TeliaSonera January-June 2009

Strong performance driven by cost savings

Second quarter

· Net sales increased 8.7 percent to SEK 27,478 million (25,274). Net
sales in local currencies and excluding acquisitions decreased 0.7
percent.
· The addressable cost base in local currencies and excluding
acquisitions decreased 5.8 percent.
· EBITDA, excluding non-recurring items, increased 13.3 percent to SEK
9,043
million (7,978) and the margin to 32.9 percent (31.6).
· Operating income, excluding non-recurring items, increased 10.3
percent to SEK 8,176 million (7,410).
· Net income attributable to owners of the parent company rose to SEK
4,469 million (4,130) and earnings per share to SEK 1.00 (0.92).
· Free cash flow rose to SEK 3,499 million (2,471).
· During the quarter the number of subscriptions grew by more than 2.4
million, of which 0.9 million new subscriptions in the majority-owned
operations and 1.5 million in the associated companies, totaling 139.4
million.
· The forecast EBITDA margin has been raised and is expected to be
higher in 2009 than in 2008. Net sales in local currencies and excluding
acquisitions are expected to be in line with or slightly below the level
of 2008. The addressable cost base is expected to be lower than in 2008
and the CAPEX-to-sales ratio 13-14 percent.


First half

· Net sales increased 10.1 percent to SEK 54,682 million (49,672). Net
sales in local currencies and excluding acquisitions decreased 0.1
percent.
· Net income attributable to owners of the parent company increased to
SEK 8,909 million (8,595) and earnings per share to SEK 1.98 (1.91).
· Free cash flow rose to SEK 7,781 million (3,581).



Financial highlights



SEK in Chg Chg
millions, (%) (%)
except key
ratios,
per share
data and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 27,478 25,274 9 54,682 49,672 10
EBITDA1)
excl. non-
recurring
items2) 9,043 7,978 13 17,864 15,733 14
Margin (%) 32.9 31.6 32.7 31.7
Operating
income 7,464 6,818 9 14,715 13,388 10
Operating
income excl.
non-
recurring
items 8,176 7,410 10 15,653 14,160 11
Net income 5,085 4,640 10 10,103 9,632 5
of which
attributable
to owners of
the parent 4,469 4,130 8 8,909 8,595 4
Earnings per
share (SEK) 1.00 0.92 9 1.98 1.91 4
Return on
equity (%,
rolling 12
months) 17.0 18.5 17.0 18.5
CAPEX-to-
sales (%) 10.8 17.7 11.1 15.5
Free cash
flow 3,499 2,471 42 7,781 3,581 117

1) Please refer to page 13 for definitions.
2) Non-recurring items; see table on page 17.

In this report, comparative figures are provided in parentheses
following the operational and financial results and refer to the same
item in the second quarter of 2008, unless otherwise stated.




Comments by Lars Nyberg, President and CEO


“I am very pleased that despite a challenging macroeconomic environment
in the second quarter, we reported among the highest EBITDA, excluding
non-recurring items, in the company’s history. We are delivering on the
issues that we can control ourselves, namely cost reductions and careful
capital spending. As a result, our cash flow for the first six months
more than doubled compared to last year’s first half.

Our cost efficiency measures are now having visible effects throughout
our operations and in Sweden and Finland operating expenses decreased by
as much as 12 percent in the second quarter. We maintained the
profitability improvement in Broadband Services and also noted some
effects within Mobility Services. At the same time, Eurasia maintained
its high profitability.

We experienced similar market trends in the second quarter as in the
first quarter with lower equipment sales, reduced roaming due to less
business travel and lower usage. In Eurasia, however, organic revenue
growth improved somewhat compared to the first quarter.

Looking ahead, we expect that our efforts to lower addressable costs and
capital expenditure will offset the negative impact from declining GDP
and rising unemployment in our markets. Therefore we are raising our
outlook on the EBITDA margin and now expect a higher margin in 2009 than
in 2008.”



Group outlook for 2009 (revised)


Net sales in local currencies and excluding acquisitions are expected to
be in line with or slightly below the level of 2008. Currency
fluctuations may have an increasing influence on reported figures in
Swedish krona.

TeliaSonera will continue to invest in future growth and the quality of
networks and services. We expect the addressable cost base in 2009 to be
below the SEK 33.8 billion of 2008, in local currencies and excluding
acquisitions. The EBITDA margin in 2009 is expected to exceed the 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 in the
range of 13-14 percent in 2009.

Please refer to page 22 for the previous Group outlook for 2009
(published on April 24, 2009).


Efficiency measures


The intention is to keep the addressable cost base for 2009 below the
SEK 33.8 billion of 2008, in local currencies and excluding
acquisitions, and that the number of employees will be around 30,000 by
year-end 2009 (32,171). In the first half of 2009, the addressable cost
base in local currencies and excluding acquisitions decreased 4.3
percent compared to last year’s first half. In the second quarter of
2009, the decrease was 5.8 percent compared to the corresponding period
last year. The number of employees was 30,918 at the end of the second
quarter of 2009.


Restructuring costs, reported as non-recurring items, are estimated to
be lower than SEK 3 billion, of which about SEK 1.6 billion in 2008.
These ongoing efficiency measures affect 2,900 employees in Sweden and
Finland, about 1,300 in 2008 and about 1,600 in 2009, as announced in
February 2008. In the first half of 2009, approximately 300 employees in
Finland and approximately 700 in Sweden left the company, agreed to be
transferred to the competence pool in Finland or accepted an offer for
early retirement.


Review of the Group, second quarter 2009


Net sales increased 8.7 percent to SEK 27,478 million (25,274). Net
sales in local currencies and excluding acquisitions decreased 0.7
percent. The positive effect of acquisitions was 1.1 percent and of
exchange rate changes 8.3 percent.

In Mobility Services, net sales increased 7.9 percent to SEK 13,030
million (12,071). Net sales in local currencies and excluding
acquisitions decreased 1.4 percent due to regulatory intervention, lower
equipment sales and roaming revenues. Net sales were positively impacted
by the increased number of subscriptions in Spain. Sweden showed
continued strong growth driven mainly by mobile data and sales rose 5.1
percent. In Norway lower interconnect revenues and the loss of a
national roaming agreement caused a substantial decline in sales. In the
other markets sales decreased mainly because of the slowdown in economic
activity.

In Broadband Services, net sales increased 1.7 percent to SEK 10,740
million (10,557). Net sales in local currencies and excluding
acquisitions decreased 4.7 percent mainly due to a revenue decline in
domestic wholesale and international voice traffic. The price increases
in fixed telephony in Sweden that were announced in March 2009 had a
modest positive impact in the second quarter.

In Eurasia, net sales rose 32.5 percent to SEK 3,786 million (2,858).
The acquisition of the operations in Nepal and Cambodia, consolidated in
the fourth quarter of 2008, contributed to the rise. Organic growth in
local currencies was 8.6 percent for the business area. In Kazakhstan,
TeliaSonera’s largest Eurasian market, growth was 8.1 percent, an
improvement from the first quarter. In Uzbekistan, net sales nearly
tripled and in Tajikistan revenue grew by more than 50 percent.

The number of subscriptions rose by 16.5 million from the end of the
second quarter of 2008 to 139.4 million, of which approximately 6.4
million to 45.2 million in the majority-owned operations and 10.1
million to 94.2 million in the associated companies.

During the quarter the number of subscriptions grew by more than 2.4
million, of which 0.9 million new subscriptions in the majority-owned
operations and 1.5 million in the associated companies.

EBITDA, excluding non-recurring items, increased 13.3 percent to SEK
9,043 million (7,978). Efficiency measures, mainly in Sweden and
Finland, and maintained high profitability in Eurasia contributed to the
rise. The margin rose to 32.9 percent (31.6).

Operating income, excluding non-recurring items, rose to SEK 8,176
million (7,410) mainly due to higher EBITDA.

Non-recurring items affecting operating income totaled SEK -712 million
(-592). Non-recurring items included charges of approximately SEK -840
million (-545) related to efficiency measures. Non-recurring items also
included a capital gain of SEK 134 million from the sale of SmartTrust
within TeliaSonera Holding.

Financial items totaled SEK -788 million (-631), of which SEK -824
million (-643) were related to net interest expenses. Financial items
were negatively affected by higher net debt.

Income taxes amounted to SEK -1,591 million (-1,547). The effective tax
rate decreased to 23.8 percent (25.0).

Minority interests in subsidiaries totaled SEK 616 million (510), of
which SEK 532 million (381) were related to operations in Eurasia and
SEK 69 million (119) to Eesti Telekom, LMT and TEO.

Net income attributable to owners of the parent company rose to SEK
4,469 million (4,130) and earnings per share to SEK 1.00 (0.92).

CAPEXdecreased to SEK 2,974 million (4,475) and the CAPEX-to-sales ratio
to 10.8 percent (17.7).

Free cash flow rose to SEK 3,499 million (2,471) mainly as a result of
higher EBITDA and lower CAPEX.

Net debt increased to SEK 50,777 million at the end of the second
quarter (45,026 at the end of the first quarter of 2009), following the
payment of ordinary dividend of SEK 8,083 million to shareholders in
April for the 2008 fiscal year.

The equity/assets ratio was 51.8 percent at the end of the second
quarter (50.3 at the end of the first quarter of 2009).


Acquisitions and divestitures

· TeliaSonera sold its 24 percent shareholding in SmartTrust on June 3,
2009, and recognized a capital gain of SEK 134 million in the second
quarter.


Significant events in the second quarter

· TeliaSonera Finland on April 9, 2009, reached an agreement with Elisa
Oyj and DNA Finland Oy on new mobile interconnection fees for the years
2010-2011. Under the agreement, the parties will adopt symmetrical
interconnect pricing as of December 2009. The new pricing is estimated
to have a combined positive effect on EBITDA in Mobility Services
Finland of approximately SEK 65 million (EUR 6 million) for the period
2010-2011, assuming 2008 traffic volumes.

· TeliaSonera’s Swedish infrastructure company Skanova Access on March
5, 2009, announced higher prices for access to the copper network
following a change in the price regulation. Consequently, Telia raised
the price for fixed telephony in Sweden on April 14, 2009. The increase,
from SEK 125 to SEK 145 per month (SEK 132, excluding VAT, for Telia
business subscriptions), was the first for fixed telephony subscriptions
since 2001. The impact of the price increases will be gradual and
started in the second quarter of 2009.


Significant events after the end of the second quarter

· TeliaSonera’s subsidiary NextGenTel, the second largest Norwegian
broadband supplier, on July 1, 2009, acquired the broadband and VOIP
business of Tele2 Norge for NOK 100 million in cash, debt free.




Continued strong mobile data growth 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.


· The impact of the economic downturn is visible in most countries in
terms of lower equipment sales and reduced roaming due to less business
travel. Mobile usage showed a somewhat weaker trend than in previous
quarters. Regulatory intervention remains a prime cause of price
pressure in all markets and impacted net sales negatively by
approximately 3 percent in the second quarter.

· In Sweden, the strong trend for mobile data and mobile broadband
continued and Telia­Sonera gained market share in Spain. In the Baltic
countries, the economic recession continued to cause substantial sales
declines in local currencies.


SEK in Chg Chg
millions, (%) (%)
except
margins,
operational
data and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 13,030 12,071 8 25,608 23,590 9
EBITDA excl.
non-recurring
items 3,720 3,663 2 7,132 7,051 1
Margin (%) 28.5 30.3 27.9 29.9
Operating
income 2,488 2,341 6 4,682 4,594 2
Operating
income excl.
non-recurring
items 2,610 2,513 4 4,907 4,807 2
CAPEX 1,019 1,792 -43 1,768 2,617 -32
MoU 194 203 -4 191 197 -3
ARPU, blended
(SEK) 225 230 -2 223 226 -1
Churn, blended
(%) 26 27 -4 28 26 8
Subscriptions,
period-end
(thousands) 16,284 15,086 8 16,284 15,086 8
Employees,
period-end 8,086 8,070 0 8,086 8,070 0


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

· Net sales rose 7.9 percent to SEK 13,030 million (12,071). Net sales
in local currencies and excluding acquisitions decreased 1.4 percent.
The positive effects from acquisitions and exchange rate fluctuations
were 0.6 percent and 8.7 percent, respectively.

In local currencies, net sales grew in Sweden and Spain. Net sales in
Sweden rose 5.1 percent, mainly as a result of strong growth in mobile
data and an increasing number of paying mobile broadband subscribers. In
Spain, Yoigo continued to strengthen its market position by offering
low-price services. As in previous quarters, revenue drew additional
support from the decision in 2008 to purchase terminals directly from
vendors and sell them, without intermediaries, to the distribution
channels.

In Norway, net sales in local currency decreased 9.4 percent mainly as a
result of lower interconnect revenues and the loss of the national
roaming agreement with Network Norway. In Finland, net sales in local
currency fell 3.7 percent due to a reduction in postpaid traffic and
roaming mainly in the business segment. In the Baltic countries, net
sales in local currencies decreased approximately 20 percent due to
lower equipment sales and declining traffic revenues.


· Interconnect fees that TeliaSonera receives from other mobile
operators were further lowered in Sweden on July 1, 2009, from SEK 0.43
to SEK 0.32. On the same date, fees in Norway were lowered from NOK 0.60
to NOK 0.50. In Denmark, interconnect fees were lowered from DKK 0.62 to
DKK 0.54 on May 1, 2009. In Finland, interconnect fees were lowered from
EUR 0.051 to EUR 0.049 on January 1, 2009. On the same date, fees in
Lithuania were reduced from LTL 0.337 to LTL 0.267.

· The number of subscriptionsrose by 1.2 million from the second
quarter of 2008 to 16.3 million, with increases in most markets. Growth
was strongest in Spain with a rise of 560,000 subscriptions to 1.2
million despite the elimination of approximately 70,000 inactive
subscribers during the second quarter. Sweden followed with 429,000 new
subscriptions and Finland with 153,000. During the quarter the total
number of subscriptions rose by 164,000, with Sweden and Spain showing
the largest increases.

· EBITDA, excluding non-recurring items, increased 1.6 percent to SEK
3,720 million (3,663). Addressable costs in local currencies and
excluding acquisitions decreased 0.9 percent compared to last year. The
EBITDA margin decreased to 28.5 percent (30.3) but improved compared to
the previous quarter.

In Sweden, EBITDA increased 11.4 percent to SEK 1,411 million (1,267) as
a result of higher sales and unchanged costs. Consequently, the margin
increased to 39.2 percent (37.0). The EBITDA loss in Spain widened to
SEK 327 million (269) due to more gross additions and a higher intake of
postpaid subscribers but narrowed compared to the first quarter of 2009.

In Finland, the EBITDA margin improved to 33.0 percent (30.1) as a
result of cost efficiency and lower interconnect and roaming related
expenses. In Denmark, the decrease in net sales in local currency was
compensated for by reduced costs and the EBITDA margin improved to 18.5
percent (18.1) from 14.8 percent in the first quarter of 2009. In
Norway, cost savings did not compensate for lower interconnect revenues
and the loss of the national roaming agreement with Network Norway, and
the EBITDA margin decreased to 34.3 percent (37.3).

Lithuania and Estonia have successfully reduced operating costs and the
EBITDA margins remained largely at the same level as last year at 33.4
percent (32.7) and 38.2 percent (39.0), respectively. In Latvia, cost
savings did not offset the decline in sales and the margin fell to 39.8
percent (46.3).

· CAPEX was reduced to SEK 1,019 million (1,792) and the CAPEX-to-sales
ratio to 7.8 percent (14.8). Cash flow, measured as EBITDA minus CAPEX,
increased to SEK 2,701 million (1,871). The second quarter of 2008
included a one-off payment of SEK 563 million for the acquisition of the
2.6 GHz license in Sweden.




SEK in Chg Chg
millions, (%) (%)
except
margins
and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 13,030 12,071 8 25,608 23,590 9
of which
Sweden 3,595 3,420 5 6,937 6,529 6
of which
Finland 2,684 2,417 11 5,337 4,828 11
of which
Norway 2,267 2,417 -6 4,519 4,697 -4
of which
Denmark 1,849 1,665 11 3,715 3,325 12
of which
Lithuania 592 664 -11 1,169 1,341 -13
of which
Latvia 575 639 -10 1,227 1,285 -5
of which
Estonia 529 561 -6 1,046 1,086 -4
of which
Spain 1,082 420 158 1,925 755 155
EBITDA
excl.
non-
recurring
items 3,720 3,663 2 7,132 7,051 1
of which
Sweden 1,411 1,267 11 2,651 2,390 11
of which
Finland 886 728 22 1,679 1,539 9
of which
Norway 778 902 -14 1,545 1,699 -9
of which
Denmark 342 302 13 618 600 3
of which
Lithuania 198 217 -9 385 481 -20
of which
Latvia 229 296 -23 530 585 -9
of which
Estonia 202 219 -8 391 414 -6
of which
Spain -327 -269 22 -667 -657 2
Margin
(%),
total 28.5 30.3 27.9 29.9
Margin
(%),
Sweden 39.2 37.0 38.2 36.6
Margin
(%),
Finland 33.0 30.1 31.5 31.9
Margin
(%),
Norway 34.3 37.3 34.2 36.2
Margin
(%),
Denmark 18.5 18.1 16.6 18.0
Margin
(%),
Lithuania 33.4 32.7 32.9 35.9
Margin
(%),
Latvia 39.8 46.3 43.2 45.5
Margin
(%),
Estonia 38.2 39.0 37.4 38.1
Margin
(%),
Spain neg neg neg neg





Significant profitability improvement 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.


· The economic downturn has so far had a limited impact on net sales,
and the efforts to reduce operating expenses have significantly improved
profitability and cash flow compared to last year. Demand for IP-based
services increased and revenues now represent more than one-third of
Broadband Services’ total net sales. The loss of fixed-voice
subscriptions was somewhat higher than in previous quarters.

· Investments are being directed into fiber access and transmission
networks to support services requiring higher bandwidth, such as IPTV
and broadband. TeliaSonera has strengthened its market position in IPTV
in the Baltic countries and Sweden.


SEK in Chg Chg
millions, (%) (%)
except
margins,
operational
data and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 10,740 10,557 2 21,704 21,003 3
EBITDA excl.
non-recurring
items 3,345 2,741 22 6,842 5,790 18
Margin (%) 31.1 26.0 31.5 27.6
Operating
income 1,347 1,118 20 3,344 2,709 23
Operating
income excl.
non-recurring
items 2,056 1,510 36 4,172 3,294 27
CAPEX 1,188 1,490 -20 2,268 2,561 -11
Broadband ARPU
(SEK) 311 247 26 310 258 17
Subscriptions,
period-end
(thousands)
Broadband 2,288 2,228 3 2,288 2,228 3
Fixed voice 5,491 6,013 -9 5,491 6,013 -9
Associated
company, total 765 771 -1 765 771 -1
Employees,
period-end 14,380 16,148 -11 14,380 16,148 -11


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

· Net sales increased 1.7 percent to SEK 10,740 million (10,557).
However, in local currencies and excluding acquisitions net sales
decreased 4.7 percent. The positive effect from exchange rate
fluctuations was 6.4 percent. Sales of IP-based services increased 19.7
percent in reported currency.

In Sweden, net sales decreased 2.8 percent to SEK 4,716 million (4,853).
Growth in IP-based services remained strong. Revenues for IPTV tripled
and revenues for IP telephony increased more than four times compared to
the second quarter last year. However, the growth in IP-based services
and price increases in fixed telephony could not offset the decline in
traditional fixed-voice services and equipment sales. The price
increases in fixed telephony in Sweden that were announced in March 2009
had a modest positive impact in the second quarter.

In Wholesale, net sales were SEK 3,003 million (3,009). In local
currencies, net sales were negatively impacted by a revenue decline in
domestic wholesale and international voice traffic.

· The number of subscriptions for broadband access rose to 2,288,000,
an increase of 60,000 from the second quarter of 2008 and a decrease of
12,000 during the quarter.

The total number of TV subscriptions rose by 104,000 from the second
quarter of 2008 to 711,000, of which 532,000 were IPTV subscriptions.
More than 20 percent of Telia­Sonera’s broadband customers also
subscribe to the TV services. The total number of IPTV subscriptions
increased by 23,000 during the quarter, of which 17,000 in Sweden.

The number of fixed-voice subscriptions decreased by 522,000 from the
second quarter 2008 to 5,491,000, and was down 169,000 from the first
quarter 2009.

· EBITDA, excluding non-recurring items, increased 22.0 percent to SEK
3,345 million (2,741), with approximately two-thirds of the rise coming
from cost savings and one-third from currency fluctuations. Addressable
costs in local currencies and excluding acquisitions fell 14.8 percent
compared to last year, with the Swedish and Finnish operations showing
the largest decline of 17.5 percent in total. The EBITDA margin improved
to 31.1 percent (26.0).

In Sweden, the EBITDA margin, excluding non-recurring items, improved to
32.3 percent (24.9) due to lower operating expenses as a result of
efficiency measures and reduced costs of goods sold related to lower
volumes and lower interconnect costs.

In Finland, price increases, improved cost efficiency and lower
maintenance and subcontractor costs lifted the margin to 30.6 percent
(17.1).

· CAPEX was SEK 1,188 million (1,490) and the CAPEX-to-sales ratio 11.1
percent (14.1). Cash flow, measured as EBITDA minus CAPEX, increased to
SEK 2,157 million (1,251).


SEK in Chg Chg
millions, (%) (%)
except
margins
and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 10,740 10,557 2 21,704 21,003 3
of which
Sweden 4,716 4,853 -3 9,425 9,657 -2
of which
Finland 1,711 1,512 13 3,494 3,073 14
of which
Norway 237 228 4 475 459 3
of which
Denmark 262 230 14 552 496 11
of which
Lithuania 635 551 15 1,286 1,114 15
of which
Estonia 537 512 5 1,070 997 7
of which
Wholesale 3,003 3,009 0 6,088 5,793 5
EBITDA
excl.
non-
recurring
items 3,345 2,741 22 6,842 5,790 18
of which
Sweden 1,524 1,209 26 3,128 2,623 19
of which
Finland 523 259 102 1,107 577 92
of which
Norway 56 46 22 106 100 6
of which
Denmark 23 -43 51 -39
of which
Lithuania 300 246 22 598 503 19
of which
Estonia 160 145 10 324 290 12
of which
Wholesale 759 877 -14 1,528 1,733 -12
Margin
(%),
total 31.1 26.0 31.5 27.6
Margin
(%),
Sweden 32.3 24.9 33.2 27.2
Margin
(%),
Finland 30.6 17.1 31.7 18.8
Margin
(%),
Norway 23.6 20.2 22.3 21.8
Margin
(%),
Denmark 8.8 neg 9.2 neg
Margin
(%),
Lithuania 47.2 44.6 46.5 45.2
Margin
(%),
Estonia 29.8 28.3 30.3 29.1
Margin
(%),
Wholesale 25.3 29.1 25.1 29.9





High profitability maintained in Eurasia



Businessarea Eurasiacomprises mobile operations 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.


· Eurasia showed good growth in terms of traffic volumes. However, the
economic downturn is evident, particularly in Azerbaijan and Georgia.
Overall, mobile usage was not dramatically affected but the average
price per minute declined mainly as a result of regulatory intervention,
intense competition and promotional campaigns.

· TeliaSonera maintained market leadership in Kazakhstan, Azerbaijan,
Tajikistan and Georgia, and retained its positions in all other markets.


SEK in Chg Chg
millions, (%) (%)
except
margins,
operational
data and Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 3,786 2,858 32 7,527 5,575 35
EBITDA excl.
non-recurring
items 1,900 1,422 34 3,765 2,761 36
Margin (%) 50.2 49.8 50.0 49.5
Income from
associated
companies
Russia 1,299 1,344 -3 2,501 2,361 6
Turkey 941 1,033 -9 1,682 1,881 -11
Operating
income 3,536 3,373 5 6,668 6,175 8
Operating
income excl.
non-recurring
items 3,536 3,373 5 6,668 6,175 8
CAPEX 542 917 -41 1,570 2,140 -27
Subscriptions,
period-end
(thousands)
Subsidiaries 20,045 14,511 38 20,045 14,511 38
Associated
companies 93,494 83,365 12 93,494 83,365 12
Employees,
period-end 4,731 4,213 12 4,731 4,213 12


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


Consolidated operations

· Net sales rose 32.5 percent to SEK 3,786 million (2,858).
Consolidated since October 1, 2008, the operations in Nepal and Cambodia
affected net sales positively by 6.3 percent. The positive effect from
exchange rate fluctuations was 17.6 percent. Organic growth in local
currencies was 8.6 percent. In Kazakhstan, TeliaSonera’s largest market
in Eurasia, growth was 8.1 percent, an improvement from the first
quarter. In Uzbekistan net sales nearly tripled and in Tajikistan
revenue grew more than 50 percent.

· The number of subscriptions totaled 20.0 million, an increase of 5.5
million, or 38 percent, from the second quarter of 2008, including 1.9
million subscriptions from the acquired operations in Nepal and
Cambodia. Subscription growth excluding acquisitions was 25 percent,
with the largest increase in Uzbekistan mainly driven by a successful
rebranding that helped grow the subscription base by 2.5 million. During
the quarter the total number of subscriptions rose by 0.9 million.

· EBITDA, excluding non-recurring items, increased 33.6 percent to SEK
1,900 million (1,422) as a result of higher reported sales. The margin
rose to 50.2 percent (49.8), driven by a balanced-growth approach and
efficient cost control. The profitability improvement was achieved
despite price erosion, caused by growing competition, and higher
promotional spending.

· CAPEX decreased to SEK 542 million (917) and included continued
investments in capacity, coverage and higher service quality in the
networks, particularly in Uzbekistan. The CAPEX-to-sales ratio fell to
14.3 percent (32.1), mainly due to the timing of investments between
quarters. Cash flow, measured as EBITDA minus CAPEX, increased to SEK
1,358 million (505).


SEK in Chg Chg
millions, (%) (%)
except Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 3,786 2,858 33 7,527 5,575 35
of which
Kazakhstan 1,670 1,443 16 3,335 2,862 17
of which
Azerbaijan 1,002 802 25 1,990 1,543 29
of which
Uzbekistan 303 93 226 586 169 247
of which
Tajikistan 182 108 69 353 196 80
of which
Georgia 332 321 3 674 629 7
of which
Moldova 123 97 27 245 188 30
of which
Nepal 175 – 342 –
of which
Cambodia 5 – 16 –



Associated companies – Russia

· MegaFon (associated company, in which TeliaSonera holds 43.8 percent)
in Russia grew its subscription base to 45.6 million, an increase of 1.9
million from the first quarter of 2009, and 6.7 million, or 17 percent,
from the second quarter of 2008. MegaFon maintained its market share in
terms of subscriptions at 23 percent during the quarter.

· TeliaSonera’s income from Russia decreased to SEK 1,299 million
(1,344). The Russian ruble depreciated 2.9 percent against the Swedish
krona, which had a negative impact of SEK 37 million.


Associated companies – Turkey

· Turkcell (associated company, in which TeliaSonera holds 37.3
percent, reported with a one-quarter lag) in Turkey grew its
subscription base to 36.4 million, an increase of 1.3 million from the
corresponding period last year, but a decrease of 0.6 million from the
first quarter of 2009. In Ukraine, the number of subscriptions rose by
2.1 million to 11.5 million and by 0.3 million during the quarter.

· TeliaSonera’s income from Turkey decreased to SEK 941 million
(1,033). The Turkish lira depreciated 3.4 percent against the Swedish
krona, which had a negative impact of SEK 36 million.

· On November 28, 2008, Turkcell was granted the A Type license
providing the widest frequency band for a consideration of EUR 358
million (excluding VAT) following the tender for the issue of four
separate licenses by the Information and Communication Technologies
Authority (ICTA) to provide IMT 2000/UMTS services and infrastructure.
On April 30, 2009, Turkcell signed the license agreement with ICTA and
paid EUR 422.4 million (including VAT) to the Turkish Treasury.

· Turkcell’s Annual General Meeting 2009, held on May 8, decided to
distribute a cash dividend of approximately SEK 5.8 billion (TRY 1.1
billion), corresponding to 50 percent of Turkcell’s distributable net
income for the 2008 fiscal year. TeliaSonera’s direct and indirect share
of the dividend is in total approximately SEK 2.1 billion (1.1). During
the second quarter, TeliaSonera received SEK 733 million (403) in cash
dividend from Turkcell, corresponding to TeliaSonera’s direct ownership
share.




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 Chg Chg
millions, (%) (%)
except Apr-Jun Apr-Jun Jan-Jun Jan-Jun
changes 2009 2008 2009 2008
Net sales 1,331 1,190 12 2,686 2,323 16
EBITDA
excl. non-
recurring
items 45 144 -69 102 142 -28
Income
from
associated
companies 176 -16 198 -8
Operating
income 56 -31 -11 -96 -89
Operating
income
excl. non-
recurring
items -64 -3 -126 -122 3
CAPEX 224 274 -18 441 385 15


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

· Net sales increased 11.8 percent to SEK 1,331 million (1,190). In
local currencies and excluding acquisitions, net sales decreased 0.4
percent.

Net sales of the cable TV company Stofa, which was transferred from
Broadband Services Denmark to Other operations on January 1, 2009,
increased 18.6 percent to SEK 376 million (317). In local currency, net
sales grew 2.6 percent. The number of subscriptions for broadband access
decreased by 4,000 from the second quarter of 2008 to 147,000, while the
number of subscriptions for cable TV increased by 2,000 to 211,000.


The Board of Directors and the President and CEO certify that the
Interim Report gives a true and fair overview of the Parent Company’s
and Group’s operations, their financial position and results of
operations, and describes significant risks and uncertainties facing the
Parent Company and other companies in the Group.

Stockholm, July 24, 2009




Tom von Weymarn Agneta Ahlström Magnus Brattström
Chairman



Maija-Liisa Friman Conny Karlsson Lars G Nordström



Timo Peltola Lars Renström Jon Risfelt



Caroline Sundewall Berith Westman



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 July 24, 2009.









Financial Information

Interim Report January–September 2009
October 28, 2009
Year-end Report January–December 2009 February
11, 2010
Interim Report January–March 2010
April 23, 2010
Interim Report January–June 2010
July 23, 2010
Interim Report January–September 2010
October 28, 2010








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.






Condensed Consolidated Statements of Comprehensive Income



SEK in
millions,
except per
share data,
number of
shares and Apr-Jun Apr-Jun Chg Jan-Jun Jan-Jun Chg
changes 2009 2008 (%) 2009 2008 (%)
Net sales 27,478 25,274 9 54,682 49,672 10
Cost of sales -15,269 -14,076 8 -30,668 -27,763 10
Gross profit 12,209 11,198 9 24,014 21,909 10
Selling,
admin. and
R&D expenses -6,491 -6,362 2 -12,916 -12,327 5
Other
operating
income and
expenses, net -703 -349 101 -794 -392 103
Income from
associated
companies and

joint
ventures 2,449 2,331 5 4,411 4,198 5
Operating
income 7,464 6,818 9 14,715 13,388 10
Finance costs
and other
financial
items, net -788 -631 25 -1,647 -644 156
Income after
financial
items 6,676 6,187 8 13,068 12,744 3
Income taxes -1,591 -1,547 3 -2,965 -3,112 -5
Net income 5,085 4,640 10 10,103 9,632 5
Foreign
currency
translation
differences -3,008 2,674 -1,258 -3,922 -68
Income from
associated
companies -10 149 205 117 115
Cash flow
hedges 89 52 71 71 40 78
Available-
for-sale
financial
instruments 21 -38 36 -67
Income taxes
relating to
other
comprehensive
income -76 -3 -110 -14
Other
comprehensive
income -2,984 2,834 -1,056 -3,846 -73
Total
comprehensive
income 2,101 7,474 -72 9,047 5,786 56

Net income
attributable
to:
Owners of the
parent 4,469 4,130 8 8,909 8,595 4
Minority
interests 616 510 21 1,194 1,037 15
Total
comprehensive
income
attributable
to:
Owners of the
parent 2,010 6,826 -71 9,272 5,084 82
Minority
interests 91 648 -86 -225 702

Earnings per
share (SEK),
basic and
diluted 1.00 0.92 9 1.98 1.91 4
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 8,213 7,427 11 16,824 15,002 12
EBITDA excl.
non-recurring
items 9,043 7,978 13 17,864 15,733 14
Depreciation,
amortization
and
impairment
losses -3,198 -2,940 9 -6,520 -5,812 12
Operating
income excl.
non-recurring
items 8,176 7,410 10 15,653 14,160 11





Condensed Consolidated Statements of Financial Position



Jun 30, Dec 31,
SEK in millions 2009 2008
Assets
Goodwill and other
intangible assets 101,571 100,968
Property, plant and
equipment 60,086 61,946
Investments in
associates and joint
ventures, deferred tax
assets
and other non-current
assets 62,703 62,265
Total non-current
assets 224,360 225,179
Inventories 1,474 1,673
Trade receivables,
current tax assets and
other receivables 21,904 23,434
Interest-bearing
receivables 1,609 2,147
Cash and cash
equivalents 14,442 11,826
Total current assets 39,429 39,080
Non-current assets
held-for-sale 41 27
Total assets 263,830 264,286

Equity and liabilities
Equity attributable to
owners of the parent 131,576 130,387
Minority interests 9,179 11,061
Total equity 140,755 141,448
Long-term borrowings 59,619 54,178
Deferred tax
liabilities, other
long-term provisions 24,832 24,594
Other long-term
liabilities 1,783 2,565
Total non-current
liabilities 86,234 81,337
Short-term borrowings 9,302 11,621
Trade payables, current
tax liabilities, short-
term provisions
and other current
liabilities 27,539 29,880
Total current
liabilities 36,841 41,501
Total equity and
liabilities 263,830 264,286




Condensed Consolidated Statements of Cash Flows



SEK in Apr-Jun Apr-Jun Jan-Jun Jan-Jun
millions 2009 2008 2009 2008
Cash flow
before change
in working
capital 9,278 6,767 15,794 11,772
Change in
working
capital -2,848 298 -1,904 -489
Cash flow
from
operating
activities 6,430 7,065 13,890 11,283
Cash CAPEX -2,931 -4,594 -6,109 -7,702
Free cash
flow 3,499 2,471 7,781 3,581
Cash flow
from other
investing
activities -110 392 -561 486
Total cash
flow from
investing
activities -3,041 -4,202 -6,670 -7,216
Cash flow
before
financing
activities 3,389 2,863 7,220 4,067
Cash flow
from
financing
activities -8,236 -10,467 -4,962 -5,547
Cash flow for
the period -4,847 -7,604 2,258 -1,480

Cash and cash
equivalents,
opening
balance 19,137 13,819 11,826 7,802
Cash flow for
the period -4,847 -7,604 2,258 -1,480
Exchange rate
differences 152 31 358 -76
Cash and cash
equivalents,
closing
balance 14,442 6,246 14,442 6,246





Condensed Consolidated Statements of Changes in Equity



Jan-Jun 2009 Jan-Jun 2008
Owners Owners of
SEK in of the Minority Total the Minority Total
millions parent interests equity parent interests equity
Opening
balance 130,387 11,061 141,448 117,274 9,783 127,057
Dividends -8,083 -1,628 -9,711 -17,962 -931 -18,893
Transactions
with minority
interests – -29 -29 – -1,496 -1,496
Total
comprehensive
income 9,272 -225 9,047 5,084 702 5,786
Closing
balance 131,576 9,179 140,755 104,396 8,058 112,454




Basis of Preparation


General. As in the annual accounts for 2008, TeliaSonera’s consolidated
financial statements as of and for the six-month period ended June 30,
2009, 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). On June 18, 2009,
amendments on group cash-settled share-based payment transactions to
IFRS 2 Share-based Payment (effective for annual periods beginning on or
after January 1, 2010; earlier application permitted, to be applied
retrospectively) were issued. The amendments clarify how an individual
subsidiary in a group should account for some share-based payment
arrangements in its own financial statements. The amendments also
incorporate guidance previously included in IFRIC 8 Scope of IFRS 2 and
IFRIC 11 IFRS 2–Group and Treasury Share Transactions, which as a result
are withdrawn. IFRS 2 is currently not relevant to TeliaSonera.

On July 9, 2009, the self-contained IFRS for SMEs (effective immediately
on issue) was published, tailored for the needs and capabilities of
small and medium-sized businesses (SMEs). IFRS for SMEs is not relevant
to TeliaSonera.

On July 23, 2009, amendments on retrospective application of IFRSs to
IFRS 1 First-time Adoption of International Financial Reporting
Standards (effective for annual periods beginning on or after January 1,
2010; earlier application permitted) were published. IFRS 1 is not
applicable to TeliaSonera.

For additional information, see corresponding sections in TeliaSonera’s
Interim Report January-March 2009 and Annual Report 2008.




Non-recurring Items



SEK in Apr-Jun Apr-Jun Jan-Jun Jan-Jun
millions 2009 2008 2009 2008
Within EBITDA -830 -551 -1,040 -731
Restructuring
charges,
synergy
implementation
costs, etc.:
Mobility
Services -123 -169 -225 -210
Broadband
Services -693 -354 -796 -547
Other
operations -14 -28 -19 26
of which
TeliaSonera
Holding 8 -6 6 50
Within
Depreciation,
amortization
and impairment
losses -16 -41 -32 -41
Impairment
losses,
accelerated
depreciation:
Mobility
Services ─ -3 ─ -3
Broadband
Services -16 -38 -32 -38
Within Income
from
associated
companies and
joint ventures 134 – 134 –
Capital gains:
SmartTrust 134 – 134 –
Within Finance
costs and
other
financial
items, net ─ 15 ─ 290
Penalty
interest:
Tele2 ─ 15 ─ 290
Total -712 -577 -938 -482




Deferred Taxes



Jun 30, Dec 31,
SEK in millions 2009 2008
Deferred tax assets 12,628 13,206
Deferred tax
liabilities -12,208 -11,260
Net deferred tax assets 420 1,946




Segment and Group Operating Income



SEK in Apr-Jun Apr-Jun Jan-Jun Jan-Jun
millions 2009 2008 2009 2008
Mobility
Services 2,488 2,341 4,682 4,594
Broadband
Services 1,347 1,118 3,344 2,709
Eurasia 3,536 3,373 6,668 6,175
Other
operations 56 -31 -11 -96
Total
segments 7,427 6,801 14,683 13,382
Elimination
of inter-
segment
profits 37 17 32 6
Group 7,464 6,818 14,715 13,388





Related Party Transactions


MegaFon. As of June 30, 2009, TeliaSonera had interest-bearing claims of
SEK 359 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 and the six-month period ended June
30, 2009, TeliaSonera purchased services from its 50 percent-owned joint
venture Svenska UMTS-nät AB worth SEK 171 million and SEK 353 million,
respectively, and sold services worth SEK 26 million and SEK 153
million, respectively.



Investments



SEK in Apr-Jun Apr-Jun Jan-Jun Jan-Jun
millions 2009 2008 2009 2008
CAPEX 2,974 4,475 6,048 7,705
Intangible
assets 419 927 672 1,162
Property,
plant and
equipment 2,555 3,548 5,376 6,543
Acquisitions
and other
investments 10 3,716 103 3,955
Asset
retirement
obligations ─ ─ 12 ─
Goodwill and
fair value
adjustments 7 3,698 80 3,931
Equity
holdings 3 18 11 24
Total 2,984 8,191 6,151 11,660




Net Debt



Jun 30, Dec 31,
SEK in millions 2009 2008
Long-term and short-
term borrowings 68,921 65,799
Less derivatives
recognized as financial
assets and hedging
long-term and short-
term borrowings -3,311 -4,327
Less short-term
investments, cash and
bank -14,833 -12,858
Net debt 50,777 48,614




Loan Financing


The underlying cash flow generation was positive also in the second
quarter of 2009.

Conditions for funding activities continued to improve during the first
half of the year and TeliaSonera issued longer-dated bond financing with
maturities from 5 to 15 years. During the second quarter, TeliaSonera
issued bonds denominated in EUR and JPY with final maturity in 2017.

No short-dated debt issuance was made during the first half of the year.
TeliaSonera is well funded for the remainder of the year.

In April, the last outstanding Eurobond issued by TeliaSonera Finland
Oyj (former Sonera Oyj) was repaid.


Overall financial market sentiment has improved in recent months, with
credit spreads tightening from the high levels in the very early part of
the year, but no clear signs of any recovery in the general economy are
visible yet and it is still not clear whether the worst effects of the
financial turmoil have passed, since real-economy effects and credit
losses tend to lag. The Swedish krona remains weak.



Financial Key Ratios



Jun 30, Dec 31,
2009 2008
Return on equity (%,
rolling 12 months) 17.0 17.2
Return on capital
employed (%, rolling 12
months) 16.8 17.3
Equity/assets ratio (%) 51.8 50.5
Net debt/equity ratio
(%) 37.1 36.5
Owners’ equity per
share (SEK) 29.30 29.04




Business Combinations in the Second Quarter


For minor business combinations in the second quarter, the cost of
combination totaled SEK 6 million and the net cash outflow SEK 6
million. Goodwill was SEK 5 million, allocated to reporting segment
Other operations. Goodwill is explained by strengthened market
positions. The total cost of combination and fair values were determined
provisionally, as they are based on preliminary appraisals and subject
to confirmation of certain facts. Thus, the purchase price accounting is
subject to adjustment.



Guarantees and Collateral Pledged


At June 30, 2009, the maximum potential future payments that TeliaSonera
could be required to make under issued financial guarantees totaled SEK
2,428 million, of which SEK 2,150 million referred to credit guarantees
on behalf of Svenska UMTS-nät AB. Collateral pledged totaled SEK 1,192
million, mainly referring to blocked funds in bank accounts related to
Ipse 2000 S.p.A.’s future license payments, certain court proceedings
and shares in Svenska UMTS-nät.



Contractual Obligations


Contractual obligations at June 30, 2009, totaled SEK 1,832 million, of
which SEK 1,361 million referred to contracted build-out of
TeliaSonera’s mobile network services in Sweden, Finland and Spain as
well as its fixed network services in Sweden.




Parent Company



Condensed
Income
Statements
(SEK in Apr-Jun Apr-Jun Jan-Jun Jan-Jun
millions) 2009 2008 2009 2008
Net sales 3,774 4,164 7,615 8,183
Gross profit 369 825 973 1,356
Operating
income -230 561 -102 21,164
Income after
financial
items 7,873 156 7,769 20,544
Income before
taxes 7,968 174 7,946 30,431
Net income 7,968 171 7,945 30,431


Net sales, primarily related to fixed network services and broadband
application services in Sweden, declined due to migration to mobile
services and lower-priced IP-based services. Out of the total net sales
in the period, SEK 6,075 million (6,402) was billed to subsidiaries.
Income after financial items increased strongly as a result of dividend
payments from subsidiaries. In the first quarter of 2008, operating
income was heavily impacted by capital gains on assets transferred to
the subsidiary TeliaSonera Skanova Access AB (Skanova Access) and income
before taxes by a related reversal of excess depreciation.


Condensed Balance
Sheets Jun 30, Dec 31,
(SEK in millions) 2009 2008
Non-current assets 168,535 170,852
Current assets 41,581 40,246
Total assets 210,116 211,098
Shareholders’ equity 74,967 75,017
Untaxed reserves 7,847 8,024
Provisions 833 708
Liabilities 126,469 127,349
Total equity and
liabilities 210,116 211,098


Total investments in the period were SEK 635 million (35,549), of which
SEK 519 million (602) in property, plant and equipment primarily for the
fixed network. Other investments totaled SEK 116 million (34,947). In
2008, other investments included a capital contribution of SEK 34,000
million provided in kind in exchange for new shares issued by Skanova
Access.



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 2008 for a detailed description of some of
the factors that may affect TeliaSonera’s business, financial position
and results of operations. TeliaSonera believes that the risk
environment has not materially changed from the one described in the
Annual Report 2008.

Risks and uncertainties that could specifically impact the quarterly
results of operations during the remainder of 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 sharp decline 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 long-term recession in the countries in which
TeliaSonera operates 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 re­financing is
expected to be made by 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, build-up of its customer
base in start-up operations and investments in infrastructure in all
markets to improve capacity and access. 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 expenditures 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 portion 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.



Previous Group outlook for 2009 (published on April 24, 2009)


Net sales in local currencies and excluding acquisitions are expected to
be around the same level 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 ser-vices, although the intention is to keep the
addressable cost base for 2009 unchanged compared to SEK 33.8 billion in
2008, in local currencies and excluding acquisitions. 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. In order to preserve strong cash generation,
capital expenditures may be reduced further if the economy continues to
deteriorate.



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.