire customers in most markets as well as building up its

customer base in start-up operations and emerging markets. While

TeliaSonera believes that 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 quarters.



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

cost base to reflect the shift from traditional to new services,

especially from fixed-voice services to mobile and IP-based 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 the 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.